Can the Farmers Act finally bring India’s agricultural sector into the 21st century?


Introduction

Despite being one of the fastest growing emerging market economies in the world, India still derives 15% of its GDP from agricultural activities, engaging 41% of its population.[1] Recurring attempts have been made every year by the government at both central and state levels through the issuance of new schemes, programs and subsidies to promote the Indian agricultural industry. However, the Indian agricultural industry still lags behind in innovation and technology compared to other jurisdictions. India’s agricultural sector largely depends on traditional means and methods through which it has still not been able to realize its full potential. One of the factors acting as an impediment to the growth of the Indian agricultural sector is the presence of intermediaries at different levels of the supply and production chain. The presence of intermediaries results in a considerable time lag between the harvesting of the product and the time it reaches the end user or storage facility, in addition to reducing margins for actual farmers. Therefore, 16% of the total crops harvested in India are wasted.[2]

There is also a lack of adequate cold chain and storage facilities, export, transport, processing and marketing facilities. Although there has been an increased use of fertilizers, pesticides and herbicides, many farmers still fail to get the right prices for their crop due to various reasons including rising input costs. As a result, farmers often do not consider investing in technology and innovation or are unable to invest in innovation due to financial constraints. With this in mind, there is a lot of room for innovation in the Indian agricultural sector, especially in the area of ​​product optimization and process optimization.

There is therefore enormous potential for agro-innovation in the sector. Agri-innovation incubators can play an important role in this regard and bridge the gap for the agricultural sector, which faces challenges such as climate change, lack of market access, lack of storage facilities, poorly equipped warehouses, access to agricultural equipment, seed quality. , soil quality, access to credit, etc. Remote sensing, data analysis, geographic information system (GIS), blockchain, artificial intelligence, etc. are some of the key areas of incubation and innovation that can be maneuvered by the agri-innovation industry in collaboration with the agricultural sector.

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Contract farming to achieve adequate scale for innovation

The high fragmentation of land ownership is one of the main reasons why the Indian agricultural sector is not optimized. The average size of land ownership in India is as small as 1.15 hectares.[3] Parliament has made multiple efforts over the years to introduce standards on contract farming, but they have sparked unrest from farmers. There are fears that big business will take over the agricultural sector and that small farmers will lose control of their land.

Recently, the President gave his assent to the Farmer Price Insurance and Services Agreement Act 2020 (FEPA law) and the Agricultural Trade and Commerce (Promotion and Facilitation) Act 2020 (CPAC Act).

The legislation attempts to commercialize agriculture by allowing the farmer to directly enter into agricultural agreements with sponsors, aggregators and, if necessary, agricultural service providers. The legislation emphasizes objective criteria for determining crop prices, including the link between prices and APMC meter rates. At the same time, the onus is on the farmer to adhere to standard cultivation specifications similar to any sale of goods or services bringing agriculture to the level of all other goods and services in India for the first time.

Legislation empowers farmers to form mixed cooperative societies and undertake contract farming. It offers farmers the freedom to choose the commercial area for the exercise of their activities.[4] Further, it enables the farmer, agricultural producer organization or primary agricultural cooperative society to establish and operate an electronic trading and transaction platform to facilitate interstate trade and commerce and intrastate.[5] In addition, exemption from payment of any market fees or taxes is also granted to farmers to access the trading and trading platform.[6] All these measures are aimed at making contract farming sustainable in India.

However, much depends on the implementation of this legislation. There is also a sudden surge of interest in agri-tech which, like any other aggregator model, enjoys the privilege of breaking free from regulatory capture. This may be one of the reasons why it is necessary to suddenly improve farming as a business. However, change is not going to be easy in a country where farm income is still tax exempt with no accountability.

It is at times like these that agricultural incubation centers and the innovators attached to these centers should step up and support one of the most important yet underserved sub-categories of bio-innovation. , namely agriculture. The creation of agricultural cooperative societies will make it easier for bio-innovators to map and contact these groups of farmers who will now be part of the farmers’ cooperative society. This will help innovators help farmers with the required technology support and provide innovative solutions for agriculture and production. Contract farming as well as market linkages, crop and farm management, farm support facilities such as soil sample testing and improvisation, access to quality seed, etc contribute to the production of high-value, high-yielding crops. Aerial seeding and drone-facilitated monitoring for large agricultural fields to check for pest infestation and weather review will also play an important role in the agricultural sector if input costs outweigh net benefits.

Agricultural Innovation Centers can engage in adopting agricultural communities geographically close to their centers and helping them form cooperative societies, develop bylaws, verify agricultural agreements and facilitate meetings with bio-innovators , sponsors, aggregators and agro-techs. of their existing ecosystems.

Comparative analysis of quality standards in agriculture

Despite initiatives like the agri-mark, standardization of product and seed quality standards is a persistent problem. This has become even more important now that legislation requires contractual agreement on standards.

Bio-innovation can help in gene editing and design to obtain high-yield quality products. This field is constantly evolving, with innovators having multiple opportunities to work towards clean, quality products. This will also help farmers get the best price for their produce by meeting quality, grade and standards under the agriculture agreement.[7] At the same time, the ghosts of past disasters in mismanaged GM seeds loom over the history of Indian agriculture. It is very important for Agri-incubation centers to promote sustainable development and implementation this time.

Scope of agri-tech

With increased access to mobile phones in rural areas as well as cheap data and internet plans, access to technology even in the agricultural sector has increased. The number of internet users in rural India grew by 35% in 2018.[8] Affordable access to technology also in itself presents an increased opportunity for the expansion of agricultural technology. India is also home to the world’s largest digital literacy program for rural adults, ‘Pradhan Mantri Digital Grameen Saksharta Abhiyan’ (PGMDISHA). The Indian agro-technology sector, with a turnover of 204 million dollars, today represents less than 1% of its market potential.

However, a relevant question to ask is whether the agricultural community in India is organized enough to reap the benefits of agri-technology. On the other hand, will professionally funded agri-tech ventures survive proof of concept in outback India? Agri-Innovation Centers can act as buffers and facilitators to facilitate this transition.

The new legislation and growing interest in agri-tech is definitely an exciting opportunity to propel India’s growth story constantly mired in uncertainty attached to one of the major sectors contributing to its GDP. Only time will tell if this social experiment will succeed.

[1] https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS

[2] https://www.financialexpress.com/economy/india-wastes-up-to-16-of-its-agricultural-produce-fruits-vegetables-squandered-the-most/1661671/

[3] Census of Agriculture, Department of Agriculture and Farmers’ Welfare, available at: http://agricoop.nic.in/divisiontype/agriculture-census

[4] Section 6(a), Agricultural Trade and Commerce (Promotion and Facilitation) Act 2020

[5] Section 6(b), Agricultural Trade and Commerce (Promotion and Facilitation) Act 2020

[6] Section 6(c), Agricultural Trade and Commerce (Promotion and Facilitation) Act 2020

[7] Section 3(1)(a), Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020

[8] https://economictimes.indiatimes.com/industry/telecom/telecom-news/indian-to-have-820-million-smartphone-users-by-2022/articleshow/76876369.cms?from=mdr

Jitendra Kumar is the managing director of Bangalore Bioinnovation Center and Mrs. Aditi Jha is a consultant (public policy), Bridge policy think tank.

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Lana T. Arthur