Crystal Gazing Indian Agriculture in 2050

 

Indian Agriculture in 2050

Subhash Chandra Garg

 

Economy, Financial and Fiscal Policy Strategist, Advisor (finance and resources) to the Chief Minister Andhra Pradesh and former Finance and Economic Affairs Secretary, Government of India

 

 

Agriculture today is pre-dominantly industrial agriculture

Hunter-gatherer society had no economy. Homo-sapiens, like other living beings, hunted and gathered their food. Even when they organised themselves in bands, the primary mode of gathering food remained the same. In this age, no-one employed another. There was no labour consequently. No production and sales of goods and services, no labour and absence of an economy defined the hunter-gatherer society.

Agriculture transformed the hunter-gatherer society. Homo-sapiens started agriculturisation by domesticating wild plants and animals and growing food and raring animals on the land. This enabled them to settle down and organise themselves in groups. Villages came up. Fibre crops were also domesticated and raised.

This agriculturisation of food and fibre production required farm-land, farmers and labour, which came into existence. Some manufacture, basically of processing food and fibre, also developed. However, the post hunter-gatherer society was predominantly agricultural. Classes of landlords, farmers and labour took shape. Slavery was also essentially the by-product of agricultural society. Adam Smith, in his masterly book- Wealth of Nations written in 1770s before the onset of industrialisation, describe the situation of and development of the concepts of production, consumption, markets, land, rent, stock, profits, farmers, labour, and all that which we broadly describe as the pre-industrial agricultural economy.

Industrialisation, with harnessed energy use and mechanisation of production process, revolutionised manufacturing and manufactures. Industrialisation was late to enter in agriculture. US agriculture was pre-dominantly worked by slaves and labour until late nineteenth century. Similar was the situation elsewhere. In last 100 years or so, agriculture in most parts of the world, most specifically in the West, has got massively industrialised. In Asia, except quite a few countries like Japan, Korea and now China, and Africa, agriculture still remains pre-dominantly unindustrialised, though several elements of industrialisation have got introduced, in varying degrees.

Industrialisation brought three fundamental changes

Industrialisation has changed agriculture in three major ways.

First, is the mechanisation of agriculture processes. Crops, sown with seeders and harvested with harvesters, are grown in industrialised environment. Mechanisation also assisted better application of water and other inputs for raising crops efficiently and with lesser costs.

Second, is the chemicalisation of agriculture. Use of fertilisers, pesticides, ripening and storage chemicals etc. have massively chemicalised the agriculture. Chemicalisation complemented and substituted natural nutrients and other nourishing elements available from land, nature and other organic means. Biological modifications of seeds and planting material- hybrid seeds, biologically-modified seeds etc. are biological mode of fiddling with natural processes, much in the same way chemicalisation impacted natural and organic ways of supplying nutrients.

Third, is the digitalisation of agriculture. Application of information technology in better managing and applying water through IT enabled drips, sprinklers, etc. brought some of the industry 3.0 practices to agriculture. IT controlled storage, warehousing, packaging, marketing and retailing have added to the digitalisation of agriculture.

Industrialisation of agriculture raised agriculture production and productivity massively, reduced storage and transit losses and enabled processing of agriculture produce. The world has managed to ensure that there is enough food and fibre and their processed products to banish famines and hunger in much of the world today.

Industrialisation of agriculture, however, reduced the requirement of farmers and labour in agriculture massively. Most countries in the West are surplus in agriculture produce but use less than 5% of the labour force in agriculture. Quite a few countries manage with less than 1% of the labour force as well. As the value addition in these industrialised economies shifted to manufacture and later to services, the enormously reduced GDP/GVA emanating from agriculture has not really bothered them much as that low GDP is shared by a very insignificant portion of their population. The tax surpluses generated in industry and services have been used to provide the farmers income levels which are at par with the rest of the workers in the economy.

State of industrialisation of Indian agriculture

Indian agriculture is only partly industrialised and is behind the West, in terms of industrialisation, by 50-60 years. Mechanisation of many agricultural processes has taken place (e.g. harvesters are used for almost entire rice and wheat crop in most states). Power, by electricity or diesel generating engines, has mechanised boring of wells and application of water. Some digitalisation of agriculture has also taken place.

In some respects, Indian agriculture is suffering from improper and unwise industrialisation. Excessive use of nitrogenous fertilisers, aided by poorly targeted government subsidies, has adversely affected the productivity of soils and quality of food crops. Indiscriminate use of insecticides and weedicides has also led to chemical residues being left in food causing side-effects. Criminal use of growth and ripening chemicals is playing with citizens’ health. There is grossly inadequate digitalisation of agriculture in the country.

All this has led to an ironical situation where India is increasingly self-sufficient in food and fibre production but has seen massive degradation of land and soils and deterioration in quality of agriculture produce. The value added from agriculture has become less than 1/6^th of GDP, but still about one half of the population remain dependent on agriculture, making most people dependent on agriculture for their livelihood quite poor.

Natural farming experiment in Andhra Pradesh

Natural agriculture experiment being conducted and promoted in Andhra Pradesh is taking place in the toughest of agronomic conditions. The farmers adopting natural farming are the small and marginal farmers, in most cases farming less than 1000 metres of land. The districts where the experiments are being carried out are the rain deficit districts and therefore the farmers have the driest of areas to do their experiments of natural farming.

AP natural agriculture experiment primarily, by design, targets the chemical part of the industrialised agriculture. Chemical fertilisers are being replaced by natural manures and products. Chemical insecticides, weedicides etc. are being replaced by natural pesticides. Water is being harvested and conserved by using natural practices of growing fodder crops, planting trees and by other appropriate interventions. There are some other experiments being done to marshal the natural forces of nutrients in soils, energy from sunlight, water from the moisture available in the atmosphere and the like.

AP natural agriculture experiment does not explicitly target mechanisation and digitalisation processes. In my understanding, the AP natural agriculture experiment is not against use of machines and digital processes. However, small size of farms, resource poverty of farmers, the nature of crop raising etc. minimises the use of machines and has possibly seen very little necessity of digitalising the processes.

AP natural agriculture experiment is a clear winner in curing the agriculture produce of the ill-effects and side-effects of chemical industrial agriculture. The produce is more wholesome. Its’ quality is much better. There are no pesticides ad chemical residues in the food to worry about.  

Primary goal of AP agriculture experiment is to promote and establish natural agriculture in a manner that the farmers’ income from the produce thus raised is better and not lesser than the income generated by similarly-situated farmers from the chemical industrial agriculture. While there seems to be considerable data which support this claim, it is still to be established conclusively.

There are two complications in doing so. One, the level of subsidies and other government support for natural agriculture as compared to commonly prevalent chemical industrial agriculture is not satisfactorily documented. Second, value/price differential in the natural agriculture crop and chemical industrial agriculture crop is not understood very well.

The AP natural agriculture experiment needs to be conducted in more agronomic conditions. Additionally, better data with respect to the two issues mentioned above need to be collected to make a more precise estimate of the competitiveness of natural agriculture with the chemical industrial agriculture.

Crystal gazing agriculture in 2050

Agriculture in India is still dependent on monsoons.

The agriculture is in private hands, but the government is hugely present in all segments of agriculture- supplying. subsidising and controlling inputs (seeds, fertilisers, pesticides, electricity, loans, insurance and what not), buying outputs (regulating APMCs, MSPs, market intervention schemes etc., legislating (so many agriculture laws) and providing income support to farmers (PM Kisan etc.). These elements impart uncertainties and affect returns of farmers.

Agriculture, however, is much more stable in terms of growth and employment. Agriculture growth rates, though low in comparison to industry and services, are fairly stable at 3-4% per annum, ever since the green revolution was ushered in 1960s.

On the margin, there are experiments like organic farming, AP natural agriculture project which are going on.

For crystal gazing agriculture in India in 2050, we need to make certain scenarios and assumptions regarding the course which agriculture development is likely to take over next 30 years.

Three scenarios

In my assessment, there are three most probable scenarios.

First, business as usual scenario (Scenario I). In this scenario, the production structure of agriculture, government role and support in agriculture and marketing system of agriculture produce remain essentially as it is at present. There might be minor tweaks here and there- some inputs supply programmes might change e.g. urea support might get reduced and other nutrient support might get increased, or the states might become principal parties to undertake procurement with the central government underwriting a share of the cost, loans might get more targeted to the tillers than the owners, agriculture farm labour might get enhanced employment guarantee support and so on. Some direct income support programme like PM Kisan might be enhanced.

Second, AP natural agriculture scenario (Scenario II). In this scenario, the government stays as it is at present. All the restrictive laws also stay as they are. Subsidy programmes stay. Output procurement stays. What changes is replacement of the support of chemical agriculture by natural agriculture. The government withdraws support for all the chemical fertilisers, chemical insecticides, pesticides and other chemicals. The government, instead, combines all of its production support for chemical agriculture into an organic and natural farming support programme. This support reaches every farmer of the country as it reaches today in the form of fertiliser subsidy and other subsidies.

Third, direct income support scenario (Scenario III). In this scenario, the government replaces all the production, distribution and market support programmes with one or more income support programme.  The income support may be pegged at average of the per acre cost of all the support programme run by the central and the state government. This scenario also assume that the government removes all the restrictive laws- ceiling laws, leasing laws etc. With the income support delivered essentially on per acre basis, the government gets off the back of farmers completely. Farmers get all the freedom- to do agriculture the way as doing presently, not to reaming engaged in agriculture and shift to some other work selling the land or leasing it to others or keeping it fallow.

What is most likely to happen?

Normally, a very comprehensive data based study would be required to project likely agriculture output, growth, employment, state of industrialisation in all its three components of mechanisation, chemicalisation and digitalisation, and state of organic and natural produce. I am in no position to do such a resource intensive study. However, I do believe that it is possible to construct reasonable scenarios based on historical performance and intellectual analysis factoring in likely behaviour and response of farmers and other associated parties.

In my assessment, the business as usual scenario (Scenario I) would yield annual average growth of 2.5% and see shift of about 15% in the share of employment in agriculture. The process of mechanisation and digitalisation would get further accelerated. The chemicalisation would peak soon but there would be small dechemicalisation by 2030 in this scenario. 

Second scenario would face very big challenges. Pace of the adoption of natural agriculture would be quite slow and gradual. Anticipating disruption in agriculture and opposition from vested interests in government, industry and farmers, the government would be very wary and quite unwilling to switch to natural and organic farming fully. The impact on farmers income in all parts of the country and under all kinds of agronomic conditions would be extremely challenging task. There are also issues regarding the adequacy of availability of natural farming inputs for such a large scale adoption. It seems that at best about 20% of agriculture in India might convert into natural and organic farming. Assuming further that the productivity would remain the same, the growth will most likely to same around 2.5% annum. As natural and organic farming is more labour intensive, the reduction in the number of farmers and labour dependent on agriculture would be lesser than the scenario one, may be around 5%.

Third scenario, in my judgement, has the biggest promise. The conversion of all indirect, in-kind and muddled support into a single farmers’ income support will protect farmers income. At the same time, this would convert farming into a business making the farmers businessmen. This would lead to better choice of crops to grow which will have profound impact on pricing, realisation and on markets. This would spur the farmers to effect cost savings and raise productivity, which will incentivise investment in making mechanisation and digitalisation more suitable to small holder agriculture of India. This will release lot of labour and farmers from farming which should bring down unduly high under-employment in agriculture and raise the income of farm families from non-farm income. It will also incentivise consolidation of farming which will encourage investment in better seeds, storage, gradation and packaging. There would definitely be resistance from the vested interests in government, industry and farmers, but the political endorsement of universal basic income approach and PM Kisan approach suggest that this transformation has very good chance of being adopted widely, if not fully. I also see profound change in energy production and consumption in this scenario with increasing solarisation of farms. I factor a higher growth rate of 5% per annum in this scenario with larger growth coming from shift to high value agriculture produce- fruits, vegetable milk and proteins etc. and greater value addition coming from storage and processing of produce. In this scenario, the share of farmers and farm labour in total workforce might come down to 10-15% by 2050.

Policy reforms for realising third scenario

Structural and basic policy reform package for realising scenario III will have to be built around following agenda:

First, the central government and the state governments accurately compute all the fiscal expenditure incurred (including unpaid liabilities) on all the agricultural inputs- seeds, fertilisers, power, credit and all other and work out per acre cost for the net sown area in the country and respective states. For each state, the per acre support of the central government and per acre support of the state government concerned added together would be the amount of per capita income support in lieu of inputs. The government transfers this amount in farmers account after dismantling/ deregulating/ privatising all the input subsidy programmes.

Second, the governments likewise calculate the fiscal cost embedded in output price support programmes like MSP purchases, price intervention schemes etc. and also in income support schemes like PM Kisan. This support is also delivered on per acre net sown area basis. The government dismantles the MSP programme and makes procurement of whatever is needed for the food security programme from the market.

Together these two components constitute the income support programme.

 

SUBHASH CHANDRA GARG

NEW DELHI 24/05/2021