Feeding a Billion: Agriculture and Food Security in India
BRICS, 3 Mar 2014
Sonia Luthra – The National Bureau of Asian Research
An Interview with Suresh Babu*
February 27, 2014 – Today, five decades after the start of the “Green Revolution,” India’s food grain production has increased fivefold and the country is one of the world’s largest producers of staples like rice and wheat. However, its hunger and malnutrition levels are still extremely high, and great inefficiencies remain within the agricultural sector, which employs about half of the population, including 70% in rural areas.
In this NBR interview, Suresh Babu (International Food Policy Research Institute) examines the dynamics facing Indian agriculture as the country seeks to meet its food security needs while moving more of its workforce to the industrial and services sectors. Dr. Babu argues that the foremost challenge is improving productivity within the agriculture system and recommends that India adopt new technologies in agricultural mechanization, increase food processing, develop better supply chains, and increase investment in agriculture research, among other solutions.
India’s Green Revolution in the 1960s and 1970s introduced significant reforms that were intended to drastically increase the country’s agricultural output. How has India’s agricultural sector changed since this period?
India’s production of food grain has increased fivefold since the Green Revolution. The agricultural sector has also made good strides in the production of high-value commodities such as milk, livestock, aquaculture, and fruits and vegetables, although productivity in some cases is still less than optimal. The sector has benefitted from high levels of government support for farmers in the form of fertilizer subsidies and other subsidies for technology adoption. In addition, private-sector participation has increased in the input markets, such as those for fertilizer, seeds, and animal feed, and in output markets for crops produced, such as basmati rice and wheat.
Today, there is tremendous opportunity for developing joint ventures between India and the United States in mechanizing agriculture. As India looks to increase its agricultural output, there is great need—and a growing market—for sophisticated mechanized tools and equipment from the United States. There is great potential to collaborate more in this area to arrive at a win-win situation. India needs this agricultural technology and is now increasingly capable of paying for it, which should be an interesting proposition for U.S. industry. While Indian companies are successful at producing tractors, for example, there is room for them to upgrade their technologies in collaboration with U.S. companies. Perhaps surprising to many outside of India is that there is a great shortage of labor within India’s agricultural sector. The Mahatma Gandhi National Rural Employment Guarantee Act, with its aim to guarantee the “right to work,” increased the safety net within rural India, which has had the effect of taking away some low-end labor from agriculture and thus has increased the need for machinery.
The key question for India in the next stage of developing agriculture productivity is how to organize its farmers to connect with those in other parts of Asia. The country is a bit disorganized right now. This is partly because agricultural supply is primarily led by local demand and prices are low overall. However, for the agricultural sector to contribute in larger part to the economy, this cannot continue much longer, and India must find ways for its farmers to engage in regional markets by opening up markets both in South Asia and throughout Asia more broadly, including Central and Southeast Asia.
Although India’s food supply is now largely self-sufficient, the country’s hunger and malnutrition levels are still extremely high. Restrictions such as banning the movement of food grains from one state to another and from one district to another within the same state have hindered further growth of the sector. To meet the increasing demand for high-value commodities, several private companies are developing various models for working with farmers to enhance production and improve integration with local, regional, and international markets. However, further efforts are needed to streamline the contractual procedures so that both producers and aggregators benefit from these arrangements. In addition, the public agriculture extension system has declined since the 1990s, and there have been efforts recently to revive it in order to more effectively deliver information to farmers based on agricultural research. Finally, although input markets are well-developed to meet the needs of farming communities in most places, the timely availability of fertilizers and varieties of seeds suitable for certain agro-ecological zones remains a challenge.
What are the top agricultural issues India should focus on to meet its food security needs?
The top issue by far for Indian agriculture is increasing productivity. This is due to a need for more effective integration of smallholder farmers in markets by providing necessary rural marketing infrastructure, strengthening the capacity of farmers to access and use information for problem solving, and increasing the quality of agricultural research and education. In addition, productivity is low in part because smallholder farmers produce less than their potential due to the poor adoption of best practices. The need for technology varies among farmers according to their natural resource base, land quality, water availability, and connections to local and regional markets. Developing best practices in crop cultivation based on scientific methods, including applying fertilizers based on soil testing and optimizing water use with micro-irrigation systems, can help increase productivity. This is something the federal government is starting to understand, and India’s twelfth five-year plan, covering 2012–17, emphasizes food security and also discusses ways to increase agriculture productivity. There is a huge potential for small farmers to increase sustainable productivity. The United States has much to offer here, and there is a successful history of similar collaboration during the Green Revolution.
Another key issue for productivity enhancement is the development of high-value commodity supply chains. While this has been happening in the India in the last ten to fifteen years, it has been driven largely by the private sector. A much greater role for the public sector could help facilitate the process of engagement between farmers and the private sector.
In addition, agricultural research must become more relevant to address the emerging challenges faced by farmers, such as the impact of climate change on smallholder agriculture and the high risk that farmers face in the event of droughts and floods. To improve the quality of the research system, there is an urgent need for the government of India to invest in agricultural education, which has been deteriorating over the last 30 years. Increasing the accountability of the researchers and rewarding them based on performance, through salary increases, benefits, and promotions, are important means to improve the productivity of the national agricultural research and education systems.
To increase agriculture growth, what is fundamentally required is to increase productivity and the efficiency of the agricultural research system. There are many ways the United States can assist with this, and there is great need to build long-term sustainable partnerships. During the George W. Bush administration, for example, the United States and India launched an initiative aimed at strengthening India’s agricultural knowledge system, but such initiatives require continued commitment. In 2010 Washington and New Delhi launched the U.S.-India Agriculture Dialogue to look at these issues at a higher level and this should be further developed into joint programs. Above all, what will build long-term sustainable collaboration and growth is if U.S. researchers can find opportunities to work in India, and, if U.S. professors can work with or more Indian students. Indian universities should also host students from U.S. universities to work on joint research projects. These types of researcher exchanges would benefit the next generation of Indian scientists, who could then increasingly do research of global quality. It would also benefit U.S agricultural scientist’ understanding of global agricultural challenges.
Over half of India’s workforce is engaged in farming-related activities. Yet agriculture accounts for only about 14% of India’s GDP. Why is this?
Agriculture contributes to the livelihoods of over 70% of India’s rural population. The share of agriculture in GDP, however, has been declining due to the growth of the industrial and service sectors. This is a normal structural change for emerging economies and is a good sign. What is worrisome, however, is the low productivity of the rural sector, and in particular of smallholder farms. It should be possible, for example, to increase the rice harvest from 2.5 tons to 5 tons per hectare, and yet due to poor adoption of best practices, farmers continue to harvest less than the potential yields. In addition to improving food security, increasing productivity would help reduce the area of land under crop production and make it possible to preserve more land for forests and tree cover. Heightened engagement with farmers through rural advisory services is needed to encourage the adoption of new technology.
In September 2012, India opened its retail trade market to FDI. How does this move affect Indian agriculture and help address the country’s food security challenges?
Opening up the retail trade market to FDI will affect the agriculture sector positively. This allows for technology transfers from international firms to Indian firms and will facilitate the integration of Indian agriculture into international markets, as well as the development of better supply chains. The quality of the processed products could improve, and in the long run this will help India compete in the global markets. However, the experiences of local output aggregators that are also local retailers have not been rosy, in part due to contract disputes between smallholder farmers and companies that are difficult to enforce on both sides.
Because of a strong preference for fresh produce and the existence of local market chains that supply fresh produce to rural and urban markets, the retail revolution in India’s agriculture sector may not occur as quickly as expected. Take, for example, the local pushcart vendor or vegetable stand. He gets his produce every morning, so it is very, very fresh. Retailers make organized purchases that require refrigeration; they cannot compete with the vegetable stands or pushcart vendors on freshness. However, pushcart vendors’ children will not be pushing carts in another fifteen years. They will have moved on to another profession as India’s economy grows. It is a purely a process of development. While some of these bigger retailers are struggling right now—both Indian and Western companies—eventually they will succeed. India is not fully ready for big retail markets in rural and semi-rural areas. The retailers who are there are only cater to a small percentage of consumers, even in big urban areas like Bangalore, Chennai, Delhi, and Mumbai.
There needs to be a middle ground where the pushcart suppliers and the highly franchised retailers meet. This has not been explored yet. Why should we only have a refrigerated store with vegetables that go bad after one day? There is an opportunity to take advantage of the benefits of each. For example, one could pay a little extra to the pushcart operator for fruits and vegetables that are washed and kept clean. We are trying to jump from street markets to highly sophisticated Western grocery stores and that takes time.
However, in the long run, increasing the productivity of cereal and legumes will release land and allow for development of the high-value chains I noted above that will increase the income levels of smallholder farmers, thereby potentially enhancing food security as well. Greater processing also means that there is room for better storage and handling, providing additional opportunities to farmers and rural households.
Indian Prime Minister Manmohan Singh has called for moving many Indian workers out of agriculture and in other sectors such as manufacturing and services. What changes within India’s agriculture sector are needed for this to take place, and how might this shift affect India’s food security?
As discussed earlier, increasing labor productivity is the key factor in enabling the movement of surplus labor to other sectors. This requires improving the quality of research available to smallholder farmers. For example, new technologies could release laborers from tedious practices such as the transplanting and harvesting of rice. Agricultural labor is already in short supply due to the out-migration of rural labor to urban areas to perform non-agricultural operations. Mechanization has been increasing in areas with labor shortages. Movement from one rural area to another is also becoming increasingly common. Agricultural processing promises to be an important outlet for this excess labor in some rural areas. Placing processing units in rural areas could, for example, absorb some of the labor and add value in terms of processing and packaging.
Yet the processing sector in India lags significantly behind that of several other developing countries, such as Thailand, because of poor rural infrastructure characterized by low-quality feeder roads, the erratic availability of electricity, and a lack of cold-storage facilities. For example, Thailand processes almost 90% of its agriculture products, either for export or domestic consumption. India processes less than 10% of its agriculture products. There is thus huge potential for rural, agro-based industries to operate in a more mechanized and organized way to process commodities from various parts of the country. This will be next big area to absorb rural employment and take advantage of India’s demographic dividend. Policies and strategies at the central, regional, and local levels that can help farmers to add value by using the local labor force will also assist in this process. India can learn an important lesson from the United States on this. For example, from watching the recent debates on the new farm bill, India can learn how national policies on agriculture are implemented at the state and local levels. There could also be an exchange of policymakers and farmers to help facilitate this.
India’s federal government has passed a National Food Security Bill to improve food access. How does this legislation address the country’s core food needs? Can the requirements of the bill be met with India’s current agricultural policies and output?
The food security bill is part of a larger program that the government of India has put in place to provide the poor and vulnerable with a safety net and should be seen in conjunction with the 150 other rural policies to help poor and vulnerable families. Yet a major challenge is in the local implementation of these programs. This includes ensuring proper governance and accountability that goods are delivered without leakages (meaning that the food did not reach targeted populations). Supervision is often minimal at the local levels.
Current policies in agriculture also complement the National Food Security Bill. For example, the national food security mission addresses the problem of food security from the supply side by increasing food production. However, the coordination and harmonization of these seemingly disparate programs and policies need serious scrutiny in terms of their effectiveness and efficiency in achieving food security goals. There are many ways to improve. For example, much more should be done in the way of monitoring and evaluating information on leakages, how people are using the program, and other key data, and this information should be transmitted back to program managers. The Indian government could create a mobile app to assist in this, with tools to reduce the burden of local supervision, mapping, and getting the local level involved. The key is to be innovative.
Over the last few years, food prices in India have risen dramatically, as evidenced most recently by the tremendous increase in the price of onions during the fall. Why has this been the case? Are there any policies or practices you recommend to reverse this trend?
Price increases are due to both supply and demand factors. On the supply side, production shortages have been caused by low rainfall and poor management of food stocks. On the demand side, consumption of high-value commodities such as meat, milk, and produce has been growing. The increase in onion prices is a special case that involves poor functioning of the markets and to some extent speculative pricing by middlemen who tend to create artificial scarcity to take advantage of the higher prices. Farmers, however, have responded to this trend by reallocating land to increase the supply of onions to the market, which has brought prices down recently. Onions are a big business in India and are s storable crop, which allows middlemen to manipulate market prices by creating scarcity. To reduce market pricing pressures, technology and information play a role. Looking out over both the next five to ten and ten to twenty years, increasing productivity and organizing farmers better through supply chain efficiency is critical to help ameliorate this problem. It is particularly important as there may likely be a decline in onion supply due to environmental degradation.
India seeks to play a larger role in the global economy and return to 7%–8% GDP growth. How does the agricultural sector contribute to this goal?
There has been a set target of 4% growth in the agricultural sector to meet the target of 7%–8% overall GDP growth. Again, increasing productivity is the key to achieving this target. Although the growth rate of agriculture is on the rise, this trend does not seem to be robust. The main reason is India’s dependence on monsoon rains for the major share of agricultural production. In addition, the sector is largely managed at the state level. States that have invested in agriculture research and extension policies that are focused on outcomes at the farm level have done well at increasing their productivity growth rate. Still there remains a need to invest more in both the agriculture systems and in people to enhance productivity. Yet several states are struggling to do so.
Gujarat and Bihar provide examples of successful models. In Gujarat, for example, mobilizing the implementing organizations and institutions to meet farmers’ needs for quality inputs at the right time has helped achieve higher yields. In Bihar, the effective use of resources in strategic areas such as agricultural extension systems has increased returns for farmers. By contrast, states such as Orissa and Madhya Pradesh are still behind in making notable strides to improve productivity.
Looking at this year’s general elections, in many ways it is a debate between Gujarat-style and Bihar-style agricultural productivity. In Gujarat, Chief Minister Narendra Modi mobilized his state at all levels. He did not change any agriculture policies dramatically, but he made existing ones work through coordination, harmonization, and synergy among the players involved. He brought both the private and public sectors into play to help the farmers. Should Modi become prime minister with the Bharatiya Janata Party, a key question is whether he will try to replicate this Gujarat-style model throughout the country, and if so, whether it will work. Many states lack strong governance, which was key to Gujarat’s success. The Bihar-style model, alternatively, is more hands-on and places a greater emphasis on subsidies and helping with resources. It creates a different environment for farmers. The Congress party is running on a “right to food” platform as part of its “five rights,” which has an emphasis on uplifting the poor through subsidies. We will see in the coming months which ideas are more persuasive and in the months after how new agriculture policies will be implemented, if any.
Do you have anything final to add?
The agriculture sector will continue to be crucial for reducing poverty and eliminating hunger in India for several decades to come. Yet the challenges of water scarcity, inadequate irrigation systems, land deterioration, and nutrient depletion have to be addressed in a holistic manner as well. For example, continued support to the fertilizer industry from the government based on the quantity of fertilizer sold has drained valuable resources without providing any incentive for manufacturers to increase the efficiency of their production units. India should take a look at the way it supports this industry, but the political will must be there. This would be a bold step and an issue that should be raised continually.
Emerging challenges such as climate change will only complicate efforts to improve the resilience of the agricultural sector. Strengthening the capacity of agricultural professionals and organizations, as well as the delivery process of intervention programs, is key to increasing the productivity and sustainability of Indian agriculture. For example, efforts to revamp the extension system that are currently underway through the district-level agricultural technology management agencies need further evaluation to increase their efficiency and effectiveness. In addition, cost-effective micro-irrigation systems are required to sustain groundwater systems and could benefit from technologies developed by foreign collaboration. Finally, there is continued need to strengthen professionals working in the agriculture sector to ensure they have the necessary skills to innovate and interact on a global scale.
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Sonia Luthra is Assistant Director for Outreach at NBR.
*Suresh Babu is a Senior Research Fellow at the International Food Policy Research Institute (IFPRI). For the past 23 years at IFPRI, he has been involved in institutional and human capacity strengthening for higher education and research in many countries in South Asia and Sub-Saharan Africa, including Ghana, Nigeria, Mozambique, Ethiopia, Kenya, Uganda, and South Africa. Dr. Babu has an MS and PhD in Economic from Iowa State University.
This is part of a series of publications produced by NBR for the Senate India Caucus.
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