At a recent lecture, I heard the expert recommendation that the country should direct greater resources towards raising the field-level productivity of crops in order to boost the country's food security and to improve farmers' incomes. As someone who might have believed in these platitudes until a few years ago, I think it is imperative to set the record straight, and offer a more nuanced picture. It should be understood that productivity in itself is not a "silver bullet", and except at the individual enterprise level, such a focus is in many ways contraindicated.
The food security paradox
India actually produces more than enough food to feed herself, and the country can claim to be technically food secure. Then, farmers' income growth no longer depends on how much he/she produces, but on the institutional arrangements for marketing, such that they can capture value from every grain, every ounce or every drop produced. Today, when farmers produce a bumper harvest, the prices crash, and when the food prices respond positively to the "demand curve", the consumer affairs department rushes in to make strategic imports to keep prices 'reasonable' for the consumer. Both situations make a dent in farmers' income.
Essentially, farm-level productivity improvement can offer an incremental gain but risks higher losses if the farm output has no enhanced market access.
Increasingly, we produce more wheat, rice, pulses, cotton and sugar than we can consume or export, global inventories are at an all-time high, and commodity prices are down as never before. Yet, a nutritional deficit is evident and all food is not affordable to all people. Conversely, awareness and demand for nutritional foods such as fresh vegetables, fruits, dairy and meats are fostered by growing affluence. Being perishable, such produce continues to face high losses along to route from farms to markets, detracting from availability and feeding inflationary swings. Markets seem inaccessible and disorganised, with real demand not being suitably communicated or connected with.
Focus on demand before supply
Efforts to produce more by ramping up farm-level productivity should be on the basis of the right market—whether domestic or global—signals! Essentially, farm-level productivity improvement can offer an incremental gain but risks higher losses if the farm output has no enhanced market access. Further, there is a need to factor in the ecological dimensions of our production system. Growing more foodgrains in Punjab and Haryana based on the current strategy of drawing more groundwater and applying more fertilizers will be an ecological nightmare and an eventual economic blunder.
So where should future interventions be focused? First, we must ensure that production "losses" are minimised. This will lead to improved logistics' infrastructure and better inventory management at all levels, and this will create "near farm jobs". We must also remember that we lose not just the final commodity (say rice) but also everything that has gone into its production, such as water, fertiliser, human effort, power and diesel. Productivity assessments need to be applied system wide and not in isolation!
Growing more foodgrains in Punjab and Haryana based on the current strategy of drawing more groundwater and applying more fertilizers will be an ecological nightmare and an eventual economic blunder.
Second, we must focus on real demand from consumers and promote the production of what the markets want. This means high-value agriculture, and particularly the fruits and vegetable sector which benefits the needs of national nutrition as well as farmer's income. However, this means specialised post-production handling with associated market linkages. Market linkages will also benefit in increasing trade, including globally, in the surpluses in other crops types.
The importance of agri-logistics infrastructure
Over the next decade, the focus should be on "agri-logistics infrastructure", preferably in the PPP mode or by the private sector so that a sustainable revenue model can be applied. However the priority regions for this investment should be driven by the "end-user demand", rather than the "supply points". Investments need to be planned backwards from fork-to-farm, such that they direct a targeted flow of produce from farm-to-fork. There is also need to invest in agri-logistics infrastructure closer to the ports so that in the case of export opportunities, precious time is not lost in intra country movement of commodities.
If agri infrastructure is important for cereals, it is critical for the perishables sector—especially in trade of fruits and vegetables, where losses are at least 50% higher due to their shorter saleable life. This subject immediately draws attention to available cold storage capacity. Contrary to common perception, the gap between the cold storage requirement in India and the capacity already created in the country is not that large. What is most worrying is the shortfall in the other infrastructure items that are integral to cold chain. The country is wide off mark in the availability of pack-houses at village level and cold-chain transport modes. This results in a debilitating hiatus in cold-chain handling between point of harvest and storage at consumption end. As frequently pointed out by the National Centre for Cold-Chain Development (NCCD) these pack-houses are the first stage interventions for extending the holding life of most perishable commodities, and for the subsequent productive use of cold-chain as a market link.
The country is wide off mark in the availability of pack-houses at village level and cold-chain transport modes.
These pack-houses are not as capital intensive as cold stores, and can be designed and constructed locally. Attached to these would be almost an equal number of reefer vehicles to complete the farm-to-market logistics connectivity. Such an integrated logistics networks will empower access to more markets, improve food supply systems and provide the appropriate commercial motivation to produce more. The establishment of a network of these pack houses can actually set in motion a "virtuous cycle": there will be a manifold increase in near farm jobs and entrepreneurship opportunities in the tertiary sector. The consequence of cross-regional market connection through cold-chain would provide an inherent impetus to farm-level productivity.
In this context, the National Agriculture Market can play a stellar role. When price discovery and marketing opportunities have a pan-India dimension, it will have an even greater impact on farmers' incomes. The internet and the mobile have opened several new options—at least information on demand, quality and associated prices can be made available on tap, and virtually free. The market signals from across the country just need to be met with matching agri-logistics.
Productivity must follow demand if it is to be meaningful for farmers and the country!
And once again: while productivity gains cannot be placed on the back-burner, they must be applied holistically, in the context of physical market connectivity.