Cultivating Change: A Call for Rational Reforms in Agriculture

About Author: Sandeep Sabharwal is the CEO of Sohan Lal Commodity Management (SLCM), India’s leading Post Harvest Management Group, renowned for providing comprehensive and innovative solutions to address the challenges of post-harvest agricultural services. Through extensive research spanning two years, he uncovered a stark reality—India incurred annual losses of over 10% of its agro produce, amounting to approximately Rs 60,000 crore, due to poor and inefficient storage practices. As a result, he formed SLCM in 2009 to address this challenge.

Agriculture has long been the backbone of the Indian economy, providing livelihoods to millions and ensuring food security. However, the sector faces numerous challenges that require a combination of rational and promotional policies to meet its demands effectively. To meet the demands of the agriculture sector in India, radical reforms in the form of rational and promotional policies are essential. Higher investments, cooperative farming, precision agriculture, mechanization, and advanced post-harvest infrastructure are some of the aspects that India needs to seriously consider. Additionally, providing farmers with better access to credit, research, infrastructure, and market linkages, along with rational land reforms and sustainable practices, will pave the way for a more prosperous and resilient Indian agriculture sector. These policy reforms are vital to ensure food security, reduce farmer distress, and contribute to the nation’s economic growth.

Challenges

A significant issue in Indian agriculture is the fragmented land holdings, making it challenging for small-scale farmers to access modern technologies and practices. This leads to suboptimal production levels and income disparities. Despite progress, a large segment of Indian farmers still employ traditional farming methods. The lack of access to modern techniques and knowledge hampers productivity growth. The inadequate mechanization of farming activities in India not only leads to lower productivity but also puts excessive physical strain on farmers, discouraging the younger generation from taking up farming as a profession.

India faces significant post-harvest losses due to inadequate storage and transportation infrastructure. It results in food wastage and hampers the overall economy. Farmers in India often face erratic income patterns, depending on the vagaries of weather and market conditions. This volatility can lead to debt traps and hardships for farming families.

Need for Policy Push

The Indian government should prioritize facilitating accessible credit for farmers, especially those with smaller landholdings. This would enable them to invest in contemporary technology and mechanization, ultimately elevating their productivity levels. It is imperative to bolster agricultural research and extension services, as they play a pivotal role in equipping farmers with the latest knowledge and best practices, thereby encouraging the adoption of modern and sustainable farming techniques. Furthermore, it is crucial to endorse crop diversification, moving away from the traditional monoculture of rice and wheat. Promoting the cultivation of high-value crops can augment farmers’ income and reduce their reliance on a limited range of staple crops. Additionally, enhancing market linkages is of paramount importance. By establishing connections between farmers and equitable, transparent markets, farmers can secure better prices for their produce, making agriculture more appealing to the younger generation.

Recent Initiatives

An increase in the agricultural credit target to Rupees 20 Lakh crore is one of the most recent initiatives that has been taken by the Union Government. Another initiative to decentralize storage will also go a long way in controlling the post-harvest losses and also it will be an enabler as well as a catalyst for increasing farmers’ returns especially when it is coupled with the 10,000 Farmers Producer Organizations (FPOs) program, Operation Greens and eNWR (electronic Negotiable Warehouse Receipts). This step is aligned with the goal of doubling farmers’ income. In the 2023-24 Union Budget Agriculture Accelerator Fund, Digital Public Infrastructure, and computerization received a thrust to the green economy – where agriculture and allied sectors will also play an important role. On the policy front, a long pending taxation-related demand of the sector needs serious attention. The exclusion of Goods and Services Tax (GST) on the lease rentals that go as input to Agri warehousing services is a major pain point as it becomes a cost to service providers.

Radical Reforms

Along with the GST issue, the agriculture sector needs radical reforms. Rational land reforms are needed to consolidate fragmented land holdings. This would enable more efficient mechanization, promote economies of scale, and encourage investments in modern agricultural practices. Rational water management, including efficient irrigation practices and rainwater harvesting, can address the issue of water scarcity, ensuring the sustainability of agriculture.

Implementing a clear and transparent legal framework for land ownership, contracts, and dispute resolution is crucial. This would protect the rights of farmers and encourage investments in the sector. Rational policies should prioritize sustainable agriculture practices to minimize the negative impact on the environment. Encouraging organic farming and reducing chemical pesticide use can improve soil health and protect the ecosystem.

The need for promotional and rational policies in the Indian agriculture sector is evident. By implementing a combination of rational and promotional policies, India can unlock the potential of its agricultural sector. These reforms are not only essential for ensuring food security but also for reducing farmer distress and contributing to the nation’s economic growth. With the right policies and adequate investments, India can transform its agriculture sector into a modern, sustainable, and resilient powerhouse.

Overall, there is a need for higher budgetary allocations for various schemes/segments with structural reforms which will make the sector more efficient and competitive in the long run. Along with other segments, critical post-harvest management needs further boost with fresh policy provisions.

*The views expressed by the author are his own.