Indicative Outlines of Subjects Selected for Discussion at the 76th Annual Conference of the Indian Society of Agricultural Economics
The 76th Annual Conference of the Indian Society of Agricultural Economics will be held under the auspices of Assam Agricultural University, Jorhat (Assam) from November 21-23, 2016.
The following subjects are selected for discussion:
(a) Agro-Industry, Agricultural Marketing, Entrepreneurship, Agri-Business, Trade and Innovations.
(b) Agrarian Distress, Family Farming, Land Management and Other Issues.
(c) Farm Income, Productivity and Methodology of Farm Income Level.
Research Papers on the above themes are invited from members and other paper-writers for discussion at the Conference. The scope of each of the three themes is spelt out in the enclosed Indicative Outlines below. The Indicative Outlines are also available on the Society’s website www.isaeindia.org.
Three copies of each paper (not exceeding 3500 words or 10 pages), with its Summary in triplicate not exceeding 250 words need to be submitted. The last date for the receipt of the papers at the Society’s office is May 15, 2016.
AGRO-INDUSTRY, AGRICULTURAL MARKETING, ENTREPRENEURSHIP, AGRI-BUSINESS,
TRADE AND INNOVATIONS
With the rapid growth of Indian economy the focus of agriculture sector is gradually shifting from production towards marketing and value addition. Farmers’ profitability is determined not only by their per unit production but also the price obtained from their output. A well functioning market structure is prerequisite for an efficient price realisation for farmers and higher production and prosperity for the farming sector. With rapid diversification in consumption basket from cereals to high value commodities, the supply side changes are impending. However, such changes to occur on the production front requires a large physical as well marketing infrastructure including post harvest cold chain, refrigerated transportation and warehousing facilities nearer the farmers’ field. The shelf life of horticultural and other perishable commodities is limited leading to their large scale post harvest losses. Primary processing and modern packaging of such commodities will raise their shelf life and increase farmers’ realisation from such products and provide large scale employment at the rural front. There is a large chain of intermediaries between the producers and consumers that needs to be leveraged. It requires a system of procurement of agricultural commodities directly from farmers’ fields and to establish effective linkage between the farm production and the retail chain and food processing industries. This needs large scale investment in the marketing and processing industry. A major portion of such investment is possible only with the entry of corporate sector for which an appropriate regulatory and policy environment is necessary.
Way back in 2003, Department of Agriculture and Cooperation formulated a model law on agricultural marketing for guidance and adoption by the state governments. The amendment in the legislation makes provision for the establishment of private markets/yards, allows establishment of direct purchase centres, consumer/farmers’ markets for direct sale and it promotes Public-Private Partnership (PPP) for agricultural markets in India. To promote quality produce in agriculture, the Act makes provision for grading, standardisation and quality certification of agricultural produce. Further, it facilitates constitution of State Agricultural Produce Marketing Standards Bureau to facilitate pledge financing, direct purchasing, forward/future trading and exports (MOA 2006). The legislation on agriculture falls under the ambit of state, therefore state governments were requested to suitably amend their respective APMC Acts. Several state governments have initiated steps for amending their respective APMC Acts.
Food not only includes primary output produced at the farm but it also encompasses a wide variety of processed products. It is in this sense that the agro-industry is an important and vital part of the manufacturing sector and can contribute to the “make in India” initiative. The agro-industry adds value to agriculture based products, through primary and secondary processing for intermediate or final consumption. There are large number of agricultural and animal products which are consumable only after primary or secondary processing. The agro industry converts them into edible forms and in the process does value addition and also create employment near the production centres. The rapid development of the agro industry in India will not only help creating extra employment opportunities for the farmers but also help in reducing their post harvest losses and raise farmer net returns from the farming sector. The broad-based development of the agro industry would also help farmers diversify not only within agriculture but across agriculture, allied and non-agricultural activities and thus overcome the problem of disguised unemployment. The agro industries include village industries with little investment and concentrated by manual labour owned by rural households (pickles, papad, etc.); Semi automation industry with medium investment (edible oil, rice mills, etc.); and high automation large scale industry involving large investment (sugar, jute, cotton mills, etc). With modernisation, innovation and up-gradation of technology in the food chain, the total production capacity of agro products in India is likely to increase many fold. Indian agro industry has a huge potential. Sea fishing, aqua culture, milk and milk products, meat and poultry are some of the agro sectors that have shown marked growth over the years. Many big companies like Tata Chemicals, PepsiCo, ITC, HLL, Nestle entered the Indian market a long time ago and have made a deep penetration in the market. From these success stories we can learn some lessons in order to capture the higher end of the local market and get a fair share of the export market.
Development of entrepreneurship in agriculture can help in rapid growth of rural industrialisation. However, development of entrepreneurship in the areas of agriculture requires special skills like human development, knowledge of agriculture and global agriculture market. Rural industrialisation can generate employment opportunities for rural youth within rural area and thus check migration of rural youth to urban areas. Agro based industries should be planned in a way that major products are manufactured in a medium and small enterprises while middle level services can be provided by groups or co-operatives at the rural level and repair and maintenance services could be taken up by the artisans at individual level. The agribusiness sector encompasses four distinct sub-sectors, viz., agricultural inputs; agricultural production; agro-processing; and marketing and trade (Acharya, 2007). Agribusiness can provide necessary backward and forward linkages to farming sector and facilitate supply of modern inputs and services for high value agricultural production. Over the years, while the agricultural marketing and trade scenario has undergone some changes, it has not changed enough to meet the emerging demand for such services. Some noticed marketing system-related limitations include market expansion at a limited scale; lack of marketing infrastructure; excessive regulatory framework and dominance of unorganised sector; a long chain of intermediaries; low processing and value addition in agriculture; lack of proper grading and standardisation and so on. Higher investment in value chain system and in modern infrastructure is necessary to achieve marketing efficiency. Development of agribusiness can help in accelerating both production and processing and help producers realise better return for their output by bringing in necessary investment in marketing activities. This will also make a valuable contribution by creating additional employment opportunities in the non-farm sector.
The traditional regulated marketing system whereby producer is merely a price taker and traders’ collusion determines the market price is becoming outmoded. This system involves a large chain of intermediaries, each one of them adding cost to the final consumer and reducing the share of producer in the price paid by the consumer. The growth of organised retail chain can provide an alternative solution to the above problem by cutting down the numbers of intermediaries. The retail chain also has the capacity to bring in new technical knowhow in marketing and reduce inefficiency in the supply chain. In the process, it not only improves the quality of the output transacted but also creates employment for the rural youth. Thus the existing marketing system needs complete overhaul, with direct marketing, producer companies, modern retail chain and modern agribusiness system. This modern market structure will reduce post harvest losses, cut down the cost of intermediaries, promote value addition, increase shelf life and benefit both producers as well as consumers.
The success of agri entrepreneur would also depend on the adoption of innovations which is the specific requirement of entrepreneurship. Essentially, entrepreneurs are innovators. Innovation has been the key to success of every entrepreneur, be it a farmer or trader. Entrepreneurs strive to compete with others through innovations. Through innovations small farmers or small enterprises are able to counter the disadvantages of size and scale. Innovation, which involves both the creation and diffusion of products, processes and methods, is a critical part of creating new sources of growth, as it provides the foundation for new industries, businesses and jobs. Four types of innovation can be distinguished: product innovations, process innovations, marketing innovations and organisational innovations (Kiriyama, 2012). Product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. Process innovation is the implementation of a new or significantly improved production or delivery method. A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. An organisational innovation is the implementation of a new organisational method in a firm’s business practices, workplace organisation or external relations (Kiriyama, 2012). All innovations must contain a degree of novelty, which can be new to the firm, new to the market or new to the world. Trade links innovation to the market and business sector. Any innovation in agriculture sector cannot be successful unless the ultimate producer, i.e., the farmer stands benefit from it.
In the light of above discussion the core issue is whether agribusiness, retail food chains, direct marketing and other forms of new marketing help improve the agricultural marketing efficiency. In this context, how much benefits of the reduced marketing cost would be transferred to the farmers and consumers? It has been observed that food chain owners consider working with small and marginal farmers a cumbersome and costlier proposition. Will they encourage farmers’ organisations or other forms of collective farming to assist in sourcing the farm products? To what extent, these firms will be able to use the expertise and experience of the existing traders and vendors and what would be the fate of latter in the modern marketing system? What is going to be the overall employment scenario? Can the entry of organised retail chains help India become more (internationally) competitive? Further, given the advantages of hawkers and street corner shops and the purchasing habits/behaviour of a large number of consumers, what would be the market share that the modern food retailers can capture? The most important issue, of course, relates to the legal and regulatory framework that is put in place, which will determine whether or not adequate private investment flows in these activities and the market structure that ultimately emerges is more or less perfect than what we have today.
Research papers under this theme can focus on the following issues:
- Agribusiness management: new initiatives, challenges and strategies
- New initiatives in agricultural marketing like contract farming; producers companies; organised retail chain; direct marketing
- Issues related to Public-Private Partnership (PPP) in agro industry; agribusiness and agricultural marketing
- Agro based entrepreneurship development and organisational support in setting an enterprise
- Supply and demand side arguments about market interventions and new forms of markets
- Present innovative models that can be scaled up to achieve high growth potential in agriculture
- Appraisal of innovations for augmenting agribusiness potential
- Why states are not adopting model APMC Act?
- Can National Agricultural Market and E auction platform become gamechanger for Indian agriculture?
Acharya S.S. (2007), “Agribusiness in India: Some Facts and Emerging Issues”, Agricultural Economics Research Review, Vol. 20 (Conference Issue) 2007 pp 409-424.
Kiriyama, N. (2012), “Trade and Innovation: Synthesis Report”, OECD Trade Policy Papers, No. 135, OECD, Publishing. http://dx.doi.org/10.1787/5k9gwprtbtxn-en.
MOA (2012), Ministry of Agriculture and Farmers Welfare, Department of Agriculture and Cooperation, Government of India, Website: “http://agricoop.nic.in/AnnualReport06-07/AGRICULTURAL%20MARKETING.pdf”.
AGRARIAN DISTRESS, FAMILY FARMING, LAND MANAGEMENT AND OTHER ISSUES
Distress in Indian agriculture has two analytically interrelated domains – the agrarian and the agricultural. The former is about the distress that the farmer (as also the agricultural labourer) is in. In other words, it is about the distribution of the agricultural produce and its impact on the livelihood of the people involved in or dependent on agrarian activities. The latter is the distress that the farm is in on account of a production focus (the target of 4 per cent growth not being met). To be specific, it raises questions about the inadequacies and inappropriateness of the agricultural developmental programmes. Thus, studies or papers that look into distributional concerns (the net returns to the farmer, the income to the agricultural labourer, and their alternative sources of income among others) or production issues (for instance, the ship-to-mouth legacy leading to green revolution practices, mono-crop versus multi-crop systems, and sustainable agricultural practices) or an intertwining of the two would be welcome.
A symptom of the agrarian distress is farmers’ suicides. The drought of 2015 saw an upsurge in farmers’ suicides from many parts of the country. This has led to many questions on the consistency and quality of data reporting, on how to measure normalised suicide rates that are comparable, and on the efficacy of a specific technological intervention (genetically modified seeds) in a specific crop (cotton) in addressing the spurt of suicides in the cotton growing regions among others. All said and done, suicide is a multifaceted complex phenomenon. Equally important is the link of suicides to livelihood concerns. Of course, absence of suicides in a region does not do away with agrarian distress. Addressing some or all of these concerns would add value to our understanding.
Similarly, debt, or non-serviceability of debt, is a symptom of the agricultural distress (note that its absence does not imply absence of distress).The reasons for this non-serviceability of debt could be explained through an understanding of risks that would render debt on account of agricultural production non-serviceable. Such a scenario can also be considered as an important risk factor associated with suicides and thereby indicating the intertwining of the agricultural with the agrarian. Further studies that explore this intertwining are needed.
Conventionally risks were identified with weather shocks (production loss) or price shocks (low returns per unit of output). However, it was understood that these two shocks moved in opposite directions reducing the impact of their combined risk. Over the years, this has changed because the farmer can be exposed to low yields and low prices at the same time because production losses are largely based on localised factors (sometimes farm-specific) while prices are increasingly being determined by global factors. Besides, the possibility of production loss has increased over time because it can also be because of vulnerabilities of different inputs: non-availability of timely and adequate amount of credit, spurious seeds, ineffective pesticides, and poor quality soil among others. Examining the specificity of these in different contexts would be helpful in our understanding.
At the same time, there is an increase in marginalisation (67 per cent of operational holdings are less than 1 hectare and another 18 per cent are between 1-2 hectares in 2010-11), casualisation (worker classification of census indicate that it is for the first time in 2011 that cultivators population has decreased in absolute number while that of agricultural labourers has increased) and feminisation (the proportion of females in operational holdings is increasing – from 11.7 per cent in 2005-06 to 12.8 per cent in 2010-11 as per agricultural censuses, they have a larger proportion of marginal workers in rural India as per the worker classification of census 2011) when it comes to agricultural and rural work. All these need to be examined in detail at sub-group levels and smaller geographical entities among others.
Researchers working in the field as also others are increasingly observing that the median age of the farm worker (cultivator and agricultural labourer) is increasing. Farms are increasingly being dependent on the older or female populations. Besides, the marginalisation of holdings entail that these marginal and small holders are largely dependent on family labour. Detailing of these aspects will be important to our understanding.
Land evokes many questions. The maintenance and digitalisation of records, the rights of the tenant or even sub-tenants where tenancy rights were given few decades ago, increasing usage for urban and industrial purposes, land acquisition and its implications on the livelihoods through a critical evaluation of the social impact assessment studies that are mandatory under the new Act, and many others. At the farm level, land management aspects require an understanding of soil health, the relevance of cropping practices that espouse sustainability (for instance multiple cropping and crop rotation). All these are important questions that need to be explored.
Climate change is an important concern. It is not only about rising temperatures, but also about intense wet spell and long dry spells. The adverse implications that these would have on crop production. How is the administration gearing to bring about resilient production systems?
Understanding of the agrarian and the agricultural distress will require and enquiry that encompasses the economic, the social, the multiple facets of agricultural sciences (soil, hydrology, seeds, livestock, fisheries), the agro-ecological aspects, and the emerging technological dimensions (for instance, genetically modified seeds) among others. This requires studies that go beyond disciplinary boundaries and within disciplines they need to apply mixed methods are challenges that need to be taken head on. Papers that take this plunge will be of help not only for the theme, but also for the discipline of agricultural economics.
Besides the above mentioned aspects the paper writers may also examine how price volatility and weather risk are affecting agrarian distress. Will new crop insurance address risk in farming? How agricultural technology is affecting farmers suicides. How watershed development programmes are affecting farm productivity and risk. How liberalisation of land lease market and change in land lease will affect different types of farmers and household income.
FARM INCOME, PRODUCTIVITY AND METHODOLOGY OF FARM INCOME LEVEL
Indian agriculture has made rapid stride in terms of production and productivity of crops especially after the introduction of green revolution. Production of foodgrains increased to 264 million tonnes (mt) in 2014-15 from the level of 51 million tonnes in 1950-51. Similar development has also been achieved in oilseeds, sugarcane, cotton, fruits, vegetables and other crops. The increased volume of crop output, which resulted from the intensification of agriculture after the introduction of green revolution during the mid-sixties, helped to increase the wage rate and generate more employment opportunities in the rural areas particularly for the landless labourers. Incidence of rural poverty has also reduced considerably mainly because of the improved production of agricultural commodities, as proved by a number of studies.
In spite of these impressive achievements, the news coming from the farm sector is not very encouraging since early 1990s.Farmers’ suicides have become widespread and indebtedness (both incidence and extent) among the farm households have increased. Farmers committing suicides were not apparent before the early 1990s, but it became a widespread phenomenon today in many States in India. Over three lakh farmers have committed suicides in India between 1990-91 and 2013-14 and the proportion is alarmingly high in States like Maharashtra, Andhra Pradesh and Karnataka. Why is this happening in India? Is it because of poor returns from crop cultivation? Are crop failures due to vagaries of monsoon? Could the increased indebtedness be the reason? A large number of studies have analysed these issues since mid-nineties where the problem of farmers committing suicides started appearing as a serious problem in the policy circle. Some of the studies reported inadequate supply of institutional credit, decline in productivity of crops and imperfect market conditions as the major reasons for this phenomenon. Some researchers have blamed the green revolution for the farmers’ suicides without paying adequate attention to the benefits that the green revolution brought to the farmers and to the country as a whole. Though the farmers’ suicides started mostly from early nineties in India, some of the researchers have attributed this phenomenon to behavioural and social factors.
The liberalisation policy was introduced in India during 1991 with the objective of integrating the domestic market with the international market. This integration was expected to reduce the distortion of domestic prices and also significantly increase the overall agricultural productivity and profitability by an efficient allocation of resources. But against this expectation, the Indian agriculture has witnessed many unprecedented developments after the introduction of economic reforms. Farmers’ suicides, indebtedness, crop failures, un-remunerative prices for crops and poor returns over cost of cultivation are the foremost features of India’s agriculture today. Why all these are happening only in the recent years? What could be the main reasons for it?
Adequate income from crop cultivation and other land based activities is essential not only for the survival of the farmers but also facilitate to reinvest in agriculture for the next season. If the flow of income from crop cultivation is not regular and adequate, farmers may not be able to repay their debts which would obviously lead to increased indebtedness. Despite this, not many studies have made detailed analysis to find out as to what is happening to the profitability or farm income of different crops in relation to the cost of cultivation over a period of time. Without using any temporal data on cost of cultivation, some recent studies have observed that stagnation in real income and rise in input prices more than the prices of the agricultural produce could be the reasons for farmers’ suicides. The National Commission on Farmers (2006) has also recognised that inadequate return from the crop cultivation is the main reason for present agrarian crisis and farm suicides. This is also reinforced by the data of Situation Assessment Survey (SAS) which found that the income from farming activities has remained meagre across all the States in India. In fact, SAS reveals that about 40 percent of farmers are willing to quit agriculture citing poor remuneration as the main reason.
What is the status of farm income of the rural households? Why is the farm income low? Is the farm income same for both irrigated crops and rainfed/un-irrigated crops? It is often believed that the crops cultivated under irrigated condition generate higher income than those crops cultivated with less or un-irrigated condition. How far this is true? Using cost of cultivation survey data, some studies have shown an insignificant difference in farm income between irrigated and less or un-irrigated crops. Why is this so? Is it because of increase in the cost of cultivating crops under irrigated condition? One needs to find out the differences in cost of cultivation between irrigated and un-irrigated crops using spatial and temporal data to assert the real movement in it.
Understandably, the issue of farm income or farm profitability received more attention from different quarters especially after mid-1990s because of increased farm suicides. In fact, in the recent years this particular issue is being intensely debated in the academic and policy circles following the unprecedented incidents of foodgrains and non-foodgrains farmers in the agriculturally well developed regions observing ‘crop holiday’ and engaged in violent agitations. Many have attributed this to increased cost of cultivation. Why is the cost of cultivation increased in the recent years? Has the cost increased uniformly across all major operations and crops? It is argued that the increased labour cost due to the introduction of MGNREGS has escalated the cost of cultivation which has also made dent on the farm income? How far is this true? Do we have any solid evidence to demonstrate that MGNREGS has affected the farm income?
In order to increase the farm income, many suggestions have been made by different committees and researchers. While some have suggested the increased supply of institutional credit will help improving the farm income, others have proposed that increased productivity of crops will help the farmers to reap better remuneration from crops cultivation. How far the increased supply of credit can improve the income when the issue of poor remuneration from crop cultivation remains unaddressed? Without making arrangements for improving the income of crops cultivation, wouldn’t the increased credit supply aggravate the indebtedness of the farmers? Do we have any concrete evidence to support the common perception that the farmers with better institutional credit supply harvest higher income from their crop cultivation than their counterparts? If so, the process of it can be traced and narrated so that policy decisions can be made appropriately.
In the recent years, many have been suggesting that the farm income can be increased only by increasing the productivity of crops. There is no doubt that any increase in productivity of crops would ultimately increase the value of output or gross income from crop cultivation. But what is the guarantee that a rise in productivity will increase the profitability from crop cultivation? Productivity of crops cannot be increased without adopting superior technology (new variety of seed) and yield increasing inputs along with better irrigation facility. Can these new technologies be suitable for rainfed areas where farm income is deplorably poor? The truth is that with the adoption of all these new technologies/inputs, the cost of cultivation is bound to increase which is the major problem that the Indian farmers have been encountering in the recent years. What are the best possible technologies available for farmers to increase the productivity of crops without increasing cost of cultivation? Several field level studies have amply proved that the SRI method of paddy cultivation seems to reduce the cost of cultivation while increasing the productivity of crops and farm income. But the moot question is that as to what extent SRI can help increasing the income of the farmers? Similarly, the micro-irrigation such as drip and sprinkler method of irrigation proved to be useful in increasing the productivity and profitability of crops with substantial saving of water in different crops. Can more crop output and farm income be achieved by adopting micro-irrigation in crops like oilseeds and pulses? Amidst lots of controversies, GM crops (such as Bt cotton, etc) seem to show promising results in increasing the productivity. Given the cost-intensive nature of GM crops, as to what extent this technology will be useful in raising the income of small holders who account for over 80 percent of farming households today.
Of late, not only the researchers but also the farmers’ organisations have questioned the methodology of calculating cost and income from crops cultivation. Despite knowing the fact that cost A2 does not cover the entire cost of cultivation, many scholars have been employing this cost to estimate profit/farm income. However, late Prof. V.M. Rao (who also worked as a member of CACP) argued that cost C is nothing but political cost. Which is the right cost (among the nine cost concepts used by the CACP) for fixing the MSP for different crops? Since a reasonable profit margin is essential to solve the present agrarian crisis and to alleviate the indebtedness among the farmers’ households, the prices for the crops should be fixed in consonance with cost of cultivation. The National Commission on Farmers (2006) and also by the Working Group on Agriculture Production have suggested that the government should announce the minimum support price (MSP) for crops at 50 per cent more than the actual cost of production (cost C3). Very recently, the Parliament’s Committee on Agriculture has also urged the government to ensure that support prices for various crops should give farmers 50 percent profit margin over the cost of production. Some also argue that minimum support prices announced every year for various crops should also be linked with the wholesale price index so as to protect the farmers from the possible inflationary pressure. As the MSP for different crops is fixed mostly based on the cost of cultivation, it is essential to identify the right cost for fixing the prices for agricultural produces. In the meantime, Prof. Ramesh Chand Committee on Minimum Support Price Calculation has suggested a complete revamp of methodology to calculate MSP and introduction of mechanisms, such as Deficiency Price Payment or Price Insurance for price surety, for all those crops for which MSP is announced presently. If the recommendations of this committee are implemented, what kind of impact it will have on the farm income? There is also a need to see whether increased MSP would be sufficient for raising the farm income without improving the market infrastructure which has been the major problem for farmers.
In the context of the above discussed subject, the paper writers can contribute research papers covering the issues raised with the specific focus on the following questions:
- What is the state of farm income in India over the years?
- Has the farm income increased/decreased after the introduction of economic reforms?
- Are there significant differences in the level of farm income between irrigated and un-irrigated crops?
- Has increased human labour cost that may have happened due to MGNREGS affected the farm income?
- What is the impact of irrigation development on farm profitability or income?
- What is impact of groundwater depletion on farm profitability?
- Can we improve the farm profitability only by increasing bank credit supply?
- Is there any relationship between crops productivity and farm income?
- How have the rainfed intervention programmes such as watershed development programmes, etc., helped to augment the farm income?
- What is the role of genetically modified crops in farm profitability?
- Can micro-irrigation technologies such as drip and sprinkler be useful in increasing the farm income of distressed farmers?
- What are the determinants of farm income?
- Other than MSP, what other measures are needed to increase the farm income?
- What is role of competitive agricultural market in determining the farm income?
- What is the trend in resource use efficiency and cost of production. Is income squeeze happening due to rising cost of production? What are the prospects of traditional agriculture and organic agriculture leading to increase in farm income.