Why is the Indian agricultural sector ripe for disruption?

Indian agriculture is in dire straits. There is no doubt about it. The source of livelihood for 50% of the workforce in the nation, agriculture’s contribution to GDP has been declining steadily. This when 60% of the land in the nation is under agriculture.

Why is Indian agriculture in such a mess?

There are several factors crippling the sector. Small land holdings, dependence on rainfall, lack of use of good quality seeds, indiscriminate use of fertilisers, etc. Not to mention vote-bank manipulation, corruption and the indifference of politicians for decades now.

Agriculture is also looked at only as a means of alleviating the poor.

Let’s take the example of Maharashtra. 3/4th of the farmland in the state is un-irrigated and rain-fed. 79% of the farmers in the state try to earn a living from farms spanning 2 hectares or less. The state’s productivity is only the 7th highest in the country despite being the second-largest sugarcane grower (66.35 tonnes per hectare in 2012/13 compared with 105 t/ha in West Bengal). The tale is similar for cotton production in the state.

Indian farmers largely are exploited by the middlemen in a market that covers 30,000 mandis. Agriculture Produce Market Committees (APMCs) regulate about 7,500 of these mandis. APMCs also require to buy and sell foodgrains. There is a huge room for corruption and theft in government procurement. Just last week, the media had reported that 5 million tonnes of wheat had vanished overnight from the Punjab government warehouses.

What is being done?

The union budget 2016 was a ray of sunshine for farmers. The BJP-led government had introduced several measures that were aimed at making lives easier for farmers. More recently, prime minister Narendra Modi on April 14th launched the National Agricultural Market amidst much fanfare. At the launch, the Prime Minister spoke at length about the need for farmers to be paid more for their produce. He also touched upon the need to use smarter new ways to grow and sell produce.

The aim behind eNAM he said was ‘per drop, more crop’. eNAM is currently linked to only 21 mandis from eight states. The government is hoping to add 200 more in five months and 585 by March 585. The catch? That is not even a tenth of the existing APMCs.

Here’s food for thought. Farmers based out of Neemuch in Madhya Pradesh are only paid a meagre 30 paise per kilogram for onions. We pay 30 rs for the same. That’s a hundred times more.

Room for improvement? There’s a whole nation out there.

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