Five Indian Policies Affecting Agriculture
19 March 2012 By Dr. Bipul Saha
As part of its national agriculture program, India is prioritizing crops that require significant intensification, especially for fungicides. The focus on more sugarcane production, horticulture and continued growth in the production of grains can lead to a significant boon for the crop protection industry.
Some major recent trends include:
1. Year of horticulture: Agriculture Secretary Mr. P.K. Basu said that the Ministry of Agriculture is giving significant thrust to the horticulture sector. The year 2012-13 has been declared as the “Year of Horticulture.” Two conferences are going to be organized during the year. The first conference in February will focus on planting, material improvement and crop management while the second conference in November will be on post-harvest management and processing. Throughout the year, exhibitions will be held.
2. Government of India likely to allow fresh export of sugar: The Government of India is likely to allow 1 million tones of fresh sugar exports with an aim to help cash-strapped sugar mills take advantage of the higher export price and repay farmers of previous cane purchases. In early January, the Supreme Court asked the mills to repay within three months around Rs 9 billion ($180 million) to farmers in the state of Uttar Pradesh for cane purchases made during 2006-2008.
3. Subsidized crop loans likely to be extended to farm equipment: The Ministry of Agriculture proposes to extend subsidized crop loan of 4% for agriculture mechanization. At present, the loan at the subsidized rate is only available for crop-related inputs such as seeds. Officials said the idea is to bring down farmers’ labor costs, which account for around 25% of total costs.
4. Government of India to discontinue technological missions for cotton and jute: To give priority to food grain production, the Union Ministry of Agriculture has decided to end the technological missions for cotton and jute beginning in April. The move was partly prompted by farmers growing more cash crops beyond domestic demand. “In cotton, the acreage has gone up sharply year, in anticipation of higher prices. However, domestic demand is not much. Now, producers eye export market and there is no reason why the government will fund a crop to meet overseas demand,” a government official said.
5. Cash transfer to farmers faces hurdle: The Indian Government buys rice, wheat and other crops from the farmers at a price known as “minimum support price” (MSP). The Food Ministry introduces this year a plan to transfer the MSP directly to the farmers’ accounts or through account a check system, but it has run into roadblocks.
The plan was strongly opposed by the cartel of middlemen and commission agents. Commission agents purchase grains from farmers at low rates and sell the produce to Food Corporation of India at MSP. If payments are made directly to the farmers, the middlemen will lose their commission.
Many states have not yet adopted a system to directly transfer money to farmers for grains procured on behalf of Food Corporation of India (FCI), making the plan purposeless.
In Punjab, one of India’s biggest contributors of grains, the government is facing the biggest challenge in starting the process of direct payment, as the state has a well-established system of commission agents and middle men. The Food Corporation of India had to discontinue the process of direct payment during the current season midway because of dispute between FCI and commission agents.
The direct payment system could allow smallholders to better manage input costs because of India’s MSP predictability.
Dr. Bipul Saha is an editorial advisor and regular contributor to Farm Chemicals International. He has more than 30 years of experience working for multinational and Indian crop protection companies, pharmaceutical companies and other chemical industry divisions. He most currently was Senior Vice President with Nagarjuna Agrichem Limited, and he has also worked for Gharda Chemicals, Monsanto and Pfizer. He is a preeminent pesticide chemist in India and is an astute observer of Indian market influences that affect the domestic and global chemical market. Dr. Saha has been invited as Chairman and speaker in various National and International seminars in crop protection chemicals and agriculture.
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