Nothing much for agriculture

The 2019-20 Budget failed to impress farmers because it lacked any significant announcement for the agriculture sector. Though the Budget proposes building rural infrastructure to woo private investment in farm and allied activities such as dairy, fisheries and agro-processing, there is hardly any fresh proposal directed to tackle distress. Pressing issues like access to remunerative prices, reduction in indebtedness, especially the high-cost loans from the informal sector (moneylenders), stability in domestic and ex­­ternal trade policies, and the much-needed structural reforms in land, marketing and other key areas have mostly been glossed over or mentioned in passing.


The two main takeaways for the farm sector are the promotion of “zero-budget natural farming” to reduce costs and bolster profits and the formation of 10,000 Farmer Producer Organisations (FPOs) to tap the benefits of scale. However, even these are not fully free of glitches, which need to be addressed before any headway can be made. The zero-expense farming, which was commended by the Economic Survey as a lucrative livelihood option for small farmers and has subsequently been presented in the Budget speech as the panacea for farmers’ ills, is yet to establish its economic and technical viability on a larger scale.


It essentially requires farmers to utilise self-prepared seeds and other inputs rather than purchase them from the market. Compost, as a replacement for fertiliser, is prescribed to be made by doping the dung and urine of desi cows with jaggery, pulses flour and soil microbes. The claim that this mode of environment-friendly farming lifts farm yields has not yet been substantiated. Many analysts believe that it can, at best, be another form of organic farming, not a substitute for the modern input-intensive agriculture, which alone can meet India’s huge requirement of food, feed, fuel, fibre and other farm products. However, well-structured studies are needed to develop a better understanding of this form of natural farming and its suitability for wider adoption.


The concept of FPOs, though, is a tried and tested business model for farmers that can be a game changer for agriculture, provided some formidable problems besetting this sector are addressed. The total count of registered FPOs is reckoned to have swelled to around 4,000 in the past decade. But a sizable number of them are also known to have shut shops because of inadequate handholding by government. Their main bane is that regardless of being a hybrid of cooperative societies and private companies, they are not treated at par with either of them. Many of the incentives offered to the cooperatives or even to the start-ups are not extended to FPOs. Banks are generally wary of lending them money as they do not have large paid-up capital and also lack physical assets to offer as collateral. The Small Farmers Agribusiness Consortium and the National Bank for Agriculture and Rural Development are the only agencies which support them, but their resources are limited. Several well-judged supportive measures, besides a favourable policy environment, are needed to let these grassroots farmer bodies survive in a competitive market. If that is done, the FPOs can be a boon for the beleaguered farm economy. 


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel