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Farm Growth Hinges on Power Reform

Last modified March 14, 2016 15:59

The Budget seeks to double the income of farmers over the next five years. In terms of nominal income, Niti Aayog member Ramesh Chand estimates that cultivators' income nearly quadrupled between 2004-05 and 2011-12.

The Budget seeks to double the income of farmers over the next five years. In terms of nominal income, Niti Aayog member Ramesh Chand estimates that cultivators' income nearly quadrupled between 2004-05 and 2011-12. So, doubling farm income in five years, calling for a 14% growth rate per year, is not impossible. The trick is to secure for the farmer a larger share of the price paid by the consumer, cutting out layers of inefficient intermediation, by reform of market design. The Centre's plan that envisages a common e-market platform in 585 selected wholesale markets nationwide can be game changing indeed provided there's proactive policy in place to boost agricultural productivity. In tandem, we need modern integrators and logistics providers to procure fruit and vegetables in the country side akin to milk collection centres and supply these directly to retailers including e-retailers in urban centres, using climate-controlled storage and transport.

The Budget rightly calls on state governments to amend their Agricultural Produce Marketing Committee (APMC) Acts to join the proposed e-platform. There are other parallel steps required, such as better farm inputs, cold chains and agro-processing. The crop insurance scheme announced by the government is welcome. But the hope that a substantial part of agriculture can turn organic is irrational: without the use of fertilisers and pesticides, production and productivity would fall sharply. The Centre's move to allow 100% FDI in food marketing is welcome but is not likely to make any immediate difference. Nestlé and Unilever already have successful and sizeable food businesses in India. For further qualitative change, India needs reliable and continuous power supply in rural areas and quality rural roads. Policy is moving in the right direction.

Source: Agriculture Today, AgriNews, <sanjay.km15@gmail.com>

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