Diversification policy: old wine in old bottles
The Punjab report on diversification is still focussed on yield enhancement even in new crops and market orientation, which is much needed, is lacking though it talks of demand-driven agriculture also.
Sukhpal Singh

THE committee to formulate agricultural policy for Punjab submitted its draft report to the state government and it was published by the State Farmers’ Commission last month. Since the document is yet to be finalised and formalised, it is important that adequate public discussion takes place and the various stakeholders in the sector are able to provide inputs.

The dairy sector is often suggested as a strategy for the diversification of income since it is growing well. File photo: Himanshu Mahajan

The report is still obsessed with yield gaps. It views diversification in terms of new crops being grown the old way which is not a desirable thing. The report recommends intercropping only in agro forestry. Why it is not possible in mainstream crops is not explained. Barley is missing from the list of new crops when neighbouring states are doing well on it with many companies, including MNCs, buying directly or undertaking contract farming. Further, the most important production risk management strategy -- crop insurance -- is not even mentioned. The report forgets to recognise that the two pressing problems of farmers generally are production risk and market risk.
Interestingly, the report talks of the need and plan for diversification but does not touch upon the previous experience of this mechanism and why it failed during 2002-2007 and how it will be done differently now. The last attempt at diversification during the Congress regime (2002-2007) could not go beyond 0.25 million hectares against a target of diversion of one million hectares from that under paddy despite all kinds of perverse incentives and schemes. Now, the report targets 1.6 million hectares diversion away from paddy without any specific mechanisms. It still asks for assured markets and prices for new crops which may not be possible and may not be good for the long term. That is the MSP culture. The MSP and procurement is already there for many alternative corps but how can it be done for perishables?
Sustainability issues
The report talks of the Systems of Rice Intensification and other such well-known techniques but not about the Systems of Wheat Intensification as wheat will remain a large acreage crop in Punjab even after diversification. This is a serious neglect. It misses many upcoming and innovative methods and technologies on water saving like khet talavadis (farm ponds) and micro irrigation systems and does not learn from other states like Andhra Pradesh or Gujarat. It is still shy of sustainable agricultural practices like organic and mentions lack of organic matter as the reason for not recommending organic practices. This, despite the fact that a private agency has been helping the state in going organic for the last many years and there is a council set up for that since the previous Congress regime.
The report is still in the farmer co-operative mode and not even aware of producer companies provision and other institutions like Joint Liability Groups and Multi-State Co-operative Societies or Mutually Aided Co-operative Societies which can be set up at the local level with plenty of support from central institutions. NABARD has a fund for the promotion of producer organisations. Similarly, the Small Farmer Agribusiness Consortium has launched many programmes to promote farmer producer organistions (FPOs) which are essentially producer companies, which can be made use of. In the 2013-14 budget, it has been given Rs. 50 crore to provide matching equity grants to registered FPOs up to a maximum of Rs.10 lakh per FPO to enable them to leverage working capital from financial institutions. It has also been allocated Rs. 100 crore for a credit guarantee fund for farmer producer organisations.
On promoting more affordable farm mechanisation, it sticks to only agro service centres for machinery, managed largely by Primary Agricultural Co-operative Societies. What about producer companies, Self Help Groups, agribusiness centres and private entrepreneurs like Zamindara Farm Solutions, with the latter already doing a good job in this field and promoting the co-owner model? It talks only of farmer income and not of landless labour and recommends mechanisation which can hit the labour interest hard. The large subsidies given on paddy transplanters and other equipment in the recent past are not even mentioned. Today, even value chains talk of labour interest for sustainability. Then, how can a state policy on a sector ignore farm and allied labour interest?
Matter of size
The report talks of tenancy laws and the size of land holding constraint, forgetting that Punjab has the largest size of operated holding in India (four hectares against one hectare in India). It fails to recognise that it is not the size of land but what you do on it which matters -- small can be prosperous and there are thousands and millions of such small and prosperous farmers in India. It recognises the poor state of small farmers, but does not say anything specific to them in recommendations. Rather, it talks of promoting large corporate dairy farms, which are already happening due to Punjab government policy and are not good for small farmers as there will be exclusion of small farmers even from the (co-operative) dairy sector.
In extension, no new models are proposed. There are public-private partnerships and franchise models in operation in India which should have been studied for their value and relevance while planning for high value crops. Just relying on the existing public extension mechanisms may not do. The report proposes the creation of an agricultural research development fund by charging it as a cess from farmers at the time of sale of their produce. If so far, the largest gainers from agricultural business/trading have been non-farmers i.e. traders and processors, why should not the technology fund cess be charged from buyers and arthiyas instead of farmers? This is so as farmers are in dire crisis already whereas the other stakeholders are doing well and should not mind paying it. If farmers are being asked to fund their own technology development, why support other sectors with public funds?
Investment vs subsidy
The report recommends in great detail the promotion of the dairy sector as a strategy for the diversification of incomes since it is growing well, but asks for a milk price stabilisation fund. If that is the state of affairs in the co-operative dairy sector after a few decades of its existence, and in the presence of MNCs in the milk sector, then where is the sustainability of the sector? The report basically makes the same demand as the state government has been asking of the Union Government i.e. provide Rs. 5,000 crore for adjustment of the cropping pattern (the Johl committee report). But that is subsidy, not investment. Demand-driven agriculture should be investment based, not subsidy based.
Surprisingly, the report is completely unmindful of the central government schemes which can be leveraged for the diversification and change in practices or institutions. More recently, of the Rs. 500 crore allocated in the 2013-14 budget for diversification, Rs. 200 crore is meant for Punjab alone. Besides, there are many schemes like the National Horticulture Mission which can be profitably leveraged for diversification.
The report recommends that the state APMC Act be amended. But the state has seen contract farming practices for 20 years and has already passed the Regulation of Contract Farming Act, 2013. But that leaves out two important aspects of the APMC reform -- direct purchase and private wholesale markets. The report should have examined the contract farming Act and the experience of contract farming in the state in various forms for the last two decades to make specific suggestions to leverage contract farming for demand-driven diversification. But that requires a hard analysis! Similarly, it recommends apni mandis (farmers’ markets) but does not mention or analyse why they did not work in the past as Punjab was the pioneer in this innovation. The report does not even seem aware of the Food Safety Standards Authority of India framed standards in the food sector which are mandatory for all operators in the food chain and very important for quality improvement in the food sector.
The report recommends genetically modified (GM) crops and technology, which anyway are not in the domain of the state government. On the other hand, what is in the domain of the state government i.e. foreign direct investment (FDI) in retail is not even mentioned in the report.
Finally, the report says that the policy paper aims at achieving two objectives: “faster and sustainable agricultural growth and an increase in real incomes of farmers by increasing productivity, lowering the cost of production and adoption of high-value crops and value addition”. These should be the objectives of policy, not of the paper. The latter should analyse the issues and show the way forward. In fact, the report is short on analysis and long on recommendations. The report also lacks inputs on how to achieve various recommendation/objectives.

The writer is the Chairperson, Centre for Management in Agriculture, IIM, Ahmedabad.

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