The dark side of Indian Agriculture

Indian Agriculture is Broken

The major problem in the current system is the inefficiency produced by intermediaries at different phases of farming. Other than intermediaries, farmer face problems like lack of mechanisms for unexpected weather conditions such as rainfall, lack of capital, inability to raise funds, denial of credit from financial institutes, volatility in crop prices, lack of infrastructure required for high yield, and unawareness of best farming techniques/practices. Besides these problems, post-harvesting phase involves a lot of corruption and inefficiency in storing the harvested crops or collected food grains which give the boost to the wastage of food and non-availability of inter-operable data for traceability along with scrutiny.

1. Lack of transparent mechanisms for inclement weather

• The unexpected weather has always been enemy of the farmers. Sudden rainfall, hailstorm, storm usually destroys the sowed crops and does a lot of loss to the grower.
• The mechanism deployed by the government are various insurance schemes but the resource allocation is not that efficient and due to the presence of multiple layers in the framework of the system, it leads to high premium and unpaid claims.
• Insurance companies that act as intermediaries usually benefit from this by imposing their complex rules and non-transparent system.

Insurance companies collected Rs 9,041.25 crore as premium (for Kharif 2016 only), but they paid just 25% (Rs 570.10 crore) of the total claims made (Rs 2,324.01 crore).

2. Lack of capital

• Agriculture process involves a lot of phases from sowing, irrigation, applying fertilizers to harvesting. These phases make use of farming equipment and machinery. Small farmers usually rent machinery like tractors but still, funds are required for various other activities like setting up poly houses, using the new innovative farming technique like hydroponics/aquaponics, drip irrigation, setting up horticulture orchard, buying cattle, animals etc, so the lack of capital makes it difficult for farmers to adopt the new efficient techniques, buy requirement and try new crops.

• Also, the systems that are used to get credit or raise funds are not that transparent. Farmers are often denied the access to credit due to lack of required collateral and also the interests stated on loan is very high.

“The credit policy is designed wrongly, as it benefits the rich at the cost of farmers and the rural poor. The rich corporates continue to get tax incentives and massive subsidies in the name of incentives for growth, but a small farmer who wants to buy a tractor to increase crop productivity is often denied access to credit or has to pay a high cost of credit received. (15%-20% interest rate)"

3. Unawareness of best farming techniques/practices

• The current techniques used by farmers are pretty outdated. Also, the output that a farmer gets is not much as compared to the input. The input required to get better yield keeps on increasing but it does not affect output proportionally.
• Using outdated techniques just not affect farmers income, but also affects the environmental and natural balance.

“The conventional irrigation method of flooding, however, renders significant water losses of 20-25%.

4. Price Volatility of crops in Agricultural Markets

• The price of crops depends on various factors like supply & demand of the economy, inflation, traders etc. The current system lacks efficient mechanisms to provide safety to the grower on the rise and fall in the prices of the crops.
• In India, MSP initially was started as a safety net for farmers through a guarantee that if there produce is left unsold in the market, will be bought by the government. Another purpose was to incentivize farmer to produce more crops so as to ensure food security in India.
• Commission for Agriculture Cost and Prices (CACP) which calculates MSP for various crops, also depends on outdated (2 years old) and non-interoperable data, which lack transparency and traceability.

Only 5.8% of farmers benefited from the minimum support price system in the year 2015.

5. Miserable conditions and corruption at Agriculture Market (Mandi)

• The government's farming policy always tries to focus on increasing outputs, crop procurement, better food security instead of living conditions of farmers. Farmers work hard and yet when the time comes to reap the benefits of harvest, their livelihood is often threatened by falling of prices of crops/vegetable often by mismanagement of food.

In May 2017, the Centre informed the Supreme Court that more than 12,000 farmers commit suicides in India annually since 2013. One of the reasons behind this disturbing trend is said to be the existence of middlemen, who allegedly exploit the farmers with the promise of future payments that never materialize.

6. Inefficient storage of food grains/produce

• There is not enough infrastructure available to store procured food/grain in many developing countries. The warehouses that are used to store the collected food grains, which later to be distributed in PDS or stocked for food security, lack smart data monitoring, leading to rotting of grains.
• The absence of monitoring also sometimes gives a boost to corruption such selling of crops in black and that thing never gets on record due to lack of auditable data.

Food Corporation of India (FCI) has allowed 46,658 tonnes of food grains to rot in its 1,889 warehouses across the country in three years, while another 143.74 tonnes were reported stolen. Together, this could have fed nearly 8 lakh people from priority families under the National Food Security Act for an entire year.

Call to action: I along with my team are trying to explore solutions to above problems. We believe that emerging technologies can help us build efficient and transparent system. So if you are farming expert, agro-tech enthusiasts and can help us in any way, connect with me.