Since 1990, India embarked on a fantastic growth journey. Our GDP grew like never before, from almost nowhere we are now within the world’s top 10 economies, on PPP basis we are at the fourth spot and according to a reputed global consulting company’s report, we will be the world’s third largest economy – almost equal to the US – by 2050.
Are you excited? Delighted? Ready to say “Cheers”? Just wait….hang on there.
Let me take you on another journey…
- As of November 2016, India is the 12th most unequal country in the world. The richest 1% of Indians own 58.4% of the wealth, while the richest 10% own 80.7% of the wealth. This trend is going in the upward direction every year, which means the rich are getting richer at a much faster rate than the poor.
- Agriculture employs more than half of India’s population while it contributes only 14% of the GDP
- Our agricultural productivity is 30 % of international standards despite the fact that our arable land as a % of total land is one of the highest in the world, second only to the US.
Let me summarise the mumbo jumbo mentioned above for you in simple English, or as I like to say let’s smell the salt….
- The wealth generated by the growth that we have achieved has gone in the pockets of only the top 20% of Indians (largely the top 1% of the Indians).
- The agriculture sector which employs half of India has grown at just 2.4% – a snail’s pace.
Have you stopped saying “Cheers”? Good – now let me stick the knife in even further…
But before I take you further into this sticking the knife fun, let’s first convert these percentages into numbers. So we have roughly 65 crore Indians who survive on agriculture. Out of these 65 crore Indians:
- 6 crores have landholding of more than 10 acres
- 6 crores are small to medium farmers
- 10 crore are small farmers
- Around 43 crores (i.e. roughly 2/3rds) are marginal farmers
Time to twist the knife some more….
Various studies have shown that the breakeven point in agriculture comes at around 10 acres of land i.e. around 60 crore Indians engaged in Agriculture are making losses.
Sorry, twisting the knife always hurts…..
There are many reasons for the state we are in, let me list a few of the main ones:
Problem 1: Size of Agriculture landholdings
Problem 2: Non-diversified crops
Problem 3: Lack of reliable information on latest agronomic practices and availability of cheap technology
Problem 4: Farmer gets nothing while middlemen make merry
All the above add up and create a massive financial problem for the farmer.
If it is so obvious, why has this problem not been solved?
- Agriculture reforms have always been considered to be political hot potatoes
- One possible reason why this is not done is because somewhere in the whole food chain some set of people stand to gain majorly (I won’t divert your attention by going into that in this article)
Now, the solution:
Land consolidation – we have to have larger farms as it allows farms to become financially sustainable, while at the same time, surplus income gives leverage to induct better quality seeds, better and appropriate inputs like fertilisers etc. and gives farm owners the bargaining power to get better deals for their crops.
How to achieve the above:
- Learn from Amul, the cooperative model. However, cooperatives cannot be run by the Govt. They have to be run by the farmers themselves.
- Allow private sector players to buy large tracts of lands and create a model of corporate farming. One of the typical fears that naysayers have is “What will happen to the poor farmer?” Well, our experience with liberalization on the Industry has shown that instead of creating problems, it has actually created more jobs and more income for people. After all, even big corporate farms will need people to work for them in the fields. Any farmer will prefer an income (salary) which is regular and allows him to feed his family and save for the rainy day than a piece of land which fails on both counts.
Result – high supply, lower food inflation, happier farmers and a stronger India.
By the way, did the facts make you despondent? Pessimistic? Lost faith in India?
Don’t be, we have achieved the impossible on the industrial front (I grew up in the decades of 60s to 80s – I assure you, what we have achieved today is stunning). All it will take is a similar kind of “different” thinking to achieve the same in the Agriculture sector. And we will truly be a giant on the world stage, with happier people.
Our future PM to be sworn in the summer of 2019 – Please listen…you will go down in history as a game changer, a person with a legacy, a person always remembered in the history who converted a “potentially” great nation to “a” great nation called India.
⁰Figures given in this article are approximate