The pulse of India’s agrarian economy
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The severe drought across India should hopefully help focus attention on the overuse of water in agriculture. A data analysis by Roshan Kishore in this newspaper last week showed that the average water footprint for five major crops—rice, wheat, maize, sugarcane and cotton—is far higher than global averages.
At the root of the problem is a policy framework that is dominated by concerns about food security rather than water usage. The dominant role given to water-intensive cereals is a hangover from the harsh lessons of the 1960s, when a shortage of rice and wheat not only forced millions to go to bed hungry but also compromised India’s strategic autonomy, thanks to the dependence on US emergency imports under the PL 480 programme.
It is time India switched its policy focus to the efficiency of water use rather than adding to the food mountain. One key element of this switch should be greater incentives for the cultivation of pulses as well as millets—not just because they use less water for every unit of output but also as a weapon in the fight against hidden hunger. It is in this context that recent policy moves by Maharashtra deserve more attention.
The Devendra Fadnavis government has taken a few baby steps to help farmers move away from crops that use water intensively. It will make it more attractive for farmers to grow pulses by offering to pay a guaranteed price that is 5-10% higher than the central minimum support prices (MSPs) for pulses, as well as provide free seeds and fertilizers to farmers who grow pulses. This is a welcome beginning in a state that is dominated by the sugar lobby, and an experiment that other state governments should keep a keen eye on.
Domestic demand for pulses has anyway shot up in tandem with growing incomes. It is no secret that the rising prices of these pulses are not only a big contributor to high food inflation but also a political hot potato. Farmers in countries as distant as Canada have begun to grow pulses to feed growing demand in India.
India has to focus on increasing the area under pulses as well as its productivity. It also needs a more transparent system of price discovery through unified agricultural markets and revival of systems such as forward and futures markets with adequate risk management provisions.
The MSPs for pulses have often been lower than wholesale prices. Procurement levels are often low or nil. The central government had revised support prices of certain pulse groups last year as an incentive to farmers, but the Commission for Agricultural Costs and Prices’ report on kharif crops submitted last week has said that a more substantial hike in MSPs of pulses will be needed to reduce shortages and keep inflation under control. In addition, to minimize the wedge between domestic prices and zero-tariff import prices, the government should also consider doing away with export duties on pulses. This will prompt farmers to produce more for both the domestic and foreign markets.
This year, the centre has issued an early directive to the states—to project pulses demand and keep hoarding in check. A caveat is in order here. Imposing unrealistic limits on stocking will aggravate hoarding instead of curbing it, severely disincentivizing storage firms from storing pulses in the first place. The move by Maharashtra to impose price controls on pulses will also lead to more hoarding.
To prevent another full-fledged pulse crisis, a sum of Rs.500 crore was allotted to pulses under the National Food Security Act, and a Price Stabilisation Fund with a corpus of Rs.900 crore was made in this year’s budget exclusively for pulses. Three agencies—Food Corporation of India, Small Farmers Agri-Business Consortium and National Agricultural Cooperative Marketing Federation of India Ltd—purchased more than 50,000 tonnes of pulses from farmers as buffer stocks during the fiscal year.
The centre and states would also do well to simultaneously focus on insuring farmers, raising yields within water constraints, enhancing food processing and storage facilities and abandoning export controls. A shift in the highly skewed cropping pattern of the country is the need of the hour.
Will the higher MSPs incentivize farmers to cultivate more pulses? Tell us at email@example.com