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E-book Agricultural Value Chains in India : Ensuring Competitiveness, Inclusiveness, Sustainability, Scalability, and Improved Finance
Changing consumption preferences towards high value, nutrient and protein richfoods are signaling agricultural diversification in India. Currently, India is the largestproducer of milk, pulses, banana, mango, pomegranate, papaya, lemon, okra, gingerand non-food crops like cotton and jute; the second-largest producer of rice, wheat,fruits and vegetables, tea and one of the leading producers of eggs and meat in theworld. India produced 281.8 million tonnes of food grains, 307.7 million tonnesof horticulture crops, 176.5 million tonnes of milk, 96 billion eggs and 7.7 milliontonnes of meat during TE 2018–19. Table1.1illustrates the production and tradestatistics for the selected commodities studied in this book.However, this record level of production has not translated into commensurateincreased economic returns to the farmers in India. Unable to find markets for theirproduce, farmers have often taken to distress sales, burning crops, and dumpingproduce on the roads. Agricultural policymaking has for a very long time focused onincreasing production without giving due attention to the need to develop efficientvalue chains. While India has diversified significantly from producing grains to avariety of high-value commodities, these commodity value chains have remainedrelatively underdeveloped. Agricultural value chains are highly fragmented andsubject to a high degree of intermediation, resulting in poor price realization forfarmers, substantial losses in the quantity and quality of produce, limited scope forvalue addition, and high price volatility.The vulnerability of agricultural value chains became more evident during thecoronavirus pandemic in 2020. With the sudden announcement of lockdown 1.0 inMarch,2020acrossthecountry,supplychainsdealinginfreshandperishableproducewere hit. Demand plummeted due to the restrictions imposed on the HoReCa (hotel,restaurant and catering) segment, and because of people keeping away from wet markets due to fear of infection. In the absence of robust direct marketing channels,farmers could not sell their produce and suffered losses in terms of low price realiza-tion and wastage. Despite farmers receiving low prices, retail prices of fresh agricul-tural produce in many urban pockets did not decline. The high consumer price infla-tion observed in the months following the lockdown in March, 2020 had been a causeof concern for the policymakers. In its pandemic relief package, the central govern-ment announced several packages for the agricultural sector and introduced the FarmLaws 2020, reiterating its vision to liberalise agricultural markets to benefit thefarmers. Reforming the Agricultural Produce Marketing Act (APMC) Act to allowdirect farming, and contract farming; doing away with the Essential CommoditiesAct (ECA) to allow free movement and stocking of agricultural commodities; andempowering farmers through the expansion and strengthening of Farmer ProducerOrganizations (FPOs), were the key components of the announcements. For the firsttime, the central government pre-empted the states and brought about legal changeby way of an Ordinance in June, 2020, followed by enactment through legislation inSeptember, 2020. Despite many challenges presented by Covid-19, the agriculturalsector could really benefit from the political will and commitment to bring aboutlong-overdue marketing reforms. markets due to fear of infection. In the absence of robust direct marketing channels,farmers could not sell their produce and suffered losses in terms of low price realiza-tion and wastage. Despite farmers receiving low prices, retail prices of fresh agricul-tural produce in many urban pockets did not decline. The high consumer price infla-tion observed in the months following the lockdown in March, 2020 had been a causeof concern for the policymakers. In its pandemic relief package, the central govern-ment announced several packages for the agricultural sector and introduced the FarmLaws 2020, reiterating its vision to liberalise agricultural markets to benefit thefarmers. Reforming the Agricultural Produce Marketing Act (APMC) Act to allowdirect farming, and contract farming; doing away with the Essential CommoditiesAct (ECA) to allow free movement and stocking of agricultural commodities; andempowering farmers through the expansion and strengthening of Farmer ProducerOrganizations (FPOs), were the key components of the announcements. For the firsttime, the central government pre-empted the states and brought about legal changeby way of an Ordinance in June, 2020, followed by enactment through legislation inSeptember, 2020. Despite many challenges presented by Covid-19, the agriculturalsector could really benefit from the political will and commitment to bring aboutlong-overdue marketing reforms. gricultural commodities. This makes it even harder for India’s predominantly largenumber of small and marginal farmers to earn remunerative prices. Given that 86.1%of total agricultural land holdings in India are small and marginal (area less than 2ha), any agriculture growth that does not deliver benefits to the small and marginalfarmers cannot be inclusive. Further, the cereal-centric policies of the governmenthave neglected the challenges faced by farmers growing non-cereal crops. Thesepolicies have exacerbated the concerns around environmental degradation includingdepleting water resources in key rice-growing states as well as soil contaminationdue to excessive use of chemicals. Very little attention has been given towards thesustainability and scalability of successful value chains across commodities and geographies.
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