10 Sep 2017

Farm Productivity is not an End in Itself!

Heard at a recent lecture, the expert recommendation that India should direct greater resources for raising the field level productivity of crops, to alleviate two core concerns: the food security needs of the nation and to improve incomes for farmers. 

As someone who might have believed in these platitudes till a few years ago, I think it is imperative to set some records straight, and offer a more nuanced picture.

While one cannot ignore the 'general sense', it should be understood that productivity in itself is not a 'silver bullet', and except at individual enterprise level, such focus is in many ways contraindicated.

Higher productivity from farms is not a silver bullet. It will cause greater hurt, without delivery systems 
India produces more than enough food to feed herself, and the country can claim to be food secure on the production side. Then, farmers' income growth no longer depends on how much he/she produces, but on the institutional arrangements for marketing, such that they can capture value from every grain, every ounce or every drop produced. Today, when farmers produce a bumper harvest, the prices crash, and when the food prices respond positively to the 'demand curve', the consumer affairs department rushes in to make strategic imports to keep prices 'reasonable' for the consumer. Both situations make a dent in farmers' income.

Increasingly, we output more wheat, rice, pulses including cotton, sugar than we can consume or export, the global inventories are at an all-time high, and commodity prices are down as never before. Yet, nutrition deficit is evident and all food is not affordable to all people, a poor reflection on the output supply chain. Conversely, awareness and demand for nutritional foods; fresh vegetables, fruits, dairy and meats; is fostered by growing affluence. Being perishable, such produce continues to face high losses on route between farms and markets, detracting from availability and feeding inflationary swings. Markets seem inaccessible & disorganised, with real demand not being suitably communicated or connected with.

In truth, efforts to produce more, by ramping up farm level productivity, should be on the basis of the right market signals - either domestic or the global markets, and on the ability to connect with these markets! Essentially, farm level productivity improvement can offer an incremental gain but risks higher losses if the farm output has no enhanced market access. Further, there is need to factor in the ecological dimensions of our production system. Growing more foodgrains in Punjab and Haryana based on the current strategy of drawing more groundwater and applying more fertilizers will be an ecological nightmare, and an eventual economic blunder.

So where should future interventions be focused? In the first instance, we must ensure that production 'losses' are minimised. Focus on minimising losses will lead to improved logistics infrastructure and better inventory management at all levels - and this will create 'near farm jobs'. We must also remember that we lose not just the final commodity (say rice) but also everything that has gone into its production, viz water, fertilizer, human effort, power and diesel.
Productivity assessments need to be applied system wide and not in isolation!
Second, we must focus on real demand from consumers and promote the production of what the markets demand. This means high value agriculture, and particularly the fruits and vegetable sector which benefits both needs of national nutrition and farmer's income. However, this means specialised post-production handling with associated market linkages. Market linkages will also benefit in increasing trade, including globally, in the surpluses in other crops types.

Over the next decade, the focus should be on 'agri-logistics infrastructure', preferably in the PPP mode or by the private sector so that a sustainable revenue model can be applied. However the priority regions for this investment should be driven by the 'end-user-demand', rather than the 'supply points'. Investments need to be planned backwards from fork-to-farm, such that they direct a targeted flow of produce from far-to-fork. There is also need to invest in agri-logistics infrastructure closer to the ports so that in the case of export opportunities, precious time is not lost in intra country movement of commodities.

If agri infrastructure is important for cereals, it is critical for the perishables sector – especially in trade of fruits and vegetables, where losses are at least 50% higher due to their shorter saleable life. This subject immediately draws attention to available cold storage capacity. Contrary to common perception, the gap between the cold storage requirement in India and the capacity already created in the country is not that large. What is most worrying, is the shortfall in the other infrastructure items that are integral to cold chain. The country is wide off mark, in the requirement and availability of pack-houses at village level and cold-chain transport modes. This results in a debilitating hiatus, in cold-chain handling, between point of harvest and storage at consumption end. As frequently pointed out by myself when heading the National Centre for Cold-chain Development (NCCD), these pack-houses are the first stage interventions for extending the holding life of most perishable commodity, and for the subsequent productive use of cold-chain as a market link.

These village located pack-houses are not equally capital intensive, as cold stores, and can be designed and constructed locally. Attached to these would be almost an equal number of reefer vehicles to complete the farm-to-market logistics connectivity. Such integrated logistics networks will empower access to more markets, improve food supply systems and provide the appropriate commercial motivation to produce more. The establishment of a network of these pack houses can actually set in motion a 'virtuous cycle': there will be a manifold increase in near farm jobs and entrepreneurship opportunities in the tertiary sector. The consequence of cross-regional market connection through cold-chain, would be inherent impetus in farm-level productivity, to produce more efficiently for optimising on their earnings.

In this context, the National Agriculture Market, can play a stellar role. When price discovery and marketing opportunities have a pan India dimension, it will have an even greater impact on farmer's incomes. The Internet and the mobile have opened several new options - at least information on demand, quality and associated price can be made available on tap, and virtually free. The market signals from across the country just need to be met with matching agri-logistics.
Productivity must follow demand, if it is to be meaningful for farmers and country!
Before closing, it is reiterated that while productivity gains cannot be placed on the back-burner, they must be applied holistically, in context of physical market connectivity.

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