Farm Productivity is Not an End in Itself

By Pawanexh Kohli

One heard at a recent lecture, the expert recommended that the country 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 by itself is not a 'silver bullet', and except at individual enterprise level, such focus is in many ways contraindicated.

Production and income paradox

India produces more than enough food to feed herself, and farmers' income growth no longer depends on how much he/she produces. Today, when farmers produce a bumper harvest, the prices crash, and when the food prices respond positively to the 'demand curve', the consumer affairs ministry 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. 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 the route between farms and markets, detracting from availability and feeding inflationary swings. Markets seem inaccessible with real demand not being suitably communicated or connected with.

Focus on system wide productivity

Efforts to produce more by ramping up farm level productivity ought to be on basis of market signals - either domestic or the global markets! Farm-level productivity improvements can offer an incremental gain but risks higher losses if the output does not have an equal enhancement in market access. Productivity at one end of the supply chain, if it results in losses elsewhere, is wasteful productivity.

So, where should future interventions be focused? In the first instance, production 'losses' need to be minimized. Focus on minimizing losses in the supply chain, will lead to better inventory management and improved logistics at all levels. 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 system-wide, encapsulating the supply chain.

Focus on demand linked production

Second, we must focus on real demand from consumers and promote the production of how the markets develop. Today, 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 specialized post-production handling with associated market linkages. Market linkages will also benefit in increasing trade, including globally, in the surpluses in other crops types

The farmers’ income is actually more intrinsically linked with the institutional arrangements for marketing. These need to be architected to allow farmers to capture value from every grain, every ounce or every drop produced. However, in the current network, they are mere platforms to make an exchange at locally derived prices, rather than to serve as a conduit to the optimal value.

Importance of agri-logistics infrastructure

Over the next decade, the focus should be on 'agri-logistics infrastructure', preferably in the PPP mode or by supporting the private sector, so that sustainable revenue models are 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 backward from 'fork-to-farm', such that market value will direct a targeted flow of goods from 'farm-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.

A study conducted by National Centre for Cold-chain Development indicates that the gap in storage is currently only about a million tonnes. If one went by the 'functional' as against installed capacity, the gap is a little higher, but the country has sufficient resources and storage capacities to meet immediate requirements. What is more 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 NCCD and assessed in this same study, India needs to develop thousands of modern pack-houses; as first points for extending the holding life of the perishable commodity, and for subsequent productive use of available storage.

These pack-houses can be designed and constructed locally. Attached to these would be twice as many reefer vehicles to complete the farm-to-market logistics connectivity. Such an integrated logistics networks will empower access to more markets, improve the food supply system and provide appropriate commercial motivation to produce more. The establishment of a network of these pack-houses can actually set in motion a 'virtuous cycle': with an associated manifold increase in near farm jobs and entrepreneurship opportunities in the tertiary sector.

Productivity gains can be safely linked to cost savings, but when aimed for higher production, the benefit is dependent to equally enhanced market linkages. In this context, the National Agriculture Market, will also play a stellar role, especially when price discovery and market opportunities get a pan India dimension – this aspect will have an even greater impact on farmer's incomes. The internet and the mobile have opened new options - at least information on demand, quality and associated price can be made available on tap, and virtually free. All that will remain is following the information flow with delivery systems.

In closing, it is reiterated that while yield enhancement cannot be placed on the back-burner, they must be done holistically, in context of physical market connectivity. Higher productivity for higher production must follow demand, if it is to be meaningful for farmers, ecology and environment!