5 steps to boost Indian agriculture

The Confederation of Indian Industry is bullish on the Indian agriculture and feels the sector can lift its growth rate above the last ten years' average of 2 per cent.

The industry body has also scripted a five-point agri-reforms agenda to boost Indian agriculture and attract private investment in to the sector.

"Indian agriculture is bouncing back. It is scripting its own success story, thanks to rising private investment, which will lead to a faster growth. Faster growth in agriculture tomorrow will happen because of rising private investment in agriculture today," says Y C Deveshwar, Chairman, CII's Agriculture Council, and Chairman, ITC.

The CII, however, cautions that it is unrealistic to expect a repeat of last year's double-digit growth in agriculture, despite the forecast of a normal monsoon. But CII is of the view that in the coming years, Indian agriculture will grow faster than before.

CII's optimism stems from the fact that across India, agribusiness companies are developing new models to reach out to farmers and consumers, providing new technologies, investing more in modern supply chains and in organized food retailing that sells more and more processed food.

According to CII, the surge in private investment is due to increased demand for food and other agricultural commodities. With the income level rising, demand for milk, meat or fish, fruits and vegetables is also increasing. With more urbanisation, Indian families also consume more processed foods, more ready-to-eat foods, etc, says CII. India is becoming a medium-sized agricultural exporter, selling tea, fish, spices and now rice and wheat to foreign countries.

According to CII, smart businesses have realized that it is a growing opportunity to be present in any part of the agricultural value chain, which has led to more investment not only by big companies but even by first-generation entrepreneurs.

Improved rural infrastructure is also playing a key role behind the agri sector's comeback trail. With better rural infrastructure, is comparatively easier and cost-effective to bring farm produce to the market. Better rural roads, more godowns and cold storages, improving rural electricity supply, will all result in faster growth in agriculture, says CII.

According to CII, Indian farmers are learning to take on the challenge of producing better quality produce at internationally competitive prices. They are willing to use new technologies, and become organized.

CII's confidence in India's agriculture stems from the fact that specific commitments are made in the manifestos of the main parties. Significant importance has been given to reforms in agriculture.

CII, however, points out that Indian agriculture still suffers from:

Poor productivity.
Falling water levels.
Expensive credit.
A distorted market.
Many intermediaries who increase cost but do not add much value.
Laws that stifle private investment.
Controlled prices.
Poor infrastructure.
Produce that does not meet international standards.
Inappropriate research.
Tax evasion by unorganised sector leading to the lack of a level playing field.

All these hamper the farmers and the Industry. In addition, agriculture is a state subject, and most states have little funds to invest in agriculture development. According to CII, if these problems are removed, India can become the 'food factory of the world.'

CII believes that agricultural reforms and increased private investment must, benefit farmers, especially small farmers. CII is of the opinion that farmers would benefit by greater corporate investment in agriculture, especially in three areas: getting competitive sources of finance; getting competitive markets to sell to; and getting competitive suppliers of knowledge.

'The Indian Farmers and Industry Alliance' that the CII has set up to bring companies and farm leaders together is only the first step to greater cooperation between these two natural allies. This development was a significant step towards bringing the farmers and corporate sector together, says CII.

According to CII, agriculture in 2004 is like industry was in 1991. The private sector was awaiting policy reforms that would allow it to make much larger investments in this sector.

CII's five main agri-reform agenda includes:

Give States an incentive to amend the APMC act and abolish mandi taxes. This would allow competitive markets to develop; farmers and processors will both gain.
Support the organised private sector in increasing its spending on extension and technology transfer. This would give farmers the knowledge of what to grow, and how to grow so that stringent quality norms are met.
Implement the Unified Food Law, and back it up with lowering the total tax burden on processed foods so that the sector picks up, and consequently demand for farm produce rises.
Target foreign buyers of high-value ethnic Indian foods, as opposed to commodity exports-starting with the large NRI population of 20 million, which can be a huge market.
Create a viable model of public-private partnership that allows private investors to invest in agriculture infrastructure in partnership with banks and financial institutions.

According to CII, the problems in Indian agriculture are well known; the many successes that have been achieved across different sectors were not so well known.

Deveshwar says CII will hold 'The Agriculture Summit 2004' at Jaipur on May 11 and 12. This CII flagship conference would showcase these success stories with the idea of 'learning from what works'.

The summit will see the industry, the farmers, the policy makers, financial institutions and commodity exchanges come together and brainstorm with the policy makers, to push reforms in the agri sector.

The CII Agri Summit would be inaugurated by Vasundhara Raje, Chief Minister, Rajasthan, and would also be addressed by K C Pant, Deputy Chairman of the Planning Commission.

The summit will highlight and discuss several policy issues and other issues, including: