18

Agriculture Policy

K. P. Mani

18.1 Introduction

Even though the share of agriculture in the Gross Domestic Product of India has declined from half, at the time of independence, to less than one-fifth, currently, agriculture remains to be the predominant sector in terms of employment and livelihood with more than half of India’s work force engaged in it as the principal occupation. Agriculture still contributes significantly to the export earnings, and is an important source of raw materials as well as demand for many industries. During the last two decades, the Indian agriculture has experienced a number of severe challenges. The important among them are listed below.

1. The slowdown of growth.
2. The unscientific shifts in the cropping pattern.
3. The problem of food security as a result of shifts in the cropping pattern, and the failure of Public Distribution System (PDS).
4. Very low rate of processing and value addition.
5. The problems in maintaining international quality standards.
6. The widening economic disparities between the irrigated and the rain-fed areas.
7. The increased vulnerability and volatility in the agriculture commodity prices.
8. The uneven and slow development of technology.
9. A wide gap between technology and farming practices.
10. The unscientific and inefficient use of inputs.
11. Lack of adequate incentives and appropriate institutions.
12. The degradation of natural resource base.
13. The rapid and widespread decline in groundwater table, with particularly adverse impact on the small and marginal farmers.
14. The increased demand for agricultural land, for non-agricultural use.
15. The rapid urbanization and the consequent diversion of land for other purposes.
16. Very slow rate of capital formation.
17. The limited interest from the public sector.
18. The limited integration with global markets and trends.
19. The weak implementation of policies.
20. The absence of a vision.

Thus, the challenges before the policy makers are multifold. The formulation of a suitable and competent agriculture policy is also multidimensional. It should broadly cover the following strategies:

1. The agriculture price policies.
2. The international trade and exchange rate adjustment policies.
3. The fiscal and monetary policies.
4. The institutional reforms.

Various dimensions of these policies are touched upon in the appropriate chapters. However, a summary of the policy measures is attempted below.

18.2 Trends in Area, Production and Yield of Crops

Growth in the production of agricultural crops depends on acreage and yield. Limitations in the expansion of the agricultural land suggest that an increase in gross area can come from multiple cropping. In view of this, the main source of long-term output growth is improvement in the yield. Low yield, a decline in yield and fluctuations in yield are the serious concerns in this context. Except for a few crops, the yield is low or is coming down. This raises a very important policy question—What is the impact of technology on the yield? Evidences suggest that, in the case of many crops, there is negative correlation between the use of technology and the yield. There are different explanations for this, based on technology and on the theories of agricultural science. One explanation is the selection of the crop, and also the agro-climatic suitability of the area cultivated. Many farmers are concerned about the profitability from the output, without bothering about the agro-climatic conditions. One policy suggestion is to make the selection of the crop based on the agro-climatic conditions or, what is precisely called, agro-climatic zones (ACZ). Now we have a narrower version of what is termed as ‘precision farming’. Precision farming is closely associated to the soil conditions, the extent of rainfall, the type of climate, the relative price of agricultural commodities, size of the farms, the availability of inputs, the demand conditions, the system of land holdings, the trade policy, the government policy and a host of other factors. The concept of precision faming can be associated to decentralize planning also. So what we need is an agricultural production strategy, at the village or the panchayat level.

Another related issue in the recent years is the preference for cash/commercial/ plantation crops. Farmers prefer such crops considering the quick profit from it. One of the states in the country where this trend is very clear is Kerala. Here the area under food crops is only around 16 per cent. This shift in trend raises two policy questions (1) What about the demand for these commercial crops? (2) What about the problem of food security? These two questions can be properly answered only with the appropriate strategies. A demand for cash/commercial/plantation crops can be generated, only if there is adequate processing and value addition. It is a fact that a reduction of area under food crops will aggregate the food security problem, which is discussed in detail below.

18.2.1 Food Management

The food management in India has three basic objectives: (1) the procurement of food grains from farmers at remunerative prices, (2) the distribution of food grains to the consumers, particularly the vulnerable sections of the society at affordable prices and (3) the maintenance of food buffers for food security and price stability. The instruments for food management are the Minimum Support Price (MSP) and the Central Issue Price (CIP). The current and appropriate policy framework is giving incentive to farmers by ensuring fair value for their produce. This is achieved through the MSP mechanism, the distribution of food grains at subsidized rates to 6.52 crore BPL families, covering all households at the risk of hunger under Antyodaya Anna Yojana (AAY), establishing grain banks in the chronically food scarce areas and strengthening the PDS.

18.2.2 Procurement of Food Grains

Table 18.1 shows the overall procurement of rice and wheat, the predominant cereals, which reached 42.4 million tonnes in 2005–06, declined to 35.8 million tonnes in 2006–07 and marginally improved to 37.4 million tonnes in 2007–08. The decline in wheat procurement is due to a fall in the production of wheat, lower market arrivals, high market prices, negative market sentiments and bulk purchase by the private traders. A marginal increase in 2007–08 is due to an increase in the MSP. To make the procurement more efficient, the Government of India launched a strategy known as Decentralized Procurement Scheme (DPS) from 1997 onwards. The DPS is in operation in 10 states, namely, West Bengal, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Uttarakhand, Gujarat, Odisha, Tamil Nadu, Karnataka and Kerala. Under this scheme, the designated states procure, store and issue food grains under the Targeted Public Distribution System (TPDS) and the welfare schemes of the Government of India. The difference between the economic cost fixed for the state government and the central government is the issue price, passed on to the state government as subsidy. This scheme has the objective of covering more farmers under the MSP operations, improving efficiency of the PDS, providing food grain varieties more suited to local taste and reducing the transportation costs. The states under this scheme have shown a healthy increase in procurement in paddy. Thus we may observe that the MSP is an important determinant of procurement.

18.2.3 Food Subsidy

Provision of minimum nutritional support to the poor, through subsidized food grains and ensuring price stability in different states, are the twin objectives of the food security system. In fulfilling its obligation towards distributive justice, the government incurs food subsidies. The food subsidy provided to the Food Corporation of India and the states/union territories has shown an annual increase of above 30 per cent, during each of the three years, namely, 2000–01, 2001–02 and 2002–03. The same trend is noticed in 2007–08 (Table 18.2). The total amount of subsidy has continued to rise at the national level. The ratio of the percentage allocation of subsidies, as given by the off take of food grains under the TPDS and the proportion of people below poverty line, is less than one for many of the poorer states.

TABLE 18.1 Procurement and Off-take of Wheat and Rice Under the Central Pool (Million Tonnes)

TABLE 18.2 Growth of Food Subsidies in India (Rupees in Crore)

18.3 Agriculture Price Policy

The most crucial policy variable in agriculture planning is the commodity prices. The price policy is a deliberate move to influence the working of the autonomous forces of demand and supply. Considering the complexities of farm products, the government can not just remain a silent spectator to the interplay of economic forces or manipulations, made by the intermediaries. Thus, interventions are justified on the grounds of income parity, the optimum resource allocation and minimizing the price-induced uncertainty. The main objectives of the agricultural price policy in India are the following:

1. Ensuring a price level for the important commodities which would cover the cost of production.
2. Containing the prices of inputs used in agriculture, by subsidies or price controls, to ensure reasonable terms of trade between agricultural inputs and output.
3. Containing the issue prices of agricultural commodities, lest they adversely affect the cost of living of the vulnerable sections.

The agricultural price policy and institutions to implement these policies have evolved in India, with an implicit understanding that the state has to ensure food security for the population by:

• stimulating the domestic food production, and
• restraining the price rise in the basic commodities.

This approach, which began during the World War II, was endorsed by the numerous committees and commissions that had been asked to evaluate the food policy. Till the mid-1950s, the prices ruled high. The emphasis during that period was on restraining food grain prices. The procurement and distribution of major food grains were organized and statutory maximum prices were set, though not strictly endorsed. The minimum prices were announced for wheat, jowar, rice and maize in 1954–55, when prices started falling sharply. A comprehensive price policy, together with its institutional framework, was given a concrete shape on the basis of the recommendations of the Food Grain Prices Committee (Jha Committee) in 1964.

India’s agricultural price policy revolves round four main policy instruments, namely, the input subsidies, the MSPs, the procurement prices and the issue prices. Other policy instruments, particularly the macro-policy instruments, like trade policy and exchange rates, are not synchronized to sub serve the objectives of the agricultural price policy. Direct interventions like rationing, price control and compulsory deliveries to public institutions, though introduced occasionally, are not the regular features of the price policy. We have already discussed the recent procurement policy. Now let us examine the recent patterns in the agricultural prices.

From Table 18.3, the recent trends in MSP and CIP are clear. In the case of wheat, the MSP made an increase from Rs 630 per quintal to Rs 1000 per quintal over a period of five years, the per cent increase being 58.73. In the case of paddy, the rise in MSP during the period 2004–2009 is only 48.21 per cent. Also, while we compare this price with the trends in inflation, it is evident that the increase is not sufficient to offshoot the inflationary trends. In other words, the farmers are not getting remunerative price. Another aspect of the price policy is the integration of the domestic price with the international price. This is more relevant today in the context of globalization. The following are some of the consequences of agricultural price policy.

TABLE 18.3 Trends in Minimum Support Price and Central Issue Price (Rs/Quintal)

1. One of the important objectives of the price policy is price stabilization. After starting the policy of MSP, the farmers are confident of getting fair prices. This confidence reduced their uncertainty and fear. Further, in recent years, commodity future trading has started in the agricultural commodities. Because of the contracts in future trading, the element of uncertainty is also reduced. Thus, regulated prices in the agricultural commodities are a real support to the farmers. However, at the same time, concern is expressed about who enjoys the benefit. For instance, in the case of future trading, the intermediaries, who are not farmers and involve in the contracts, enjoy the benefits which would have gone to the real or true farmers. The hike in procurement prices is likely to create an inflationary pressure also.
2. The procurement prices are more related to crops like wheat and paddy. The main states where wheat is cultivated are Punjab and Haryana, while paddy in Andhra Pradesh. Thus, the benefits of procurement price are mainly limited to these states, leaving a large number of states away from these benefits.
3. One of the problems of all the agricultural strategies in India is it is limited to large farmers only. This is true in the case of price policy also. It may be argued that the government’s open market purchases could have helped small farmers by improving competition vis-à-vis the traders, and hence the price received by farmers, by creating an alternative channel of marketing.
4. As mentioned above, the benefits of high procurement prices are enjoyed by large farmers, who constitute a small share of the Indian farming community. Thus, in the case of marginal and small farmers, they indirectly suffer from the high prices of the agricultural commodities, particularly wheat and paddy. Because of their small size of operation, they do not have any surplus after self-consumption. So, naturally, they cannot enjoy the benefits of the high procurement prices. At the same time, when they make purchases from the open market, they have to pay higher prices for these commodities. Thus, one consequence of procurement price policy is that the poor are more adversely affected. Hence, such policy prescriptions are needed by which the benefits of procurement prices are made available to the marginal and small farmers.
5. As mentioned earlier, agriculture policy is linked to the PDS. There are a large number of limitations for our PDS. Thus, strengthening of PDS from different angles is quite essential for a better agricultural price policy.

In order to meet the basic objectives of equity, productivity and stability, reforms on the following lines are necessary.

• The objectives of the price policy should be carefully defined and its scope delimited.
• The formulation and administration of the price policy should be flexible and discriminatory.
• There should be a much closer coordination among the different types of policy interventions.
• The institutions for formulating and implementing the price policy measures should be further strengthened and reorganized.

The subject of the farm prices is both complicated and sensitive, in view of the farm products forming a part of the daily budget of the people, in general, and a major part of the budget of the poorer sections of the society, in particular. The price management assumes a great significance, not only in the economic sense but also in its serious political implications. The agriculture price policy in India, therefore, has been an important segment of the overall economic policy, in general, and the general price policy, in particular. The actual impact of the price policy on the producers as well the consumers will depend upon the implementation of the policy. In such implementation, the marketing structure and marketing institutions dealing with the sector under consideration at various levels play an important role. The agricultural price policies should be discussed together with the issues and problems of agricultural marketing and trade. The terms of trade are also important, which require a detailed analysis of the agricultural exports and imports, is discussed in Chapter 21.

18.4 Terms of Trade in Agriculture

The terms of trade is the ratio between the export price and the import price. Thus, a detailed calculation is possible only with the use of international and domestic prices and the exchange rates. But some broad trends have emerged. The developed countries account for the bulk of exports and imports in India. Of the developed countries, European Economic Community (EEC) and the United States have a major role. The reform period also shows a greater dependence on these two destinations for the export of India. As compared to the developed countries, the trade with fewer developing countries formed only a meagre amount. As regards imports, there was a decline in the trade with less-developed countries and an increase in trade with OPEC countries, because of a rise in the import of crude oil.

To grow faster and also to compete with the global scenario, the agricultural sector has to be made more export-oriented. Exports should be encouraged more in the value-added and processed form rather than in the raw form because primary commodity prices in the world markets are unstable, and also the non-remunerative terms of trade go against them in such markets. A higher growth in agriculture thus needs a comprehensive revamp of the agriculture policy with a re-orientation towards the rapid diversification of this sector. A progressive correction is required in the incentive structure for agriculture, so that the excessively high MSPs do not continue to distort the resource allocation in agriculture. This will ensure that the farmer’s diversity towards high value-added segments of agriculture, in response to the new demand structure.

18.5 Value Addition and Processing

The exports of agriculture make the direction of terms of trade positive. However, the exports can be promoted only if the Indian agriculture is made globally competitive. One of the parameters in this direction is more processing and value addition. In India, the rate of processing of fruits and vegetables is below 10 per cent, while it is more than 60 per cent in the developed countries. Now, the concepts of processing and value addition are summarized in the term ‘agri business’. Agri business is the off-farm link in agro-food value chains. It provides inputs to the farm sector, and links the farm sector to consumers through the handling, processing, transportation, marketing and distribution of food, and other agricultural products. Thus, there are strong synergies between agri business and the performance of agriculture for development. Dynamic and efficient agri business spurs agricultural growth. A strong link between agri business and small holders can reduce rural poverty.

Agri business comprises of diverse private agro enterprises, a majority of which are small, mostly in the rural markets, and operated by households that often have wage labour and farming as other sources of income. The medium and large enterprises are mainly urban based, because of the requirements for the economies of scale and infrastructure. The large enterprises are often dominated by the multinational corporations that have consolidated through vertical and horizontal integration. In recent years, influenced by the changes in consumer demand and rapid technological institutional innovations, the structure of agri business has changed dramatically, and its performance has been highly dynamic. Promoting competitiveness and enhancing small holder participation are the two priorities of the agriculture for development agenda. These two are complementary also. In the broad framework of agri business, the necessary policy interventions are the following:

1. Make agricultural activities more professional.
2. Establish forward and backward linkages in agriculture.
3. Make post-harvest technology more popular. Even after 60 years of agricultural planning, it depends more on the pre-harvest technology.
4. Make facilities for utilizing the available market surplus.
5. Increase the quantum of processing and value addition.
6. Widen the database of the demand for the processed and value-added products.
7. An expert committee may be appointed to identify the feasible and viable value-added products and projects.
8. Make finance available for starting the processing and value-added units.
9. The government should declare incentives to those entrepreneurs, who undertake processing and value-added products.
10. Food technologists may be recruited for ensuring the quality of the processed and value-added products.
11. Provide storage and warehousing facilities.
12. Launch agro-processing clusters. A group of units producing homogenous products is called a cluster.
13. Promote agriculture industry inter phase.

18.6 Policy Towards Agriculture Inputs

The performance in agriculture is closely associated to the performance in the use of agricultural inputs. An appropriate system of inputs includes technical inputs on one hand and productive inputs like seeds, fertilizers, and pesticides on the other. During the last 40 years, the consumption of fertilizers, tractors, oil engines and irrigation pump sets increased by 130, 100, 55 and 300 times, respectively. The need for the genetically-superior and disease-resistant seeds can hardly be over-emphasized, keeping in view that more than 127 million hectares of land is annually put under food grains, but the share of certified seeds is meagre. Thus, tremendous efforts have to be made if good quality seed is to be guaranteed to the farmers. The present supply is grossly inadequate, keeping in view the national picture. Also, quality seeds are available only at exorbitant prices. The issue of supplying cheap and good quality seeds at the farmer’s doorstep needs serious consideration. At the same time, the preference on the part of the farmers for high yielding seeds is coming down in recent years, because such seeds can be cultivated only if there is an adequate supply of inputs.

But because of the lack of complementarity between the high yielding seeds and other inputs like fertilizers, pesticides and credit, farmer preference for high yielding seeds is coming down.

The issue of supplying cheap and good quality seeds at the farmer’s doorstep, supported with other inputs, needs serious consideration.

It is estimated that, on an average, for every tonne of fertilizer there is an increase of 7 tons of food grains. The consumption of fertilizer per hectare of the cropped area has increased from 5 to 46 kg in 1984–85 and to 98 kg in 2001–02. This trend continued to be more or less the same since 2002. This rate of fertilizer consumption is relatively low, compared to other parts of the world. On the other hand, in certain locations, a negative relation is reported between agricultural production and the use of fertilizers. This is because the farmers are not using the right type of fertilizers. The right type of fertilizers can be used only if the farmers go for soil testing. The percentage of farmers going for soil testing is very low, on an average 10 per cent at the national level. This is an area of policy concern. So the real question is not of fertilizer use, but of the efficiency of fertilizer use.

With the use of intensive agriculture, the use of power has increased. The government promoted a policy of selective mechanization, with a view to increase the efficiency of labour and to popularize multiple cropping, particular in the irrigated areas. In recent years, the Indian farmer has huge investments in the farm machinery, the implements and other related farm structures. Farming has thus become more capital intensive. But, even after becoming capital intensive, the productivity is either stagnant or declining in the case of many crops. This point is raised in the earlier part of the chapter also. One of the probable reasons is again the absence of supporting inputs at the right time, in the right place, and in right quantities. It is also noted that the extent of mechanization is not uniform across the regions and the crops. Changes in the institutional framework for agriculture may reduce this problem.

Another area of concern in the input supply policy is the area under irrigation, and the availability of irrigation facilities. Irrigation is a critical input in agricultural development. In the olden days, it was believed that the Indian agriculture is a gamble on monsoons. Immediately after the Green Revolution, the area under irrigation extensively increased. However, since 1985, there has been a marked stagnancy in the area under irrigation, and Indian agriculture is still a gamble on monsoons. For the last two decades, the government is giving only limited attention for widening the irrigation facilities. One reason pointed out for this trend is the absence of complementarities between public investment and private investment, which is more related to the supply of agricultural credit. There are some changes in the recent months, as a result of the policy changes.

As mentioned, the availability of credit is equally important for agriculture development. The primary agencies for the supply of agriculture credit are the cooperative institutions, the commercial banks and also the regional rural banks. When we examine the trends, composition and challenges of agriculture credit, the following points deserve immediate attention of the policy makers.

1. The cooperative banks are diverting from the agriculture and rural credit. All India Rural Credit Survey Committee in 1954, and the subsequent committees, underlined the role of the cooperatives in promoting rural credit. But recent trends indicate that those institutions go for quick yielding and profitable ventures.
2. In absolute terms, the volume of credit disbursed by the commercial banks is increasing. But when we calculate the per branch credit for agriculture, it is coming down, which raises concerns about the role of commercial banks in raising the agriculture credit.
3. Whatever the amount of agriculture credit disbursed by the commercial banks, a large number of accounts are in the form of gold loans for agriculture purposes.
4. The quantity of credit received by the farmers is found to be insufficient mainly due to inadequate scale of finance. The scale of finance is calculated on the basis of the cost of cultivation. The cost of cultivation is linked to the package of practices used in different states. In many instances, this is found to be much below compared to the actual cost of cultivation.
5. The share of agriculture and rural development banks, started exclusively for promoting long-term agriculture credit, is also not encouraging.
6. Of the total agriculture loans disbursed by all the institutional agencies, about 80 per cent went for short-term purposes. Thus the share of long-term credit is just 20 per cent. This raises another debate in the agriculture credit, popularly known as capital formation in agriculture. Capital formation is quite essential for developing agriculture infrastructure, and resultantly sustainable agriculture. In short, it is high time to revamp the agriculture credit policies.

Another input recently introduced is training. Training input helps quality control, grading, standardization and information. One of the policy instruments to compete in the global market is developing a well developed information system. Right information to the farmers, at the right time, will help them to decide their planning and harvesting strategies.

The performance of agriculture sector lags not only because of problems with production and yield, but also with the input management. The situation can be improved with the help of appropriate policy interventions.

18.6.1 Institutional Reforms and Policies

The agricultural price policy generally involves widely divided responsibilities among the ministries and other institutions. The discharge of these responsibilities must rest on adequate arrangements for the coordination of the distinct but interrelated activities, if policy coherence and effectiveness are to be attained. The institutional reforms play a very crucial role in agriculture development. One such policy instrument is land reforms. Land reform measures abolish the intermediary interests in land, thus eliminating exploitation. Further, the land reforms make tenants the land owners, in which they cultivate. Another related policy intervention is cooperative farming and group farming. In all these cases, the total land area becomes widened, and thus becomes suitable for the use of modern agricultural practices. One of the recent developments in this context is ‘producer companies’. The strict implementation of the land reforms through policy interventions will promote agriculture development. Another institutional intervention is the decentralized planning and also the local level planning. India entered into an era of local governance and planning in 1993. One of the policy interventions in this local planning is the preparation of plans for a local area, like a panchayat or village. This concept, a component of micro-level planning, is relevant and useful in agriculture development. As mentioned earlier, the selection of the crop should be based on agro-climatic conditions or, more precisely, ‘precision planning’. Precision planning gives an opportunity to the people to involve in the planning process, and thus promote local agriculture development. Other institutional reforms are as follows.

Improved inter-institutional relations: There are a host of agencies involved in agriculture development. For instance, there are multiple agencies involved in the disbursement of agriculture credit. This, sometimes lead to the problem of duplication of the credit disbursement. Similarly, the production relations pass through a large number of agencies. If these agencies are not integrated, duplication as well interdepartmental problems may arise.

Another institutional intervention suggested is the efficient use of the existing infrastructure and also developing new infrastructure. Infrastructure is very important for sustainable agriculture. One of the important requirements for developing infrastructure is capital formation, and also a vision based on scientific rationale and not on sentiments, emotions or political interests.

Parastatals play a very important role in promoting agriculture. However, the Acts of many parastatals are outdated. For instance, the Rubber Board functions are based on Rubber Act 1948, which is under restructuring now. So, if India wants to compete with the global changes, institutional reforms are unavoidable. Thus policy changes are needed in a direction, which is slowly coming up for the last four or five years. The institutional reforms will be relevant and effective, only if they are supplemented by fiscal and monetary policies.

18.6.2 Fiscal and Monetary Policies

1. Carefully consider the alternative measures, analysing the possible impacts on setting priorities like reducing general subsidies, reducing export taxes, altering value-added tax, raising land tax and so on.
2. Emphasize productive/supervised credit to ensure productivity.
3. Critically review public enterprises involved in agriculture and related activities.
4. Release funds for investment to stimulate economic growth.
5. Formulate plans for investment rationalization.
6. Identify appropriate agriculture projects for implementation. This should cover projects linked to production, processing and value addition.
7. Promote the private sector, and strengthen the complementarity between the public and the private sectors.
8. Rationalize the input subsidies.
9. Conduct intensive and well prepared training programmes and incentives, to increase skills and capabilities.
10. Plan disbursement of more credit to the agriculture sector.
11. Develop a strong database. Compared to many other sectors, the database is very strong in agriculture. But considering the present need of decentralized agriculture development, the government has to do much more.

Now let us examine what are the constraints which restrict or bring conflicts in the formulation of a suitable agriculture policy.

1. There is no guarantee that an increased price will lead to an increased production and consequently sustained development. Further, even if all the farmers shift towards a particular crop because of expected higher price in future, in the long run, it will bring down the price because of excess supply.
2. Increase in the input prices may reduce production.
3. On exposing the economy to the world market prices—(a) world market prices could be distorted, (b) severe fluctuations are frequently observed in the world market prices and (c) there could be some other obstacles to trade.
4. Imperfections in the marketing chains.
5. Imperfections in the factor chains.
6. Domestic relative prices could be significantly different from the international prices, leading to misallocation of resources and usually discrimination against agricultural exports.

18.7 Challenges Ahead

1. Strengthening R&D: The Indian agriculture R&D consists of 48 central institutes, 5 national bureau, 12 project directorates, 32 national research centres, a large number of stated-owned agriculture universities and 62 all India coordinated research projects. These agencies have been doing commendable work over the years. However, there are still a few research gaps which need immediate attention. The following are the critical research gaps.
   1. Integrating methods of traditional and modern biology that give attention to both the yield and the quality aspects.
   2. An orientation of public sector research in hybrid development with commercial viability has to be re-introduced on a mission mode, at least in crops like pigeon pea, soybean and mustard.
   3. The implications of climate change on agriculture and vice versa need to be studied.
   4. With large quantities of animal products now being produced, research on the process technologies, value addition, packaging, storage, transportation and marketing should receive high priority.
   5. There is a need to identify the integrated farming systems in different agro-climatic regions, which internalize synergies of different components to enhance resource utilization, income and livelihood generation, and minimize environmental problems.
   6. Finally, a major paradigm shift is needed to transform the present commodity-based research to a systems approach. Since farm level problems are specific to ACZ, what is needed is a convergence between R&D agencies within individual ACZs so as to bring region specificity in technologies and their time-bound assessment.
2. Role of extension: From days immemorial, extension played a very important role in promoting agriculture. One of the primary responsibilities of the extension system is to make the farmers aware about the agricultural practices, and also educate them to implement that knowledge. The public extension system has a key role in educating farmers and helping them to take the right decisions. In this context, it is to be noted that extension should be treated as a service delivery mechanism, and not to be viewed as a revenue generating programme. If the extensive service is properly functioned and utilized, a good amount of farmer inhibitions can be minimized.
3. Prioritization to horticulture sector: While the earlier five year plans assigned priority to achieving self sufficiency in the food grain production, over the years, horticulture has emerged as an indispensable part of agriculture, offering a wide range of choice to the farmers for crop diversification. It also provides ample opportunities to sustain a large number of agro industries, which generate substantial employment opportunities. The development of horticulture promotes processing and value addition also.
4. Promote rain-fed regions: Rain-fed areas, accounting for nearly 60 per cent of the cultivated area, had not received the differentiated technological, institutional, infrastructural and investment support. A majority of rural poor people and marginal farmers cultivate in the rain-fed areas. Poor people in the areas also suffer from various exploitative social practices, and the poor quality of service delivery. Droughts and water scarcity are the major problems faced by the cultivators. Thus, the challenge is to improve their livelihood through water development projects and other integrated farming methods.
5. Homestead farming: Another area where policy interventions are needed is homestead farming. Because of the changes in attitude and also of the increased rate of urbanization, the pressure on land increases. When land is scarce and the people are busy, the best method of farming operations is homestead farming. This idea can support the strategy of decentralized agriculture growth.
6. Reorienting agrarian relations: Land is the prime resource of a majority of the poor in India deriving livelihood from agriculture. The land administration is plagued by many infirmities. Unclear titles, informal tenancy arrangements and other related problems have not only affected the productivity of agriculture, but have also forced the migration of people, both landless and marginal farmers, in search of employment, to urban areas as well as of the landed gentry. This has also given rise to absentee landlordism, in which landlords do not lease out land for the fear of losing the land titles. Therefore, an efficient and corruption free land administration, coupled with a dynamically adaptive land policy, has a vital role in increasing agriculture growth and poverty reduction. The key elements of an effective land policy are the following.
   1. Modernization of management of land records
   2. Reforms relating to land ceiling
   3. Security of homestead rights
   4. Reforms relating to tenancy laws
   5. Protection of the rights in land of tribals
   6. Access to agricultural services
7. Micro finance and agriculture: Another new entrant is the concept of micro finance and Self Help Groups (SHG). This concept accommodates the agricultural operations. The groups can undertake production, processing, value addition and marketing activities. The policy measures and support will definitely enhance the role of micro finance and SHG.
8. Allied sector activities: Agriculture sector broadly covers, along with agriculture, forestry, fisheries, livestock and other similar activities. The prosperity in these sectors will definitely promote and contribute to the agriculture sector in total. There is enough potential for processing and value addition in these sectors.

The discussion on the agriculture policy will be incomplete unless we touch up on the National Policy for Farmers (NPF), 2007. Based on the recommendations of the National Commission on Farmers, and in consultation with the concerned central ministries and the states, the government of India has adopted the NPF, 2007. Major policy provisions include provisions for asset reforms, water use efficiency, use of technology and inputs services like soil health, good quality seeds, disease-free planting materials, support services for women, credit, insurance, etc. Provisions have also been made for the National Agriculture Biosecurity System, setting up of farm schools in the fields of outstanding farmers to promote farmer-to-farmer learning and to strengthen extension services and expand the food security basket to include nutritious crops like bajra, jowar, ragi and millets, mostly grown in the dryland areas. A comprehensive National Social Security Scheme for the farmers for ensuring livelihood security, by taking care of the insurance needs on account of illness and old age is also included.

Agriculture is the back bone of the Indian economy and it continues to be. But there are structural changes now compared to the pre-reforms period. Thus priorities are to be retuned and policy measures to be strengthened and declared, to make the Indian agriculture globally competitive.

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