The central government's push for reforms in the farming sector is aimed at farmer producer organisations (FPOs) and self-help groups (SHGs). Investments in this sector will be useful for strengthening the agriculture supply chains, creating better market linkages by bringing together buyers and sellers and bringing in the transformation of agriculture from subsistence to a more commercially oriented profession, says Ajay Kakra, Leader Food and Agriculture, PwC India.
Do you think that the Central Government's aggressive reforms push in the farming sector has come at an opportune time?
We know that the Central Government's push towards the farm bill is an effort to bring in reforms in the agricultural sector and address some of the pressing issues in the sector. The reforms could have been brought in two-three years earlier when the agricultural system was not impacted by the COVID-19 pandemic. In that case, there would be more clarity and most state governments would have adopted the system by now. More importantly, we could see better adoption of the new system by the farmers and warehouse owners.
Some experts compare the reforms to the opening up of the Indian economy in 1991 under the PV Narasimha Rao government. What is your take on this?
The reforms need to be looked at in the context of the economy and sector. There are many long-overdue reforms in the agriculture sector. Both 1991 and 2020 reforms should be viewed with a lens of the sustained commitment of the government towards the sector. The 2020 reforms were preceded with a long list of support to the agriculture sector that included insurance, irrigation, the inclusion of allied sectors like fisheries, beekeeping into the mainstream, bank loans, startup ecosystem, farmer producer companies and many more. Therefore, in my view, this is a strong signal for sector development. The reforms are more of structural changes that support the long-term development of the agriculture sector.
How will private and foreign investments in the agriculture sector serve to improve agriculture infrastructure and, in turn, benefit farmers?
The commitment of the private sector in agriculture infrastructure is a slow process guided by multiple factors such as ensuring procurement quantity, raw material quality, easier aggregation of raw material, faster settlement of the transaction and other factors. However, an essential pre-requirement for such investment by the private sector is sufficient confidence in the investment environment and robust industry ecosystem.
These investments will be useful for strengthening the agriculture supply chains, creating better market linkages by bringing together buyers and sellers and bringing in the transformation of agriculture from subsistence to a more commercially oriented profession. This will also lead to the development of support services such as logistics, warehouses, digital marketing, crop advisory, technology adoption, extension service, etc., which are building blocks for a robust agricultural ecosystem.
In your opinion, what should be the priority areas as far as the ramping up of agriculture infrastructure is concerned?
Agri infrastructure is directly linked to supporting operations across crop value chains. It has an important role in facilitating the operations and bringing efficiencies for a profitable business.
A correct assessment of infrastructure needs to be made before these investments are made. Usually, there is an overestimation of required infrastructure and the capacities which lead to underutilisation of installed infrastructure. Further, since agricultural commodities are seasonal, the infrastructure goes through a lean period during the offseason, which brings down the commercial viability of such installations.
Locational feasibility is also an important criterion for developing infrastructure. A lot of agriculture infrastructure projects were made redundant due to the wrong locations where it was developed. While there are other factors, these could be some of the key factors for ramping up the agriculture infrastructure.
To what extent will the proposed facilitation of Rs 1 trillion in funding for infrastructure projects at farm-gate and aggregation points, and Rs 100 billion scheme for the formalisation of micro food enterprises (MFEs) help?
The micro food enterprises (MFE) scheme is aimed at supporting farmer producer organisations (FPOs) and self-help groups (SHGs) in achieving sustainability and viability for the micro-operations. The interventions aim at facilitating finance requirements, branding, marketing, backward and forward linkages and other areas. It also focuses on empowering women entrepreneurs and promoting waste-to-wealth activities across the value chain.
The farm gate infrastructure aims at creating a common infrastructure for facilitating smallholder farmers for regular farm operations and creating efficiencies across these operations. It also aims to ease post-harvest operations and reduce inefficiencies, which lead to product wastages and product quality deterioration.
Will the reforms also help hasten the adoption of the latest technologies in the sector? The promotion of contract farming will induce a lot of technology inputs from private sector companies. The government needs to further facilitate the promotion and incentivisation of contract farming for both farmers and private players. Further, the opening up of commodity sales from outside agriculture produce marketing committees (APMCs) will require increased usage of digital technologies for creating awareness among farmers, dissemination of crop information and creation of platforms for facilitating buying and selling of commodities in a secure and transparent environment. It may also cascade down to providing services on crop advisory and predictive analysis of the crop yields.