What can the budget do for agriculture

It will also need to change farming practices to ensure soils have enough organic carbon and retain more moisture. While the recently launched Natural Farming Mission aims to promote sustainable agriculture, it cannot feed the growing population of India, which is likely to touch 1.67 billion by 2050. Nourishing soils through appropriate fertilisation, be it through biofertilisers or chemical fertilisers, is critical. But fertilisers have to be applied in the right quantities, with the right balance of macronutrients like nitrogen (N), phosphate (P), and potash (K) as well as micronutrients like iron, zinc, boron, etc. The current fertiliser subsidy policy does not promote the right usage of fertilisers. Urea is massively subsidised compared to other nutrients, leading to overuse of N and underuse of P, K, and other micronutrients. Technological innovations and products such as nano-urea and nano-DAP, or Single or Triple Superphosphates, etc, have limited penetration in the backdrop of the highly skewed subsidy policy in favour of granular urea. If the Narendra Modi government can set this right — it can, no doubt, be done — then that will be a big service to our farmers and soils.

There is ample data on fertiliser sales, soil health cards, PM-KISAN, etc to pull all these together and do direct income transfer on a per-hectare basis. This would allow freeing prices of fertilisers from controls, will help restore the N, P and K balance, as also of micronutrients. It will plug leakages of urea, improve nutrient use efficiency, and reduce environmental damage. It is a win-win situation, provided our political leaders are able to communicate this with our farmers and earn their trust. The time to do it is now.

But agriculture today is not just the production basket. It has to be treated as a food system, from production to marketing to consumption. It should ensure the food and nutritional security of people and also augment farmers’ incomes. Building value chains of agri-commodities on the lines of milk, where farmers get 75 to 80 per cent of what the consumer pays, is the way to go. The starting point has to be fruits and vegetables, where typically the farmer gets only one-third of what the consumer pays.

Milk is our largest agri-commodity, the value of which exceeds the value of rice, wheat, all pulses, and sugarcane put together. It is even more perishable than most of the other agri-commodities and is produced by smallholders with an average herd size of less than four cattle. If we have revolutionised our milk sector through cooperatives as well as private sector dairies — making India stand tall in the world with 239 million tonnes of production, leading by far the second largest producer US at 103 million tonnes — why can’t we do the similar magic for fruits and vegetables? Baby steps were taken in “Operation Green” by the government, but there was no committed caretaker to lead that. We need another Kurien to streamline our fruits and veggies sector. Creating a separate board on the lines of NDDB, with a Kurien-like person to head it, will help the government to bring about revolutionary changes in fruits and vegetables.

Else, we are afraid, we will keep faltering in trying to control veggie inflation by banning exports of onions at the drop of a hat, or banning exports of wheat and sugar, and restricting exports of rice, and then dumping wheat and rice in the domestic market at prices way below the economic cost of the Food Corporation of India (FCI). Note that the economic cost of rice to FCI is more than Rs 39/kg and it is unloading it in the open market at Rs 29/kg. This is dumping by our own government. The same is the case with wheat. This must stop. It is anti-farmer, anti-markets, anti-any rational policy. It only reflects the pro-consumer bias in India’s food policy.

Such export controls and anti-market policies inflict a large “implicit tax” on farmers, despite significant budgetary support through fertiliser and other subsidies, including loan waivers. In this context, it is useful to look at the OECD’s producer support estimates (PSEs) that it generates for more than 50 major countries in the world. They adopt a common methodological framework to estimate the impact of various agricultural policies, mainly budgetary support and market price support. The comparative results may shock some policymakers in India. For the triennium ending 2023, OECD countries supported their agriculture to the tune of about 14 per cent of gross farm receipts (PSE 13.8 per cent). Interestingly, China also supports its agriculture to the tune of 14 per cent (PSE 14 per cent), while India’s PSE is negative (-) 15.5 per cent. That happens due to the negative market price support that results from export controls, dumping in the domestic market to push prices down, putting stocking limits on private trade, banning futures markets, and so on. Unless agriculture policies try to get the agri-markets right, Indian agriculture will keep limping and our farmers will keep agitating for higher and higher prices.

It is time to put our agriculture, farmers, and planet’s concerns on high priority in the budget.

Gulati is Distinguished Professor and Juneja is a Research Fellow at ICRIER. Views are personal