27/09/2019 - S & T | Mainstorming

IAS Parliament 5 years

KEY POINTS

· As per the Economic Survey 2019, the share of private investment in gross capital formation in agriculture and allied sectors has declined from 88% in 2013-14 to 82.67% in 2016-17.

· Slow growth in private investment is due to poor economic incentives and low opportunity cost of factors employed, often fuelled by volatile markets.

Measures to promote adoption of technology

· Enhancement of farm savings requires better market price and margins, which would only happen with fairly deliverable markets, and this is a herculean task.

· The Agriculture Marketing and Farmer Friendly Reforms Index proposed by the NITI Aayog has the potential to improve competitiveness, efficiency and transparency in agricultural markets.

· The index also captures reforms like liberalisation of land lease and freedom to farmers for felling and transit of trees grown on private land.

· Investments through credit may be enhanced to the needy and hard-working farmers/enterprises through an alliance system comprising key stakeholders.

· For instance, in African nations, government-supported AGRA system (Alliance for a Green Revolution in Africa) is working in tandem to address the issue of credit access and low-cost finance to small farmers, input suppliers, farm cooperatives, agro-processing units and value-chain operators.

· The concept of smart/precision farming, climate smart villages, organic villages can be platforms for companies to showcase their CSR spending. Tax sops to companies investing in agricultural R&D would help attract private investment.

· Farm research system in India is one of the world’s largest in terms of scientific and supporting staff. Farm management systems can be established where agricultural scientists from public research institutions and universities can provide free advisory services. Companies can raise funds to manage privately-held farmlands. For instance, in South America, privately-held farmland management companies raise funds and manage farmland holdings for investors that include wealthy family groups and financial institutions.

· These measures will push private sector investments in new areas from the traditional tractors and farm equipment. Investments are needed in food processing, warehouses, cold storages and supply chain management.

· Horticulture is another sector with a potential of additional 4 million hectares that can create 8 million additional jobs. Infusion of technology and investments can help reduce the huge post-harvest losses, estimated to be almost 25-30% of the production, and result in returns for investors as also higher incomes for farmers.

· In India during favourable seasons, dietary habits and consumption patterns of people make them use less processed food products as against perishables, but urbanisation and price volatility has the potential to push demand for processed food.