India Needs New Institutions to Boost Agriculture

The agricultural sector is a cornerstone of Indian economy, contributing approximately 18% to the Gross Domestic Product (GDP) and employing 45% of the national workforce. The country ranks 8th among the world’s top agricultural exporters with a 2.33% share in global agricultural exports. Despite this, India’s agri-tech market, valued at US$ 24 billion, remains largely untapped with only 1.5% penetration.

Indian agriculture is characterized by a diverse agro-ecological landscape, and is in transition from traditional to modern farming practices with a growing focus on agro-tech and digital solutions. The country has seen impressive growth in agricultural production over the years. In terms of GDP, it has expanded from about US$25 billion in the early 1970s to over US$630 billion by 2024. This growth has been driven by high-value segments such as horticulture, dairy, poultry, and inland aquaculture.

Success stories

There are many success stories in Indian agriculture such as the Green Revolution which gave us food self-sufficiency at the national level followed by the White Revolution leading to significant increase in milk production. The most recent one is horticulture boom which has made India a major producer of fruits and vegetables.

Another significant feature of this growth story is the rise of agritech startups. Over 1,000 agritech startups have emerged between 2013 and 2020. All these success stories have had their anchor in some eponymous institutions such as ICAR, Food Corporation of India (with its public distribution system), AMUL/GCMMF, NDDB, Cotton Corporation of India and NABARD, among others.

Low farm productivity still a bane

These epochal developments overseen by such illustrious institutions brought us many successes such as increased food grain production, diversification of agricultural exports, self-sufficiency in many agri produce despite a steadily growing population and shrinking agricultural land due to diversion to non-agriculture land use.

Notwithstanding such significant achievements, some challenges remained such as low farm productivity compared to global standards, poor infrastructure and supply chain inefficiencies, global price volatility and market access issues, and effects of climate change on agriculture. Though investments in R&D have led to improved crop varieties, better farming techniques, and increased yields, there’s still a significant gap between India’s average yields and global yields. India’s average paddy yield, for instance, is 3,878 kg/ha compared to the world’s best yield of 10,386 kg/ha.

If these challenges are overcome, India has the potential to significantly increase its agricultural production. However, this could lead to surplus production in some commodities to exceed global trade volumes. For example, at world-best yields, India could potentially produce a surplus of more than 200 million metric tons of paddy, which can easily cover the entire world trade and address the issue of global hunger. Apparently, India's agricultural sector holds immense potential for export growth.

Growth drivers

Indian agriculture can be catapulted into higher orbits through creation of new and more relevant institutions for multiple but simultaneous objectives such as produce aggregation through cooperative ecosystems and Farmer Producer Organizations (FPOs), centers’ of excellence for demonstrating R&D for crop-specific productivity enhancement, public–private partnership for leveraging technology (AI, IoT, and remote sensing) for sustainable agriculture, and global consumer focused export institutions connecting farmers and world markets for building export competitiveness through value addition. Most important, the country needs an Indian Agriculture Council on the lines of GST Council for agricultural reforms and policy interventions.

Institutions designed for such objectives will bring the most required impetus to investment in the entire agriculture space and will lead to building of requisite physical, digital and human infrastructure for the creation of sustainable employment opportunities in rural areas, bridging the gap between rural and urban lifestyles and potential to become a leading food supplier to world markets.

Need for agricultural reforms

Agricultural reforms are crucial for addressing the challenges faced by the sector and unlocking its full potential. The key areas for reform include modernizing agricultural marketing systems, improving supply chain efficiency, encouraging private sector investment in agriculture, promoting sustainable farming practices, enhancing farmer’s access to credit and insurance. It is pertinent to mention here that the present government under the leadership of Prime Minister Narendra Modi is focused on this imperative and bringing out multitude of programmes, institutions, resources and legislative and executive reforms through a singularly aligned “ whole of the government approach”.

Key factors driving export potential:

     Diverse agro-ecological zones: India's varied climate and geographical conditions allow for the production of a wide range of agricultural produce.

     Growing global demand: Increasing global population and changing dietary preferences create opportunities for Indian agricultural exports.

     Government Initiatives: India’s Agriculture Export Policy aims to double agricultural exports from US$ 30 plus billion to US$ 60 plus billion by 2022 and reach US$ 100 billion in the following years.

     Technological Advancements: The rise of agri-tech startups and digital initiatives are enhancing productivity and quality in the agricultural sector. 

Major export products and opportunities:

     Rice: The largest exported agricultural product, contributing over 20% of total agriculture exports in 2022–23.

     Marine products: Benefiting coastal states with exports valued at US$ 8.07 billion in 2022–23.

     Coffee: Experiencing growth in exports, particularly in instant coffee and re-exports.

     Fruits and vegetables: Potential for growth in exports of grapes, bananas, pomegranates, and processed products.

     Value-added and organic products: Opportunity to increase the share of high-value and processed agricultural exports.

Challenges to address:

     Infrastructure and logistics: Need for improved cold chain facilities, transportation, and export-oriented infrastructure.

     Quality standards: Ensuring compliance with international quality and safety standards.

     Value addition: Increasing the share of processed and value-added products in the export basket.

     Market access: Addressing tariff and non-tariff barriers in potential export markets.

Dedicated institution in place

In order to address the challenges and tap the ever-growing world market, the government has set up the National Cooperative Export Limited (NCEL). The NCEL’s mandate is to boost agricultural exports. This dedicated institution can play a pivotal role in harnessing the export potential of India’s agricultural sector through cooperative efforts.

Here are the key areas where NCEL can contribute:

     Aggregation of Produce: NCEL can help small and marginal farmers pool their resources and produce to achieve economies of scale for exports.

     Quality Control and Standardization: Implement rigorous quality control measures to ensure that agricultural products meet international standards.

     Market Intelligence: Provide member cooperatives with crucial information about global market trends, demand patterns, and export opportunities.

     Capacity Building: Offer training and support to cooperatives in areas such as export procedures, documentation, and compliance with international regulations.

     Brand Development: Create and promote a strong 'Cooperative India' brand for agricultural exports, emphasizing quality and sustainability.

     Infrastructure Development: Collaborate with government initiatives like the Agriculture Infrastructure Fund to develop export-oriented infrastructure.

     Technology Adoption: Facilitate the adoption of agri-tech solutions among member cooperatives to enhance productivity and quality.

Alignment with government initiatives

NCEL can work in tandem with various government programmes to boost agricultural exports:

     Digital Agriculture Mission (DAM): Leverage digital technologies to improve export-oriented agricultural practices.

     Agriculture Export Policy: Contribute to achieving the policy's objectives of doubling agricultural exports and diversifying the export basket.

     Agriculture Infrastructure Fund (AIF): Utilize the fund to develop export-focused infrastructure like warehouses, processing units, and cold storage facilities.

Potential Impact of NCEL:

     Increased farmer income: By facilitating exports, NCEL can help increase farmers' incomes by 25–35% through better price realization and market access.

     Export growth: Contribute to the targeted growth of agricultural exports to US$ 60 plus billion and beyond.

     Rural development: Boost rural economies by creating export-oriented value chains and employment opportunities.

     Sustainable agriculture: Promote sustainable and organic farming practices to meet global demand for eco-friendly products.

In conclusion, NCEL has the potential to be a game-changer in India's agricultural export landscape by leveraging the power of cooperatives. By addressing key challenges and aligning with government initiatives, NCEL can play a crucial role in transforming India into a global agricultural export powerhouse while ensuring equitable benefits for farmers and rural communities.

(Unupom Kausik is Managing Director of National Coopaertive Export Limited)