The latest regional elections in India saw unprecedented promises of farm loan waivers. Representatives of both the Indian National Congress and the Bharatiya Janta Party have made “support” to farmers a key point in their manifestos. According to an article in The Economic Times, farm loan waivers since 1990 total INR 2.22 trillion (USD 31 billion) – a bill obviously paid by the taxpayer. Now farmers in India enjoy kid glove treatment – they pay no income tax, receive free energy, are not subject to controls or restrictions on groundwater use, and are offered a guaranteed purchase price for what they produce. The Indian government seems to have positioned their economic role as a sacred duty rather than a professional pursuit. These privileges and incentives are taken for granted – for instance, just a few months ago, farmers in North India blanketed the region with a toxic smog as they burned biomass in violation of numerous laws and rulings – claiming that it was an essential step for them to be able to grow their crops. Not that nation is well fed – food prices are skyrocketing, and essential nutrition from greens and vegetables is inaccessible to low-income households.
When an industry linked to a vital human necessity finds itself dependent on government handouts for survival, the stage seems set for disruption. Farmers claim that their problems are caused by the lack of water for irrigation, changing weather patterns, and a low support price for their produce. However, looking at the big picture, complacency, apathy, and no incentive to innovate are equally big factors.
An acquaintance who was associated with programs run by the Israeli charity MASHAV once told me about the gross structural issues in the Indian agricultural system. He stated that the Green Revolution was right for its time in staving off hunger among the rapidly growing Indian population, but innovation and transformation has been completely halted since then. Commenting on the lack of water for irrigation, he said that most farmers in India use surface irrigation, the most wasteful method – that loses water to evaporation. Furthermore, the rice, wheat, and pulses prioritized by the Green Revolutionistas sidelined the millets and other crops more suited to regional soil types, water resources, and weather patterns. Another acquaintance with a professional understanding of the public distribution system told me that government support to certain industries such as sugar and brewing created systemic imbalances that affected soil health at the farm and food prices at the table.
One thing that stands out about the Indian agriculture sector is low technology use. E-commerce players have superceded India Post in efficiency in terms of transporting shoes, books, and cellphones to consumers in remote corners of the country. Grocery delivery services use analytics and Just In Time inventory management to deliver a wide variety of milk and eggs to households each morning. Can these technologies be used to disrupt agriculture? What about other factors such as climate change and politics?
Climate Change is real – Crop Choices and Food Habits need to change
Over the past few years, unseasonal rain or storms have destroyed large portions of standing grain crops. Such events have increased in frequency, and if this trend endures, crop choices will have to change. There is nothing that we can do about this – farming must evolve to thrive in the changing climate. An hour of un-seasonal rain a few days before harvest can devastate an entire wheat crop. However, a hailstorm on a potato-field will still leave produce fit for harvest. A good option would be to switch from grains as a primary carbohydrate to tubers such as potatoes, cassava, yams, and jicama. For those aghast at the suggestion that your fulkas and alou-paranthas will go from being breakfast to a delicacy, remember that post the Green Revolution, traditional breads made from maize and millets such as bajra and ragi were relegated to ethnic delicacies by the emphasis on wheat and rice. In fact, a change in emphasis from calories to nutrition – calling for more vegetables and greens in the diet – may improve national health and well-being.
Supply Chains need to evolve
The Mandi system needs to die. Period.
On a day that a farmer in Nashik reportedly sold 750 kilos of onions for INR 1,064 and made headlines by sending the proceeds of the sale to the Prime Minister, a supermarket near my home was retailing them for INR 35 per kilo. This obscene price increase is driven by middlemen, who in most cases have a 100 per cent mark-up on everything that passes their hands. Obviously, the logistics and distribution systems developed by E-commerce, fast fashion, and modern trade can resolve this – if a fast fashion brand can buy a dress from a factory in Bangladesh and yet sell it at a London store for GBP 20, I’m sure we can find a way for a farmer to be paid INR 20 per kilo for onions that sell for INR 35 in a supermarket.
Farming itself needs to change
In speaking to people from agrarian communities in India, it appears to me that a key factor affecting viability of farming is the increased fragmentation of land holdings. The profit from traditional crops – however efficiently grown – is still limited by one’s land holdings. For this reason, as land holdings split by inheritance with each generation of a family, many farmers just quit. Therefore, farmers with small holdings need to grow high-value crops to keep their farms viable.
About fifteen years ago, I had a brief conversation with a farmer from southern India. He’d had an acrimonious falling out with his family, and was given (unfairly by his account) two acres of fallow land in settlement of his inheritance. Having always been an enfant terrible by his own admission, he experimented with growing exotic vegetables, rearing rabbits, and finally settled on Vanilla. He claimed that his two acres of vanilla yielded substantially more revenue than the 60 acres of paddy planted by his estranged relatives.
Another approach is to leverage technology to boost productivity. Institutes such as Hyderabad, India-based International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) and Netherlands-based Wageningen University have led pioneering research into improving the yield and resilience of crops. Wageningen, for instance, conceptualized programs that turned the Netherlands – a nation roughly the size of the state of Haryana – into the world’s largest exporter of tomatoes. The knowledge behind industrial farming on one hand and organic cultivation on the other is growing, with productivity growing by the day. Collecting this wisdom and designing programs is easier than ever in our new connected world.
A possible business model
Since we live in the era of the “collaborative” economy, here’s one possibility.
Suppose we have an enterprise that empanels “farmer partners” who “associate” their land holdings with the company. The company conducts tests on soil and uses meteorological data to identify appropriate crops, soil additives, and farming cycles for each parcel. Then, based on the ability of farmer partners to invest in their land, the company deploys a growing program. For instance, a farmer lacking the ability to invest may end up with a basic program for growing onions, but a farmer able to invest in sun protection for his field may be given a program to grow lettuce that would bring him higher revenue. The farmer handles sowing, growing, and harvesting per the program while the company would manage sale and transportation of the produce, and would be paid a percentage of the profit above a pre-decided rate.
How about it, any takers from the Private Equity world?
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