In an effort to boost the agriculture sector, the Indian government has set an ambitious goal to double farmers’ income by 2022. In doing so, it has unveiled strategies ranging from irrigation to crop insurance.
But if the food value chain is to undergo true transformation, it needs to move from a production-driven system to one driven by demand, one that increasingly connects consumers with producers.
This will require new approaches and innovations, as well as increasing collaboration between the private sector and other stakeholders in the food system. It will require integrated value chains that connect farm to fork, competitive markets that provide better prices to farmers, and an enabling environment that supports innovation and action.
The facts before us:-
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795 million people in the world go hungry everyday.
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2 Billion people lack the nutrient to live a healthy life.
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The world population is expected to reach 9 billion by 2050.
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Africa alone will double in size – from 1 billion to 2 billion.
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As people become more affluent they drift towards a diet richer in processed food, meat and dairy.
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Farmable land continues to be lost to sprawl and soil degradation.
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As global temperature rise, more land will turn into deserts.
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It takes 1500 litres of water to produce 1 kg of wheat and 15000 litre to produce 1 kg of meat.
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Food production is already responsible for 70% of the worlds’s water consumption.
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By 2050, we need as much as twice of water that we need today.
No one stakeholder – whether governmental, corporate or from civil society – can do this alone, especially given climate change and increasing pressure on land and water resources. Real impact will come from combining the competencies of diverse organizations and stakeholders and creating better alignment through partnership platforms.
What does this alignment look like? Simply: more investment, more on-the-ground resources, new collaboration models that combine the knowledge and resources of diverse stakeholders, and which share best practices, risks and mutual accountability.
Seeds of success
In India, several key states are developing such partnership platforms, including in Andhra Pradesh, Karnataka and Maharashtra. Supported by the World Economic Forum’s New Vision for Agriculture initiative and FAO initiatives , these state-level projects bring together government, private sector, farmer organizations and civil society to jointly develop solutions for integrated value-chain projects that will provide farmers with more and better opportunities.
There are currently more than 20 organizations engaged in these state partnerships, ranging from processors to retailers, multinational corporations to local enterprises. There is a strong commitment from CEOs to support this model though business leadership and support.
– Maharashtra was one of the first states to initiate this partnership model, with a 2012 government programme that aimed to develop integrated value chains for specific crops. Within three years, the initiative had reached half a million farmers and improved their incomes by 10-30%. This year the state government has introduced new marketing laws, hoping to encourage more competition and investments in agriculture markets.
– In the state of Andhra Pradesh, a partnership platform is aiming to achieve double-digit inclusive agriculture growth. The state has identified 25 growth sectors – including agriculture, horticulture, animal husbandry and fishery – and within a few months has mobilized more than $175 million in private-sector commitments to support several value-chain projects.
– In Karnataka last year, the state government launched a public-private partnership to improve horticulture value chains through value addition, technology and marketing solutions. In less than a year, five projects are already underway, led by both global and local private-sector companies.
While each state-level partnership follows a unique model, they share similar guiding principles, which have been developed and validated by countries around the world. These are:
– Locally owned and aligned with the state’s goals and priorities for the sector
– Market-driven with projects led by the private sector and rooted in viable business models
– Multistakeholder in their approach, with open and inclusive engagement that includes all relevant stakeholders
– Holistic, integrating full value chains that benefit all actors in the food system
– Supported by an international network that offers solidarity, connection and resources.
The state-level partnership platforms hold great potential for application elsewhere in India. Several other states have indicated interest. A key success factor for such models has been strong leadership and co-creation, with the government setting the vision and enabling policy framework; the private sector helping to deliver on that vision through scalable and inclusive market-based activity; and key stakeholders such as farmer organizations, civil society and international organizations combining their resources and expertise.
Only through such strong leadership from diverse stakeholders can we create the conditions needed for unlocking the entrepreneurship of smallholder farmers and ultimately boosting their income.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.