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Ardent promoters of organic farming consider that present day organic agriculture, which is a mix of traditional wisdom and modern science, can herald the complete development of rural areas, especially in developing countries like India where the large chunk of farmers are small, with minimal resources and limited access to water. As per the International Federation for Organic Agriculture Movements (IFOAM) “Organic agriculture is a production system that sustains the health of soils, ecosystems and people; combines tradition, innovation and science to benefit the shared environment and promote fair relationships and a good quality of life for all involved”. Organic agriculture is thus based on four principles:

Principle of health: It should sustain and enhance the health of soil, plant, animal, human and planet as one and indivisible.

Principle of ecology: It should be based on living ecological systems and cycles, work with them, emulate them and help sustain them.
Principle of fairness: It should build on relationships that ensure fairness with regard to the common environment and life opportunities.
Principle of care: It should be managed in a precautionary and responsible manner to protect the health and well-being of current and future generations.

The World of Organic Agriculture: According to latest FiBL-IFOAM survey by H Willer, et al., 2013, ‘The World of Organic Agriculture: Statistics and Emerging Trends’, organic agriculture is being practiced on 37.2 mha in 162 countries (0.9 per cent of total agricultural land). Apart from agricultural land, there are further organic areas, most of these being areas of wild collection—aquaculture, forests, and grazing areas on nonagricultural land. They constitute 32.5 mha. In total, 69.7 mha (agricultural and non-agricultural areas) are organic. There were 1.8 million producers in 2011. Thirty-four per cent of the world’s organic producers are in Asia, followed by Africa (30 per cent), and Europe (16 per cent). The countries with the most farmers are India (547591, 2012), Uganda (188625, 2010), and Mexico (169570, 2010) (ibid.). Organic food and beverage market was worth 63 billion US dollars in 2011. Demand for organic products is mainly in North America and Europe; these two regions comprise more than 90 per cent of sales with US being the single largest market.

Organic Agriculture in India: By March 2012, India had brought approximately 5.56 mha land under organic certification process with major share of 4.48 mha under wild harvest collection in forests and 1.08 mha under regular cultivation, spread over almost all states and union territories. In all 5.47 lakh farmers and wild collectors have produced approximately 2.8 mt of more than 250 organic commodities valued at Rs. 5000 crores. Organic cotton and its value added products, basmati rice, soybean, sugar, tea, honey, spices and dry fruits are important categories being exported to other countries. During the year 2011, India was the second largest exporter of organic tea, after China, 6th largest exporter of organic soybeans and 7th largest exporter of organic sugar.

Organic Agriculture and Productivity: Since the advent of organic farming in the recent years there had been concerns on the production potential of the system. But the results of long term experiments released during the last 10 years from world over have proved otherwise. In irrigated conditions organic farming may be yielding 5 to 12 per cent less than their conventional counterparts but under rain-fed and water deficit conditions organic system yields 7 to 15 per cent more.

Six years of experimenting, comparing two models of organic management with only-chemical and chemical-and-organic combination under 4 crop husbandry systems was undertaken at International Crops Research Institute for the Semi-Arid Tropics (ICRISAT). The study titled ‘Evaluation of crop production systems using locally available biological inputs’, by O P Rupela, et al. in 2006, published in Biological Approaches to Sustainable Soil Systems, revealed that although, maximisation of yields can be achieved by the combined use of chemical fertilisers and organic inputs/practices (integrated agriculture), but this combination may not be affordable for small and marginal farmers in rain-fed areas (Fig. 1 and 2).

The low cost organic approaches can be an attractive choice, particularly when their strategic application results in yield levels at par with conventional system. The two organic models studied in the experiment yielded comparable results, and were in fact 25 per cent more profitable than the conventional system. Pest and disease management was also effective and low cost with biological approaches. Soil fertility and soil nutrient balance was certainly on a significantly higher side in organic system and offer longer sustainability under Indian conditions, typical of small and marginal farmers.

Reviewing 154 growing seasons’ worth of data (B Halweil, 2006, ‘Can Organic Farming Feed Us All?’, World Watch Magazine) on various crops grown on rain-fed and irrigated land in the United States, University of California, agricultural scientist Bill Liebhardt found that organic corn yields were 94 per cent of conventional yields, organic wheat yields were 97 per cent, and organic soybean yields were 94 per cent. Organic tomatoes showed no yield difference. More importantly, in the poorer nations where most of the world’s hungry live, the yield gaps completely disappear. University of Essex researchers Jules Pretty and Rachel Hine looked at over 200 agricultural projects in the developing world that converted to organic and ecological approaches, and found that for all the projects—involving 9 million farms on nearly 30 mha, yields increased an average of 93 per cent.

A seven-year study from Maikaal project in Khargone District in central India (J Frank et al., 2009, ‘The Impact of Organic Cotton Farming on the Livelihoods of Smallholders – Evidence from the Maikaal bioRe project in Central India’, Organic Farming Newsletter) involving 1,000 farmers, cultivating 3,200 hectares found that average yields for cotton, wheat, chili, and soybean were as much as 20 per cent higher on the organic farms than on nearby conventionally managed ones. Farmers and agricultural scientists ascribed the higher yields in the dry region to the emphasis on cover crops, compost, manure, and other practices that increased organic matter, helping the retention of water in the soils apart from providing adequate nutrients.

Organic Agriculture and Profitability: Recently a study was conducted in Maharashtra to assess the impact of organic farming on economics of sugarcane cultivation in Maharashtra (K G Kshirsagar, 2007, ‘Impact of Organic Sugarcane Farming on Economics and Water Use Efficiency in Maharashtra’, Artha Vijnana). The research was based on primary data collected from two districts covering 142 farmers, 72 growing organic sugarcane and 70 growing inorganic sugarcane. The study found that organic cultivation enhances human labour employment by 16.9 per cent and cost of cultivation is lower by 14.24 per cent as compared to conventional farming. Although the yield from the organic crop was 6.79 per cent lower than the conventional crop, it was more than compensated by the price premium received and yield stability observed on organic farms.

In a paper by Tej Pratap et al., 2009, titled ‘Organic Farmers Speak on Economics and Beyond’, Westville Publishing House; based on a nationwide survey of organic farmers indicates favourable economics through a cost-benefit analysis. Farmers in 5 out of 7 states are better placed so far as organic farming is concerned. The returns are higher in Himachal Pradesh, Uttarakhand, Karnataka, Maharashtra and Rajasthan. In Karnataka organic farmers had 4-35 per cent higher returns. In Kerala the differentials ranged between 4-37 per cent in favour of inorganic farmers. In Maharashtra the difference in net profit was more than 100 per cent in case of soybean. Cotton farmers were enjoying a comfortable profit margin. The profit differential in Rajasthan ranged from 12-59 per cent in favour of organic farmers. In another study by Ramesh et al., 2010, ‘Status of organic farming in India: Productivity vs Profitability’, Current Science; it has been reported that, although the productivity of crops in organic farming is lower by 9.2 per cent compared to conventional farming, there was a significant reduction in the average cost of cultivation by 11.7 per cent compared to conventional farming.

Article 9 Figure 1

Conventionalisation of Organic agriculture: Since its re-emergence during the last decade of the twentieth century, organic agriculture was promoted as a self generating and self sustaining enterprise with total reliance on on-farm resources coupled with practices like crop rotations, inter-cropping, multi-cropping, integration of legumes in cropping systems and integration of cattle. But of late, in its quest to compete with the conventional agriculture in terms of productivity and to make the practices relevant to present day scenario, the system has started accepting the importance of off-farm inputs and use of industry produced inputs in the form of commercially produced composts, biostimulants, botanical extracts, biofertilisers and biopesticides etc. To cater to the growing demand, a new set of organic input industry has started to grow. The trend might have added to the acceptability of the system by farmers and policy makers, but it is a matter of concern for the original promoters of the organic, in whose wisdom it is a natural cycles based, natural resource dependent and self generating production enterprise.

Ardent promoters of organic farming term it as conventionalisation of organic agriculture and caution that with such developments, organic farming may transform into a slightly modified version of modern conventional agriculture, replicating the same history, resulting in many of the same social, technical and economic ills. Conventionalisation of organic farming is now increasingly seen as problematic, since organic farming has received public support for its potential to contribute to environmental protection and rural development. However, if organic farming increasingly comes to resemble conventional farming and this potential contribution is jeopardised, organic farming may lose the support it currently receives from both consumers and policy makers.


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  • Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.

    Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.

    The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.

    Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.

    In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.

    Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.

    “Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.

    India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.

    With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.

    They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.

    India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.

    As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices

    The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).

    The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.

    Here is an approximate break-up (in Rs):

    a)Base Price

    39

    b)Freight

    0.34

    c) Price Charged to Dealers = (a+b)

    39.34

    d) Excise Duty

    40.17

    e) Dealer Commission

    4.68

    f) VAT

    25.35

    g) Retail Selling Price

    109.54

     

    Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.

    So the question is why government is not reducing the prices ?

    India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.

    However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.

    That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.

    Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.

    Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.

    But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.