For AgriMatters the best part of the recent budget was the interest subvention of 2% for agricultural loans, and a provision of farm credit of Rs 375,000 crores. He also announced that the repayment period of loans to be repaid by December 2009 stands extended to June 2010 because of the adverse weather conditions in most parts of the country in the recent months. Taken together these will inject the much needed liquidity in the farm sector and farmers would be able to avail short term credit loans from the Kisan Credit cards at 5%, just 1 % more than what AgriMatters had argued for in one of its recent columns. What is also required is an automatic enhancement of the credit limits under each functional KCC by 50 % so that the farmers do not face any problem on account of the increased prices of diesel, and the anticipated increase in the MRP non- Urea fertilizers, which will definitely rise beyond ten percent as the government moves from product based subsidy to nutrient based subsidy regime. This should also be built into the KCC mechanism – every year the credit limit should be raised so that it becomes easier for farmers to get the necessary inputs for their agricultural production.
AgriMatters would also like to compliment the governemtn for increasing the allocation for all the major flagship programmes of the Agricultural Ministry, especially the RKVY. Addressing his last video conference with the agricultural secretaries of states, Union Agricultural Secretary T Nanda Kumar who superannuates this month said that states could easily expect an increase of 65 to 70% over their last years’ allocation as the Finance Ministry has enhanced the RKVY budget from Rs 4067 crore last year to Rs 6,722 crore this year. He therefore suggested that the state governments should take immediate steps towards the convening of the State Level Sanctioning committees so that the annual Plan for the fiscal year 2010-2011 can be approved within this financial year, and funds released from April itself. This should not be very difficult as the long term perspective plan for agriculture and allied sectors has been prepared by each district (CDAP) and getting the approvals of the District Planning Boards should not be as difficult as it was in the first three years of the RKVY.
In addition to this there is an additional Rs 700 crore for two new sub-components- bridging the yield gap in the eastern Region, and special programme for development of pulses and oilseeds in the Rainfed regions of the country. India’s leading agricultural expert MS Swaminathan has lauded this particular initiative as he is convinced that the next Green Revolution must take place in the water surplus areas of Bihar, Bengal, Assam and the North East which have still not reached their optimal levels of food production. He has however expressed his reservations on the Finance Minister’s suggestion of opening up of retail trade for creating market linkages that could drive competition to make the existing supply chains more efficient, besides significant reduction in the post harvest losses. This becomes specially important in the case of perishables like most fruits and vegetables.
Another Rs 200 crore has been earmarked for conservation farming and climate resilient agriculture in regions where the soil stress on account of Green Revolution, agricultural resources like soil health and water resources have come under severe constraint. The National Food Security Mission and the National Horticulture Mission have also seen an increase an upward increase in their allocations, and both are getting more than a thousand crore each. Likewise, another thousand crore rupees has been set apart for micro irrigation technologies. The signals are thus clear : there shall be no constraint of public funds for this sector. Besides, the private sector is being encouraged to build the necessary infrastructure for warehousing, cold chain logistics and agro food processing parks. External Commercial borrowings are being allowed to establish infrastructure for the cold storage and cold room facility.
AgriMatters rough estimation is that India needs another two to three thousand cold storages for perishable commodities to ensure price stability in commodities like potato, tomato and onions – to name a few. This year for example, West Bengal has recorded a bumper production of potato – 98 lakh MT – but with a cold storage capacity of not more than 50 lakh MT, the price of potato has crashed to less than Rs 1.50 per kg at the farm gate, and many farmers are worried that even this price may tumble because there is no storage space available. If the country had a cold chain grid, some price stability could have been brought about, because even as this column is being written, potato is being retailed between Rs 12 to Rs 15 per kg in Chennai, Bengaluru and Hyderabad . The humble potato was being retailed at Rs 20 even in the Kolkata markets a few months ago. The tragedy of the situation is that the farmer loses out in both situations : when crops fail – for he has not produced enough, and in an year of bumper harvest, because the price crashes. AgriMatters therefore suggests that state governments must leverage these announcements to announce a policy package for the establishment of cold chain facilities. Another suggestion is that the National Horticulture Mission should approach the Railways for establishment of warehousing and cold chain infrastructure on railway lands in the key agricultural production districts of the country – for oranges in Nagpur, grapes in Nashik, potato in Burdwan, mango in Saharanpur, Lychee in Muzzafarnagar , etal. If these could also be linked to Commodity Exchanges like the SNX or MCX, the boost to farmers’ income will be significant. More importantly, it would make it possible for governments to implement the market Intervention schemes – for in the absence of this infrastructure, even if agencies like NAFED want to intervene, they cannot. AgriMatters is hopeful that just as several suggestions made in this column have seen the light of the day, this will also be accepted sooner or later.