Engaging Corporates to enhance production PPPs in Agriculture

There are many ways  to view Indian agriculture . While many commentators  bemoan the fact that our agricultural yields are lower  compared to global benchmarks, the counter factual is that  productivity in certain crops in some states is equal or better than the best in the world. The differential  of productivity levels within the country is as much as study in  contrast, as any inter country comparison would perhaps offer.    Productivity in states such as Bihar, Orissa and other parts of eastern India is way behind the states such as Punjab and Haryana. Rice yield in Madhya Pradesh is 25 per cent of the yield in Punjab. Similarly, wheat yields in Karnataka are close to 20 per cent of the yields in Punjab and the productivity of sugarcane in Tamil Nadu is three times that of  Bihar. The questions is : when such technologies and institutional mechanisms are available within the country, should we not look at some out-of box solutions, as the conventional system has not yielded results.  Meanwhile in seminar after seminar, the corporate sector talks about  the need to  encourage private sector investment in extension services, contract farming and viability gap funding for infrastructure in  the agriculture sector.  This essay is to place issues in perspective.

It is true that ICAR and other research institutes have demonstrated that the yields in rice (table 1) by adopting improved technology (varieties and practices) at farmer’s field both with improved practice and farmers practice are much higher than the actual crop yields in farmer’s field.  This means that when it comes to basic research, the system is in shape, and because there is close supervision and monitoring, the results  are there for all to see.  However, when it comes to extending this to the farmers filed, the results are far from satisfactory, as the table below  will show :

The reasons  are not far to seek. The state extension machinery is woefully inadequate in terms of strength and numbers to  accomplish this task, and it is often pressed on to do other miscellaneous work as well.  Moreover, the obsession of the government to  cover its problems for fear of a critique by the press or the  Opposition also leads to a situation  in which everything is geared to respond to a parliamentary query, and avoid any critique from the CAG.

While the government’s schemes are always designed with good intentions and the money is spent with good intentions, the missing link is good implementation. While financial audit in most of the agriculture projects in India would stand a good stead even with the best in the world, the functional audit of these projects might not stand anywhere near the bottom 5 percentile in the world. The functional audit would mean the higher correlation between the money spent and desired objective, say improving yield of rice in Bihar.

Can we therefore pose a challenge to the private sector ?  Can we ask them to take up the gauntlet ? Can they step into the extension  space and do specific crops in specific districts, because  even if the government revamped the extension system, by its very nature it will have to offer general  support services : soil testing,   credit and input management, rather than specific inputs for crops .

The perception of PPPs in India is always about the private sector investing and sharing the revenues with the government as was done in NHAI projects and airports. The public sector does not trust the private sector in agriculture, while the private sector is tired of red-tapism in the public sector. How can both the sectors converge? This is where the industry bodies like FICCI, CII , ASSOCHAM  can play the role of facilitators.

Over the last decade, may  corporate have been working closely with the farmers . These include  PepsiCo, ITC, McCain, DCM, and  Tata Chemicals ,among others. They have usually confined their operations  to sourcing materials for their own consumption.  They have realized that the only way to procure quality raw materials in required quantities for their processing plants is through developing strong backward linkages with farmers. In the process, these companies have provided small and marginal farmers the right quality seeds, right inputs and technical know-how on best practices. These efforts have translated into higher incomes for farmers and better quality raw materials for the companies.

Is it possible to leverage the capabilities of the private sector to anchor second green revolution in the eastern India? Can we  projectize agriculture with specific targets and time lines for improving the productivity in eastern India? For instance, the projectization could be targeting to increase rice yields by 1 tonne/hectare in West Chamapran district in Bihar in an area of 50,000 hectares cultivated by 20,000 small and marginal farmers in a time frame of 2 years. How do we go about it? Can the government invite bids from the private sector or a consortium of public-private organizations for implementing such projects on the basis of a management fee?

At least there is no harm in pilot testing new policy such as this before going full steam. Like any other tender bid, several checks and balances could be put in place to evaluate the implementing agency from time to time. There could be severe penalty clauses for non-performance.

Like how the innovations are important in a life-cycle of a successful business enterprise, it is equally important to innovate and improvise policies from time to time. The planning commission has to take a lead in encouraging the departments to develop innovative policies and improve the efficiency in implementation of the schemes