Barely 5 percent of all loans in rural and urban areas are secured by mortgages on immovable property. Since ownership of farmland is legally restricted to those who till the soil, anyone who wants to give up farming will have a difficult time finding buyers — especially since there are also ceilings on the amount of land farmers can legally own. In any case, most are too financially stressed to consider expanding their holdings. Nonfarmers must secure a series of special permits to buy farmland.
While secure land and property rights are necessary for agriculture to develop, they are not sufficient. The large state-owned farms were broken up, and rural families were given long-term leases and encouraged to grow their own crops. The subsequent phenomenal growth of agriculture, trade and food processing have significantly contributed to reducing rural poverty.
Despite many initiatives, barely 3 percent of Indian farm produce is processed. In the late s, India sought to promote food processing as a way of boosting farm income and lowering wastage. Despite good intentions and many initiatives, barely 3 percent of Indian farm produce is processed today. In , the government announced with much fanfare another effort to encourage food processing, allowing foreign investors to hold percent stakes in food manufacturing and trading ventures. Government schemes to help Indian farmers have multiplied in recent years source: macpixxel for GIS Government Initiatives Every political party in India eulogizes the farmer.
Yet every government has tied up the farmer in red tape. Successive governments have sought to juggle two conflicting priorities when it comes to regulating the sector. The first is to boost farm incomes by raising the minimum support prices MSP for major crops. The second is to keep food prices low enough to satisfy urban consumers. In this tussle, the farmers have mostly lost out to urban dwellers. The terms of trade have been mostly unfavorable to agriculture over the past 70 years, except for a brief interlude in the s. But in recent years, conditions for farmers have again turned negative.
Following in the steps of its predecessors, the Modi government has launched its own high-profile initiatives for agriculture.source
Reforms, Structural Adjustments, and Rural Income in China
But almost every new program has expanded the scope of government action, increased spending and narrowed the scope of farmers and traders to find their place in an open market. Indian farmers have coped with the vagaries of nature better than the hazards of navigating through the maze of government policies.
Pulses are a key source of protein in India, where vegetarians make up much of the population. In the past few years, retail prices have been extremely volatile, fluctuating by as much as percent. Following scanty rainfall in and , prices rose sharply, and the government lifted import barriers to protect consumers. In , after a good monsoon, farmers planted more pulses, only to see prices crash on a market glut. The government began emergency purchases to support farmers, yet only 60 percent of the crop was sold at the prescribed minimum price.
Now the authorities have accumulated several million tons of pulses. Yet without proper storage and viable distribution channels, this intervention has done little to curb price volatility. This year, the government has re-imposed import restrictions on some pulses, along with import duties ranging from 10 to 50 percent. Even so, prices have remained low and for some varieties had virtually collapsed by the end of Without a futures market, agricultural producers can only be guided by expectations based on prices of the previous year.
Given the experience of , it is quite likely that farmers will plant less acreage in Canadian producers, an important source of Indian pulse imports, have already reduced their plantings. That suggests there could be another price spike in This sort of situation repeats itself someplace in India virtually every year. In the summer of , for example, farmers in Maharashtra dumped their tomato harvest in the streets to protest collapsing prices. In the autumn, farmers in Madhya Pradesh and Gujarat were upset about low soybean prices.
In January , potato farmers in Uttar Pradesh destroyed their crops in the field and dumped unwanted produce in front of the offices and residences of senior officials. Their farm gate price had fallen to barely Rs 0. What is generally not realized is that it followed the earlier Asian tigers in first reforming the farm sector. This created the social capital needed to undertake a wider economic transformation, by demonstrating the benefits of reforms to the largest segment of the population in the s — the farmers. Even so, Chinese agriculture is not without its challenges.
The sector is significantly undercapitalized, productivity remains modest and the workforce is rapidly aging. Building the social support necessary to restructure the economy is impossible without farm reform. Most of the issues pertaining to agricultural reforms listed above have been debated in India for years. India now finds itself in a Catch In a country where the vast majority of the population is engaged in agriculture and the informal economy, building the social support necessary to restructure the economy is impossible without farm reform.
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Yet unless the broader economic reforms come early in the transition, there will be no nonfarm jobs to absorb the million surplus rural laborers who must move off the land and adapt to urban life. Its economy is still struggling to overcome the aftereffects of the poorly conceived demonetization and badly prepared introduction of a national Goods and Service Tax GST. Unfortunately, the probability of such a scenario playing out does not seem very bright at present.
The political calendar for the next months also militates against any radical reforms in agriculture.
China’s agricultural reform grows bolder
The shadow of rural distress that fell over the Gujarat elections is likely to cloud the political horizon for elections in six more states in Many of these areas are significantly more rural than Gujarat. Over the past three years, Mr. Modi has revealed his basic inclination to tackle economic challenges by throwing public money at them. He seems to see in the present agricultural distress a political opportunity to score points by leveraging state largesse. In that case, we can expect more loan waivers, price support, trade restrictions and welfare schemes aimed at rural areas.
But at best, that approach will only push aside the underlying problems for a time. As Indian agriculture expands, farmers and reform prospects suffer. General info Location. Report Scenarios. Economic trends. Mitra Barun S. Indian farmers are languishing even as agricultural output continues to grow The country cannot match Asian tiger growth rates without reforming the farm sector Price volatility and debt are turning desperate farmers against the government So far, Prime Minister Modi has preferred palliative measures to structural reform Over the past 50 years, India, often referred to as a basket case, has transformed itself into a breadbasket.
India's grain output has doubled since even as the area planted decreased source: macpixxel for GIS Agriculture tied in red tape Over the past 25 years, Indian economic reforms have mainly focused on liberalizing the nonfarm sectors of the economy, particularly industry. Government intervention has created a highly inefficient trading network for farm goods Over the past decades, several laws aiming to restrict storage and trade in agriculture produce have been enacted to discourage speculation and protect consumers.
GMOs tied up in knots In October , the Indian government deferred an earlier decision to approve genetically modified GM mustard and rapeseed. Pulses and prices Pulses are a key source of protein in India, where vegetarians make up much of the population.
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A weekly summary, plus unique comments from Prince Michael of Liechtenstein. Suggested reports. At home and abroad, he has proved an adept operator. All this has constantly contributed to new achievements in the development of agriculture and rural economy. Currently, China ranks first in the world in terms of the production of cereals, cotton, fruit, vegetables, meat, poultry, eggs and fishery products. Rural residents have continued to improve their living standards, moving from a subsistence life to a better-off one.
China has successfully resolved the problem of feeding and clothing its population that accounts for almost 21 percent of the world total with its farmland that makes up less than 9 percent of the world total. In , the total rural poor population reduced to Now, China is taking up an important historical opportunity in the development of agriculture and rural economy.
Taking into consideration the national interests at the new stage of economic development in the new century, the central government has put forward basic requirements for taking the solve of problems facing agriculture, rural areas and farmers as top priority in all our work; identified the basic strategy for balancing urban and rural development; determined that the country has entered such a stage in economic development of having industries to promote agriculture and cities to help the countryside; worked out the basic principle of getting industry to support agriculture and cities to support the countryside, and giving more, taking less and loosening control; and set basic tasks for building a new socialist countryside.
Currently, economic development has maintained a good momentum and agricultural markets have faced strong demands, which has played an increasingly stronger role in fueling the development of agriculture and rural economy as well as in increase of farmers' job opportunity and income.
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Nevertheless, agricultural development in China is now under double restrictions of resources and markets, which makes it a very arduous task to develop agriculture in a sound and fast way. From now on, we will take the building of a new socialist countryside as the general target, and develop a modern agriculture as the priority, promote higher grain production, better returns in agriculture and increased income of farmers as our central tasks.
To this end, we energetically make greater efforts in policy support, increase inputs to agriculture and rural areas, deepen restructuring, accelerate progress in science and technology, upgrade equipment and facilities, improve cultural and scientific levels of farmers, and improve the performance, returns and competitiveness of agriculture in an all-round way.
Thanks to the great importance attached to opening agriculture to the outside world, China has increasingly closer links with other countries in this field. As a result, a wide-range, all-round and in-depth opening of agriculture has come into being.
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