Rural Markets and Agriculture

India has emerged as a major global economic power with the economy registering high growth rates in the recent past. Parts of India have started to display signs of affluence, but this progress has not even uniform. The rural regions have not been able to match their urban counterpart. Even with increasing urbanization and migration it is estimated that 63 percent of India's population will continue to live in rural areas in 2025.The development of rural India is essential for sustaining the Growth levels in the country. With agriculture being the primary employer of more than half of India’s population. However, in recent years, agricultural growth has dropped. The growth rate in agriculture sector investment and profitability, net sown area under crops and the area under irrigation have also dropped.

Agriculture being the mainstay of India’s economy, it is imperative that considerable efforts are made to extricate the sector from stagnation. Larger irrigation facilities better seeds and agri-inputs at reasonable costs will have to be provided to farmers. The access to improved inputs and technologies will have to be coupled with provision of finance infrastructure and marketing facilities. Agriculture needs to become an income producing activity and farmers should not be left to the uncertainty of weather, financial resources, and markets.

One of the key reasons for the stagnation of India’s agriculture is the falling productivity. Challenges with hard and soft infrastructure coupled with poor sources of information and financing have created a lot of distress in the sector. 2008-09 was the poorest year in the last 5 years, with the agricultural sector growing at 1.6 percent. Hurdles in the Agri-supply chain with respect to poor seed development, poor Crop selection and management techniques, inadequate irrigation and water conservation measures, poor cold chain and processing infrastructure, lack of research and development and poor extension of current technologies have resulted in wastages. Lack of basic infrastructure such poor roads inadequate education and healthcare facilities have also inhibited the growth of this sector.

Beside the transport, the state of infrastructure for horticultural produce as well as meat products leaves much to be desired. India has around 5000 cold storage facilities, of which 90 percent are privately owned. Nearly 80 percent of the cold storage facilities are accounted for by a single commodity namely potato. Addressing these structural challenges through innovative measures and technologies which effectively link production systems with processing and consumption an lead to self sufficiency in food as well as improvement in rural welfare.

In order to achieve this, we need to work on resolving some of the self-made Problems as well as build mechanisms to address external problems such as climate variability and erosion of natural resources. By analysing the various linkages in the agriculture value chain and identifying the challenges within each, we could come up with effective solutions. This could not only unearth new opportunities but could also transform these challenges into potentially profitable investments.

There is a need for new technologies, new organizational structures, new institutional responses and, above all, a new compact between farmers, technologists, scientists, administrators, businessmen, bankers and consumers. Hence, there is a need for creative and imaginative solutions that increase agricultural productivity, farm incomes, and food production and, at the same time, also contribute to greater purchasing power for the poor.

Akshay Jambhulkar

PGPABM I

2009-11