Crop diversification, digital marketplaces, liberal agri-export policy to boost farmer income

Diversification of crops for a shift towards high-value commodities, improved market access, digital marketplaces for agricultural produce and liberalised trade policy can transform Indian agriculture, suggests a recent policy brief published by Indian Council for Research on International Economic Relations (ICRIER).

Authored by a team of researchers led by agriculture economist Ashok Gulati, the policy brief titled “New Deal for Agriculture for Viksit Bharat@2047” also considers contract farming, farmer producer organisations (FPO) and futures market in agriculture as other key measures that can be beneficial for farmers without placing any undue costs on the rest of the economy.

The ICRIER researchers point out that the potential for increasing farmers' incomes lies primarily in animal husbandry and pisciculture. “The market for these products is demand-driven, and most of their marketing occurs outside of the Agricultural Produce Market Committee (APMC) mandis. This trend is expected to strengthen in the future as incomes of consumers rise and dietary preferences diversify. Encouraging private sector investment in building efficient value chains through a cluster-based approach can be an effective investment strategy," the policy brief notes. It also suggests that the 27% increase in allocation 2024-25 (BE) over last year’s revised estimate for the Ministry of Fisheries, Animal Husbandry and Dairying, may allow it to allocate a special package for farmers of Punjab and Haryana to diversify their crops and shift away from paddy cultivation.

The researchers also state that a well-functioning FPO enhances market access for its members by improving their bargaining power, enhancing their productivity, increasing incomes, and ultimately mitigating rural poverty.

On liberalised trade policy front, the researchers say that Indian farmers often lose out on opportunities for higher earnings presented by high international prices for their produce due to policies aimed at preventing exports. “In times of high domestic prices, imports are incentivised for lowering prices that result in lower earnings for Indian farmers. To provide a level playing field for Indian farmers, the government should remove all curbs on selling farm produce. The most prudent policy would be liberalising the trade policy, especially on exports side so that farmers can benefit from access to lucrative foreign markets," the researchers point out.

The policy brief was prepared in the backdrop of the farmers’ protest demanding legal guarantee for minimum support price (MSP) that is fixed according to a formula prescribed by a committee led by M S Swaminathan some years ago.