Guest Column | Uphill task to implement new agricultural policy in Punjab

The draft is a well-intended document, however, there are challenges in implementation. The agricultural economy of Punjab is gridlocked in the country’s macroeconomy. Five policy instruments that include fixing MSP for crops, foodgrain procurement and distribution, export and import of commodities and border prohibitions, fertiliser subsidy and agricultural credit are a part of the national policy and outside the state’s purview.

After much delay, the draft of the new agricultural policy of Punjab is in public domain. The draft contains 28 main recommendations. In brief, it proposes creating a network of agro-ecological area specific research and extension centres of excellence for each crop in its natural growing areas. Prominence has been given to the development of backward linkage (input supply and services support) for the production and forward linkage (cooperative marketing societies, processing and value addition, provision of market intelligence, ensuring remunerative prices) for post-harvest handling of crops.

A farmer at the Amritsar grain market on Monday. (PTI)

The draft report envisions the establishment of progressive farmers’ societies, innovative agricultural marketing societies, and multipurpose cooperative societies for strengthening forward and backward linkages. The committee has proposed the establishment of the Agricultural Marketing Research and Intelligence Institute at Punjab Agricultural University as a ‘global market eye’ of crop-specific progressive farmers societies.

Cotton, maize, basmati, sugarcane, pulses, oilseeds, fruits, vegetables and organic produce have been identified as potential alternatives to paddy and wheat for diversification. The report also contains a suggestion to reduce 20 billion cubic metres (BCM) water usage, which is 30% of the total 66.12 BCM of the present usage. A ban on growing paddy in 15 blocks, where the volume of water extracted is three times more than the recharge, is suggested and the loss of income of farmers resulting from the transition to alternative crops be compensated in such a way that ‘they may get higher returns than that of paddy cultivation’. Building the Punjab brand for dairy products, changing tenancy laws, land records upgrades, promoting fruit and vegetable production, importance of the poultry and other allied occupation have been dealt with a pragmatic approach.

Five broad inferences

Overall, five broad inferences can be drawn from the report. First, interventions to be made by Punjab government and its institutional establishments can cohabitate with the national policy objectives. The state government, Punjab Agricultural University, and other related organisations are supposed to initiate and undertake most of the actions.

Second, implementation of the recommendations requires strong political commitment and an unusual response from the bureaucracy manning agricultural institutions. Third, the onus is mainly on the state government to provide the required financial assistance.

Fourth, it is assumed that the changes in the cropping pattern can be put into effect through agro-climatic area-based planning that can surpass and outpace the robustness of the market forces. Agro-climatic regional planning was proposed by YK Alagh, former member of the Planning Commission of India, for the whole country in the ’90s but the implementation failed because the influence of market forces was stronger than the planning mechanism. Fifth, the report has dimly dealt with contentious issues such as free power supply to agriculture, declining landholdings and its impacts, such as youngsters turning away from agriculture.

Challenges in implementation

The draft is a well-intended document, however, there are certain underlying issues that will pose as challenges in implementation. The agricultural economy of Punjab is gridlocked in the country’s macroeconomy. So, it will be difficult to reconcile recommendations with national economic policies. Five agricultural policy instruments that include fixing the minimum support price for crops, foodgrain procurement and distribution, export and import of agricultural commodities and border prohibitions, fertiliser subsidy and the agricultural credit are a part of the national policy and outside the state’s purview. In addition, rail transport is essential for moving foodgrains from Punjab to the rest of India at the right time. Successful implementation will require cross-compliance from all partners.

The committee has suggested setting up the state commission for agricultural costs and prices parallel to the existing national commission to provide cost and return estimates for all crops, dairy products and eggs so that remunerative prices can be given to the farmers. The Punjab government has been tasked with holding a dialogue with the Union government for ‘establishing a legal guarantee of procurement of MSP crops cultivated in the state’. But it needs to be clarified who will guarantee the MSP for the non-MSP crops, dairy products and eggs and how much it will cost?

The loss of income of the farmers resulting from the transition to alternative crops in the 15 blocks in which a complete ban on paddy cultivation has been proposed will entail a huge cost. So far there is no alternative crop that can compete with paddy in terms of net income. The proposed ₹2,000 crore price stabilisation fund ( ₹1,000 crore from the state and an equal amount from the Centre), even if established, will be insufficient. Sparing enough financial resources will be a challenge as the state is neck deep in debt.

Operational objectives

Experts have rightly emphasised on strategic objectives, but operational objectives are unclearly defined. Strategic objectives have been formulated in general terms but what is most important is how they will be translated into operational objectives to achieve quantifiable outcomes in a predetermined timeline.

Many countries’ agricultural policies ensure a minimum level of income to farmer households, and they use the instrument of direct welfare payments. The formula for that is the difference between the targeted minimum income minus the actual income. Though one of the objectives of the policy was to increase the farmers’ household incomes, the report is silent on fixing a benchmark of a minimum family income needed, especially for marginal farmers.

Despite these contentious issues, the report contains valuable ideas. It’s high time the government studies the report and supports the committee to finalise it as a policy document in the light of the feedback received from experts and stakeholders. It will be beneficial to make a list of accepted recommendations while readying the roadmap. bhullaramarjitsingh@gmail.com

The writer is a former professor of economics at Punjab Agricultural University, Ludhiana, and University of Northern British Columbia, Canada. Views expressed are personal.