Annual Report

Abstract

The National Institute (earlier Centre) of Agricultural Economics and Policy Research (NIAP) continued its efforts towards achieving excellence in agricultural economics and policy research in the country. The Institute serves as a policy think tank and helps the ICAR through credible evidence-based feedback to actively participate in agricultural policy debates and decisions and in monitoring and interpreting the research impacts systematically. The Institute sensitizes policy planners and research administrators about the emerging changes and concerns related to farmers and farming. Besides, the Institute also provides policy inputs to several other public sector bodies, departments, ministries and state governments. The staff of the Institute comprised of 16 scientists, 17 other staff members and the research project staff. The total expenditure of the Institute, including that from external sources was ` 817.75 lakh during the year 2014-15. A high-powered Research Advisory Committee led by Prof. S. Mahendra Dev, distinguished economist and Director (Vice Chancellor), Indira Gandhi Institute of Development Research (IGIDR), Mumbai, guides the Institute on its research programmes, and a Management Committee administers its overall functioning. Besides, a number of internal committees like academic planning and policy committee, publication committee, budget committee, purchase committee, etc. facilitate decentralized management of the Institute. Research studies of topical importance are conducted at the Institute under five broad themes, viz. technology policy, sustainable agricultural systems, markets and trade, institutional change, and agricultural growth and modelling. Each broad theme is supervised by a senior faculty. Research programmes within and across themes are so designed as to achieve the mandate of the Institute. During the year 2014-15, the Institute undertook 16 research projects and completed one consultancy project. The Institute has not only maintained but also increased the linkages and collaborations with many institutions in India and abroad. The Institute organized a number of workshops, trainings and policy advocacy programmes. The main research achievements and a glimpse of other activities undertaken by the Institute during 2014-15 are given below: • Agricultural diversification towards highvalue crops (HVCs) is considered as one of the alternatives to increase income, generate employment and reduce poverty. Study on crop diversification revealed that the likelihood of a farmer being poor is 3-7 per cent less if he grows HVCs. The biggest impact of HVCs on poverty is assessed for smallholders having landholding less than or equal to 2 hectares. Estimates show that higher the degree of diversification, lower is the probability of a household being poor. • Indian agriculture has become more knowledge intensive over past one decade. xiv national institute of agricultural economics and policy research The role of information in meeting knowledge intensive agriculture is more pertinent in view of increasing commercialization, changing demand pattern, climate change, stress on natural resources, etc. Farmers not only needed improving farm productivity and conserving natural resources but to comply with market preferences for safe and quality food also. The study has shown that about 28 per cent of farmers in India use information on modern crop technologies and practices. About information sources, analysis revealed that government sources are used by 14 per cent of the farm households, and they meet rest of their information needs from social networks (29%), mass media (33%) and private sources (23%). Farmers who use information on modern farm practices realize 12 per cent or more net returns per hectare. The impact is significantly higher (17%) for farm households growing cash crops along with the food grains than for those who grow only food grains. These findings are crucial for policy decisions regarding information dissemination. The policy should aim at developing mechanism for information dissemination in such a way that there is a greater uptake of information by the farmers. Study also observed that the public investment in extension services has not kept pace with the rising demand for information in agriculture. About 12 per cent higher net income per hectare for users adds ` 1140 per hectare of cropped area (at 2002-03 prices). This suggests that underinvestment in public extension may limit realization of the potential increases in agricultural productivity from spending more on agricultural research. • The quality of information is essential to improving productivity. The preliminary results of a study on livestock services in Haryana has revealed that public sector service providers are more qualified and experienced than the private service providers. Their impact on livestock productivity is yet to be assessed. • A study on impacts of climate change on yields of major crops revealed that 1 °C rise in the maximum temperature in kharif season reduces the yield of rice, sorghum and pigeon pea by 11-12 per cent and of maize and groundnut by 9 per cent. However, the effect of a similar increase in the minimum temperature is opposite but is not sufficient enough to fully compensate the loss due to rise in maximum temperature. The yield loss due to maximum temperature has been found considerable in the case of wheat, but the net effect after accounting for the positive effect of rise in minimum temperature remains significant (5.9%). The marginal effect of 1 °C rise in minimum temperature on yield of rapeseed-mustard is positive and almost equivalent to the negative effect of a similar increase in the maximum temperature. The marginal effect of rainfall on kharif crops, except maize, has been found positive and significant. However, in the rabi season its effect was not significant, except on rapeseed-mustard where it was negative and significant. The non-significant effect of rainfall in the rabi season is expected as the quantum of rabi rainfall is not only less but more variable also. In general, the marginal effect of rainfall is much smaller than of temperature. These results suggest xv ANNUAL REPORT 2014-15 that the climate change impact on Indian agriculture will be largely driven by temperature change. • Analysis of total factor productivity change, technical efficiency change and technical change in production of rapeseed and mustard in major growing states revealed that the mean (states) TFP increased at the rate of 3 per cent during 1994-95 to 2011-12. The technical efficiency has increased at the rate of 2.24 per cent and technical change at the rate of 1.9 per cent. • A study on regional crop planning for Punjab state showed that sugarcane and paddy (basmati) are the most profitable crops to be grown considering market price situation. These two crops remain most profitable even when input subsidies are removed and environment effect of crop cultivation is monetised and included in cost and returns. It was found that rice in kharif and wheat in rabi enjoy strong technological advantage over other crops besides stable market and input subsidy benefits. The study observed that pricing of power and fertilizer at economic prices is not likely to shift area under wheat and paddy but it will reduce irrigation water use significantly. • A study on performance of rainfed agriculture at national level revealed that yields of crops during 1990s improved but at a higher cost. The increase in cultivation cost was higher in traditional rainfed crops compared to water intensive crops like paddy and sugarcane. The study suggests for increased investment in rainfed areas for water conservation and improving water use efficiency for sustainable crop production. • Continuance of rice-wheat cropping pattern in Punjab has led to severe decline in groundwater table in recent years and requires an optimum crop plan that could be sustainable and profitable for farmers. If use of groundwater is restricted to replenishable level then optimum cropping pattern dictate large area in kharif season to be kept fallow. Optimum crop plan for rabi crops suggested no change in existing cropping pattern and only minor reduction in area under maize crop. Following the optimum crop plan of sustainable groundwater use, net returns from crop sector reduces by about one-third. The optimum crop plans indicate that reduction in farmers’ net income due to removal of subsidies will be much lower than the cost borne by society. • The study on groundwater use in Punjab indicated drastic decline in water table especially during the recent years. Among different crops, paddy emerged as the most water- guzzling crop and farmers give more than 50 per cent higher groundwater than the optimum level for its cultivation. The average cost of groundwater extraction in Punjab was estimated as ` 0.46 per cubic meter (cum) and farmers pay almost half of the groundwater irrigation cost even in case of free electricity supply by the government. The groundwater extraction cost was found to be varying directly with the decline in water-table and inversely with the size of land holdings. The study further shows that removal of power and diesel subsidy would make crop production comparatively less profitable but may not alter the dominance of paddy-wheat sysetm which enjoys high level of policy as well technological edge over other crops. xvi national institute of agricultural economics and policy research • In other study on Women Empowerment in Agriculture Index (WEAI) was done in Rupnagar district of Punjab state. Study revealed that 31 per cent of farm women are empowered having WEAI score of 0.815. Control over income, use of production resources and proper time management are the factors contributing towards their empowerment. • The network project on market intelligence intended to provide price forecasts to farmers on selected agricultural commodities as to enable them take informed production and marketing decisions. Price forecasts for major agricultural commodities are disseminated to farmers before sowing and during harvest so that farmers can take benefits from possible price forecasts. So far 129 forecasts have been generated and provided to farmers. The predicted prices have been found close to the actual market prices in most cases. • A comparison of value chains for milk between formal and informal sector was made considering aspects of efficiency, inclusiveness and financing mechanism. Study revealed that majority of smaller dairy farmers use informal channels (vendors and consumers) for selling milk, while large dairy farmers prefer selling milk to formal channels including cooperatives, multinational and domestic private processors. Study further revealed that small dairy farmers are also supplying to formal sector value chains as processors cannot heavily rely on few large farmers. Study showed that price difference was not significant indicating milk markets in Punjab are competitive, though the food safety standards are more associated with formal markets. Analysis showed that more than half of the dairy farmers borrow credit from formal and informal financial institutions. Chain-based financing is available to less than one-third of farmers. • Establishing processing unit for mango pulp requires substantial investment and working capital. The study on financing of value chains for mango pulp industry in Andhra Pradesh revealed that about 55 per cent units require finance as working capital and 27 per cent require assistance for both working capital and term loan. Commercial banks and private sector banks are the main source of finance for establishing processing units. Study revealed that mango processers are facing challenges due to middlemen menace, post-harvest losses, poor profitability and seasonality of processing activity. Other challenges facing mango processors include high perishability, lack of postharvest infrastructure and standardized supply-chain system. • The trend in sectoral employment showed that the rural labour market is undergoing profound changes. Despite increase in the total rural workforce during 1993- 94 to 2011-12, workforce in agriculture declined during 2004-05 to 2011-12. This decline in labour force was primarily due to withdrawal of female workers from agriculture. Moreover decline in female workforce was not accompanied by increase in female workers in non-farm sectors. Among the main factors, high wage rates and labour productivity in nonfarm sectors were the drivers of labour shift from agriculture to non-agriculture. A changing work culture and the emerging xvii ANNUAL REPORT 2014-15 contractual arrangements between labour and its hiring households are also affecting the rural labour market. The improvement in education and skills of large uneducated and unskilled rural labour will further change occupation structure of rural labour force. • Analysis showed that labour productivity in agriculture increased with increase in labour absorption in most crops during TE 1975-76 to 1995-96, while after mid- 1990s, per hectare labour use has shown mixed trends. It declined in majority of the crops, but increased in paddy in West Bengal and cotton in Gujarat and Punjab. Study revealed that productivity of labour in agriculture has been higher than decline in labour use per unit of area during past 15 years. • A study on agricultural diversification indicates that Indian agriculture is diversifying towards horticultural crops. The speed of diversification accelerated after 2005-06 as compared to period 1995- 96 to 2005-06. The growth in horticulture output showed twice the growth rate of all crops and non-horticultural crops, except cotton. This could happen due to very high differential in productivity of horticultural crops relative to non-horticultural crops and high demand for horticultural crops. Price trend evinced that prospects for demand-led growth of horticultural crops are very high. • Study on farm income and agrarian crisis showed that during two decades since 1983-84, the growth in income of farmers and farm labourers could not keep pace with growth in income earned by the nonfarm workers. However, in recent years, the income gap has been narrowing. Growth rate in farm income is found to be closely associated with number of farmers’ suicides. The study observed that after 2004, number of farmers suicides declined and growth rate in farmers’ income accelerated. • A study on employment diversification in rural India and the role of non-farm sector in altering the economic and social life of rural people revealed that between 1993-94 and 2011-12, employment share declined by 20 per cent for crop sector and by 48 per cent for livestock sector, while the share of non-farm sectors in rural employment increased substantially (83%). Analysis further revealed that nonfarm employment was higher for marginal and small farmers compared to large farmers. Notably, construction activity was attracting more number of workers than other non-farm activities after 2004-05. Its share in non-farm sector is bulging at the cost of other sectors such as trade and hospitality, community, personal and social services. The main factors determining non-farm employment includes age and gender, education of household head and size of households. • The study on consumption of livestock products (milk, eggs, meat) for improving food and nutritional security revealed that cereals consumption, a predominant contributor of total nutritional intake, is declining over the years. Any reduction in cereals consumption is bound to be reflected in nutritional impoverishment if it is not accompanied by sufficient large increase in non-cereals food, particularly livestock products which are high in calorie and protein. Temporally, the share of xviii national institute of agricultural economics and policy research livestock products in total calorie (protein) intake as well as their supply increased during the past 16 years (1993-94 to 2009- 10). Further, livestock products are better source of nutrients supply during drought conditions and relatively stable prices than other products make them a preferred commodity. • The Institute organised a number of training programmes to achieve the objective of capacity development of scientists in ICAR institutions and state agricultural universities (SAUs) and project staff. Besides, NIAP conducted two oneweek training programmes on ‘core issues in the agricultural sector’ for the officers of Indian Economic Services. The several other short-term project-wise trainings, interaction meetings, workshops, etc. were also organized which helped in capacity building of the project partners. • The website of NIAP available at http:// www.ncap.res.in has been redesigned and regularly updated. The Institute publications are now available in the PDF format and can be downloaded. Data revealed that policy briefs, working papers and policy papers were the most referred publications during the year. The faculty at NIAP published 32 research papers in leading journals of national and international repute and contributed 16 book chapters/ popular articles. More than 12 presentations were made in national and international conferences. The scientists of the Institute were involved in a number of professional and policy interactions and projects. • Faculty of NIAP have played a major role in creating proper perception and awareness among public on various agricultural issues through public debates and newspaper reporting. In total 11 policy inputs were provided to various Ministries by the Institute. Director NIAP Chaired important high-level committees constituted by the Government of India on price policy, WTO and Trade during the reporting year