Why the state needs to act now?

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SRINAGAR: The conversion of agricultural land into horticulture land in Kashmir is occurring at a fast pace. According to an economic survey, the agricultural land in Kashmir has shrunk by two lakh hectares since 1996. Overlaying this development are demographic pressures which have induced a flawed and warped form and design of urbanization in Kashmir. Increasingly, the land to people ratio is getting skewed by the day. Farmers and agriculturalists are converting their land into horticulture because horticultural products are more lucrative- horticulture brings six times greater revenue than agriculture. 

This development which has led to the fast decline of agricultural land is alarming. Among other things, it means and implies that our self sufficiency (or whatever remains of it) will no longer hold with the passage of time. Obviously, this will have repercussions on our food security. Our food import bill will rise and our agricultural production will be non-existent. As is well known, agriculture development is an important component of economic development and hence poverty reduction. If our agricultural resources and production gets depleted, our economic development will take a hit and our ‘prosperity’ will be an illusion.

What we urgently need and require is an institutional framework that incorporates and prioritizes robust agricultural development policies. From a generic and broader perspective, we need a systemic overhaul that aligns the input side of the equation with the output side. This naturally calls for a synthesis of market forces with a prominent and robust role for the state.

Essentially, if we employ an analytical framework to understand the issue, it may be revealed that the main problem lies with the indifference of the state towards agriculture or even apathy. This leads to a condition wherein ‘the price signal’ – contra economic theory- gets distorted. Or, more accurately, the price signal sent by the market prioritizes and incentivizes horticulture and allied activities over agriculture. As economic theory posits, human beings are rational agents (this may be debatable). As rational agents, farmers respond to incentives and signals and switch over to horticulture. This switching is inevitable from another angle too: the seasonality of agricultural products leads to variability of income hampering the production and consumption process of farmers. A regular and stable income is the need of every person let alone farmers. To smoothen their production and consumption flows and make their income stable, farmers switch over to more secure sources of income.

This is , insofar as the, reasons for the switching of farmers and agriculturalists into activities other than farming is concerned. The question is what can be done about it?

The answer is state activism and a larger and effective role for the state in agriculture. Markets cannot and should not be ignored here. They must play a complementary role.  What could be the policy response of the state?

The state should, first, make vigorous efforts to take recourse to what have been called ‘targeted subsidies’ , in the sense of making subsidies more effective and efficient in the interests of the producers. This could be followed up with more effective and vigorous provision of public goods like robust and focuses irrigation facilities, transportation and logistics support. The state could also create ‘thick markets’ for agricultural produce which will create more buyers and sellers. This could, among other things mean, land improvement programs, assistance in processing, improved infrastructure, and help in accessing diverse and accessible retail outlets, and marketing support.  Productivity needs to be improved with new technology and application of latest scientific methods.

Given the variability of demand, supply and price, the state could also assist in price stabilization efforts. Price floors for producers and price ceilings for consumers could be enacted. Last but not the least, income stability for farmers is a vital policy program; this would smoothen the production and consumption process of farmers and reduce income variability.  All these options have been tried and tested in many formats and countries; the route to success lies in coordinating and executing these seamlessly and ensuring that ‘leakages’(corruption) are reduced to the bare minimum if not eliminated.  

What is required is a policy design and formulation that aligns producer interests with consumer interests, robust provision of public goods and income support and other allied policies that align the state with the markets. Contemporarily, the drift of events is in a direction that would inevitably lead to the depletion of our agricultural resources and activities rendering us dependent on other markets for our basic needs. This needs to end for obvious reasons. All in all we need a Green Revolution in Kashmir. And, it perhaps only the state with ancillary support from markets that can lead to this revolution.  All this is doable but the question is will the government wake up to this reality before it is too late? This is a billion dollar question.

 

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