India has enough land for farming but there are other bigger issues to worry about

agricultureVivek Kaul

One of the fears that has been raised in the aftermath of the government promulgating an ordinance to amend the land acquisition act is that land will be taken away for other purposes and given that, the amount of land used for farming will come down dramatically.
This is a very specious argument that is being made.
Data from World Bank shows that around 60.3% of India’s land area is agricultural land. The bank defines agricultural land as “share of land area that is arable, under permanent crops, and under permanent pastures.”
In fact India has the second largest agricultural land in the world. A
s India Brand Equity Foundation, a trust established by the Ministry of Commerce and Industry points out: “At 157.35 million hectares, India holds the second largest agricultural land globally.” Only, the United States has more agricultural land than India.
What this means is that India has enough land dedicated to agriculture and even if some of it is taken away for other purposes there will still be enough land left for agriculture. Nevertheless, there are bigger problems when it comes to Indian agriculture.
Take the case of China. India has more arable land than China. This, despite the fact its total area is only a little over 34% that of China. However, China produces more rice and wheat than India does.
As a report in The Wall Street Journal points out: “India is the second largest producer of rice and wheat after China, with China producing about 40% more rice and wheat than India. India is also the second largest producer of fruits and vegetables in the world after China, but China’s fruit production is three times India’s production.”
What this tells us is that India’s agricultural productivity is low compared to that of China and many other countries in the world.
A report in Mint using 2013 data from the Food and Agricultural Organization points out: “India produces 106.19 million tonnes of rice a year from 44 million hectares of land. That’s a yield rate of 2.4 tonnes per hectare, placing India at 27th place out of 47 countries. China and Brazil have yield rates of 4.7 tonnes per hectare and 3.6 tonnes per hectare, respectively.”
In case of wheat the productivity is better than that of rice. “With 93.51 million tonnes of wheat from 29.65 million hectares, India’s yield rate of 3.15 tonnes per hectare places it 19th out of 41 countries. Here, we do better than Brazil’s yield rate of 2.73 tonnes per hectare, but lag behind South Africa (3.4 t/ha) and China (4.9 t/ha),” the report points out.
There are multiple reasons for this low productivity. The average holding size of land has come down over the decades.
The State of the Indian Agricultural Report for 2012-2013 points out that: “As per Agriculture Census 2010-11, small and marginal holdings of less than 2 hectare account for 85 per cent of the total operational holdings and 44 per cent of the total operated area. The average size of holdings for all operational classes (small & marginal, medium and large) have declined over the years and for all classes put together it has come down to 1.16 hectare in 2010-11 from 2.82 hectare in 1970-71.”
The shrinking size of the average land holding of an Indian farmer has held back agricultural productivity. There is not much that can be done about this. But there are other areas which can be worked upon. As the State of the Indian Agricultural Report points out: “To enhance productivity, easy and reliable access to inputs such as quality seeds, fertilizers, pesticides, access to suitable technology tailored for specific needs, the presence of support infrastructure and innovative marketing systems to aggregate and market the output from large number of small holdings efficiently.”
Ensuring that quality seeds are available is very important. “The efficacy of other agricultural inputs such as fertilizers, pesticides and irrigation is largely determined by the quality of the seed used. It is estimated that quality of seed accounts for 20-25% of productivity. Hence timely availability of quality seeds at affordable prices to farmers is necessary for achieving higher

agricultural productivity and production,” the report further points out.
Another issue which adds to the problem is that “substantial chunks of scarce land remain untilled because of landowners’ reluctance to lease out land for fear of losing its ownership.”
What these details tell us clearly is that India has enough land for farming. The problem is that it is not productive enough. The other huge issue is that for nearly 58% of India’s population (as per India Brand Equity Foundation) agriculture is a primary source of livelihood. But agriculture accounts only 14% of nation’s GDP.
Hence, there is a huge requirement to move people away from agriculture into other areas. This can be done if enough industry and jobs are created. For that land is required and farmers have that land.
The worrying point is that in the past when governments have taken away land from farmers, they have not been adequately compensated. Neither have they been re-skilled so that they can take on other professions. And too many times in the past, the government has taken land from farmers at cheap prices and sold it on too industrialists at a higher price. The industrialists have then sold it on further and made a killing. Hence, the trust system that is required for acquiring land for public purposes and building industry has broken down completely. Building this trust will not be easy.
Further, the industry has had a totally lackadaisical attitude towards the entire issue. They seem to be just interested in getting the land and profiting from it. Take the recent comment made by Sunil Kant Munjal, joint MD, Hero MotoCorp,
to the Financial Express. “We can pay but don’t make us responsible for resettlement. That should be left to a government agency,” he said. The question to ask is why can’t the industry be responsible for resettlement?
The issue of land acquisition is a complicated one. If India has to develop, land is required. There should be no doubt on that front. But the entire system of compensating and re-skilling farmers so that they can move away from agriculture needs to be thought through as well.

The article originally appeared on www.firstpost.com on January 6, 2015
(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek) 

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About vivekkaul
Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis(DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System , the latest book in the trilogy has just been published. The first two books in the trilogy were published in November 2013 and July 2014 respectively. Both the books were bestsellers on Amazon.com and Amazon.in. Currently he works as an economic commentator and writes regular columns for www.firstpost.com. He is also the India editor of The Daily Reckoning newsletter published by www.equitymaster.com. His writing has appeared across various other publications in India. These include The Times of India, Business Standard,Business Today, Business World, The Hindu, The Hindu Business Line, Indian Management, The Asian Age, Deccan Chronicle, Forbes India, Mutual Fund Insight, The Free Press Journal, Quartz.com, DailyO.in, Business World, Huffington Post and Wealth Insight. In the past he has also been a regular columnist for www.rediff.com. He has lectured at IIM Bangalore, IIM Indore, TA PAI Institute of Management and the Alliance University (Bangalore). He has also taught a course titled Indian Economy to the PGPMX batch of IIM Indore. His areas of interest are the intersection between politics and economics, the international financial crisis, personal finance, marketing and branding, and anything to do with cinema and music. He can be reached at vivek.kaul@gmail.com

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