Agriculture Summit 2006: Reforms for Empowering the Farmer
October 18-19, 2006, Vigyan Bhavan, New Delhi

Address by Mr P M Sinha, Chairman, FICCI Agriculture & Rural Development Committee

Hon'ble Prime Minister, Dr Manmohan Singh
Hon'ble Union Minister for Agriculture & Consumer Affairs,
Food and Public Distribution, Shri Sharad Pawar
Hon'ble Minister of State for Agriculture & Consumer Affairs,
Food and Public Distribution, Shri Kanti Lal Bhuria
Secretary, Department of Agriculture & Cooperation, Smt Radha Singh
FICCI - President, Mr Saroj Kumar Poddar
FICCI - Secretary General, Dr Amit Mitra

We are very grateful to the Hon'ble Prime Minister of India, Dr. Manmohan Singh for kindly accepting our invitation to inaugurate the Agriculture Summit 2006. Sir, we are indeed honoured to have you here at this important event. We are also delighted that Hon'ble Minister of Agriculture, Shri Sharad Pawar and his Ministry have once again come forward to partner in organizing Agriculture Summit this year as well.

FICCI had constituted a Task Force on Agriculture Reforms five years back, which has been working very assiduously. The mandate of the Task Force, which I chair, has been to support agri -reforms and policy changes, with a view to make Indian agriculture viable and raising the incomes of farmers by making them globally competitive.

Sir, We are grateful to you and your government for implementing some of the pertinent recommendations of the Agriculture Summit 2005. To quote a few:

• Amendments in the APMC have taken place in many states
  
• Number of items in the Essential Commodities Act have got reduced
  
• Contract Farming and Direct Marketing of farm produce has been initiated.
  
• Integrated Food Law and Warehouse Receipt bill have been tabled in the Parliament
  
• Forward Contract Regulation (Amendment) Bill has also been tabled in the Parliament
  
• Modernisation of agricultural marketing infrastructure through private investment and setting up of terminal markets
  
• Opening up of a separate window for self-help groups or joint liability groups of tenant farmers by the banks, has begun.
  
• Provision of short-term loans to farmers at 7 % has been announced.

We thank you and your Government for sincere efforts to revitalise the agriculture sector. We feel that we have only made a beginning and much remains to be done to accomplish our mission. There are many more issues that need to be delved into for devising appropriate policies and concrete action plans.

1. There has been a secular decline in Agriculture growth rate from 4.7 percent in the eighth plan and to only around 1.5 percent during the first four years of the current plan. We need to accelerate farm growth to 4 percent plus.
   
2. We find that our food grain production is showing signs of stagnation and it is the non-food grain segment of agriculture that is growing much faster. In food grains, we are faced with stagnation in productivity even as our productivity levels are way below global levels and this is raising concerns about our food security. Time has come to deliver new knowledge and crop technologies and policy has to create new formats for their development and delivery.
   
3. In the non-food grain segment, higher growth is not translating into higher income for the farmers because of low levels of value addition. Here, we need to accelerate implementation of the National Horticulture Mission and create infrastructure that facilitates and supports value addition.
   
4. We continue to have conflicting domestic policies related to production, procurement, pricing and distribution and farmers still face risk from price volatility.
   
5. Despite the fact that India is the largest producer of farm commodities in the world - Adhoc export bans on some products are not conducive to building a sustained export market.
   
6. We find that capital formation in agriculture continues to be low. The actual investments in agriculture are only 1.3 percent of the total GDP.

We are, therefore, carrying forward our agenda that we set for ourselves in the first Agriculture Summit last year. In this Summit, we are looking for suggestions and solutions that would accelerate the pace of reforms and also create opportunities for the farmers and the investors, to realize better returns from investments in farming.

While my colleagues would delve into these issues in greater detail during these two days, I would briefly talk about some of the broader issues.

1. Considering that the contribution of agriculture to the total GDP is nearly 20 percent, we strongly feel that a minimum 5 percent of the GDP should be invested in Agriculture & Allied sectors.
   
2. It has already been proposed during the last agriculture summit that we need to attract private investment and modernise marketing infrastructure. As per our estimates, a total investment of around Rs 62000 crores is required for this and has to be made available by the government and private sector.
   
3. Presently, there are 40 odd agencies at the State and Central level giving incentives/subsidies for various schemes under infrastructure schemes or for processing industries etc. These agencies should be amalgamated and brought under a single umbrella.
   
4. Public-Private Partnership models should be evolved with tax incentives for the private sector. While providing incentives to the private sector, we must ensure that the benefits percolate substantially to our farmers, through direct purchases by the investor, cutting out the middlemen. Tax incentives should be across the value chain to include storage and transportation facilities.
   
5. We need to announce standards for all crops, quality grading and sizes in line with Codex. Sorting and grading stations, as close to farms or markets need to be set up. Entire agri value chain has to be put in place to avoid enormous losses and facilitate exports.
   
6. We, at FICCI, feel that Public-Private Partnership in R&D with focus on raising crop productivity, creation of regional Centres of Excellence and permitting co-locating industry R&D with public institutes, would greatly help.
   
7. Bio fuel is one sector that can be promoted on a large scale. We suggest that we should publicly announce wasteland-demarcated area for its acquisition/lease to the private sector, and a transparent policy for allocation of wasteland on a long-term lease.
   
8. Other sectors that appear to be promising and are not climate dependent are horticulture, floriculture, dairy, meat, poultry and fishery
   

Let me sum up by saying that agricultural scenario is fast changing. As a result of increasing participation of the corporate sector in different segments, we expect significant developments in the near future. It is imperative that government takes up a proactive role in catalysing private initiatives through creation of a framework that creates and sustains productive and mutually rewarding linkages between the farmer and the corporate sector. Sir, FICCI with its strong alliance with the government, would strengthen the process of ongoing reforms, which will empower the farmers, while creating a viable environment for investors. We assure you of our constant support in this endeavour.

With these words, I thank you Sir for listening to our suggestions and being a part of this momentous event.