Changing Sources of Growth in Indian Agriculture: Implications for Regional Priorities for Accelerating Agricultural Growth
56 Pages Posted: 27 Mar 2014
Date Written: February 2014
Indian agriculture was transforming from a cereal-based production system toward high-value crops (HVC) during the 1990s. However, food security concerns resurfaced during the first decade of the 21st century, and the policy environment tilted in favor of cereal-based production systems, especially rice and wheat. This paper revisits an earlier study to evaluate how the policy shift influences the patterns and the sources of agricultural growth in India and assesses their implications for regional priorities for higher, more sustainable, and more inclusive agricultural growth. The study found that technology has remained the most important source of agricultural growth due to policy emphasis on cereal-based food security. Nevertheless, agricultural diversification toward HVCs, driven by a sustained rise in per capita income and urbanization, among other factors, emerged as the next most important source of agricultural growth. The growth in high-value agriculture has come largely from area reallocation from less profitable coarse cereals, mainly millets and sorghum. The contributions of area expansion and commodity prices to agricultural growth have been erratic and small, suggesting that these cannot be sustainable sources of agricultural growth.
The sources of agricultural growth, however, have varied widely across the regions; while the irrigated northern region followed a technology-led growth trajectory, the rainfed western and southern regions followed diversification toward HVCs as the main strategy to enhance and sustain agricultural growth. Agricultural diversification toward HVCs was found to exhibit a pro-poor bias and thus can serve as an important pathway for smallholders to move out of poverty.
In the long run, growth in agriculture must come from technological change and diversification toward HVCs. To sustain agricultural growth, investment in agricultural research must be increased, and the agricultural research agenda must be revisited in view of the emerging challenges and market opportunities in agriculture and the agrifood industry. Promoting high-value agriculture will require enabling policies, institutions, and infrastructure that facilitate farmers’ access to remunerative markets.
Keywords: India, South Asia, Asia, agricultural growth, agricultural policies, smallholders, high value agricultural products, high value agriculture
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