pingali - india agricultural renaissance
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Agricultural Renaissance and the pursuit of inclusive growth in 21st Century India. Lecture to the 94th Annual Conference of the Indian Economics Association. 28th December 2011, Pune, India.TRANSCRIPT
Agricultural Renaissance and the Pursuit of Inclusive Development in 21st Century India
Dr. Prabhu Pingali, Deputy Director
& Mumukshu Patel, Program Officer
Agricultural Development
Ajit Kumar Sinha Memorial Lecture to the 94th Annual Conference of the
Indian Economics Association
December 28, 2011
*The views expressed here are personal and do not reflect the official position of the Bill and Melinda Gates Foundation.
Inclusive growth: emphasizes both the pace and pattern of growth
Inclusive growth and development
The role of agriculture: key to
ensure inclusive growth in India in
the 21st Century
− Role in GDP
− Share of employment
− Links with new markets
© 2011 Bill & Melinda Gates Foundation | 2 December 28, 2011
Inclusive growth refers both to the pace and pattern of growth
• Strong focus on economic growth as a necessary condition for poverty reduction
• Long-term perspective, concerned with sustenance of growth
• Broad based, across sectors
• Include a large part of the country’s labor force
• Emphasis on productive employment, not redistribution of income
• Aligned with the absolute definition of pro-poor growth
• Fuelled by market-driven sources with government providing a facilitating function
Source: World Bank (2009), “What is inclusive growth?’; also, Commission on Growth and Development, Strategies for Sustained Growth and Inclusive Development; Thorat (2010) “How Socially Inclusive has growth been?”; Planning Commission (2011), Faster, Sustainable and More Inclusive Growth
The Green Revolution: 20th Century India's inclusive growth experience
Agricultural productivity growth, unleashed by the Green Revolution, brought some of the most dramatic poverty reduction in India resulting in more inclusive development
© 2011 Bill & Melinda Gates Foundation | 3 December 28, 2011
Source: World Bank (2008), World Development Report; national rural poverty line data
This poverty reduction occurred – principally through Ag GDP growth – since India underwent the ‘Hindu rate of growth’ during those decades
But, we could have done better
Poverty
Indian poverty rates have not fallen as quickly as China: in 1981 China had 835 million people living in extreme poverty (compared to 420 million in India), in 2005 that number was down to 208 million (for India it stood at 456 million - an absolute increase of 36 million).
© 2011 Bill & Melinda Gates Foundation | 4 December 28, 2011
1211
5450
947
2572
0
1000
2000
3000
4000
5000
6000
1961 1971 1981 1991 2001 2009
kilo
s/h
ecta
re
China India
84
15.9
59.8 41.6
0
20
40
60
80
100
1981 1984 1987 1990 1993 1996 1999 2002 2005
% p
op
ula
tio
n i
n e
xtr
em
e
po
vert
y
Poverty Rate
China India
Cereal Yields
China and India: A comparative perspective ‘on pace’
Source: World Bank, PovCal database; FAO
Productivity
Cereal yield gains are stagnating in India and much lower than in China. Chinese yields are far above the world average and rapidly converging with Western Europe and the US.
Pattern of India’s development
December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 5
Concentration of poverty in states Per capita incomes – a comparative lens on ‘pattern’
Source: Planning Commission, Data Tables; Economist Intelligence Unit; IMF, World Economic Outlook $0 $5,000 $10,000 $15,000
Ethiopia
Bihar
Rwanda
Madhya Pradesh
Uttar Pradesh
Assam
Rajasthan
Orissa
West Bengal
Uttarkhand
Andra Pradesh
India
Karnataka
Kerala
Tamil Nadu
Gujarat
Punjab
Maharashtra
Delhi
China
Chandigarh
Brazil
Pattern of development: an alternative view
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Source: NASA, Visible Earth Catalog
Agricultural Renaissance in India: the pursuit of inclusive development
A strong focus on small-holder productivity growth is critical to ensure inclusive development in India
• To achieve this goal, we need a two-pronged agricultural
development strategy that:
1. Links smallholders to supply chains to feed the growing urban
middle class
2. Increases small-holder agricultural productivity in lagging
regions
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Linking smallholders to supermarkets to feed the growing Indian middle class
© 2011 Bill & Melinda Gates Foundation | 8
Leveraging the power of markets for inclusive development
Share of Urban and Rural Income (2005)
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Source: World Bank, Perspectives on Indian Poverty and ICP
Smallholders are taking advantage of new opportunities
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Dairy
Hybrid feed maize
Fruits and vegetables
The Supermarket Reality
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86 170
275
513
967
1223
1290
1717
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2003 2004 2005 2006 2007 2008 2009 2010
US
$ m
illi
on
Supermarket Sales- Top 5 Retailers (Account of ¾ share)
Futures Group* Reliance RPG (Spencer's) Vishal (Megamart) Aditya Birla (More)
Source: Reardon and Minten (2011)
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FDI in retail: role in inclusive growth What have been the lessons of FDI in other sectors in the Indian economy?
We already have joint multinational investment in the retail sector: has it hurt the prospect of inclusive growth?
Name Sales
Metro Cash&Carry 281 mn
(Germany)
Bharti (Walmart) 116 mn
Tata (Tesco UK) 103 mn
Source: Reardon and Minten (2011)
How can policy facilitate this integration for inclusive growth?
Policies need to overcome the ‘scale mis-match’ by reducing the costs of smallholder participation in markets
• Various contractual and/or out-grower arrangements can help
overcome the ‘scale mismatch’
Policies should make information access cheaper and easier, and rules clearer
Policies should aim to enhance capacity to meet quality and safety standards
Policies should help manage risk and provide credit support
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© 2011 Bill & Melinda Gates Foundation | 14
Back to the future: jumpstarting agricultural growth in lagging regions ‘Back to the future’: Increasing Agricultural Productivity in Lagging Regions for Inclusive growth
Emerging opportunities and contexts
Opportunities for jump-starting growth in lagging regions for inclusive development
We see new opportunities in catalyzing agricultural growth in lagging regions
• Private Sector investment in Indian agriculture is increasing
rapidly
• Biotechnology offers exciting opportunities, much like high
yielding varieties during the Green Revolution
• Information revolution: mobile phones and other ICT
developments offer unique advantages for agriculture,
particularly in extension services
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Role of the private sector in Ag R&D
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The changing locus of Ag R&D in India
54
251.3 271.8
688.3
0
100
200
300
400
500
600
700
800
1994-1995 2008-2009
20
05
US
D m
n
India R&D Ag Investments
Private Public
16.6
83.4
Share of Ag R&D Investments: '94-'95
30.9
69.1
Share of Ag R&D Investments: '08-'09
Private PublicSource: Carl Pray et al, Private R&D in Agriculture in South Asia (forthcoming)
Private sector Ag investment in India: by industry and origin
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S No Industry
1984-85# 1994-95#
2008-09*
Total Indian MNCs
USD (2005, mn)
1
Seed and
Biotechnology 1.3 4.9 88.6 49.3 39.3
2 Pesticides 9 17 35.7 24.4 11.3
3 Fertilizers# 6.8 6.7 7.9 4.9 0.0
4
Agricultural
Machinery 3.7 6.5 40.5 20.5 20.0
5
Biofertilizers &
Biopesticides 0 0 1.3 1.3 0.0
6 Poultry and feeds - 3.5 7.8 7.8 0.0
7 Animal Health 0.9 2.7 18.6 3.7 14.9
8 Sugar 0.9 2.5 10.8 10.8 0.0
9 Biofuels 0 0 13.1 13.1 0.0
10
Food, Beverages &
Plantations 1.3 10.3 27 16.2 10.7
Total 23.9 54.1 251.3 155.0 96.2
Private sector is investing in a variety of industry areas
The MNCs are playing a major role
Private sector Ag investments in progressive states needs to be leveraged for lagging regions
Source: Pray (ibid)
Biotechnology: a revolution that’s already begun globally
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Will India lead or be left behind
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Should policy enable or retard India’s ability to use biotechnology to help lagging regions accelerate their growth?
GMOs can help overcome pressing social challenges: example of Golden Rice
Biotech is not all GMOs—MAB selection
Ex-ante estimates of financial benefits of speeding technology development using MAB in India for rice has an NPV of $447 million
Stress tolerant varieties: Swarna sub-1
Yield advantage of Sub1 version is
typically double, or around 1-2 t/ha
under submergence
The role of public sector in ensuring biotech is leveraged aptly for inclusive growth
Seek collaboration and partnership with the private sector
Concentrate on areas under-researched by the private
sector
Establish IPR and bio-safety regulations
Generate public goods and human resource capacity
Explore new mechanisms for international collaboration
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Harnessing the power of information: mobile phones and ICT for agricultural development
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Source: TRAI; PWC (2011)
New contexts for Agricultural Development in India
With rapid economic growth and urbanization, largely following
liberalization in the 1990s, we see several different contexts for
agricultural development in India
Two key contexts that need to be understood more are:
• Rising wages
• Feminization of agriculture
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Labor wages have increased rapidly
© 2011 Bill & Melinda Gates Foundation | 23 December 28, 2011
Much of the employment growth is in the non-farm sectors, which is creating a net pull away from agricultural labor and driving up wage rates.
Source: Government of India
Dealing with rising labor scarcity
Short to medium term:
− Small scale mechanization
− Herbicide use & minimum tillage systems
− Labor saving management practices
− Changing contractual arrangements for leasing land
Longer term:
− Changes in the organization of production
− Changes in farming systems – towards lower labor intensity
− Reducing cropping intensities on marginal lands
December 28, 2011 © 2010 Bill & Melinda Gates Foundation |
Increasing feminization of Indian agriculture: ‘50 percent solution’ for inclusive development The symbolic (and real) face of the Indian small-holder has been the face of
a woman farmer
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Feminization of Indian agriculture is growing today, albeit in a different
context
• Migration from rural to urban areas is largely a story of men
• Women are increasing their role in farm management, entrepreneurship and have a greater voice
Indian policy needs to leverage this development for inclusion
Key trends relevant to agricultural development in lagging regions
Source: “Food Processing in Bihar,” Government of Bihar; “Orissa Agriculture Statistics 2009.”; Department of Agriculture and
Cooperation, GOI. “Regional disparities in electrification of India – do geographic factors matter?” Center for Energy Policy and
Economics, Swiss Federal Institutes of Technology, Nov 2006. Map created based on 1999-2000 NSS data.
Small and
fragmented
holdings
Infrastructure
Climate-change
Weak extension
services delivery
• Operational land holdings in East Asia are small
and fragmented (Avg. size in Bihar is 0.75 ha)
• Farmers cannot access useful information
about new technologies or markets
• Farmers continue unsustainable and low-
yield farming practices
• A significant amount of cultivated land in East
India is vulnerable to flooding and droughts
• Farmers are exposed to farm losses and
income fluctuations
• Food supply is often at risk
• Extension services offered at the central and
state government levels are ineffective at
informing and training farmers
• Existing technologies are not delivered to
farmers
• Farmers are not utilizing new technologies to
improve crop yield
• Outputs from research and development are
not being adopted
• R&D in agriculture has declined since the Green
Revolution
• SAUs do not have enough funding
• Farmers are unable to utilize new innovative
technologies to improve their crop yields
• Greater number of rural people relying on
agricultural income from smaller plots of land
• High incidences of landlessness (~32% of
landless live in our eastern lagging regions)
26
Water Scarcity
• Lagging regions adopted little of Green
Revolution’s technology advances
• They are behind the rest of India in crop
productivity due to limited usage inputs
Implications for lagging regions’ agriculture Description
Policy agenda for lagging regions and inclusive development
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Invest in infrastructure to link lagging regions with the mainstream economy
Encourage smallholders to meet the rising food and feed demand in the rapidly growing regions
Promote crop neutral intensification
Pro-actively connect agriculture and nutrition, using new technologies
Focus on education, health and safety-net programs for the ultra-poor
Emphasize the importance of girls’ education and empower women
Conclusions
The agricultural sector is key for India’s inclusive development – for
better pace and pattern of growth
• Small-holder productivity growth and links to emerging markets –
like organized food retail – will be critical
The private sector and markets can and must play a major role in
catalyzing agricultural productivity
New technologies need to be leveraged, particularly biotech, to better
the prospects of lagging regions
The feminization of Indian agriculture is an immense opportunity
Indian government development strategy should facilitate an
Agricultural Renaissance, this requires:
• Smart investments: particularly in Ag R&D
• Smart policies: to link small-holders to new markets, apt
policies for biotech, streamlined rules and regulations for
private sector in the Ag sector among others
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December 28, 2011 © 2011 Bill & Melinda Gates Foundation | 29
Thank you!