Not by price alone

The Centre's decision to raise the minimum support price (MSP) sharply for pulses, moderately for coarse cereals and oil seeds, and not at all for rice and cotton (the nominal hike for rice merely rolls in the bonus offered last year) is right, in the conventional sense. The signal against increasing acreage for rice this kharif is sound, given the huge stocks with the government. The signalling is right, too, with the 30% hike in the MSP for pulses, but its utility is in doubt since farmers already receive higher prices from the market. The technology mission on pulses has not really delivered, with the supply trailing, by far, the fast-rising demand for pulses.

Imports are no cure, because import prices are high, with the rest of the world not producing much of pulses. With rising income levels, and rising demand for superior foods, the only solution is to rapidly raise output. And for that, price changes signalling a shift in the cropping pattern are not sufficient. We need to raise yields and output across the board.

Farm economists stress the interdependence of different lines of farm activity. Brajesh Jha of the Institute of Economic Growth, for example, finds that Indian milk output is constrained by the availability of fodder and of oil cake. A shift in the cropping pattern might alleviate the shortage of a particular agri commodity, but could well trigger shortage, perhaps unforeseen, of others. Cropping mix changes are welcome to the extent they raise productivity (as would happen, for example, if water-scarce Maharashtra were to abandon sugarcane and Bihar to embrace it).

But otherwise, the focus has to be on increasing output in every crop, through modern crop husbandry, huge investment in water management and new hybrid and bio-engineered seeds. Such changes are not possible without a change in the political culture vis-a-vis farming. Investment is viable only if diversion of subsidy is viable. Farmers need new organisational forms to take advantage of markets and technology. Only reforms will ensure sustained growth in agriculture and rein in inflation.