Farm lessons from China – Burning Issues

Table of Contents

Context

India and China have limited arable land
China has about 120 million hectares (mha)
India has 156 mha.
Irrigation cover – China’s irrigation cover is 41% of the country’s cultivated area, while India’s irrigation cover is 48%.
Total sown area – China’s total sown area is 166 mha, compared to India’s gross cropped area of 198 mha.
Even though China has less land under cultivation, its agriculture output is valued at $1,367 billion, more than three times that of India’s agriculture output, $407 billion.

Indian farmers had been taxed much more than they have been subsidised — despite high amounts of input subsidies.
This negative PSE is a fallout of restrictive marketing and trade policies that do not allow Indian farmers to get free trade prices for their output.
This negative market price support exceeds the input subsidy support the government gives to farmers through low prices of fertilisers, power, irrigation, agri-credit, and crop insurance.
China dropped the price support scheme for corn and has been gradually reducing the support prices of wheat and rice.
India’s stock situation in July 2019 was 81 MMT as against a buffer stock norm of 41 MMT.

India spent only 3 billion dollars under its direct income scheme, PM-KISAN in 2018-19, but the country has spent $27 billion on heavily subsidising fertilisers, power, irrigation, insurance, and credit.
This leads to large inefficiency in their use and also creates environmental problems.

The Indian government has been trying to jack up MSPs for 23 crops for farmers.
India needs to reduce the gamut of commodities under the MSP system and keep MSPs below international prices.
India should consolidate all its input subsidies and give them directly to farmers on a per hectare basis and free up prices from all controls.

Agriculture sector accounts for 18 per cent of India’s GDP and provides employment to 50 per cent of the workforce of the country.
The Gross Value Added by agriculture, forestry and fishing is estimated at Rs 17.67 trillion (US$ 274.23 billion) in FY18.
Government initiatives