Seeds sown for agriculture and food processing sector in Interim Budget need energetic nurturing

Investments in micro-irrigation, farm ponds, and rural roads translate to water conservation, enhanced production and productivity, and higher income potential.

India's rising crescendo of annual per capita income at about Rs 2.75 lakh is playing a delicious symphony in the kitchens of its citizens. The demand for processed food is steadily rising, presenting a unique opportunity to satiate these cravings and the potential to transform India into a food factory for the world.

With the right set of policies, it will be easy to drive one's imagination of plates piled high with convenient, delicious options, fields brimming with value-added crops, farmers empowered with technology, and a nation marching toward self-sufficiency. The Interim Budget 2024, though a mere appetizer before the July feast, offers some promising seeds of hope for the agriculture and food processing sectors. Let's savour them:

For Farmers, A Brighter Harvest

Picture millions of farmers across the country, the backbone of India's agricultural story, receiving a welcome income boost. The budget hints at an increased allocation for the PM-Kisan scheme, currently providing
Rs 6,000 annually. This could be a critical shield against rising input costs and volatile markets for their output, allowing them to invest more in their land and livelihoods.

Small farmers, traditionally at the mercy of middlemen, are beginning to negotiate deals through their smartphones thanks to e-NAM expansion and other digital initiatives. Enhancing logistics, connectivity to quality testing and standardisation, and scientific warehousing through public investments would be equally critical to driving e-NAM deep into the farming hinterland.

These initiatives empower farmers with real-time market information and direct access to buyers, potentially fetching them better prices and breaking the chains of dependence. But what truly transforms their lives is resilient infrastructure, including their facilitation to move up in the value chains.

Investments in micro-irrigation, farm ponds, and rural roads translate to water conservation, enhanced production and productivity, and higher income potential.  Farmers with better irrigation and better inputs, including seeds with productivity potential, will be the true recipe to ‘Doubling Farmers’ Income.’  Further, farmers with an adequate advance intimation of likely crop prices through well-developed futures markets and a spot market backed by WDRA-regulated repositories trading just the depository receipts will remain a better recipe indeed. A food for thought in the process of preparation of the July budget.

For Food Processors, A Value-Added Feast

The expansion of Mega Food Parks is music to the ears of food processors, especially smaller players. These parks provide the much-needed infrastructure and processing facilities, enabling them to add value to agricultural produce and compete effectively.

Imagine new parks springing up nationwide, creating local processing hubs and generating employment opportunities. Connecting the farmer-producer organisations to the value-addition opportunities these parks offer will be critical to delivering the benefits to their member farmers.  The real feast lies in value addition opportunities delivered at the farm level. Initiatives promoting food diversification, organic farming, and branding could be a game-changer in our movement towards self sufficiency and strengthening agricultural and value added foods exports.

Shelves stocked with diverse, high-quality food products, proudly bearing the 'Made in India' label, capturing global markets, and generating valuable foreign exchange should be possible with appropriate policies and institutional support. Streamlining the licensing process under the One Nation, One Food Processing License scheme could be a major boost. Food processors shall focus on innovation and expansion instead of getting bogged down in paperwork.

Remember, Growth Needs Nurturing

These are promising announcements, but it's crucial to remember that this is an interim budget.  Accordingly, it defines the policy intentions to drive agricultural growth. More details and concrete allocations will come in July, pushing the cart of policy aspirations forward.

Additionally, successful implementation is key. Streamlining processes, ensuring timely fund disbursement, and tackling bureaucratic hurdles are crucial to making these plans a reality. Sustainability is also key. Addressing issues like water scarcity, soil health, and climate change remains critical for long-term agricultural sustainability. We need solutions that ensure environmental protection and future-proof the sector.

Measures to boost regulated and scientific warehousing, which has the capacity to wipe off two-thirds of the food subsidy bill by reducing wastage and increasing grain availability, are much awaited.  Information on production and storage is critical to the formation of prices in markets, and efforts to strengthen the same are critical to ensure the robustness of the price discovery process of the markets and their transparency, empowering the smallest of the growers in the sector.

Setting up a quality standards regime will be critical for both the warehousing and food processing sectors while slowly accounting for the fading away of regional preferences for the varieties rather than functional suitability for human consumption.  Hope to see much of these expectations woven into the July budget announcements to further strengthen the rural economy and the primary sector.

V Shunmugam is Adjunct Faculty with National Institute of Securities Markets. Views are personal, and do not represent the stand of this publication.