Why the smart choice is letting farmers choose

[Prakat]

When cars, scooters, cement, bricks, and a zillion other things can be bought online, why not pesticides? 

 

It’s a question that’s been asked many times by many people these past few years. But we won’t be going into why it wasn’t allowed so far in this edition. Except to note that it’s (finally) no longer the case. Because on 24 November, the Indian government issued a gazette notification allowing e-commerce platforms to sell pesticides, subject to certain rules and guidelines under the Consumer Protection Act.

 

 It’s a liberalising move. Especially when you consider that sale of spurious pesticides is endemic to the sector.

 

Equally significant was last week’s news that the long-running pilot of direct benefit transfers (DBT) for fertilisers will undergo a data twist. One that will, hopefully, link land area to nitrogenous fertiliser use. 

 

And finally, we also got some data as Punjab’s official stubble-burning season came to a close on 30 November. Farmers in the state had burned only 1.4% less stubble than last year. 

 

Because farming habits are hard to change if the incentives aren’t right.

 

Let me explain. 

A shot at controlling spuriousness 

As it is, India is already one of the lowest users of pesticides, leaving its crops largely unprotected. It is estimated that pesticide consumption in India is more similar to Africa than to other agri-dominated or developed countries like China or the United States. 

It’s one reason why Indian agriculture is low-yield:

 

The highest losses were reported in the two food-insecure hotspots—the Indo-Gangetic plains and Sub-Saharan Africa. Losses in the two low-yield areas could be due to either warmer climate and or lack of access to more effective pesticides. It is projected that losses to insect pests and pathogens will increase with global warming.

[Source: Indian Academy of Science, Dialogue, June, 2021]

 

As for the pesticides that Indian farmers do use, industry reports say that at any point of time, about 25-30% are spurious by value as well as volume.

I spoke with Mark Kahn, an inveterate agritech investor and managing partner at the VC firm Omnivore, who has both a bird’s eye view as well as a worm’s eye view of ground realities. 

 

Because, you see, while I agree with the industry view that online sales will give farmers fair pricing, and the rest a peek into their buying behaviour, my (small) concern is around fake products. For a sector that has traditionally lived (and died) with high levels of spurious agri inputs, won’t online platforms aggravate the situation? After all, fake products abound on Amazon, Flipkart, and other similar platforms. 

 

But Kahn has a different point of view. “I agree with you. If you go on Amazon or Flipkart, there’s plenty of fake stuff. But the reality is, if you go to an agri-retailer in any village, at least 20% of agri inputs are spurious.” If sales are moved to an e-commerce platform, he believes we’ll have a better shot at regulating spurious products and stopping farmers from buying them.

 

Because as far as the new guidelines go, the whole platform could be made (or held) responsible for selling genuine products. 

 

Allowing pesticides to be sold on ecommerce platforms also doesn’t mean only progressive farmers will access it; every kind of farmer can access it, Kahn argues. And access, and the freedom to choose what products to use without external prodding, is a privilege most Indian farmers have been deprived of for a long time. 

Which brings us to the second piece of news I mentioned in the intro—plans to pilot a modified DBT system for fertilisers. 

Fertiliser in the bank?

So for the last few years, India has been testing a version of DBT for fertilisers. But it has had its share of problems, like excess usage and misuse: 

 

Currently, the version of DBT in fertilisers involves farmers purchasing their fertilisers through point of sale (PoS) devices after undergoing Aadhaar authentication. This ensures that the identity of the person who purchases the fertiliser bags is well established. However, there is no restriction on the number of bags a farmer can purchase. This sometimes leads to excess usage and chances of misuse. To curb this, officials said that a system is being thought of where farmers’ details will be fed on the PoS machines, including the land he holds and area, among others. And, as soon as he enters the Aadhaar details, it would show up on the machines as to how many bags of urea, DAP or NKPS he is entitled to, based on details entered. The state government will feed the farmer details on the PoS machines, which can then be used for this process. Govt plans pilots on new DBT model for fertilisers, Business Standard

The classic DBT we’ve rolled out for LPG or kerosene is neither possible nor desirable in fertilisers. Since the government has a monopoly on the sector, it seems to have managed to curb pilferage which was rampant and entrenched in LPG. 

 

The best outcome for DBT in fertilisers, therefore, would be to get insights into how the heavily subsidised fertilisers—which lead to a huge annual import bill—are being used. By establishing a linkage between land records and urea usage.

 

This linkage is also important because, in the larger scheme of things, it’s this skew that is hurting India:

For land under cultivation—the overall quantity of inorganic fertilizers used in India is not excessive. However, there are serious imbalances in the usage. Intensively cultivated irrigated areas under wheat-rice and rice-rice cropping cycles use far more fertilizer than the dryland and high rainfall areas. Further, there is an imbalance in the use of the three major components N, P, and K. N use is disproportionally higher than that of K. To keep the food prices low, the Government of India subsidizes the cost of fertilizers; in the financial year 2019-20, fertilizer subsidies amounted to around Rs 81,124 crore (Economic Survey 2020-2021). However, N fertilizers (mainly urea) are subsidized by 70% of the market price, P only by 35%; potash is all imported and expensive—leading to an imbalance in the use of the three macro components. Indian Academy of Science, Dialogue, June, 2021

It’s true that DBTs have backend issues with payments that exclude poor beneficiaries. But it’s still the most efficient way to take welfare to people without warping their behaviour. 

 

For behaviour-warping incentives, though, you need to look no further than Punjab and neighbouring states that do intensive farming of rice and wheat.  

“Right now, the government [of India] tries to achieve farmers’ welfare outcomes by artificially cheapening the cost of agri inputs and artificially inflating the output by way of minimum support pricing (MSP) for procurements by the Food Corporation of India,” Kahn tells me.

That distorts markets and decision-making. Which is another reason why farmers continue to burn stubble.

Those subsidies make nitrogenous fertilisers too cheap; so cheap that farmers abuse it. Secondly, they encourage farmers to keep growing these subsidised crops even when neither the market needs it, nor the environment supports it.

And this is a problem that gets more difficult to fix further downstream. 

 

For instance, nurture.farm is a company that provides a bio-decomposing solution that removes the need to burn stubble. But while it had big plans for this season, the company said incessant heavy rainfall during late September and early October in Punjab and Haryana destroyed crops and delayed harvesting. Which meant it was left with a very short window to provide farmers bio-decomposition services before the next sowing season. 

 

It’s just better to prevent excess crop cultivation right at the beginning, and not incentivise waste. Which is why many like Kahn are of the opinion that India should get rid of fertiliser and the crop subsidies (MSPs) to an extent, and distribute that money by cutting cheques to farmers. 

In other words, use DBT.

 

Because for the sake of sustainable agriculture, allowing farmers to make more informed decisions and allowing them to buy what they want is an experiment whose time has come.

 

soss: https://the-ken.com/greenmargins/why-the-smart-choice-is-letting-farmers-choose/

[BacktoCricaddict]

Tangential to OP, but not totally irrelevant.

 

Go straight to the precipitous drop from the 1960s onwards.  Two things happened that made this possible: 

(a) hybrid grains (b) abundant synthetic fertilizer. 

 

Yes, there were improvements in transport, storage and distribution, but without enough grain in the first place, what are you going to move, store and distribute?  We live in the most abundant, luxurious era of human existence.  We must prepare for the future, not by pushing for farming methods used by our ancestors, but by finding even better ways to grow more food on less land with less labour input. 

 

 

 

Edited December 8, 2022 by BacktoCricaddict

[Prakat]

Good graph there!

 

1 hour ago, BacktoCricaddict said:

finding even better ways to grow more food on less land with less labour input.

 

this is a plan. especially if we take a) human population growth and b) ever decreasing arable land due to climate change and human world-building efforts as absolutely unsurmountable givens. 

 

And if that is the imperative for our species, then we must also put in place safeguards to check private enterprise from offering solutions that are detrimental to society. Genetic engineering of seeds with under-studied or - as is more often the case when shareholder value is paramount - mis-reported side-effects or super-pesticides and antibiotics that accumulate in the fibre and organs of the food we consume leading to silent carcinogenic epidemics.