AgroSpectrum India : Indian Agriculture way Forward

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Main Findings  Mechanization technologies were first
adopted by the large farmers followed by
There is no doubt that India has achieved medium scale farmers. The large numbers of
considerable progress in the field of agricultural such farmers in states like Punjab, Haryana
mechanization over the past four decades. While and western Uttar Pradesh played a critical
the success of the green revolution in the 1970s role in facilitating the creation of a viable
was largely attributed to three major inputs - the agricultural machinery and implements
increased utilization of fertilizers and improved distribution and services sector. Such farmers
seeds [the high yielding varieties] as well as were also the ones who were able to provide
irrigation, it is apparent that mechanization mechanization and other services to the more
as the fourth input also played a key role. numerous semi medium and small holder
Further the development and dissemination farmers.
of the mechanization technologies was largely
dominated by the private sector – machinery  The assured support prices for the
and implement manufacturers and distributors farmers produce as well as availability of
as well as the farmers themselves who were off and on farm custom hire possibilities
ready to invest in agricultural machinery and where agricultural machinery could be
implements. used further enhanced the profitability of
acquiring agricultural mechanization inputs
The following facts and lessons demonstrate by farmers.
the pace of adoption and impact of agricultural
mechanization in India:  The high level of effective demand for
agricultural machinery and equipment led
 The states with high rates of available to the creation of a competitive and viable
power per hectare are the ones which have the manufacturing industry such that India
highest yields. Four-wheel tractors dominated became globally a leading player in this sector
the farm power sector in India with very little including becoming a net exporter.
use of two-wheel power tillers compared to
other Asian countries.  The Government of India provided
support services for research and
development; testing and standards; as
well as for human resources development
in support of agricultural mechanization.
The agricultural engineering programs
established in the numerous state agricultural
universities were instrumental for the success
of agricultural mechanization in India.

Global Prospects

Based on a report (FAO, 2011) investment
requirements for primary agriculture and
its downstream industries in developing
countries show that the total over 44 year
period (2005-07 to 2050) could amount to
almost $ 9.2 trillion (2009 dollars), 46 per
cent of which will be for primary agriculture,
almost a third (31 per cent) of all capital
needs will stem from projected mechanization
needs and almost a quarter (23 per cent)
from further expansion and improvement
of irrigation (Table 3). Broken down by type
of investment 60 per cent (US$ 5.5 trillion)
will be for replacing existing capital stocks
and 40 per cent (US$ 3.6 trillion) for growth
investments.

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Table 3 Cummulative Investment from be preferred in future, including rotary tiller,
2005-07 to 2050 (Billion US$; 2009) harrows, laser levelers, high clearance sprayers,
planters, high capacity threshers and self-
Total for 93 Developing Countries 9174 propelled and tractors drawn combines.

Total in Primary Production 4236 The custom hiring of mechanical power for
tillage, irrigation, harvesting and threshing
Crop Production 3505 will be preferred by those farmers who cannot
afford to own machines. The present trend
Land development, soil conservation 161 in agricultural mechanization is for the high
and flood control capacity machines to be used for custom hiring
and for contractual field operations. Hand
Expansion and improvement of 960 operated tools and implements will only grow
irrigation very slowly as the number of agricultural workers
increases. Animal operated implements will
Mechanization 1312 decrease due to the continued decrease in the
number of draft animals. In contrast, the use of
Other power sources and equipment 482 power operated farm equipment will increase
rapidly.
Livestock Production 731
The projections for mechanization in India
Downstream Support Services 4938 are given in Table 4. The tractor population is
expected to stabilize at around 7 million units
Cold and dry storage 797 by 2050 and available farm power will then
stabilize at around 4.5 kW/ha. The draft animal
Rural and wholesale market facilities 959 population will decrease drastically whereas
power tillers, diesel engines and electric motors
First stage processing 3182 are expected to register significant increases
during the period 2010 to 2050.
Region Percent Share
Policy
Sub-Saharan Africa 10
Business and enterprise friendly policies,
Near East and North Africa 13 laws, and regulations as well as physical and
institutional infrastructures which encourage
Latin America and Caribbean 20 commercial activities and entrepreneurship
in farming, input supply, produce handling,
Asia 57 processing and marketing as well as in
manufacturing will be key factors to success of
South Asia 25 agricultural mechanization in the different states
of India.
East Asia 32
1. Reduce or eliminate all subsidies and
China and India 40 invest in infrastructure, mainly, roads, electricity
supply, irrigation systems and markets with
Future Prospects for storage and processing facilities in catchment
Mechanization in India areas.

The future investment in agriculture will be 2. Reduce interest rates on loans and taxes
for purchase of equipment and machinery for
guided by a number of factors. Sales data agricultural operations and food processing.

gathered over the past years indicates a growing 3. Provide assured support prices for the
farmers produce.
preference for tractors in the 41 to 50 hp or
4. Strengthen support services for research
higher hp range. High capacity machines will also and development; testing and standards; as well
as for human resources development in support
of agricultural mechanization.



54 AGROSPECTRUM | NOVEMBER 2019 | www.agrospectrumindia.com

PRAMOD CHAUDHARI

Founder and Executive Chairman,
Praj Industries Limited

Farm to fuel: Bioenergy

as clean source of energy

As one of the world’s fastest growing that can be readily replenished. Biofuel is a
economies, India has been seeing rapid source of renewable energy, unlike fossil fuels
industrialization in the past few years. such as petroleum, coal, and natural gas.
The country is also experiencing an
influx of migration with people relocating from In the transportation sector, biofuel is one
villages to cities for employment and education of the largest sources of renewable energy in
opportunities. Industrialization and urbanization use today. Derived from agricultural resources,
have therefore led to ever-growing energy needs, biomass can be in liquid, or gaseous form.
making India the third largest primary consumer
of energy.

Today, India’s energy mix is dominated
by conventional sources mainly derived from
fossil fuels. The country imports 80 per cent
of crude oil, thus making it dependent on
external resources while incurring high foreign
expenditure.

The pursuit of ever-rising energy demands
driven by growth is damaging planet earth
irrevocably, leading to concerns over the evils of
climate change and global warming. The country
needs to strike the right ecological balance
for sustainable growth. India’s existing CO2
emissions hover around 2.29 billion tonnes. As a
signatory at the UN Climate Change Conference,
bioenergy will help India fulfill its COP21 Paris
Summit obligations to bring down carbon
emission by 30-35 per cent.

This is where bioenergy plays a significant
role in optimizing India’s overall energy portfolio.

What are biofuels?

Biofuel is a fuel that is derived from agri-residue

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1. Liquid: Bioethanol, Biodiesel, Biojet fuel and foreign exchange payout for crude oil. To
2. Gaseous: Compressed Biogas (CBG) that extent, they also help mitigate the spikes in
Ethanol is the most widely used form of pricing of crude oil in volatile situations caused
biofuel in liquid form where it is blended with by a mismatch in demand and supply.
gasoline. Among gaseous form of biofuels,
compressed biogas is the most preferred. As a social enabler: The exodus from rural
areas in the pursuit of education and employment
Biofuel as environmental, is putting additional stress on already stretched
economic and social enabler urban infrastructure. India has to strive for
inclusive growth especially in the rural sector for
As an environmental enabler: Climate it to realise its ambition of reaching a five trillion-
change is affecting monsoon patterns, and dollar economy mark in five years. This is where
consequently, the agriculture economy. biofuels can play a vital role in stepping up the
Uninhibited industrialization is having a rural economy.
detrimental impact on ecological balance.
Increasing traffic and associated rise in pollution Bioenergy offers an alternative revenue
levels, and the burning of agricultural waste, (as stream to farmers by way of using agri residue
evident in the recent brown clouding in northern to generate fuel ethanol. This can de-risk them
India) are adversely affecting air quality and is a from uncertainties in weather and crop pricing.
health hazard. Since ethanol plants are in rural areas, close to
availability of feedstock, they provide employment
Biofuels are carbon neutral and therefore opportunities to the farming community.
combat these issues. Moreover, biofuels are Additionally, they also present entrepreneurship
renewable and cleaner in nature and are available opportunities to rural youth in creating a robust
as captive feedstock in farms, and emit lesser eco system by way of feedstock supply chain.
toxic greenhouse gases.
Various technologies
As an economic enabler: Being captive in for producing biofuel
nature, biofuels facilitate energy security. They
also help reduce the country’s high import bill Biofuels can be derived from sugar and starch-

56 AGROSPECTRUM | NOVEMBER 2019 | www.agrospectrumindia.com

based feedstock and various technologies are and other beneficial products.
available based on them. Several advanced technologies to convert

a. 1G Technologies: First generation agri-waste into valuable products in the form of
biofuels, also known as conventional biofuels, biofuels and bio chemicals have been developed.
are made from sugary feedstock (sugarcane juice,
syrup, B heavy molasses, C molasses), starchy India’s first integrated bio-refinery
feedstock (grains like sweet sorghum, corn, etc.) demonstration plant was based on the
or vegetable oil. First generation biofuels are proprietary platform technology - “enfinity’’ for
produced through well-established technologies manufacturing ethanol from a variety of agri-
and processes like fermentation, distillation and waste. The 1 MLPA capacity 2G bio-refinery
transesterification. demonstration plant is in operation for over three
years. It is capable of processing a variety of agri-
b. 2G Technologies: For India to fulfil its residue like rice and wheat straw, cotton stalk,
10 per cent (ethanol blending mandate) EBM, it bagasse, cane trash, corn cobs & stover, etc.
must look beyond 1G technology solutions due to
limitations in feedstock availability, etc. Renewable chemicals

There is availability of 2G technology for Multi feedstock help produce a variety of fuels.
lignocellulosic feedstock like wheat straw, paddy Advanced refineries can generate not only
straw, rice straw and various other agricultural biofuels but also renewable chemicals from 1G
residue. and 2G sources.

The 2nd Generation bio-ethanol technology Renewable chemicals are another segment
converts agri waste into fuel grade ethanol. that has huge potential in the coming future.
This alternate solution helps farmers earn from At Praj Matrix the R&D centre, scientists
stubble that is otherwise burnt, become an are developing different renewable and
additional source of revenue besides farming oleochemicals such as Furfural, Xylitol,
and create employment opportunities through Hyaluronic Acid, Vitamin E etc. These renewable
collection of agri waste and managing supply chemicals find applications in growing industrial
chain of feedstocks. segments such as health and wellness, cosmetics,
nutraceuticals.
The 2G integrated smart bio refineries
based on ‘enfinity’ technology process Challenges in achieving
multiple feedstock/ biomass like corn and the potential of biofuels
sugarcane residue, rice or wheat straw, various
lignocellulosic biomass. They produce fuel grade Setting up a robust ecosystem for the smooth
ethanol, bio chemicals, bio CNG, liquid CO2, bio functioning of supply chain management of
fertilizers and power which is exported to the biofuel feedstock is still work in progress.
grid. Securing funding at various stages of the project
lifecycle is a challenge, and various statutory
c. Compressed Biogas: Agri waste clearances and permissions take longer than
can be used as a raw material or feedstock to expected.
produce not just biofuel such as ethanol, but
also compressed bio-gas (CBG) which can There is a need to create awareness and
complement compressed natural gas (CNG). educate farmers about supplying agri residue
Indigenously developed cutting edge technology for advanced biofuel projects. The government
solutions that help convert agri-waste into CBG may consider making available suitable bio-
have been developed which unlike fossil fuels, are mass aggregation machinery and announcing a
carbon neutral and therefore do not contribute to minimum support price (MSP) for agri residue
GHG emissions. which will address the feedstock concern.

Concept of a biorefinery Conclusion

Just like a petrochemical refinery transforms Biofuels are poised to play a critical role in
and refines crude oil into more useful India’s energy basket. Being an economic, social
products such as petroleum naptha, gasoline, and environmental enabler, biofuels have the
diesel fuel, jet fuel, etc., a BIO- refinery potential to make definitive contributions in
converts biomass to biofuels, biochemicals ushering India’s bio-economy.

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DR DHANANJAY SAMANT

Chief Economist,
Maharashtra Economic Development Council

Steps ahead for the

future of Indian agriculture

Although agriculture contributes just national economic growth to occur in an inclusive
17 per cent to the Gross Domestic and sustainable manner.
Product (GDP) of India, its significance
to the national economy remains Agriculture and Climate Change
undiminished. Apart from feeding the country,
the sector has about half of the 1.3 billion Unseasonal rains this year have damaged around
population depending on it for their daily 30 per cent of agricultural crops in Maharashtra,
livelihood. Unfortunately, agricultural growth Gujarat, Rajasthan, UP and West Bengal. Among
has been slowing all over the country. Between the crops affected are sugarcane, oilseeds,
FY 2014-19 agricultural GDP grew at just 2.9 pulses, paddy, jowar and bajra. The number of
per cent per annum compared to a 3.7 per cent unusually hot days as well as the number of dry
per annum growth between FY 2005-14. There days have increased, consistent with models of
are many reasons for this, not the least being climate change which predict rising variability in
widespread crop damage caused by unseasonal weather. Vulnerability to climate change is also
weather due to global warming and climate directly proportional to poverty, as the poorer
change. farmers have fewer resources, both financial and
technical, to cope with the vagaries of Mother
If India is to become a trillion dollar economy Nature.
over the coming five years, focused attention will
need to be paid to the agricultural sector and Unless our farmers are adequately prepared
proactive steps will need to be taken for its revival. to deal with climate change, the sheer magnitude
Most Indian farmers are aging and the younger and spatial distribution of such changes may
generation is largely disinterested in following affect our ability to enhance our agricultural
in their parents’ footsteps. Many educated rural productivity in line with our expanding
youth who are able to migrate to urban areas to population. That could have severe consequences.
better their livelihood prospects are doing so, as In this context, the following could be attempted:
in the majority of cases, farming does not offer
suitable financial incentives to those who practice  Research on the development of new crop
it and depend on it for their daily sustenance. varieties incorporating various traits such as heat
Indian agriculture also accounts for a large share and drought tolerance, salt and pest resistance
of disguised unemployment in the country, which etc. should be given priority.
considerably reduces workforce productivity in the
sector. All this does not bode well for long-term  The proportion of cultivated land under
irrigation in India is less than 50 per cent today.
Thus, much more needs to be done to spread
irrigation throughout the country, especially

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against the backdrop of steadily diminishing will need to compete in international markets.
groundwater reserves. There needs to be a clear timeline set by the
government to make domestic producers more
 Power and fertilizer subsidies encouraging cost-effective. In this regard, the continuous
the indiscriminate use of water need to be Minimum Support Price (MSP) hikes are hurting
rationalized and reduced. Instead, support India’s agricultural exports and diminishing our
to farmers could be extended through non- farmers’ global competitiveness.
distortionary mechanisms such as direct
transfers. It is the lack of competitiveness of Indian
agriculture that has prevented our farmers
 The government needs to act proactively from taking advantage of the market access
to promote rainwater harvesting and efficient opportunities provided by the three free trade
groundwater replenishment during the monsoon agreements with Association of South East
season, so that those scarce resources could be Nation (ASEAN), Korea and Japan. Fixing the
gainfully employed in leaner times. internal challenges of Indian agro-businesses
(essentially through quality infrastructure
Agriculture and development and a smooth flow of credit to the
International Trade Deals sector) will ensure steady growth and ensure
India’s mutually beneficial participation in
It is India’s agricultural sector which has the international trade deals.
most to gain (or lose) from our involvement
with international trade deals. With the current Technology and Indian Agriculture
state of Indian agriculture being what it is, the
government has done well in opting out of the Even as we advance steadily on the policy front,
Regional Comprehensive Economic Partnership we need to bridge the massive knowledge gap
(RCEP). The need of the hour is to enhance the in Indian agriculture between farmers on one
competitiveness of domestic agro-businesses hand and crop scientists on the other. Farmers
so that they will be able to stand up to tariff should be encouraged to learn more about
liberalization, which is a sine qua non of most technology and to apply global best practices to
global trade deals today. enhance their productivity and earning capacity.
Technology usage will boost their entrepreneurial
We cannot afford to sit out of trade deals
indefinitely. Sooner or later, Indian agriculture

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spirit and help them inculcate an innovative New solutions to
mindset. For example, remote sensing can help old problems required
farmers estimate their yield, schedule irrigation
patterns, and analyze relevant data and other Indian agriculture is currently undergoing
crucial weather related information. Timely massive transition. However, the fact remains
and precise information will enable farmers to that we continue to remain uncompetitive
take better decisions. Technology can also help primarily due to a lack of domestic reforms,
to build more efficient supply chains that will whether they pertain to land, labour,
minimize wastage of produce and enable our capital, water management or research &
farmers to compete effectively in global markets. development. On the flip side, our problems
are not insurmountable. The best agricultural
Social media also has a pivotal role to play in practices from all over the world could be
the growth prospects of India’s agro-businesses. suitably modified and implemented in India,
WhatsApp is widely used in the country, and keeping in mind our unique socioeconomic
that platform can be used to educate farmers, realities. A transparent and predictable set of
transform them into micro-entrepreneurs and link policies for promoting the agricultural sector
them with national and international markets. will ensure that the benefits of economic
Already, greater access to technology has led growth percolate uniformly across both urban
to the emergence of social enterprise startups and rural India.
in rural areas that are coming up with suitable
apps to educate farmers and keep them posted We cannot wish away climate change and
about the latest developments in their vocation. its adverse impact on our agricultural sector,
The use of digital platforms can transform as well as continue to isolate ourselves from
delivery mechanisms for farmers, reducing costs international and regional trading blocs. In this
and turning their profession into a potentially context, our laws and regulations for reviving
remunerative one. Suitably designed startups agriculture and agro-businesses need a revisit.
can leverage technology to arrive at innovative India’s growth story will remain incomplete
solutions to issues faced by agro-businesses and unstable if our agricultural sector and its
and the food processing industry. This will also allied activities prove to be a drag on the rest
form a part of the larger poverty eradication and of the economy. The bottom-line is that much
development strategies in rural India. of today’s Indian agriculture simply needs new
solutions to old problems.

60 AGROSPECTRUM | NOVEMBER 2019 | www.agrospectrumindia.com

DR RAM KAUNDINYA

Director General,
Federation of Seed Industry of India

DR RATNA KUMRIA

Director of Biotechnology,
Federation of Seed Industry of India

Organic, ZBNF, Biodynamic or

GM – Way for future farming in India

The challenges of meeting the food (ZBNF) does not use any purchased inputs and
security and nutritional security of instead uses cow as the central resource for
the country in a profitable way for managing several aspects of farming. Another
the farmer and in an environmentally method quite similar to ZBNF and organic
sustainable way are enormous. We have to get farming is Biodynamic agriculture that considers
ready to feed 150 crore population in the next ten animals, crops, and soil as a single, self-sustaining
years, with the bottom of the pyramid requiring living system. It insists on the use of manure and
food at affordable prices. compost along with herbal and mineral additives.
The system uses astrological calendar for sowing
Science helped our country to achieve a to engage spiritual and cosmic forces.
breakthrough in crop yields and ensure food
security except in oil seeds. Starting with High Agriculture involves de-forestation, loss
Yielding Varieties (HYV) of Rice and Wheat fifty of biodiversity, eutrophy and acidification
years back we passed through hybridization of the land and aquatic ecosystems. Globally
and Genetic Modification in some crops to agriculture emits 25 to 33 per cent of the total
achieve this success. Our food grains production GHG emissions, uses 40 per cent of the land and
quadrupled in last fifty years. Genetically 70 per cent of the available freshwater. These
Modified (GM) Cotton helped the country and resources are not completely renewable, making
the farmer to prosper. Hybrids in Maize, Millets, the agricultural essentials continually scarce for
Sorghum, Vegetables and other crops helped us the growing population. Similar studies show
to meet increasing demand. Input intensive and that 25 to 110 per cent higher land acreage is
high yielding agriculture helped us to keep food used in organic farming for obtaining similar
prices affordable. However, the debate continues production as conventional farming. Although
about what technologies we should use for the organic farming utilized 15 per cent less fuel
future. Lack of profits for farmers and the adverse
impact of some of the inputs on soil health ZERO BUDGET NATURAL FARMING
coupled with the depletion of natural resources
like water pose this question before us: what is
the way forward for our agriculture?

Some recommend organic as the way forward.
Organic farming produces food according to
certain production methods like cultivating
without chemical pesticides and fertilizers and
processing the output without ionizing radiation
or food additives. Zero Budget Natural Farming

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energy, it had 37 per cent higher eutrophication BIODYNAMIC AGRICULTURE
potential. There was no significant difference for
Greenhouse gas (GHG) emissions (4 per cent Similarly, fungal infections during production or
lower in organic) and acidification potential (13 storage of produce may lead to poor quality toxin
per cent for organic) between the two practices. contaminated food.

Despite lower fossil fuel consumption in The organic produce may have higher
organic farming due to non-use of fertilizers and micronutrient content but is very similar to
pesticides, the GHG emissions are not lower as produce of high input cultivation in nutritional
more land needs to be tilled and planted to obtain value and taste. It is estimated that the lower
output comparable to input intensive farming. productivity from organic farms and higher
The acreage increase further leads to loss of pricing of organic produce will increase stress
biodiversity thereby negating the positive impact on global food security. According to a paper
of low fossil fuel usage. in the Nature (Nature volume 564, 249–253,
2018), if one nation takes more land and grows
Organic farming as well as biodynamic the same amount of organic food, it would
agriculture yields are lower than high input result in more deforestation in the tropics which
agriculture yields by about 10 to 45 per cent. would contribute to more carbon dioxide in
Since organic farms use manure that releases the atmosphere. Research shows that organic
nitrogen as per the environmental temperature peas, farmed in Sweden, have close to 50 per
and moisture, the release and thus the availability cent higher climate impact than conventionally
of nitrogen for crops is not uniform, impacting farmed peas. Scientists have also shown that
the yield and increasing the land required for organic meat and dairy products are climatically
equivalent produce. The reactive nitrogen worse than their conventional counterparts. Since
released by the manure forms nitrous oxide, organic farming requires higher farmland use, its
which is GHG, hence there is no difference in impact maybe observed more in the developing
GHG emissions either, even though the GHG nations than the developed ones.
types may vary for the two systems.
The promotion of ZBNF promises reduced
Organic and ZBNF farms are more labour input costs, higher yields and better pricing
intensive than regular farms due to manual for the produce. Unfortunately, the input costs
weeding and pest control though it does are lower only when family labour does all the
generate more rural jobs. Human and animal hard work and hired labour is not utilized for
labour costs ranges between 40 and 60 per cent cultivation. It is much more labour intensive than
of the operational costs and these are higher conventional farming. A dramatic drop in yield
in organic/ZBNF system. In the tropical and is observed in the initial years of adopting ZBNF,
sub-tropical nations, the soil health is poor which tapers off in 3-4 years, though higher
due to heavy rains and no external inputs, the yields have not been observed later. Similarly,
soil nutrients are not replenished by nutrient there is no clear price advantage for ZBNF
cycling or mobilisation from the subsoil. This is produce. Continued adaptation of ZBNF would
very different from the winter rest for the soil require advantageous output markets along
that helps in mineralization in the Temperate with farmers holding power, considering the low
nations. Large-scale organic farming does utilize initial output.
approved pesticides and hence the produce is
not completely free of pesticide residue. A US
Department of Agriculture (USDA) report has
shown that pesticide residues are found on both
organic and conventional crops.

Usage of manure in organic farming on the
other hand has led to many human health crises,
including most importantly, E. coli outbreaks
due to faecal contamination from manure. A
comparative study in vegetables found E. coli
traces on 10 per cent of organic but only 2
per cent of conventionally farmed vegetables.

62 AGROSPECTRUM | NOVEMBER 2019 | www.agrospectrumindia.com

The future HIGH YIELDING VARIETIES

Our population will reach 170 crore by 2050. population and work towards ensuring food
The food basket is undergoing a huge change security. Planting crop varieties that uptake and
with increasing demand for nutritional, chemical utilize lower amount of minerals and water to
free food. Demand for organic food is growing efficiently produce higher yields, have resistance
as income levels increase. Farmers profitability to plant pests and tolerance to adverse climatic
is not improving. Environmental impact of conditions, so that crop losses are minimized, is
agriculture has to be reduced. We have to reduce the sustainable way forward. Such biotechnology
the consumption of water in agriculture. Soil and mechanization supported produce that will
heath is to be improved with more organic be available in sufficient amounts and devoid
matter. In the midst of all this is the threat of microbial infections and toxins will address
of climate change which can reduce yields the Sustainable Development Goals (SDGs)
drastically. We need reorientation of the package of no poverty, zero hunger and good health
of technologies we use in our agriculture. and well-being much better than highly priced
low yielding organic food. Such produce will
There is no doubt that we have to reduce use not only be profitable for the farmer but also
of chemicals. Science & Technology supported safer for the consumer and the environment.
high input farming helps to feed our growing Such an amalgamation of conventional and
organic farming will improve the soil-plant
ORGANIC FARMING environment and strengthen the coordination
between promotors of organic and conventional
agriculture towards food security and
accessibility for consumers worldwide.

Every technology comes with its advantaged
and disadvantages. We need to make available
a basket of technologies including chemicals,
HYVs, Hybrids, GM, Organic, ZBNF, etc to the
small holder farmer. It is for him to decide what
he wants to use in his field. Each technology must
be used where it gives best results compared to
others. No single technology can be a silver bullet
for meeting our agricultural challenges.



64 AGROSPECTRUM | NOVEMBER 2019 | www.agrospectrumindia.com

DR BHAGIRATH CHOUDHARY

Founder Director,
South Asia Biotechnology Centre

A GST burden on
smallholder farmers

Farm inputs such as seeds, biological &
botanicals, fertilizers, pesticides and farm
implements are important components
of the farming system. These inputs
form the basis of farmers’ business for raising
successful crops. Farmers spend tremendous
amount of resources to buy these inputs and use
them as an intermediaries in his/her business.
He/she pays the goods and service tax (GST) on
farm inputs, which is costing about Rs 15,000
crore annually to smallholder farmers engaged in
the production of cereals, pulses, edible oilseeds,
fruits & vegetables etc. On contrary, farmers sell
his produce through APMC mandi’s where he/
she cannot set off the input credit tax because of
nature of his/her business.

Notably, farmers are spending about Rs 15,000
crore on GST annually on farm inputs such as
botanical, biological, pheromone trap & lure,
micronutrients, fertilizers, pesticides, tractor,
drip/sprinkler irrigation systems or other agri
equipment to produce farm commodities to feed
Rs 135 crore and also contribute significantly in
export of agriculture and processed food products.
Unfortunately, farmers are the only businessmen
today who cannot claim tax credit and cannot
set it off on the sale of his/her produce. Input
tax credit is a GST mechanism that allows the
manufacturers/producers to adjust GST tax on
inputs against tax liability on output i.e. sales.

The inability of farmers to claim input credit
tax paid on-farm inputs, violates the spirit

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and foundational principles of the GST system executed by South Asia Biotechnology Centre and
in India. The smallholder farmers should, supported by FMC Corporation and implemented
therefore, be provided a fair treatment in virtue in collaboration with key stakeholders in maize
of GST principles as they purchase farm inputs value chain. Fall Army Worm (FAW), Spodoptera
for raising crops, and do not consume them frugiperda is an invasive pest that has been a
as final goods, and therefore there must be a cause of concern for maize farmers in all maize
mechanism for availing input tax credit. This is growing areas since it was first reported in July
in line with the GST principle that goods and/or 2018 in Karnataka, India. The project SAFFAL
products consumed as intermediaries are eligible conducted large numbers of mega farmers’
for the input tax credit. Hence, GST exemption awareness programs & mobilized grassroots
on farm inputs shall be exempted in line with an extension & state agriculture department
exemption granted on seeds, animal & poultry officials, researchers, RAVE students, Diploma in
feed - other two critical farm inputs. Agricultural Extension Services for Input Dealers
(DAESI) retailers and NGO to help maize farmers
Apparently, the issue of GST came to deal with the devastating fall armyworm.
light while implementing the project on fall
armyworm, a voracious pest that has become a While purchasing the pheromone trap & lures,
serious threat to maize production in India. The which are meant for monitoring of FAW adult
project safeguarding agriculture and farmers male – a critical step in determining the ETL for
against fall armyworm (Project SAFFAL) is farmers to implement control measures, we were

66 AGROSPECTRUM | NOVEMBER 2019 | www.agrospectrumindia.com

Table 1. GST cost of farm inputs to Indian smallholder farmers ~Rs 15,000 crore per annum

Item HSN GST 2018-19 Farmers
18% Cost of
Pheromone trap & lure 3808-9990 Market GST (Crore)
Botanical/Biological/ PGR/
Micronutrients 3101-3105 Size 12.9

Pesticide/Agro-chemical Insecticides (Crore)
Fungicides 85
Total pesticide GST Herbicides
Seed Treatment 5-12% 3,300 258.5

Urea Domestic 3808 18% 8,273
3808
3808 18% 4,463
3808
18% 3,891
3101-
3105 18% 190
3101-
3105 2563.5
3101-
3105 5% 13,507 675.3
3101- (48502*!)
3105
Urea Imported 5% 6,458 322.9
(17695*!)

Fertilizers (direct use/use in the manufacturing DAP 5% 25,669 1222
of other complex fertilizers for agricultural use Potash (MOP) (35551!)
(Soil or crop fertilizers)
5% 4,734 225.4
(6703!)

Other complex incl. 3101- 26,695
3105 (33183!)
Ammonium Sulphate, Ammonium 5% 1271.3

Chloride, SSP, SOP & NP/NPKs)

Total Fertilizer GST 4,037.7
4,500
Tractors 8701 12% 42,000

Farm Implements/Combined harvesters/

pumps/drip & sprinkler systems/pvc/ 8201-8211 12% 28,920 3,098

solar panels etc

Seeds 1005-1008, 1207, 1209 NIL 10,000 NIL
14,470
Grand GST Total: Rupee Fourteen Thousand Four Hundred Seventy crore

(Source: GST Council 2019; Chemical & fertilizer industry estimates, 2019; analyzed by South Asia Biotechnology Centre, 2019 *GST excluded from market size whereas
all other products GST is included in market size & therefore GST calculation is carried out as per the nature of market size. Market size including of subsidy)

shocked to pay 18 per cent GST, which was a production due to climate change and infestation
trigger to look into GST on other farm inputs. To of invasive pest and diseases in India.
our conservative estimates, as tabulated below,
farmers in India pay a hefty GST on farm inputs Unfortunately, the complexity of GST has
costing them about Rs 15,000 crore annually. deterred farmers’ organisations including
farm bodies of different political parties, to
It is a profound tragedy that the hardworking comprehend the nuances about GST on farm
farmers are unable to reap benefits from the inputs and has not been able to help farming
claim of input credit tax on paid GST due to community who is losing Rs 15,000 crore every
nature of their business, exclusion of farm year due to farmers inability to claim input tax
commodities from GST, and non-enrolment credit. Therefore, the South Asia Biotechnology
of farmers on GST. Further, another issue Centre – a not for profit organization has recently
contiguous with the proposed reform is the reached out the Union Minister of Finance to
possibility of the manufacturers/suppliers of provide respite to farming community from the
farm inputs reworking the costs to recover misbalanced GST regulations on farm inputs,
input tax credit paid by the company for various which costs them Rs 14,500 crore per year and
raw material, technical and packing material look into the possibilities of blanket exemption
in the form of the increased cost of farm of GST on farm inputs – a necessary step to
inputs from farmers. Therefore, we request check increasing cost of production, which is an
the Government to develop a mechanism for insurmountable barrier to doubling of farmers’
absorption or refunding of the input tax credit income – a clarion call of Prime Minister
for the production of farm inputs or provide GST Narendra Modi.
exemption as for the seed businesses. It will help
reduce the cost of farm inputs by at least 18 per (The South Asia Biotechnology Centre (SABC) is a not-for-profit
cent-point basis and bring great relief to farmers scientific organization that aims at serving as a knowledge hub,
facing the massive problem of the high cost of helps in bridging the knowledge gap between science and society and
facilitates the transfer of innovative farm technologies from the lab to

the land. More about SABC at: www.sabc.asia)

With
Best Compliment