State's agriculture policy needs a complete reversal
Given 60% of Uttar Pradesh’s workforce is engaged in agriculture, and the sector’s 30% share in GDP, any meaningful reduction in poverty has to be centred around a near-complete turnaround in agriculture. If, as a research paper by Icrier’s agriculture team—Smriti Verma, Ashok Gulati and Siraj Hussain—points out, UP’s agriculture growth doubles to 5% per annum, there will be a meaningful dent in poverty. One part of the turnaround plan is purely mechanical—a 1% rise in irrigation ratio increases Uttar Pradesh’s agricultural-GDP by 1.25%, a 1% increase in road density raises it by 0.5% and a 1% increase in relative prices for agriculture raises the state’s agriculture-GDP by 0.6%. How chief minister Yogi Adityanath is to achieve this is really the question. To the extent more funds from central government schemes like those on roads and irrigation are to be made available to the state, getting this part organised may not be insurmountable. It is after this that things get more complicated. With just 4% of the state’s foodgrain output — it accounts for 18% of India’s production — being procured at the minimum support price, its farmers get prices that are at least 15-20% lower, leaving them with little incentive to invest in productivity-enhancing measures which includes that in farm-level irrigation. Ditto in the case of other crops where it is a major producer. With less than 12% of the state’s milk being processed as compared to 49% in Gujarat, for instance, dairy farmers get paid much less than their counterparts in Gujarat and have little incentive to invest in higher-yielding cows.
It is to increase profits of such activities that Icrier suggests the chief minister work on setting up a robust procurement network—like Madhya Pradesh—so that a larger share of UP’s foodgrains output can be bought at a higher price. In the case of dairy, while the CM has spoken of adopting the Gujarat model—it is important to get cooperatives like AMUL into the state—the fact is that the meat industry is an intrinsic part of dairying. Apart from the money—UP accounts for half India’s buffalo meat export—culling of buffaloes is critical to dairy’s health; this means the CM has to stop the anti-abattoir movement and actually help in modernising it. In the case of sugar, decades of artificially high state-government-fixed cane prices has made the industry sick and resulted in a perpetual cane arrears situation with farmers and industry on opposite sides. A rational policy is to let markets determine prices—as the Rangarajan committee recommended—and, with farmers getting 70% of the money, they will partner with industry to improve yields. In other words, the Icrier doubling-farm-growth story is predicated on the CM reversing the state’s agriculture policies so far. With the BJP promising to ensure all cane dues are recovered instead of promising a more sensible policy, and the government going after mill-owners, the chances of that happening aren’t too bright.