The sector has witnessed consistent budget allocations, with a compounded annual growth rate (CAGR) of 5.4% since the 2019-20 fiscal. For the current fiscal, the outlay for the agriculture and farmers welfare department stands at ₹1.32 lakh crore, slightly exceeding the revised budget of ₹1.27 lakh crore for FY24.
However, the question remains: Will the Union Budget bring about game-changing reforms for this crucial sector? To address this, CNBC-TV18 engaged in a discussion with key industry stakeholders: Atul Ganatra, President of Cotton Association of India; Ajay Goyal, Chairman of Wheat Product Promotion Society; DN Pathak, Executive Director at Soybean Processor Association of India; and Sameer Bhanushali, Managing Director at Ashapura Agrocomm.
Excerpt from the discussion:
Q: Cotton and textile are important pillars when it comes to agriculture as a space, and we have seen some problems in 2024. From this Budget, especially when it comes to cotton, whether it is about import duty, PLI scheme or employment, what is your sense? What are you anticipating from this Budget?
Ganatra: We have three demands.
First, Indian cotton yield is around 400kg per hectare against the global average of 800kg. To increase our cotton yield, we need sufficient funds to bring in new seed technology.
If new seed technology is given to our farmers, then the cost of growing cotton will be reduced by 50% and, at the same time, production can increase to 50 million bales from 30 million bales, and our farmers’ income will also double.
Secondly, cotton imports. Due to the customs duty, our textile industry is not able to import cotton for cheap. If we want our textile industry to grow and compete with China and Bangladesh, then this import duty should be removed with immediate effect. We have sought this for three years.
The main season of cotton is from October 1 to March 31. So, if we get this relief from April 1 to September 30, it will help the textile industry grow.
Thirdly, if larger subsidies are given to farmers for drip irrigation, Indian cotton yield will increase. Drip irrigation, along with fertilisation and high-density plants, will double the yield.
A country like Brazil has a getting cotton yield of 2,400kg, whereas ours is 400kg. So, we suggest sending a committee to Brazil to see how their farmers are getting 6x more yield.
Q: Wheat is an important staple crop. The yields are an issue here as well. But what should be in this Budget to support the economy?
Goyal: Just like cotton, wheat also has an issue with yield. We hardly are able to get about 3,500kg per hectare. Wheat and most agri commodities, globally, are grown in the least populous regions of the country, whereas in India, it’s the inverse. Here, most of the wheat crop is grown in the highly populous regions of the country. So, we are not going to be able to add acreage. We have to concentrate on yield so that productivity goes up.
In the past few years, we have seen productivity come down, and the growth rate has almost stagnated as far as wheat is concerned.
So, from this Budget we expect a higher allocation for agriculture. The problems with Indian agriculture are well known. It’s all about fragmented land holdings, lower productivity, poor soil conditions, and vagaries of the weather. So besides that, there is a vibrant food processing industry that is there in the country, and that needs to be encouraged.
One of the problems is, post-harvest, we don’t have modern means of storage or transportation. We still continue with the age-old practice of bagging it, which is cost-inefficient. We hope the government will pay some attention to this and look at silos and bulk storage and methodology so that wastage is reduced, costs come down, the farmer and the consumer benefit.
As far as taxes are concerned, most processed food, even the first-stage processed food like wheat being converted to flour, and various other products when packed in 25kg or below for a consumer, attract a 5% GST. These are all basic commodities and basic items. So, this is unfair to people who spend a lot of time and effort adding to the value chain of agriculture, bringing the products to the consumer directly. So, this 5% is quite a burden for a business with a 1-2% turnover. And the entire burden of this goes on the consumer, and we cannot grow well because of this tax.
Also, the government should take a call as far as imports and exports are concerned. It should not be a knee-jerk reaction all the time. A bit of import won’t harm the economy, won’t harm the farmer. It will benefit the consumer and the processing industry at large because, as wheat prices keep increasing, it becomes unaffordable for most of the population. Then there’s a shift to other cereals and things like that. Globally, wheat is about 30-40% cheaper than Indian wheat, so we are hopeful that the government will take a medium-term view, if not a long-term one, on this.
Watch the accompanying video for the entire discussion.