With the onset of kharif (monsoon) in the southern states of India, the majority of farmers have started procurement of inputs such as seeds, fertilizers and pesticides. Amidst COVID-19 induced disruptions in input production and distribution, the state governments are making efforts to ensure timely distribution of inputs to farmers. Based on recent field survey in Warangal rural district emerging issues around inputs are discussed with some solutions including make input products traceable, changes to India’s APMC and ECA acts and better monitoring of input value chain, among others.
During the last Kharif season, a smallholder farmer from rural Warangal purchased Maize seeds from a local inputs shop. The dealers’ terms were that, with a receipt the seed would cost Rs.1500, but without a receipt the cost would fall to Rs.1400/-. Thinking that the receipt would be of no use to him, the farmer chose to pay Rs.1400. To his utter dismay, only around 20% of the seeds germinated. Upon reading the cover of the seed pocket, to his shock, he noticed that the seeds were for demonstration purposes and had expired three months ago. He took the empty pack back to the input shop and demanded compensation for loss of crop for that season. But without a receipt as proof of purchase, the farmer was powerless to obtain compensation. He was furious.
There are several such anecdotal pieces of evidences of substandard or fake agricultural inputs, but there is hardly any empirical proof of the magnitude of the issue. Through focused group discussions (FGDs) in three villages in Warangal, a rural district of Telangana state, we sought to obtain such evidence.
“Every year new kind of pest and diseases are attacking our crops, at the same time soil health is also gradually declining. To manage pests and diseases, we have to spray frequently and apply more fertilizers leading to high cost. But, [the] insecticides and fertilizers we get are very expensive and many times are substandard or fake. Whom should we blame for this?” asks a female farmer from Neerukulla village.
Farmers told us that every cropping season there is a dilemma in the village over whether they should buy inputs from a local shop or the nearby town or city. Most farmers, particularly small and marginal farmers, buy the inputs they need – seeds, fertilizers or pesticides – using credit. The majority of the farmers we spoke with, emphasized that close to fifty percent of their total crop production cost goes for inputs. So, the quality of these inputs is very important.
To ensure quality inputs, farmers can opt to buy from a retailer in the nearby town. However, they may not be able to obtain inputs on credit without a reference from the market intermediary. Those retailers who do provide inputs on credit to farmers then charge 2-3 percent interest rate per month till the harvest. There is also a requirement to sell the produce through the same trader (though there is no formal agreement). These restrictions and higher costs on purchases in the city, coupled with a one-day wage loss and transport costs for travel to the city (and delivery in the case of fertilizers), force most of the farmers to buy inputs from local (un) authorized village shops.
In the absence of insurance, if the crops fail, perhaps due to poor quality inputs, or for any other reason, farmers then get into a vicious circle of debt. One farmer told us:
“If inputs are substandard or fake, we have to go through a minimum of two years of suffering due to debt. Therefore, in addition to the good monsoon, the quality of inputs we buy decides our farm income season after season.”
Farmers also indicated that they trust inputs, particularly seeds and fertilizers, supplied through the notified state government agencies in subsidized rates. The distribution is made every year through an online Subsidy Seed Distribution System (OSSDM) in Telangana State. However, the supply is very limited, with only a few field crops and chemical fertilizers supplied.
“The government should take action on substandard inputs distributors and traders. By using such substandard inputs, we are incurring losses in agriculture. We expect that the Government should supply good quality of inputs at a reasonable price within our vicinity.”
For remunerative agriculture, quality, availability, accessibility and affordability of inputs is crucial. Quality inputs are essential for improving productivity and, in turn, incomes. This would make a positive impact through inclusive agricultural and rural development in developing countries like India where the majority of the farmers are small and marginal.
Potential interventions to improve the current situation
Capacity building of smallholder farmers
Information asymmetry is evident among the small and marginal farmers. There is a gap in the skills and knowledge needed to check the quality of inputs, which may result in low productivity. Therefore, strengthening the capacity of farmers about inputs use and quality standards (package and expiry dates, per cent germination and other quality parameters), is critical.
Strengthening public-private partnership
Currently, there are fewer public extension officers advising farmers than required, yet there are around 2.82 lakhs (282,000) active private agri-input dealers across the country. There is therefore huge potential for a public-private partnership where private agri-input dealers could become extension service providers and provide defined services in association with public agriculture extension officers. Each agri-input dealer, under the supervision of a public extension officer, would then serve a prescribed minimum number of farmers, thereby increasing the support available to farmers in their service area.
Strengthening farmer collectives
Smallholder farmer’s collective action can create economies of scale to facilitate quality input procurement, extension services, and better bargaining power through setting up collective marketing such as Farmer Producer Organizations or Farmer Producer Companies.
Better vigilance over the input value chain
Insights from the farmers we spoke with suggest a critical need for better regulatory mechanisms which focus on identifying and rooting out sub-standard agricultural inputs supplied by local retailers. Standards must be enforced whilst making sure affordable quality inputs are available to smallholder farmers at their farm gate.
Traceability of products
Every packet of inputs that farmers purchase should be traceable, providing details about where it is tested and its efficacy, as well as reviews by other farmers. Essential information about good practices for how to use the product, contact details of local extension officers and GPS details would also be beneficial and provide traceability along the value chain.
Reforms to the agricultural market system in response to COVID-19
Major reforms to the Essential Commodities Act (ECA) and Agricultural Produce Marketing Committee (APMC) Act implemented in response to the current COVID-19 pandemic can go a long way in building efficient value chains and ensuring better returns to farmers. These reforms provide great opportunities for market prices to prevail, which would allow farmers to sell their produce across India and stimulate competition among private companies. At this juncture, the government could make a real difference to farmers by ensuring appropriate models that bring convergence among all value chain actors and in so doing provide quality inputs at affordable prices to make farming more sustainable and competitive.
About the authors:
Dr Ravi Nandi, Associate Scientist (Agricultural Economics)
Innovation Systems for the Drylands Program, ICRISAT
Dr S Nedumaran, Senior Scientist – Economics
Markets, Institutions, Nutrition & Diversity,
Innovation Systems for the Drylands Program, ICRISAT