A doubtful harvest

Agricultural production statistics need revisiting

Even as everyone is celebrating the bounce in the economy with a return to 8.5 per cent growth, the jury is out on the accuracy of the agricultural output numbers. The impressive 5.4 per cent agricultural growth rate number is suspect if one looks at recent trends in farm productivity and output. The agriculture ministry anticipates foodgrain output to grow by 6.4 per cent to 232 million tonnes in 2010-11. But this growth rate is over the low figures for 2009-10, when grain output dropped by 6.98 per cent to 218 million tonnes owing to severe drought. In real terms, therefore, the output does not seem to have recovered to the pre-drought level of 234.4 million tonnes in 2008-09. Moreover, though the agriculture ministry has boasted of achieving new highs in the production of crops like wheat, pulses and cotton, in most of these cases, barring cotton, the advances are just marginal over their previous peaks. Among the food crops, the biggest year-on-year jump of over 13 per cent is in pulses but their projected output of 16.5 million tonnes is just 1.5 million tonnes higher than the 15 million tonnes produced way back in 1998-99. A noteworthy aspect, which the farm ministry, predictably, has opted to underplay, is the anticipated 5 million-tonne drop in rice production to 94 million tonnes from record 99 million tonnes in 2008-09. Besides, the output of oilseeds, another key component of the essential food commodities basket, has remained almost static, with this year’s projected level of 27.85 million tonnes being little different form 27.72 million tonnes bagged in 2008-09. So is the case with sugarcane — it is yet to rebound to the peak touched in 2006-07. Cotton, undeniably, is the real growth story as its harvest has steadily risen since 2003. The credit for this should go to the bold step of allowing the cultivation of transgenic pest-protected Bt-cotton hybrids in 2002-03, which are now used in nearly 90 per cent of cotton area.

It would appear the agriculture ministry has really no reason for patting itself on the back. Nor can it afford to sit back, considering food inflation remains high and there is limited scope for taming it through imports, given commodity trends. It is important to understand why crop production is not responding to demand and high prices despite several positive investment-related factors. These include, among others, the phenomenal increase in the flow of institutional credit to agriculture, at least on paper; record annual hikes in minimum support prices (MSPs) of crops; and positive growth in gross capital formation in agriculture which had remained in the negative domain till the mid-2000s. Clearly, there is something wrong with either production statistics or the market mechanism in agriculture.