Reform in agriculture is needed: Gokul Patnaik

In an exclusive interaction with SMART AGRIPOST, Gokul Patnaik, Chairman, Global AgriSystem says India can become world class agriculture power if we imbibe right technology and management skills.

Q.Briefly tell us about the profile of Global AgriSystem.

Ans. Global AgriSystem was established in 1998 as a consultancy organisation dealing exclusively in agriculture and food processing.  Initially, it started as a 50:50 joint venture with the Royal Cebeco Group, which was a national cooperative of the Netherlands. I started this because I felt that Indian Agriculture lacked technology and marketing skills to compete with the world. Agriculture needed to be viewed as a commercial venture and it was not enough only to focus on production.  Global AgriSystem’s Mission is to bring technology and management skills of the highest international standards to Indian agriculture and food processing  sectors. Over the last 16 years, we have completed more than 300 projects. Our clients are mostly private promoters, corporate, State Governments, Central organisations and international development agencies like the World Bank, ADB, FAO and IFC. Lately, we have taken up a number of assignments abroad like Afghanistan, Bangladesh, Nepal and Africa.

Q. What’s your company’s road-map for 2015?

Ans. 2015 promises to be a busy year.  We are working on two Mega Food Parks (one of them in Odisha), two projects for ADB in Bihar, a World Bank project in Maharashtra and some prestigious projects abroad. We are also developing some organic farms for private promoters in and around Delhi and Himachal Pradesh.

Q. You quit an illustrious career of an IAS officer and started your own venture. What did prompt you to start in Agriculture sector?

Ans. While in service, by a series of coincidences, I got involved in some prestigious agriculture projects.  I was instrumental in the entry of Pepsi Foods which was the first MNC to enter India after 1977, and was its first Director.  I was also Chairman of APEDA  in the formative years from 1991 to 1996.  In these assignments, I realised that India can  become a world class agriculture power if we imbibed the right technology and management skills.  Global AgriSystem sought to provde these skills to the Indian entrepreneurs as a one-stop shop.

Q. How do you see Agriculture as a business venture? Is it profitable?

Ans. Unfortunately, most of our policy makers still tend to consider agriculture “as a way of life”.  The underlying thought seems to be that as the farmer is doing a national service, it is sinful for him to earn too much money.  Restrictive market access, lack of insurance and other risk mitigation instruments, inadequate public investment in irrigation and agricultural infrastructure and lack of capital formation combine to keep agriculture either a losing proposition or only marginally profitable.    I feel that with application of required capital, technology, marketing and management skills in equal measure, agriculture can be a profitable business.

Q. Brief us about the current Agriculture scenario in India. What are the measures need to be taken to improve it?

Ans. As mentioned earlier, Agriculture has not received the required priority from our policy makers.  The APMC Act restricts market access and denies free competition.  Agriculture Insurance policies are non-existent or ill designed.  The enormous amount spent on fertiliser and food subsidies do not help in improving productivity and are not sustainable in the long run.  Government can better utilise these funds in building agriculture infrastructure including access roads, irrigation channels, a more reliable market information system, warehouses and logistics.

Q.Do you believe that FDI or PPP should be encouraged in Agriculture sector? If yes, what are the areas that seek more attention?

Ans. I think that FDI will certainly bring in more capital and management skills into this sector which is mostly unorganised. It may help in improving the realisation of farmers.  PPP model will galvanise private sector participation in building agriculture infrastructure and processing units which will not only help in augmenting the scarce resources of the Government but also in providing management efficiency.

Q.How important is the role of banking and insurance companies in sustaining agriculture?

Ans. Lack of capital formation is one of the banes of Indian agriculture. As land holdings are small, farmers live on a subsistence level and are highly risk prone.  New technologies such as hybrid seeds and higher cost of inputs are often beyond their scope and failure of crops due to natural calamity often results in farmers’ suicide.  As we move from a ‘low-input, low-output’ to ‘high-input, high-output’ agriculture, sound banking and insurance regimes are most important pre-requisites.

Q.What is the scope of digitizing agriculture sector? How will it benefit to the farmers and traders?

Ans.Digitalisation will help in quick and wider dissemination of information.   Information like prevalence of diseases or weather will empower the farmer and online market information can help both farmers and traders to conclude their transactions to mutual benefits

Q.Do you expect reforms in Agriculture in India? If yes, what are the areas to be looked into?

Ans. Reforms in agriculture sector are imperative.  The most important areas of reform will be marketing and risk mitigation like Insurance, WDRA and Forward markets. Government should try to make India a single market and remove all restrictions on inter-state movement. The subsidy regime should be rationalised.  I also feel that Government would do well to free the land market and atleast allow hassle-free leasing of land.

Q.Many state governments announce sops, subsidies and financial packages for farmers to woo them for vote bank politics. Are these necessary? Or will these resources be used rationally for the benefit of farmers in long run?

Ans. Agriculture is subsidised all over the world and I feel that some subsidies are necessary. However they should be rationalised and aimed at improving productivity.  They should be aimed at preserving the natural resources and environment so that they can be sustainable in the long run.

Q.Food inflation is a big concern. How could it be contained?

Ans. Although there has been significant food inflation in consumer prices, the farm-gate prices have not gone up that much. This means that the long and fragmented supply chain has led to a huge gap between the consumer prices and the farmers’ realisation. We must address the supply chain constraints by providing a more efficient marketing system. I also feel that the burden of tax on food items is very high. Many countries in the world do not tax primary agriculture and food products as such taxes hurt the poorer segments more. One way of tackling food inflation would be to reduce taxes on agriculture and food products to zero in the coming GST regime.