Year Ender 2021: Record foodgrains production likely in 2022; farm laws repeal, price rise bitter pills for agri sector

India achieved record foodgrains production this year but the withdrawal of three agri-reform laws and spike in cooking oil prices cast a shadow on the country's resilient agriculture sector that is on course for better harvest in 2022 despite pandemic blues.

While soaring production of foodgrains that also helped the government provide free additional rations for COVID-hit poor families for many months together came as a relief, the passing year will be remembered for the long drawn farmers' protest at Delhi borders against the three laws and subsequent repeal of the legislations.

The Indian agriculture sector, which was among the few segments that remained robust amid the pandemic gales, is expected to register a growth rate of 3.5 per cent in the current financial year ending March 2022.

Foodgrains production hit an all-time high in the 2020-21 crop year that ended in June at 308.65 million tonnes. The production could reach 310 million tonnes in the current crop year.

The government procured huge quantities of wheat, rice, pulses, cotton and oilseeds at the Minimum Support Price (MSP) for the benefit of farmers.

During 2020-21, paddy and wheat procurement reached a record 894.18 lakh tonnes and 433.44 lakh tonnes, respectively. Procurement of pulses touched 21.91 lakh tonnes, coarse grains 11.87 lakh tonnes and oilseeds 11 lakh tonnes, as per official data.

As production and procurement continued smoothly, the farmers' agitation, which started in November 2020, finally ended this month after Parliament passed a Bill on the first day of Winter Session on November 29, to repeal the three contentious farm laws. The Supreme Court had stayed implementation of these laws in January itself.

Farmers unions are claiming victory after they forced the Centre to accede to their demands. In contrast, economists and government officials see it as a setback in ushering in reforms in the agricultural marketing system.

The jury is still out on the merit of these three laws.

"We were expecting one-fifth of the country's farmers to benefit from the implementation of the three farm reforms. We completely lost that opportunity. However, I feel the setback is only temporary," Niti Aayog Member Ramesh Chand told PTI.
Had farm laws been implemented, the Niti Aayog member said, "it would have helped achieve the target of doubling farmers income to a large extent. We had put nearly 20 per cent increase in income on implementation of the farm laws".

The three laws, passed by Parliament in September 2020, were aimed at giving marketing freedom to farmers beyond notified mandis. A framework for contract farming and regulating supply of essential commodities only under extraordinary circumstances were the other main objectives.

Chand said, the overall performance of the agricultural sector has been robust this year. "The agri-growth rate is intact. This year, we expect 3.5 per cent growth rate in agriculture by the end of March 2022, same as last year's level," he said.

Record production of foodgrains helped the agriculture sector to maintain its growth rate.

Agriculture Commissioner S K Malhotra said the country's foodgrains production could touch 310 million tonnes in the 2021-22 crop year (July-June). Good monsoon rains, adoption of new technologies and successful implementation of government schemes like PM-KISAN have aided the rise in production.

Malhotra said crop productivity has been improving as farmers are adopting better seed varieties that give higher yields and are high in nutritional value, besides having resistance to diseases and adverse climatic conditions.

The official also pointed out that the unseasonal rains affected perishable and horticulture produce in some parts of the country. As a result, prices of some commodities like tomatoes came under pressure. Despite bumper production of oilseeds crops, the edible oil prices skyrocketed to unprecedented levels on global cues.

India meets about 60-65 per cent of the domestic demand of edible oils through imports, which jumped to a record Rs 1.17 lakh crore in 2020-21 season, ended October. Prices of mustard oil rose to around Rs 200 per litre and prices of other cooking oils also went up.

During the year, the government reduced import duties of palm oil as well as other oils multiple times to ease domestic prices but rates are still ruling high. To keep the prices under control, the government also banned futures trading in many commodities and also imposed stockholding limits on traders and wholesalers.

A sharp rise in rabi oilseeds acreage has given hope for a likely fall in cooking oil prices in the New Year.

Among other developments, co-operative major IFFCO launched nano-urea in liquid form that promises to reduce India's import as well as subsidy bill.

"We started producing nano urea commercially and we have so far produced 1.5 crore bottles of nano urea which helped save Rs 6,000 crore of government's subsidy," IFFCO MD U S Awasthi said and urged the government to support production of such innovative products.

2021 also saw huge investments in agritech startups that are working in the area of farm advisory, provisions of inputs and marketing support among others. New technologies like drones are being used in the farm sector.

The government has already announced the setting up of a committee to address the key demand of protesting farmer unions -- a legal guarantee for Minimum Support Price (MSP) regime.

Hopefully, an amicable solution on the MSP issue is expected in the New Year.