Revitalizing Agriculture in Andhra Pradesh: Role of HighValue Commodities

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Revitalizing Agriculture in Andhra PradeshRole
of High-Value Commodities

• P. Parthasarathy Rao
• ICRISAT
• IFPRI-ICRISAT Collaborative Project
• July, 2005

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Presentation

• Andhra Pradesh a snapshot
• Agriculture sector a silent crisis
• Mapping of High-Value Commodities (HVCs)
• Policy interventions
• Conclusions

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Andhra PradeshA Snapshot
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Andhra Pradesh, India
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Andhra Pradesh fast facts

• Population 76 million
• Rural population 63
• Agriculture GDP 25
• 3 agroclimates dry, semi-arid, and coastal
• Irrigated area 45
• Front-runner in macro-economic reforms
• World Bank Andhra Pradesh is a leader in
  economic reforms but not yet in economic growth

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Andhra Pradesh is catching up with other
developed states
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Agriculture SectorA Silent Crisis
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Andhra Pradesh farming sector Facets of the
crisis

• Yield stagnation in traditional crops
• Food self-sufficiency achieved
• Accounts for 35 of rice procurement in India
• Relentless pressure on natural resources
• Declining water tables
• Unsustainable rice cropping
• Excessive use of inputs
• Fertilizers, pesticides, water, electricity
• Newer pressures from trade liberalization
• Prices, quality, sanitary and phytosanitary (SPS)
  measures

• Rising rural unemployment
• Decline in rural per capita incomes
• Inadequate access to formal credit
• Poor rural and marketing infrastructure
• Profound disquiet in rural areas
• AP has dubious distinction of highest farmer
  suicides
• High levels of out-migration to urban areas
• Highest incidence of child labor
• Chandra Babu Naidus Government voted out of
  power in 2004

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Annual compound growth rates of agriculture
sub-sectors and GDP, Andhra Pradesh (1993-94
prices)
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Diets trending away from basic cereals
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Mapping HVCs
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Share of high value commodities Andhra Pradesh
to All India
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(No Transcript)
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Composition of the value of agricultural
production by level of diversification Andhra
Pradesh, 1999-2001 (1980-82 prices)
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Districtwise HVC share in total value Andhra
Pradesh,
Change in share, 1982 to 2001
Distribution by HVC share
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Selected indicators by level of diversification
Andhra Pradesh, 2001.
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Income from HVCs - Kurnool, AP 2002-03
(household survey)
Irrigated
Rainfed
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Employment effects of HVCs, AP, 2002-03
household survey (average)
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Factors determining diversification All HVCs,
Vegetables and Poultry meat eggs Tobit model
results, 1999-2001
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HVCs Challenging policy terrain

• Marketing
• Domestic
• Export
• Processing
• Contract farming
• Case study Gherkins
• Credit
• Infrastructure

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Price spread selected markets, Andhra Pradesh,
2004
Fruits
Vegetables
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Agri-Export Zones (AEZ) in Andhra Pradesh
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Share of food processing industry by type Andhra
Pradesh
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Contract farming a new frontier
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Distribution of priority sector credit Andhra
Pradesh 2003-04
Priority sector
Crop sector
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Distribution of credit by diversification zones,
Andhra Pradesh, 2003-04
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Policy Interventions
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Pro-HVC policy interventions

• Pricing water
• Building efficient marketing networks
• Implement Model Marketing Act
• Dismantling government monopoly
• Increasing investments in infrastructure
• Roads, cold storage, bulk coolers
• Foster improved linkages between rural-urban
  markets

• Emphasizing vertical integration thru contract
  farming
• Increase enforceability
• Harness private sector innovations in food
  processing and marketing
• Adding value thru processing
• Simplify procedures for setting up food
  processing industries
• Enhancing access to formal credit
• Expand crop/rainfall insurance schemes
• Enabling public-private partnerships
• Extension

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Thank you