In the upcoming budget, the government is expected to incentivise value addition in agriculture that can boost farmers‘ incomes by encouraging backward linkages to the farm. Additional transport, marketing and branding incentives for exports of diverse farm produce are also likely.
The government is also eyeing incentives over and above the Rs 10,900 crore production-linked incentive (PLI) scheme for food processing to promote the creation of relevant storage and logistics infrastructure while a support plan to help in income diversification for farmers dependent on a single crop through assistance via research and development as well as credit support is also under discussion, ” the Economic Times had reported earlier this month.
The government is also likely to raise the farm credit target to Rs 18 lakh crore in the budget from the current credit target of Rs 16.5 lakh crore. “The government will continue to push for an uptick in farm credit limit given sharper focus on agri-infrastructure in the wake of the repeal of farm laws,” said Aditya Narain, Head of Research at Edelweiss.
“Agriculture was amongst the only sectors that saw growth during the pandemic years, this was enabled through various short terms measures to alleviate farmer stress. However, the share of such short-term schemes now accounts for around 80% of budgetary spends of the ministry of agriculture and farmers welfare. We would be keen to see what the budget has in store for long term structural measures such as infrastructure development, FPOs, and encouraging R&D in the agriculture-input space. These can ensure sustainable growth for the sector over the long term”, said Hetal Gandhi, Director, CRISIL Research.
Rating agency Icra expects the government to focus on improving farmers’ earnings through enhanced support for the agricultural economy. This will benefit the entire ecosystem of agri-inputs, seeds, fertiliser, crop protection chemicals, tractors etc.” The subsidy requirement for fertilisers has sharply increased in FY22 following elevated prices of key inputs and finished fertilisers in the international market. Icra expects the revised budgetary allocation to range between Rs 1,300 and Rs 1,410 billion.”
“My expectations center around creating AgriTech infrastructure in India and enabling tech adoption by farmers. The government should expand direct allocation to educate and train farmers through farmer producer organisations and incentivise smallholder farmers, FPOs and other value chain players to use digital and IoT tools to make India’s AgriTech revolution meaningful to them,” said Suniti Gupta, CEO of InnoterraTech, an AgriTech platform.
“The government is working on its promise to double the income of farmers by 2022-23 and is drawing up plans accordingly. This step will involve support for exports to help farmers establish markets for their products, where I am expecting additional transport, marketing and branding incentives for exports covering diverse farm produce are likely,” said Gaurav Garg, Head of Research, Capitalvia Global Research Ltd.
Farmers in India still work on agri models that are input-intensive, which affects their overall profitability. “Enabling a lean agribusiness model should be a priority by developing shared economy platforms through which farmers can access farm equipment and machinery at substantially lower costs. Mechanisation in agriculture would improve productivity and yield, and India needs significant improvements in both these spheres. An impetus towards shared economy models and digitisation of agri ecosystems in India would induce transparency into the entire sector – empowering farmers to make informed decisions and improve their output and incomes,” said Dhruv Sawhney, business head and COO, nurture.farm.
Another way to improve farmer income is to focus on adopting sustainable agricultural practices.
“Incentivising sustainable agricultural practices will have a two-pronged impact – on the one hand, it will improve the carbon footprint of agriculture, making it climate-friendly, and on the other, by leveraging carbon credits, farmers will have scope to earn higher income,” added Sawhney.
Another key demand for the agrochemical industry is higher budgetary allocation for both nutrient- and urea-based fertilisers. “This is primarily linked to an increase in the overall cost of raw materials. The government may double the subsidy allocation vis-a-vis last year. This will be a positive for fertiliser players given most of them have been facing constraints in passing through raw material costs,” said Edelweiss Research in a note.