Executive Summary

The National Centre for Agricultural Economics and Policy Research (NCAP) was established by the Indian Council of Agricultural Research (ICAR) in March 1991. The Centre is located at the campus of the Indian Agricultural Statistics Research Institute (IASRI), a sister institute of ICAR and is adjacent to the Indian Agricultural Research Institute (IARI), a premier institute in the country. The Centre has at present twenty scientists, and sixteen other staff. It had a total budget of Rs.265.45 lakhs for the year 1999-2000.

A high level Research Advisory Committee (RAC), comprising eminent professionals outside the system, guides the Centre in its research policies. Dr. S.S. Johl is the current chairman of the RAC. The Centre has also a Management Committee (MC). A number of internal committees, such as Staff Research Council (SRC), Budget and Policy Committee, Official Language Committee, Consultancy Processing Cell, Grievance Cell, Women Cell, Institute Joint Council, etc. have been constituted for decentalised management. Quinquennial Review Team has recently been constituted with Dr. V.S. Vyas as chairman.

In consonance with the mandate of the Centre, there are five major research themes viz. technology policy, sustainable agricultural systems, markets and trade, institutional change and agricultural growth and adjustment. The research is underway in each theme. Major achievements of the completed and ongoing research studies are summarised below.

A study was undertaken to examine the pattern of research resource allocation in rainfed agriculture. The study revealed that in the rainfed ecoregion, 40 percent of the research resources should be earmarked for the rice-based production system, 27 percent for the oilseeds-based production system, 22 percent for the coarse cereasls-based production system and 11 percent for the cotton-based production system. Across different production systems, besides dominant crop, the two most important activities viz. dairy and horticulture need higher share in research resources. In the arid ecoregion, livestock should receive higher share, followed by oilseeds and cereals.

One of the important considerations in research in India has been to improve upon income distribution and reduce incidence of poverty. The investment made in agricultural research in different states was negatively correlated with the incidence of poverty, which implied that the benefits of research had percolated down to the poor people. In a related study it was observed that research has generated substantial gains in land and labour productivity. However, land-augmenting technical change has slackened in relation to labour-saving technical change. This does not augur well for small and poor farmers. The study suggested more vigorous efforts to break the land productivity barriers.

In a study on 'crop diversification in rainfed agriculture' it emerged that rainfed agriculture is highly diversified, but the cropping intensity was low and witnessed very slow growth. The growth in cropping intensity was largely due to introduction of new crops. Development of irrigation facilities and watersheds along with moisture conservation techniques and bio-mechanical technologies (tractorisation, drought resistant and short duration varieties) would help increase cropping intensity and productive potential of rainfed agriculture.

One such example is the emergence of short duration and drought resistant chickpea varieties in non-traditional hot and dry climate in Andhra Pradesh in recent years. Area expanded sharply, contributing to the output growth substantially. The area under chickpea cultivation came mainly from fallow/marginal lands. It also occurred through substitution of rabi sorghum. Higher yield instability of sorghum and slow increase in its yield and prices relative to chickpea had a positive influence on spread of chickpea cultivation.

Accumulating evidences indicate that there is an ample scope to raise agricultural production in both the rainfed and irrigated regions. Studies were initiated to identify the factors hindering the realisation of the production potential in different production systems. In the soybean-based production system, agricultural output worth Rs. 21106 million was lost in 1999. In groundnut based production system, the annual losses due to biotic and abiotic factors were estimated at Rs. 32023 million. Non-podding in soybean, water stress in wheat and heavy infestation of pod borer in chickpea in the soybean-based production system, and problems of weeds and insect pests in the groundnut-based production system were identified as the limiting factors. These need to be addressed through research on soil and moisture conservation and breeding of short duration, drought and pest tolerant crop varieties. The socio-economic factors that were somewhat common in different production systems include erratic input supplies, lack of access to institutional credit and insurance and high price risk. These need to be alleviated through policy.

In contrast to the general perception that at existing level of technology, there is little scope to raise production in irrigated ecoregions, results of a study from Haryana are revealing. About half of the existing production potential remains untapped due to problems of insect pests, weeds, poor seed germination, imbalanced use of fertilisers and some socio-economic factors such as erratic power and input supply and labour scarcity. To sustain the growth of irrigated agriculture, research priorities need to be oriented towards breaking the yield barriers through development of insect pest resistant varieties and mechanical devices suitable for small holder agriculture.

These findings are supported by another study that examined the efficiency of chemical fertilisers and the integrated nutrient management using data from studies on long-term fertiliser experiments. The response of paddy and wheat yields to sole chemical fertiliser application was found less and decelerating, compared to combinations of fertilisers with organic sources of nutrients. Another study based on experimental data found that the optimal quantity of water (53 cm/ha) at different crop growth stages and 120 kg nitrogen/ha could yield 6 tonnes/ha of wheat in Punjab.

Pesticides too have contributed to increased agricultural production in India. Because of technological failure and adverse effects of chemical pesticides on ecology and society, integrated methods of pest control are proposed and claimed to be compatible with the objectives of a productive and sustainable agriculture. The results of a farm level study, with rainfed cotton as a case, support these claims. Application of integrated pest management (IPM) method reduced pesticide use almost to nil without any reduction in the yield. The cost of production as well as plant protection could be reduced by about 20 percent. IPM was a labour-using method implying that widespread adoption of IPM practices would generate additional employment opportunities on and off the farm.

A study was undertaken to examine the issues of growth and sustainability of brackishwater aquaculture. Brackishwater aquaculture witnessed an unprecedented growth in early nineties. The momentum could not last after 1994-95. Area kept on increasing; the yield came under pressure owing to negative externalities of intensification to the ecology, society and the system itself. Aquaculture was legally banned in the coastal regulation zone. The corporate investment declined. All these factors contributed to the decline in production and yield. The investigations, however, show that there exists enormous potential to raise brackishwater aquaculture production through area expansion alone, as at present hardly 17 percent of the available brackishwater area in the coastal states is under aquaculture. Appropriate production management consistent with principles of ecology conservation would help realise this.

Management of traditional irrigation systems is crucial to sustained growth of agricultural sector. In a study of Andhra Pradesh tank irrigation system, it was observed that neglect of minor irrigation sector had led to deterioration of tank irrigation. The tanks are an important source of irrigation in the rainfed regions and for the marginal and small landholders. Improving performance of tanks would help alleviate inter-regional and inter-farm disparities. Irrigation reforms have been initiated in the state at grassroots level by involving farmers in management of irrigation systems.

The on-going economic reforms emphasise privatisation and partnership. To assess the feasibility of privatising agricultural extension, the results of a study showed that the participation of private sector was limited to few crops in select geographical regions. The performance of the public extension system was poor, and about half of the surveyed farmers, particularly in the high-income brackets and growing horticultural crops, were willing to pay for extension services especially for plant protection and training.

Fertiliser is a crucial input in crop production. The future demand for fertiliser is expected to rise with the intensification of agriculture. The results of a study indicate that India would need about 265 million tonnes of NPK by the end of 2007.

In recent years, private sector has entered the seed market. However, the flow of information to farmers about seed attributes remains limited. Information flow takes place largely through the farmer-to-farmer contacts. The study suggests that the public sector should strengthen information system on seed quality, regulatory mechanisms, etc.

In the context of globalisation process of Indian economy, a study was initiated to assess the impact of implementation of WTO agreement on agricultural sector. The results revealed that implementation of WTO would have a mixed impact. The net returns from paddy would increase by 18 percent. However, removal of subsidies would lead to a decline in income by 11 percent. Trade liberalisation would be highly favourable to maize and the net returns would increase by 81 percent. The negative effect of removal of subsidies would be more than offset by trade liberalisation. The impact of liberalisation, however, would be negative on rapeseed- mustard.

Livestock trade is another gray area worth exploring. In a study, it was found that there is a sufficient potential to raise exports of livestock products ' particularly leather and leather products, and meat and meat preparations. In a related study, the impact of Southeast Asian economic crisis was assessed on India's livestock sector and it was observed that though the share of Southeast Asian countries in India's exports of agricultural sector has been affected marginally, it did not have any significant impact on exports of livestock products.

A study was undertaken to diagnose the status of nutritional security of farm households using NSSO data. With 2300 Kcal/caput/day as the cut-off limit, about 29 percent of the rural households were found to be undernourished. The nutritional security was better in the rice-wheat and wheat-based cropping systems, compared to rice and coarse cereals-based cropping systems. The nutrition intake was also found to be influenced positively with the increase in the level of irrigation. Ownership of dairy animals too influenced the nutritional intake positively. These imply that improved agricultural technologies have helped increase calorie intake of the farm households. Though the small farm households were found to be vulnerable in general.

The demand for high value commodities is likely to increase with the sustained rise in per capita income. The market for such commodities however is limited to households in the upper income brackets. This was observed in a study on shrimp consumption behaviour of urban households of Chennai city. The consumers were willing to pay about 25 percent more for the desired attributes. Shrimp is basically an export item, the study suggests exploring domestic markets for such products in order to provide sustainability to shrimp production, in case the exports face problems from the importing countries.

A study conducted in Uttar Pradesh showed that agricultural diversification towards high value crops has sufficient potential to generate income and employment opportunities. Concerted efforts to improve infrastructure for storage, marketing and transportation and strengthening the extension efforts for horticultural crops would help increase area under horticultural crops. In order to examine whether the developmental efforts have reduced the regional disparities in agriculture between different states, the results of a study indicated increasing disparities in per capita agricultural income across the states. The growth in per capita agricultural income was negative in the low-income states viz. Assam, Bihar, Himachal Pradesh and Orissa. On the other hand, per capita agricultural income has grown faster in the higher income states. Another study that analysed the growth and variability in rice production in eastern India indicated that except Bihar, there has been significant growth in production and yield of rice in recent years. The yield, however, is still about half of that in northern region.

Punjab has been in the forefront of agricultural development. However, in recent years the growth of agricultural sector in the state has started decelerating owing to natural resource degradation and limits to growth. The growth rates in net state domestic product, net state domestic product from agriculture and per capita income have come below the national averages. Thus, in order to accelerate the growth, the study suggests diversification of agriculture towards high value commodities such as horticulture, floriculture and dairying in different agro-ecological regions based on their comparative advantage.

In a study on temporal and spatial pattern in agricultural investment, it was observed that the investment in agriculture slowed down in most of the states. Investment as a proportion of net domestic product has also been declining. There was substantial variation in per hectare private fixed capital formation across the states. The results further revealed lack of complementarity between public and private investment. Institutional credit flow and terms of trade for agriculture were identified as the main determinants of private investment in agriculture and output growth. The study, therefore, suggested to encourage private investment through institutional credit support to sustain the growth in agriculture.

Two Policy Papers and five Policy Briefs, two Workshop Proceedings and two PME Notes have been published during the year 1999-2000. Centre's staff has also been involved in a number of professional and policy-level interactions.