Agriculture

US-India Agriculture Trade and Reciprocal Tariffs

Context: The US is India’s top market for agricultural goods, with bilateral farm trade totalling $6.6 billion in 2024. The US has imposed a 26% “reciprocal tariff" on Indian imports. The introduction of a ‘reciprocal tariff’ policy may pose certain challenges to agri-exports from India.

Relevance of the Topic:Mains: India-US Agriculture trade- Statistics, Potential, Challenges, Way forward

Key Stats India-US Agri Trade

  • Tariff Disparity: Historically, a tariff disparity of 32% has existed between India and the US. India imposes an average 37.7% tariff, while the US applies only 2.6% on agricultural products. A reciprocal tariff policy could impact the trade dynamics between the two countries.
  • Bilateral Trade Statistics (2024): 
    • Total India-US agricultural trade: $6.6 billion
    • India’s exports to the US: $5 billion
    • US exports to India: $1.5 billion
  • India’s Agricultural Imports from the US primarily include Pulses, vegetable oils, tree nuts and Fresh fruits. Tariff changes could disrupt this trade. 

Impacts of Tariffs on India’s major Agri-Exports to the US

  • Tariffs can hit key agricultural exports, particularly basmati and non-basmati rice, shrimp, wheat, and buffalo meat, which together account for 46% of India’s farm trade with the US.
  • Shrimp (India’s largest seafood export to the US) will become un-competitive in the US market. Currently, it is subjected to around 7% duty including countervailing duty and anti-dumping duty. With the increase (26%) in tariff, Indian exporters would be subjected to 33% tariff.
  • Tariff hike on processed foods, sugar, and cocoa exports will make Indian snacks and confectionery less attractive to US buyers.
  • Dairy products (ghee, butter, and milk powder) would be costlier in the US.

Potential for India’s Agri-Exports to the US: 

  • India can expand its export portfolio by increasing trade in: Rubber and derivatives; Beverages, spirits, and vinegar; Tobacco; Fish and dairy produce; Cotton. 
  • GTRI has suggested that to soften the impact, India can propose a 'zero-for-zero' tariff strategy' to the US, under which both countries would mutually eliminate tariffs on select goods rather than negotiating a full bilateral trade agreement. 

Indo-Pacific Economic Framework for Prosperity (IPEF)

  • Signed in May 2022 between the US and 13 Indo-Pacific countries, including India.
  • Aims to: Strengthen food safety and trade standards; Reduce agri-trade barriers for US agricultural exports.

Challenges Hindering India’s Agri-Export Growth

  • Logistics and Infrastructure Issues: India’s logistical efficiency improved from 54th in 2014 to 38th in 2023 (World Bank’s Logistics Performance Index). However, India still lags behind countries like Canada, China, South Africa, and Malaysia. Cold storage and supply chain infrastructure remain major bottlenecks.
  • High Post-Harvest Losses: 40% of food waste in India due to poor post-harvest management (FAO report). 30% of fruits and vegetables perish due to inadequate storage.
  • Stringent Sanitary and Phytosanitary (SPS) Standards: Trade agreements by the US, European Union etc. require adherence to strict environmental and quality regulations. Attaining compliance remains a major issue in increasing exports to these countries. 
  • Structural Issues in Indian Agriculture: Small and fragmented landholdings reduce economies of scale. Lack of aggregation and processing facilities for small and micro-enterprises results in limited value addition in agricultural produce and makes them less competitive in global markets. 

Way Forward for Strengthening India’s Agri-Exports

  • Modernising supply chains with improved cold storage and logistics.
  • Enhancing compliance with international food safety and environmental regulations.
  • Diversifying export products to reduce dependency on a few commodities.
  • Strengthening trade agreements to secure preferential access to US markets.
  • Supporting small farmers through aggregation models and export incentives.

Revised Rashtriya Gokul Mission

Context: The Union Cabinet has approved the Revised Rashtriya Gokul Mission (RGM) to boost growth in the livestock sector. 

Relevance of the Topic: Prelims: Revised Rashtriya Gokul Mission. 

Revised Rashtriya Gokul Mission

  • The revised mission will be implemented as a Central Sector scheme with an additional outlay of ₹1,000 crore.
  • Total allocation (FY22-26): ₹3,400 crore.
  • Key Components:
    • Heifer Rearing Centres: One-time assistance of 35% of capital cost for setting up 30 housing facilities for 15,000 heifers.
    • Support for High Genetic Merit (HGM) Heifers: 3% interest subvention on loans taken by farmers to purchase HGM IVF heifers from milk unions/ financial institutions.
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Rashtriya Gokul Mission

  • The Rashtriya Gokul Mission (RGM) is being implemented for development and conservation of indigenous bovine breeds and enhancing milk production.
  • Launched in 2014 under the National Programme for Bovine Breeding and Dairy Development.
  • Ongoing Activities under RGM:
    • Strengthening semen stations and artificial insemination (AI) networks
    • Bull production and accelerated breed improvement programs
    • Skill development and farmer awareness initiatives
    • Establishing Centres of Excellence while reinforcing Central Cattle Breeding Farms. 
  • Key Components:
    • Gokul Grams: Indigenous cattle development centres.
    • National Kamdhenu Breeding Centres: Two centres set up (one in North & South each). Act as gene banks for high-quality indigenous bovine breeds.
    • E-Pashu Haat Portal: Online platform to trade indigenous breeds and semen. 
  • Type of Funding: 100% grant by Central Government, with few exceptions.
  • Implementing Agency: National Dairy Development Board (NDDB) and State Livestock Development Boards. 
  • Initiative of: Ministry of Fisheries, Animal Husbandry & Dairying

Achievements under RGM

  • Increased production and productivity in dairy sector:
    • India is the world's largest producer of milk. Milk production has increased by 63% over the past decade. 
    • Availability of milk per capita has risen to 471 grams per day in 2023-24, from 307 grams per day in 2013-14.
    • Milk productivity has also improved by 26% in the last ten years.
  • Nationwide Artificial Insemination Programme (NAIP) under RGM provides free artificial insemination at farmers’ doorsteps in 605 districts across the country.
  • Setting up in-vitro fertilisation (IVF) labs to develop high-genetic merit calves.
  • Development of Gau Chip and Mahish Chip: genomic chips for indigenous bovines, created by NDDB and National Bureau of Animal Genetic Resources (NBAGR).  
  • Development of Gau Sort: indigenously developed sex-sorted semen production technology (increases probability of female calf birth). 

Kisan Credit Card bad loans rise by 42% in four years: RBI

Context: Recently, in an Right to Information (RTI) request reply, the Reserve Bank of India informed that the outstanding NPA amount in the Kisan Credit Card (KCC) segment surged to Rs 97,543 crore as at end of December 2024. 

Relevance of the Topic: Prelims: Kisan Credit Card; Non-Performing Assets in KCC segment. 

Major Highlights:

  • Among all other agriculture loans offered by banks, such as tractor or food and agri-processing loans, the highest amount of delinquencies are seen in the Kisan Credit Card (KCC) segment.
    • Scheduled commercial banks, excluding regional rural banks, have seen a sharp increase of 42% in bad loans in KCC accounts, during FY21-FY25. 
    • Outstanding NPA amount surged to Rs 97,543 crore at the end of December 2024, compared to Rs 68,547 crore at the end of March 2021. 
  • Amount outstanding in operative KCC accounts across all banks (SCBs, cooperative banks and RRBs), has risen from Rs 4.76 lakh crore in FY22 to Rs 5.91 lakh crore as of December 2024. This reflects stress in the agriculture sector. 

NPA classification in the KCC segment

  • In case of a retail loan, an account becomes an NPA if interest and instalment of principal remain overdue for more than 90 days. 
  • The repayment period for KCC loans is as per the crop season (short or long) and marketing period for the crop.
    • The crop season for states is decided by the respective State Level Bankers Committee (SLBC). 
    • For short duration crops, the crop season is 12 months and for long duration crops it is 18 months in most states.
  • If a KCC loan is not paid within three years of disbursal, it is classified as NPA.

Factors for rise in defaults in KCC segment: 

  • Inability of farmers to repay loans due to weather-related damages to crops.
  • Lack of awareness among farmers about repayment timelines.
  • Delay in payments due to exigencies related to personal household requirements.
  • Weak loan recovery mechanism for banks.
  • Expectations of farm loan waiver; Borrowers choose to default strategically in anticipation of future bailouts.

Kisan Credit Card (KCC) scheme

  • Introduced in 1998, KCC scheme provides timely access to institutional credit to small and marginal farmers for agricultural and allied activities. 
  • KCC offers credit support for:
    • Cultivation and post-harvest activities.
    • Working capital for essential farming equipment. 
    • Investment credit for allied activities (animal husbandry, dairying, fisheries, and other agricultural extensions). 
    • Meet household consumption expenses. 
  • Key Features:
    • Banks provide collateral-free loans up to Rs 2 lakhs under KCC scheme. 
    • KCC offers a revolving cash credit facility, allowing farmers to withdraw and deposit funds multiple times, without any restrictions.
    • KCC loans come under the priority sector lending (PSL) for banks. Of the overall PSL target of 40%, banks are mandated by RBI to allocate 18% of their funds towards agriculture lending. 
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Modified Interest Subvention Scheme under KCC

  • Modified Interest Subvention Scheme (MISS) offers concessional Short-term Agri-loans to farmers through KCC, up to Rs 3 lakh at a concessional interest rate of 7% per annum. 
  • An additional 3% subvention is provided for timely repayment, reducing the effective rate to 4%. 
  • MISS also includes post-harvest loans against Negotiable Warehouse Receipts (NWRs) for small farmers with KCCs.
  • In the Budget 2025-26, the government announced to increase the loan limit under the MISS from Rs 3 lakh to Rs 5 lakh.

A 2019 report of an RBI working group to ‘Review Agriculture Credit’ cited that loan waivers impact the credit flow to agriculture due to moral hazard among both beneficiaries and non-beneficiaries. This essentially leads to banks reallocating lending to lower risk borrower segments, and thus reducing credit availability for the agriculture sector. 

India's Spice Sector

Context: The World Spice Organisation (WSO) reported that despite being the largest producer and exporter of diverse varieties of spices in the world, India’s share in the global seasoning market is only 0.7%.

Spices in India

  • Primary spice-growing regions include Kerala, Karnataka, Tamil Nadu, Andhra Pradesh, and Gujarat. However, new regions like the North-East, Odisha, and Jharkhand are emerging as significant spice producers.
  • Some of the most widely grown and exported spices in India include:
    • Black Pepper: "The King of Spices," mainly grown in Kerala and Karnataka.
    • Cardamom: Highly valued in global markets, produced in South India.
    • Turmeric: Used in culinary, medicinal, and nutraceutical applications.
    • Cumin & Coriander: Essential for Indian and Middle Eastern cuisine.
    • Chilies: India is the largest producer of red chilies, widely grown in Andhra Pradesh and Telangana.

Current Status of India's Spice Exports

  • Largest producer and exporter: India is the largest producer and exporter of diverse varieties of spices globally.
  • Total spice export: India exports 1.5 million tonnes of spices worth $4.5 billion, commanding about 25% of the $20 billion global spice market.
  • Low market share: India's share in the global seasoning market (valued at $14 billion in 2024) is only 0.7%, compared to:
    • China: 12%
    • United States: 11%
  • Value addition in spice exports:
    • Only 48% of India's spice exports are value-added products.
    • The remaining 52% are exported as raw, whole spices with limited processing.

Challenges in Indian Spice Industry

  • High cost of production: Farmers struggle with rising costs due to inefficient agricultural practices, pesticide overuse, and outdated processing methods.
  • Low value addition: India primarily exports whole spices rather than processed spice products like seasonings, extracts, and nutraceuticals. To meet the $10 billion export target by 2030, the share of value-added spices should increase from 48% to 70%.
  • Limited global market penetration: While India dominates spice production, countries like Vietnam, Indonesia, Brazil, and China have expanded their presence in international spice markets. Additionally, African nations have recently entered spice cultivation, posing new competition.
  • Quality & Safety Concerns: Stringent global regulations on pesticide residues and contamination require strict quality control measures. Many Indian spice farmers need training in integrated pest management, hygiene to meet international standards.
  • Climate change impact: Spice cultivation is highly sensitive to climate conditions. Unpredictable monsoons and rising temperatures threaten yields and quality. Developing high-yielding and climate-resistant varieties is essential to maintaining production levels.

Government & Industry Efforts for Improvement

  • Spices Board of India: Promotes research, processing, and export growth in the sector.
  • World Spice Organisation (WSO): Works with Farmer Producer Organisations (FPOs) to improve spice farming techniques.
  • Indian Council of Agricultural Research (ICAR): Developing high-yield and climate-resistant spice varieties.
  • Integrated Pest Management (IPM) Programs: Educates farmers on sustainable cultivation practices.

To achieve the $10 billion spice export target by 2030, India must boost production efficiency, increase value-addition, expand global market presence, enhance pesticide control and meet international standards. 

Revised Livestock Health and Disease Control Programme

Context: The Cabinet approved the revision of the Livestock Health and Disease Control Programme (LHDCP) with a total outlay of ₹3,880 crore for FY 2024-25 and FY 2025-26, and added a new component Pashu Aushadhi, with allocation of Rs 75 crores. 

Status of Livestock Sector in India

  • India has the world's largest population of livestock. As per the 20th Livestock Census, India’s Livestock population stood at 535.78 million in 2019. This included a total bovine population (including cattle, buffalo, mithun and yak) of 302.79 million.

Significance of Livestock Sector

  • Contribution to GDP: Contribution to total Livestock GVA (at constant prices) was 30.19% of Agricultural and Allied Sector GVA and 5.73% of Total GVA in 2021-22.
    • India is ranked 1st in milk production contributing 23% of global milk production.
    • India is the largest producer of buffalo meat and 2nd largest producer of goat meat.
  • Employment generation: Livestock rearing is a major source of livelihood for over 70% of rural households in India, especially for small and marginal farmers and landless laborers.
  • Food and Nutritional Security: Livestock products such as milk, meat, and eggs are rich in essential nutrients, playing a crucial role in combating malnutrition.
  • Interlinkages with Agri-activities: The livestock sector is crucial for production of organic inputs like manure and agricultural waste is used as fodder for animals.

Issues faced by Livestock Sector in India

  • Health and Veterinary Issues:
    • High economic losses due to animal diseases: E.g., Foot and Mouth Disease (FMD), Brucellosis, Peste des Petits Ruminants (PPR), Cerebrospinal Fluid (CSF), Lumpy Skin Disease etc. 
    • Zoonotic diseases can be transmitted between animals and humans, as evidenced by recent outbreaks like COVID-19, Ebola, and Avian influenza.
    • Inadequate infrastructure: India has less than 60 recognised veterinary colleges in India, which are inadequate to turn out the required number of vets. 
    • Anti-Microbial Resistance: India ranks 4th in antibiotics use in animals, wherein the poultry sector is the largest reservoir of antibiotics. 
  • Economic Issues:
    • Low Productivity: Due to inadequate nutrition, poor management practices, and low genetic potential of local breeds.
      • Average annual productivity of cattle in India is 1777 kg/animal/year as against the world average of 2699 kg/animal/year (2019-20).
    • Unorganised Sector: About half of total meat production comes from un-registered, make-shift slaughterhouses. 
    • High Marketing and transaction costs: of livestock products at around 15-20% of sale price.
    • Low Insurance Cover: Only 15.47% of animals are under insurance cover.
    • Shortage of Fodder: India has only 5% of its cultivable land under fodder production while having 11% of livestock, creating a huge pressure on land, water and other resources. 
  • There is no exclusive livestock extension program, and most services are animal health-focused, not extension-focused. 
  • Greenhouse gas emissions: Enteric methane emission from Indian livestock contributed 15.1% total global enteric methane emissions.

Livestock Health & Disease Control Programme (LHDCP)

  • Aim: To improve the animal health sector by implementation of prophylactic vaccination programmes against various diseases of livestock and poultry, capacity building, disease surveillance and strengthening of veterinary infrastructure. 
  • Objectives of the scheme:
    • To implement a Critical Animal disease control programme to eradicate PPR (viral disease) by 2030 by vaccinating all sheep and goats and to control Classical Swine Fever (CSF) by vaccinating the entire pig population.
      • Peste des Petits Ruminants (PPR), also known as sheep and goat plague, is a highly contagious viral disease affecting domestic and wild small ruminants.
    • To provide veterinary services at the farmers’ doorstep through Mobile Veterinary Units (MVUs). 
    • To assist States/UTs for Control of Animal Disease (ASCAD) by prevention & control of important livestock and poultry diseases.

Revised LHDCP consists of Three Major Components

1. National Animal Disease Control Programme (NADCP): Focuses on immunisation and control of major livestock diseases.

2. Livestock Health and Disease Control (LH&DC): Comprises three sub-components:

  • Critical Animal Disease Control Programme (CADCP): Targets major livestock diseases like Foot and Mouth Disease (FMD), Brucellosis, etc.
  • Establishment and Strengthening of Veterinary Hospitals & Dispensaries (ESVHD-MVU): Includes Mobile Veterinary Units (MVU) for doorstep healthcare.
  • Assistance to States for Control of Animal Diseases (ASCAD): Financial and technical support to state governments.

3. Pashu Aushadhi Kendras (New component):

  • Aim: To provide affordable and good-quality generic veterinary medicines.
  • Distribution through PM-Kisan Samriddhi Kendras and cooperative societies.
  • Pashu Aushadhi Kendras will also sell ethno-veterinary medicines, based on traditional beliefs and indigenous knowledge and practices.

Other Initiatives in Livestock Sector: 

  • Rashtriya Gokul Mission: Focuses on the development and conservation of indigenous breeds through selective breeding and genetic upgradation.
  • National Livestock Mission: Aims to ensure quantitative and qualitative improvement in livestock production systems and capacity building of all stakeholders.
  • Extension of Kisan Credit Card (KCC) to the sector and establishment of Animal Health Infrastructure Development Fund etc.
  • Dairy Development Programs: Schemes like the National Programme for Dairy Development (NPDD) and Dairy Entrepreneurship Development Scheme (DEDS) aim to modernize the dairy sector and promote entrepreneurship.

Import of Pulses

Context: Indian government has recently reimposed import duties on yellow peas after allowing duty-free imports for a limited period. The surge in pulse imports has impacted domestic prices, causing distress among Indian farmers.

Pulses

  • Temperature: Between 20-27°C
  • Rainfall: Around 25-60 cm.
  • Soil type: Sandy-loamy soil.
  • These are the major sources of protein in a vegetarian diet.
  • Being leguminous crops, all these crops (except arhar) help in restoring soil fertility by fixing nitrogen from the air. Therefore, these are mostly grown in rotation with other crops.
  • Pulses are grown throughout the agricultural year. 
  • Rabi Pulses (contribute over 60%): Gram (chickpea), Chana (Bengal gram), Masoor (lentil), Arhar (pigeon pea).
    • Rabi crops require a mild cold climate during sowing period
    • Cold climate during vegetative to pod development
    • Warm climate during maturity/harvesting
  • Kharif Pulses: Moong (green gram), Urad (black gram), Tur (arhar dal).
    • Kharif pulse crops require a warm climate throughout their life from sowing to harvesting.
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Recent Government Policies on Pulse Imports

  • The government allowed duty-free imports of yellow peas from December 2023 to February 2025, but has now reimposed the duty.
  • The duty-free import period for pigeon peas (tur) has been extended until March 31, 2026.
  • A decision on chickpeas (chana) and black gram (urad) is awaited.
  • The Ministry of Food has recommended reimposing customs duty on lentils, but no notification has been issued yet.

Impact of Duty-free imports on domestic market

  • Increased imports: According to trade data, India is estimated to have imported 6.63 million tonnes of pulses in 2024, compared with 3.31 million tonnes in 2023.
  • Falling domestic prices:
    • Prices of pulses in India have fallen below the Minimum Support Price (MSP) due to increased imports.
    • Example:
      • Urad prices dropped by 25% from over ₹100/kg since June 2024.
      • Pigeon pea (tur) prices fell to $800/tonne from $1,400/tonne in mid-2024.
      • Yellow peas prices fell to $450/tonne from $700/tonne when duty-free imports were allowed.
image 30
  • Benefits to foreign farmers, while Indian farmers struggle:
    • Australian and Canadian farmers have benefited from exports, while Indian farmers struggle with lower prices.
    • Example: Australian farmers earn ₹160/kg for chickpeas, whereas Indian farmers earn ₹100/kg.
  • Impact on Domestic farmers:
    • Lower prices may discourage farmers from growing pulses, impacting India's self-sufficiency in food production.
    • Farmers may switch to other crops like maize, which is gaining demand due to ethanol production.

Reasons behind India’s dependence on Pulses Imports

According to trade data, India is estimated to have imported 6.63 million tonnes of pulses in 2024, compared with 3.31 million tonnes in 2023.

  • Shifting cropping patterns:
    • Traditionally, farmers in India practised crop rotation with pulses. 
    • However, in recent decades, there has been a shift towards cultivating water-intensive cereals like rice and wheat due to the following reasons:
      • Rice and wheat are staples in most Indian diets, leading to a rise in consumption demands.
      • Government incentives like higher margins over the average cost of production in MSPs and assured procurement for these crops.
      • Availability of better irrigation facilities in some areas.
  • Lower profitability:
    • Pulses often offer lower returns per hectare compared to cereals. This discourages farmers from planting them, especially on fertile and irrigated land.
  • Climate challenges:
    • Erratic rainfall and droughts can negatively impact pulse production, which are generally rain-fed crops.
  • Limited technological advancements: Compared to cereals and cash crops, research and development in pulse is limited and higher susceptibility to diseases and pests persist.

India’s Initiatives to boost Pulses Production

1. National Food Security Mission (NFSM)-Pulses:

  • Led by Department of Agriculture & Farmers Welfare 
  • It operates in 28 States and 2 Union Territories including Jammu & Kashmir and Ladakh.
  • Interventions under NFSM-Pulses:
    • Assistance to farmers through States/UTs for various interventions.
    • Cropping system demonstrations.
    • Seed production and distribution of HYVs/hybrids.
    • Additionally, the establishment of 150 Seed Hubs for Pulses has significantly contributed to increasing the availability of quality pulse seeds.

2. Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) Scheme: comprises three components:

  • Price Support Scheme (PSS): Procurement from pre-registered farmers at Minimum Support Price (MSP).
  • Price Deficiency Payment Scheme (PDPS): Compensates farmers for price differences.
  • Private Procurement Stockist Scheme (PPSS): Encourages private sector participation in procurement.

3. Mission for Aatmanirbharta (self-reliance) in Pulses: 

  • In Budget 2025, the government announced plans to launch a 6-year mission with a special focus on Tur, Urad and Masoor. 
  • The Mission will place emphasis on:
    • development and commercial availability of climate resilient seeds
    • enhancing protein content in pulses
    • increasing pulses productivity
    • improving post-harvest storage and management
    • assuring remunerative prices to the farmers. 
  • Rs 1,000 crore have been allocated to provide Minimum Support Price (MSP) based procurement and post-harvest warehousing solutions for these 3 pulses. 
  • Central Agencies (NAFED and NCCF) will procure these 3 pulses, as much as offered during the next 4 years from farmers who register with these agencies and enter into agreements.

4. ICAR's role in research and variety development:  ICAR focuses on:

  • Basic and strategic research on pulses.
  • Collaborative applied research with State Agricultural Universities.
  • Development of location-specific high-yielding varieties and production packages.
  • During the period from 2014 to 2023, an impressive 343 high-yielding varieties and hybrids of pulses have been officially recognised for commercial cultivation across the country.

Way Forward: Balanced Approach

  • Imposing customs duties on pulses:
    • Urgent need to curb imports of chickpeas and lentils to protect domestic farmers.
    • A moderate duty on pulses can stabilize prices while preventing excessive dependence on imports.
  • Import quotas for future stability: Instead of a blanket duty-free policy, the government should set an import quota and adjust duties based on production estimates.
  • Stakeholder consultation for a long-term policy: Engaging farmers, traders, and policymakers to create a stable pulse import policy.
  • Supporting farmers with MSP and procurement:
    • Strengthening procurement mechanisms to ensure farmers get prices above MSP.
    • Promoting pulse cultivation with incentives and better storage facilities.

India's Agricultural Exports: Key Trends

Context: India’s agricultural trade surplus has reduced from $10.6 billion in April-December 2023-24 to $8.2 billion for the corresponding nine months of the current fiscal year 2024-25. 

Relevance of the Topic: Prelims: Agriculture exports- trends. 

Agriculture Trade: Trends

  • Agriculture Exports: 
    • India's agricultural exports increased by 6.5%, rising from $35.2 billion (April-December 2023) to $37.5 billion (April-December 2024).
    • This growth surpassed the 1.9% increase in total merchandise exports.
  • Agriculture Imports:
    • Grew at a higher rate of 18.7%, rising from $24.6 billion (April-December 2023) to $29.3 billion (April-December 2024).
  • Narrowing Agricultural Trade Surplus:
    • The surplus fell from $10.6 billion (April-December 2023-24) to $8.2 billion (April-December 2024-25).
    • Historically, India's agricultural trade surplus peaked at $27.7 billion in 2013-14 but declined to $8.1 billion by 2016-17.
    • It increased again to $20.2 billion in 2020-21, but has since been declining.
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Impact of Global Commodity Prices on Indian Exports

  • The FAO food price index fell between 2013-14 (119.1) and 2019-20 (96.4), reducing India's agricultural export competitiveness.
  • Post-COVID-19 and the Russia-Ukraine war, global food prices surged, leading to higher Indian exports.
  • The index peaked at 140.6 in 2022-23, boosting exports to $53.2 billion, but has since fallen, affecting exports.

Key Agricultural Export Commodities

  • Marine products: 
    • No. 1 export commodity in India’s agri-exports.
    • Exports fell from $8.1 billion (2022-23) to $7.4 billion (2023-24).
  • Sugar: Dropped from $5.8 billion (2022-23) to $2.8 billion (2023-24) due to government restrictions.
  • Wheat: Exports reduced significantly due to domestic supply concerns.
  • Rice: Despite export restrictions, non-basmati rice exports remain high, while basmati rice exports are expected to reach record levels.
  • Spices, Coffee, and Tobacco: Crop failures in other countries (Brazil, Vietnam, Zimbabwe) have boosted India’s exports.
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Key Agricultural Import Commodities

India’s agricultural imports are dominated by two commodities: Edible oils and pulses.

  • Edible oils: Imports surged due to high global prices post-Ukraine war.
  • Pulses: Poor domestic production led to an increase in imports, expected to cross $5 billion for the first time.
  • Spices: India has become a net importer of pepper and cardamom, despite leading in other spices.
  • Cotton: Once a major exporter, India is now a net importer, with imports increasing by 84.2% in 2024.
image 19

While India remains a strong player in agricultural exports, increasing imports and global market uncertainties pose challenges. A balanced trade policy, along with investments in domestic agricultural productivity, will be crucial in maintaining a healthy agricultural trade surplus.

Farmers’ Producer Organisations (FPOs)

Context: Recently, the Prime Minister of India announced that the target of creating 10,000 farmer producer organisations (FPOs) has been achieved before the deadline, March 31, 2025. 

Relevance of the Topic: Mains: Farmers’ Producer Organisations: Significance and Challenges.

What is the Farmers Producer Organisation (FPO)?

  • A Producer Organisation (PO) is a legal entity formed by primary producers such as farmers, milk producers, fishermen, weavers, rural artisans, craftsmen etc. 
  • FPO is a type of PO where the members are farmers. The FPOs can be registered as Cooperatives (under Cooperative Societies Act of the respective State), Farmer Producer Company (Under Companies Act, 2013) or Societies (under Society Registration Act, 1860).

How FPOs Benefit Small and Marginal Farmers?

  • Facilitate land pooling and address problems associated with fragmented landholdings.
  • Reap economies of scale for buying inputs and selling the agricultural produce.
  • Enable sharing of services such as knowledge input, production supervision, storage, transportation, etc and hence reduce the transaction costs.
  • Create opportunities for farmers to get more involved in value addition activities such as input supply, credit, processing, marketing and distribution.
  • Provide interface between the farmer and global market enabling them to export  commodities.
  • Provide access to capital for farmers and manage risk for farmers through diversification.
  • Promote economic democracy at the grass root level.

Initiatives for the Promotion of FPOs

  • The SFAC is the nodal agency at the national level for the creation of FPOs. The SFAC operates a Credit Guarantee Fund to mitigate credit risks of financial institutions which lend to the FPCs without collateral. SFAC also provides matching equity grants up to Rs. 10 lakh to double the share capital of FPCs. 
  • NABARD also provides financial support to the FPOs through two dedicated funds - “Producers Organization Development Fund (PODF)” and PRODUCE Fund (Producers’ Organization Development and Upliftment Corpus) to promote new FPOs and support their initial financial requirements.

Challenges and Issues in Building Robust FPOs

In the last 8-10 years, 5000 FPOs have been formed through initiatives of SFAC (Nodal Agency), NABARD, Government etc. without much success. Hence, to ensure success of a new initiative, the Government needs to acknowledge present weaknesses, analyse their reasons and then take outcome-oriented actions.

  • Promote Collaborative Farming: The FPOs need to be formed on the basis of adjoining land holdings and common produce to ensure higher economies of scale and undertake value addition.
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  • Finances: The reluctance of Banks to give loans has to be countered through enhanced credit support from Government agencies. Further, Just like cooperatives, the FPOs also must be given income tax exemption.
  • Handholding: Need to provide regular training and business level handholding. 
  • Professional Management: It can be improved by enabling the Private sector to invest in FPOs. This will need amendment of Companies Act which currently allows only farmers to be producer members.
  • Market Linkages: Direct procurement by Government; freight subsidy to wholesale buyers; connecting FPOs to online platforms etc.
  • Village Producer Organisations (VPOs): The VPOs can be developed as a joint venture of FPOs such that an entire village region is developed for a predetermined set of agricultural produce with post-production activities. For example, a region having strength in producing fibre crops can be developed as a VPO to include small handloom weavers.

Suggestion for Improved Functioning of FPOs

  • Efficient Selection Mechanism: There is a need for a proper selection mechanism for the promoters/organisation as well as members based on merit to avoid subsidy gouging.
  • Optimal Size Determination: Enables easier monitoring and delivery of attributes like appropriate quality and food safety.
  • Skill and Product Differentiation: Optimal composition with participation of members having different skills is important to reap the gains based on comparative advantage. Further, FPOs can maximise prices for farmers if their products are differentiated.
  • Collaboration with NGOs is essential as they can play a crucial role in the development of FPOs as promoting institutions. Thus, more approaches of social enterprises should be infused to further develop these companies.

Way Forward

The promotion of FPCs should not be seen as a one-time exercise. Though there is sufficient focus on providing financial assistance to FPOs, there is limited hand-holding subsequent to their formation. In this regard, the Government must provide for sustained and continuous support until the time the FPCs become financially viable and independent.

AI in Agriculture

Context: Microsoft CEO Satya Nadella highlighted Project Farm Vibes in Baramati, Maharashtra, showcasing how AI-driven solutions improved crop yield by 40% and reduced fertilizer use by 25%.

About Project Farm Vibes

About Project Farm Vibes
  • What is it?
    • A suite of AI-driven agricultural technologies developed by Microsoft Research to enhance farming efficiency, sustainability, and productivity.
    • Uses satellite data, IoT sensors, drones, and AI algorithms to generate actionable insights for farmers.
  • Organisations associated: Microsoft Research & Azure AI Team, Agricultural Development Trust, Baramati, Oxford University AI Researchers. 
  • How AI transformed agriculture in Baramati?
    • Sensor Fusion Technology: Integrated real-time data from drones, satellites, and soil sensors to optimise farm operations.
    • AI-Powered Insights: AI analysed soil moisture, temperature, pH levels, and humidity, offering data-driven recommendations.
    • Vernacular AI Assistance: Farmers accessed AI-generated advice in their local language, making technology more accessible and user-friendly.
    • Precision farming: Spot fertilisation techniques reduced chemical use by 25%, improving soil health and sustainability.
    • Climate-responsive farming: AI monitored weather patterns and field conditions, enabling better water management and crop scheduling.
  • Impact on Agriculture:
    • 40% increase in crop yield: AI-driven insights led to better farming practices and higher productivity.
    • 25% reduction in fertilizer costs: Precision farming minimized chemical overuse, improving cost-effectiveness.
    • 50% water conservation: AI-enhanced irrigation strategies optimized water usage, making farming more sustainable.
    • Shorter crop cycle: Sugarcane harvest time reduced from 18 to 12 months, increasing profitability for farmers.
    • 12% reduction in Post-harvest losses: AI applications streamlined logistics and storage, cutting wastage.

Role of Artificial Intelligence in Agriculture

  • Precision Agriculture (Enhancing productivity and efficiency): 
    • AI technologies, such as machine learning, drone applications, and remote sensing, are revolutionising farming practices.
    • These innovations enable precise monitoring of crop health, soil conditions, and weather patterns, allowing farmers to make informed decisions.
    • These allow for targeted interventions, such as precise application of water and fertilizers.
  • Data-driven innovations: 
    • By analysing vast amounts of data, AI systems can recommend optimal planting times, crop rotations, and irrigation schedules. It helps in conserving water, reducing chemical usage, and maintaining soil health. 
    • For example, drones equipped with hyperspectral imaging can detect nutrient deficiencies and pest infestations early.
    • The concept of Hybrid Agricultural Intelligence (HAI), which combines farmers’ indigenous knowledge with AI, is particularly promising for smallholder farmers in India.
  • Climate-Smart Agriculture: 
    • AI can predict weather patterns and provide early warnings for extreme weather events, enabling farmers to take preventive measures.
    • AI-based systems can optimise resource use, such as water and fertilizers, to adapt to changing climatic conditions.

AI-Powered Solutions in Agriculture

  • Kisan e-Mitra Chatbot: 
    • An AI-powered tool designed to assist farmers with queries related to the PM Kisan Samman Nidhi scheme.
    • It supports multiple languages and is evolving to provide information on other government programs.
  • National Pest Surveillance System: 
    • AI and Machine Learning (ML) are utilized in the National Pest Surveillance System to detect crop issues early.
    • It helps in timely interventions, reducing crop losses due to pests and diseases.
  • IoT-based Irrigation systems: 
    • Indian Council of Agricultural Research (ICAR) has developed IoT-based irrigation systems tested in the field for selected crops.
    • These systems optimize water usage, ensuring efficient irrigation.
  • Crop health monitoring: 
    • AI-based analytics, using field photographs and satellite data, assess crop health.
    • It monitors weather and soil moisture conditions, particularly for rice and wheat, enabling farmers to make informed decisions.

Concerns in integration of AI into Agriculture

  • Challenges for smallholders: Small landholdings in India pose a challenge for the adoption of AI technologies, which are often designed for larger farms.
  • Ensuring affordable and accessible AI tools for smallholder farmers is crucial.
  • Technological infrastructure and costs: The high costs of AI technologies and the need for robust technological infrastructure are significant barriers.
  • Skill deficiency: There is a need for specialized skills to operate and maintain these technologies. 

Agricultural Protectionism and Higher Import Tariffs in India

Context: India’s approach to import tariffs, especially in the agricultural sector, is characterised by a significant protectionist stance aimed at safeguarding its domestic producers

Relevance of the Topic: Mains: Key trends related to Agricultural protectionism and Import Tariffs. 

Overview of India’s Import Tariffs: 

1. India’s Average Tariff (2023)

  • Average import tariff levied by India stood at 17% in 2023, which is five times higher compared to the U.S., where the average tariff is just 3.3%.
  • Despite the difference in the average tariffs levied by India and the U.S., the number of products subject to tariffs remains comparable in both countries.
image 142

2. Comparison with other Economies: 

  • Other BRICS nations (Brazil, South Africa, China, and Russia) have relatively lower tariffs than India.
    • India: 17%
    • Brazil: 11%
    • South Africa & China: 7%+
    • Russia: 6.6%
    • European Union: 5%
image 143

3. Agricultural vs. Non-Agricultural tariffs

  • India’s higher tariff rate is largely attributed to the protection of its agricultural sector.
  • Non-agricultural tariffs tend to remain under 15%. 
  • This disparity reflects the government's focus on shielding domestic farmers from international competition.
image 144

Agricultural Protectionism: 

  • India levies significantly higher tariffs on agricultural goods, which have consistently been more than twice the tariffs on non-agricultural products. The tariff on agricultural goods has always exceeded 38%, with some exceptions like in 2020.
  • Key products with high tariffs: Agricultural and dairy products, beverages, and tobacco items attract duties higher than 30%. 
  • Rationale:
    • High agricultural tariffs are to protect India’s domestic agricultural sector, which faces inefficiencies due to low investment (6% of total national investment). 
    • These tariffs serve as a buffer against subsidised agricultural products from countries like the U.S., where government subsidies make foreign agricultural products more competitive.
    • High agricultural tariffs reflect the Indian government’s preference for protecting food security and rural livelihoods.
image 145

Challenges in Reducing Tariffs

  • Global competition and subsidies: 
    • A significant challenge in reducing agricultural tariffs lies in the heavy subsidies provided by countries like the U.S. 
    • These subsidies make it difficult for Indian producers to compete with foreign agricultural products.
  • Inefficiencies in Indian Agriculture: 
    • The agricultural sector remains inefficient by global standards, and without substantial investment, it would struggle to compete internationally. 
    • The government is thus cautious about reducing tariffs, which could expose local farmers to global competition and harm livelihoods.

Impact on India-U.S. Trade Relations: 

  • U.S. trade deficit with India: 
    • As India continues to increase its exports to the U.S., it has caused concern within the U.S. over trade imbalances
    • Goods exported from India to the U.S. surpassed $53 billion in FY25 (April-November).
image 146
  • Reciprocal Tariffs: 
    • U.S. President Donald Trump proposed the imposition of “reciprocal tariffs” on countries that have “unfair” trade practices, which could include pressure on India to reduce its agricultural tariffs. 
  • India-U.S. bilateral negotiations: 
    • India has been adamant about excluding agricultural products, such as cereals, from tariff negotiations in Free Trade Agreements (FTAs). 
    • However, with increasing pressure from the U.S. for reciprocal tariffs, there is growing concern that agricultural tariffs may be revisited as part of a broader trade agreement.

Future of Agricultural Tariffs in India

  • Policy Flexibility: 
    • The Indian government is likely to continue its protectionist stance on agricultural tariffs to ensure food security and protect farmers
    • However, international trade agreements and pressure from countries like the U.S. may compel India to make some compromises.
  • Long-Term Sustainability: 
    • While tariffs provide short-term protection, they may not be sustainable in the long run.
    • India will need to balance agricultural protectionism with the need for agricultural reforms and investment to enhance the sector’s competitiveness. 

Horticulture Sector in India

Context:  India’s horticulture sector including fruits and vegetables can try replicating the Amul model for harnessing the potential of farmer producer organisations.

About Horticulture Sector: 

  • It is a vast and diverse field that encompasses the cultivation, production, processing, and marketing of fruits, vegetables, flowers, and ornamental plants. 
  • Major types of horticulture:
    • Pomology: Fruit cultivation and includes Viticulture (grape cultivation) 
    • Olericulture: cultivation of vegetables
    • Floriculture: cultivation of flowers and ornamental plant
    • Arboriculture: cultivation of trees and shrubs

Status of India's Horticulture Sector

  • India is the second-largest producer of fruits and vegetables globally, after China.
  • Contribution to Agriculture Gross Value Added (GVA): 33% 
  • In 2023-24, horticulture production was estimated at 355 million tonnes, surpassing food grain production.
  • Horticulture sector growth rate: Around 4-5% annually, higher than cereals.
  • Exports:  India is ranked 14th in vegetables and 23rd in fruits.
  • Post-harvest losses: About 8.1% for fruits and 7.3% for vegetables, accounting for 37% of the total post-harvest losses, valued at Rs 1.53 trillion annually (NABCONS, 2022).
  • Farmers' income: Farmers typically receive only 30% of the final consumer price due to unorganised value chains.

Significance of Horticulture Sector for India

  • Sunrise sector: Horticulture has the potential to:
    • Double farmers income
    • Generate employment
    • Enhance foreign currency earnings
    • Enable rural development
  • Food & Nutritional security:
    • Fruits & vegetables form major sources of vitamins/minerals in Indian diet
  • Potential in India:
    • Favourable agro-climatic conditions
    • Abundant labour force
    • Relatively low production costs
    • High productivity, compared to cereals 

Challenges in India’s Horticulture Sector

  • Infrastructure Deficit: 
    • Poor logistics and lack of equitable cold storage and warehousing facilities contribute to delays and wastages as Horticulture crops are highly perishable.
    • Cold storage distribution among the states is inequitable, with around 59% of the storage capacity present in 4 states- Uttar Pradesh, West Bengal, Gujarat, and Punjab. 
  • Post-harvest losses:
    • Lack of cold storage, grading, and processing infrastructure leads to significant wastage.
    • Seasonal gluts result in price crashes, affecting farmers' incomes.
  • Small operational landholdings: 
    • They limit the amount of land available for cultivation, for crop rotation and sustainable soil management resulting in reduced yields and decreased soil fertility.
  • Fragmented value chains:
    • Unlike the dairy sector, where cooperatives like AMUL ensure stable pricing, horticulture lacks a structured aggregation and distribution system.
    • Middlemen dominate the market, reducing farmers’ bargaining power.
  • Limited processing and value addition:
    • Only 10% of India’s fruits and vegetables are processed, compared to 60-70% in developed countries.
    • The absence of strong food processing industries leads to distress sales and lower farmer earnings.
  • Market linkages and Export challenges:
    • Limited direct market access for farmers results in price volatility.
    • Quality and traceability issues restrict India’s potential in global Fruits & Vegetables exports.
    • India’s export share in horticulture remains low, despite being a top producer. (mere 1%.)
      • Indian exports face food safety and standards related issues due to non-tariff trade barriers like Sanitary and phytosanitary measures
      • E.g.: pesticide residue has led to rejection of exports in key markets like the EU. 

Initiatives taken

  • Mission for Integrated Development of Horticulture (2014): Centrally Sponsored Scheme, for the holistic growth of the horticulture sector with 2 sub-schemes:
    • National Horticulture Mission: aims at holistic development of the horticulture sector by ensuring forward & backward linkage through a cluster approach under Horticulture Cluster Development Programme. 
    • Horticulture Mission for North East and Himalayan States. 
  • Operation Greens:
    • Launched during Budget 2018-19 to address price fluctuations in tomato, onion, and potato (TOP) and for the benefit of farmers and consumers.
    • It was later extended to all crops (from TOP to TOTAL).
  • Clean Plant Programme:
    • CPP aims to enhance the quality of fruit crops across the nation by providing disease free high-quality planting material to farmers regardless of their landholding size. 
  • Formation of Farmer Producer Organisations (FPOs):
    • The government aims to establish 10,000 FPOs by 2027, with 8,875 already registered (as of August 2024).
    • FPOs help in collective bargaining, better price realization, and reducing dependency on middlemen.
  • Agriculture Infrastructure Fund (AIF):
    • Provides financial support for cold chains, warehouses, and processing units.
    • Aims to reduce post-harvest losses and improve price realization for farmers.
  • Coordinated programme on Horticulture Assessment and Management using geoinformatics (CHAMAN): 
    • To develop and firm up scientific methodology for estimation of area and production under horticulture crops.
  • Capital Investment Subsidy Scheme: 
    • for construction/ expansion/ modernization of Cold Storages/Storages of Horticulture Products. 
  • Mega Food Parks:
    • Establishment of agriculture export zones and Mega food parks to increase processing facilities for horticulture crops.
  • HORTINET App:
    • Launched by APEDA (Agriculture and Processed Food Export Development Authority).
    • Provide online services such as farm registration, testing and certification, real time details of farmers, farm location, etc.

Case Study: Sahyadri Farmer Producer Company Ltd (SFPCL)

  • Located in Nashik, Maharashtra, Sahyadri FPO started in 2004 with 10 farmers and has expanded to 26,500 farmers across 252 villages and 31,000 acres.
  • Annual turnover: Grew from Rs 13 crore (2011-12) to Rs 1,549 crore (2023-24).
  • Processing & Export:
    • Largest grape exporter (90% exported to EU and UAE).
    • Strong processing infrastructure, turning tomatoes into ketchup, puree, and sauces.
    • Employs over 6,000 people, with 32% being women.
  • Impact: Farmers receive 55% of the final export price, compared to the usual 30% in traditional markets.

Way Forward

  • Strengthening Farmer Producer Organizations (FPOs):
    • Provide institutional support for working capital, infrastructure, and digital integration.
    • Leverage platforms like Open Network for Digital Commerce (ONDC) to enhance market access.
  • Reviving and expanding Operation Greens:
    • Increase financial allocation to improve processing, storage, and logistics.
  • Commodity-specific value chain development:
    • Develop dedicated infrastructure for key horticultural crops, ensuring at least 10-20% of production is processed.
  • Promote PPPs:
    • Encourage public-private partnerships (PPP) in food processing industries.
    • Promote partnerships with retail chains like SAFAL to improve farm-to-market efficiency.
  • National Fruit and Vegetable Board:
    • Establish a board similar to National Dairy Development Board (NDDB) to streamline policies, market linkages, and farmer support.
  • Leveraging technology for Market transparency:
    • Implement blockchain for traceability and AI-driven price prediction models to prevent distress sales.
    • Expand e-NAM coverage for horticultural produce.

The horticulture sector has immense potential to boost farmer incomes, enhance food security, and strengthen India’s agri-export base. Scaling up successful models like Sahyadri FPO across India can replicate the AMUL success story in fruits and vegetables.

Commodity Boards in India

Context: Recently, the Finance Minister, in her Budget speech, spoke about establishing a Makhana Board in Bihar.

Relevance of the Topic:Prelims: Commodity Boards, Facts about Makhana.

Commodity Boards

  • The Commodity Boards are autonomous bodies under the Ministry of Commerce & Industry.
  • Functions of Commodity Boards:
    • Provide financial and technical assistance to growers.
    • Facilitating trade fairs, branding, and market linkages.
    • Promoting research and development for value addition.
    • Ensuring remunerative prices for farmers.
    • Encourage export and domestic trade.

Existing Commodity Boards

There are five statutory Commodity Boards under the Department of Commerce. 

  • Tea Board: 
    • Set up in 1954 under the Tea Act, 1953. 
    • Membership: headed by a Chairman and consists of 30 Members.
    • Head Office: Kolkata 
    • 2 Zonal offices: one each in the North Eastern Region at Jorhat in Assam and in the Southern Region at Coonoor in Tamil Nadu. 
    • 3 overseas offices: located at London, Moscow and Dubai.
  • Coffee Board:
    • Constituted under Coffee Act, 1942. 
    • Board comprises 33 Members including the Chairperson, who is the Chief Executive and functions from Bangalore.
  • Rubber Board:
    • Constituted under Rubber Act, 1947 
    • The board is headed by a Chairman and has 27 members.
    • Headquarters: Kottayam, Kerala.
  • Spices Board:
    • Constituted in 1987 under the Spices Board Act, 1986. 
    • The board is headed by a Chairman and consists of 32 members
    • Head Office: at Kochi, Kerala
    • Responsibility: Development of cardamom industry & export promotion of 52 spices listed in the Schedule of Spices Board Act, 1986.
  • Tobacco Board:
    • Constituted in 1976 under the Tobacco Board Act, 1975. 
    • Headquarters: at Guntur, Andhra Pradesh

Newly Established Boards

  • National Turmeric Board (2024): 
    • Headquarters: at Nizamabad, Telangana
    • Aims to enhance turmeric production in 20 states.
    • Note: Turmeric is also known as ‘Golden Spice’.
  • Proposed Makhana Board: 
    • To be established in Bihar. 
    • Union Budget 2025 emphasised institutional support for Makhana farmers in Bihar.

Important Facts about Makhana (Euryale ferox Salisb.)

  • Also known as gorgon nut.
  • Makhana is an aquatic crop cultivated in shallow wetlands.
  • Bihar produces 85% of India's total Makhana.
  • Its growth requires a conducive range of air temperature (20-35°C), high humidity (50-90%) and annual rainfall of 100-250 cm.
  • It is a water intensive crop, needing assured availability of irrigation.
  • Makhana is classified as a dry fruit although it is a product of an aquaphyte.
  • Makhana plant has a combination of dicot and monocot characteristics. 
  • Economic significance: Supports 80,000 fishermen families in Bihar.
image 83

Bottlenecks in the functioning of Commodity Boards

  • Stakeholder Representation: Often dominated by public representatives instead of actual farmers.
  • Autonomy Concerns: Political interference may hinder the effectiveness of the Boards.
  • Implementation delays: For example, Turmeric Board is yet to be fully operational.

Way Forward

  • Ensure greater autonomy and farmer representation in decision-making.
  • Strengthen scientific research for better yield and quality standards.
  • Boost logistics and supply chain to foster trade into newer markets.
  • Promote technological advancements for modernizing farming practices.