Here is an essay on ‘Agribusiness’ for class 8, 9, 10, 11 and 12. Find paragraphs, long and short essays on ‘Agribusiness’ especially written for school and college students.
Essay on Agribusiness
Essay # 1. Introduction to Agribusiness:
The term ‘agribusiness’ was coined in 1957 by Goldberg and Davis. It includes all activities related to agriculture, including agro-chemicals, breeding, crop production (farming and contract farming), distribution, farm machinery, processing, and seed supply, as well as marketing and retail sales.
According to FAO, agribusiness denotes the collective business activities that are performed from farm-to-fork. It covers the supply of agricultural inputs, the production and transformation of agricultural products and their distribution to final consumers. Agribusiness is one of the main generators of employment and income worldwide.
As a business, agriculture gets raw materials in the form of seeds, fertilizers and pesticides. Its output is mostly perishable. Globally, traditional production and distribution methods are being replaced by well-oiled supply chains that link farmers with retailers, supermarkets and food processors. Only when farm output finds ready markets can agribusiness develop.
However, India still is stuck in outdated practices and thinking.
The government approach has been somewhat contradictory:
i. It wants to increase farmer incomes and thus keeps enhancing MSP of agricultural products and provides massive agricultural subsidies.
ii. At the same time, it is also concerned that inflation be kept under check and wants cheaper products on the shelves of markets.
iii. As a result, neither does the farmer get the MSP for most crops, nor do consumers get cheap products because of monopolies and long supply chains.
The results are chaotic. Subsidies distort supplies; while there is huge output of some crops, others see regular shortages and excesses and resultant price fluctuations. The MSP distorts pricing and very often farmers cannot get these prices in markets. Food processors, such as sugar mills, become defaulters in payments as they cannot pay the MSP, causing distress to the already burdened farmers. It is a strange way to conduct any business and the tragedy is that these policies affect millions of farmers in the country. It is hardly surprising that this over-regulated business does not attract the kind of investments required to modernize Indian agriculture.
Essay # 2. Farm-to-Fork and Agribusiness:
Treated as a business, farming and agribusiness has the potential to create employment and increase income levels. Small farmers must get the status of entrepreneurs since they do what other start-ups do.
One concept that is used widely in business is that of value chain, which was first described by Michael Porter (1985). In Porter’s model, firms add value in various ways, such as inbound logistics, operations, outbound logistics, marketing, sales and service, which are categorized as primary activities. Secondary activities include procurement, human resource management, technological development and infrastructure. Firms add value through all these activities, which results in a cumulative value that other firms find difficult to replicate.
The term ‘farm-to-fork’ implies a value chain in which value is added at various stages as the product moves from the farm to the consumer. Farmers, middlemen, government agencies, food processors and retailers form a set of links in a chain of production, processing and distribution as products from farms to the consumer.
Globally, this value chain is increasingly being modernized. Investments are being made to control and organize the flows of inputs and products. In some countries, large corporations control parts of this value chain.
Value chain analysis can help in enhancing the performance of agriculture in the country. The analysis helps identify weaknesses and provides clues to policy makers for growth in different areas. It creates a shared vision among parties in the chain, leading to collaborative relationships.
It also leads to development of enterprises, food quality and safety standards, producing crops as per expected demand, quality improvement and coordinated linkages among producers, processors and retailers. Above all, it will lead to an understanding that the farmer is entitled to a profit like normal business. Secondary activities enhance agricultural productivity over the long run.
An understanding of agriculture as a business points to several shortcomings in the present system. The differences between a traditional business and agribusiness are given below. It shows how agribusiness suffers since it is not accepted as a business. It also shows how the private sector can add value at different stages of the value chain.
A comparison with the developed world, where the value chains are fully integrated, shows how investments can revolutionize agriculture. United Nations Industrial Development Organization (UNIDO) data (Table 8.2) shows how developing countries lag behind the developed world in terms of agricultural products processed and value-added.
Worse, developing countries lose a huge proportion of their produce in post-harvest losses, even while they have a sizeable proportion of their population that goes hungry. That is why, agribusiness needs to be freed of government control and investments are encouraged in this crucial area.
It is seen from the table that investments in agricultural value chains will help solve three major problems:
i. Increase farm productivity.
ii. Reduce the enormous waste in food production.
iii. Introduce modern methods of storage and transportation.
It is clear that modernization of agribusiness can help agriculture a great deal. It is, therefore, important to understand its components and their business.
Essay # 3. Factors Influencing the Growth of Agribusiness:
Several factors have influenced the growth in agro-inputs marketing, which are:
i. Better Awareness:
With better education, farmers want to invest in better and modern ways of agriculture. Many have diversified into innovative crops and adopted modern farming practices and equipment.
ii. Shortage of Labour:
There is shortage of labour, especially during the sowing and harvesting season. Farmers are, therefore, becoming more dependent on farm mechanization and machines.
iii. Government Programmes:
Development programmes carried out by the government with respect to income enhancement and agricultural extension services have made farmers more open to new techniques.
iv. Enhanced Private Sector and NGOs:
Multinational and Indian private sector companies, together with NGOs, have succeeded in building networks of farm education and sourcing. These have resulted in better agricultural practices in states where they are operating.
v. Credit Availability:
The spread of microfinance as well as credit availability through banks and cooperative system has made easier for the farmers to obtain funding to modernize farming.
Agribusiness plays an important role in Indian agriculture. It helps in introducing new technologies for modernization of farms and helps achieve economies of scale in agricultural production. Tools and implements help in increasing productivity of farms, fertilizers help in increasing production while pesticides save harvest and post-harvest losses due to insects, weevils and rodents.
Seeds too help in modernization when high-yield varieties and bioengineered crops are introduced. The development of agro-processing industry helps add value to the produce and helps farmers save from price fluctuations.
Essay # 4. Chemical Fertilizers:
Chemical fertilizers have played a great role in India achieving self-sufficiency in food production. The success of India’s green revolution owes much to fertilizers. India is the third largest producer of chemical fertilizer in the world, after China and USA.
The consumption of fertilizers is expected to increase in the future because of food security needs. Over the years, production of nitrogen (N) and phosphorus (P) fertilizers has increased, but since there are no viable sources of potash (K) in the country, it is entirely imported.
Fertilizer is produced continuously throughout the year, but its use is seasonal. In India, it is used in high quantities during the two main cropping seasons- (a) Kharif (April-September); and (b) Rabi (October-March). Farmers usually buy before the season and store their requirements. Marketing of fertilizers, therefore, requires storage and supply chains to cater to the demand during these two seasons.
Unfortunately the marketing of fertilizers is stymied by tight government control. A plethora of rules and laws are imposed on the industry. Subsequent governments have flip-flopped several times and changed fertilizer marketing policy through many orders and laws. Fertilizer marketing and supply in the country is subsidized by the government, even after the reforms of 1991. This has led to many imbalances in demand and supply. An article in Mint (2015) describes the fertilizer policy as a “mess created by successive governments.”
The problems that have plagued fertilizer marketing due to government policy have been:
1. Restrictions on supply by manufacturers.
2. Limited investments in the industry because of government interference, leading to over-dependence on imports.
3. Imbalanced use of fertilizer by farmers.
4. Over-use of subsidized fertilizers, leading to environmental damage.
5. Price fluctuations in fertilizers.
6. Lack of knowledge of farmers about appropriate use of fertilizer.
Controls on prices and distribution were introduced through the Fertilizer Movement Control Order, 1973. Under the order, exports and inter-state movement of fertilizers were prohibited except if authorized, and search and seizure powers were enforced by the government. The supply and distribution of fertilizers were brought under the Essential Commodities Act (ECA) and manufacturers could only sell quantities allocated to them in different states during the two cropping seasons, kharif and rabi.
In 1977, the Retention Price cum Subsidy Scheme was implemented, which encouraged investment in the sector by assuring a 12 percent post-tax return over net worth to the fertilizer producers. The Fertilizer (Control) Order, 1985 further restricted fertilizer marketing, under which the government introduced price controls, and it retained powers of telling manufactures in which states to sell the fertilizers.
After the economic reforms of 1991, the government decontrolled prices, distribution and movement for phosphatic and potassic fertilizers in 1992. But urea, the main nitrogenous fertilizer continued to remain under government control. The New Pricing Scheme was introduced in 2003 and phased decontrol of urea was undertaken.
This resulted in imbalanced use of fertilizers. To correct this, the government introduced nutrient-based pricing in 2008 and nutrient-based subsidy (NBS) scheme in 2010. The idea was to control fertilizer subsidy, which was Rs. 26,222 crore in 2006-07, and had increased by around three times to Rs. 76,603 crore in 2008-09.
The NBS deregulated subsidy on non-urea fertilizers. While the NBS certainly did not lead to any decline in subsidy on fertilizer, it did lead to worsening of soil nutrient quality, along with shortages and price increases. The subsidy on fertilizer, which was Rs. 61,264 crore in 2009-10 before the introduction of NBS, subsequently ballooned to Rs. 72,969 crore in 2015-16.
The sharp rise in fertilizer prices resulted in a decline in the use of phosphoric and potassic fertilizer mix, with increase in urea consumption. Although urea prices remained administered, it started selling in the black market at twice the administered prices. There was also severe shortage of urea in the market.
The net result has been an overall increase in fertilizer prices, with neither the government benefiting due to subsidy reduction nor the farmer benefiting. An unintended consequence of the price fluctuations has been a change in fertilizer mix, which in turn led to severe environmental damage.
Government controls have also resulted in low investment in the industry, which has created high dependence on imports. Under the present fertilizer policy, government spends a huge amount of money for fertilizer subsidy and this burden is increasing every year. It is further leading to inefficient use of fertilizers at the farm level.
The major players in the urea industry are IFFCO, National Fertilizers Limited (NFL), Chambal Fertilizers and Chemical Ltd., Krishak Bharati Cooperative and Rashtriya Chemicals and Fertilizers (RCF), accounting for nearly two-thirds of total urea production in the country (Table 8.3). In the top five producers, Chambal Fertilizers and Chemicals Limited is the only private sector player.
In the case of controlled fertilizers, the manufacturer cannot sell directly. Fertilizer is distributed through state cooperative marketing federations and state agro-industries corporations, who in turn either sell directly or through agents and wholesalers. In the case of decontrolled fertilizers, the company sells through wholesalers and retailers or chooses to distribute directly through its own offices and outlets.
Today, large volumes of fertilizer are distributed through a network, which includes cooperatives, who supply almost 35 percent, and private channels, which distribute the balance fertilizers. There are about 2,060 central and state warehouses with a capacity of 30.1 million tonnes. In addition, the FCI has a storage capacity of 23.95 million tonnes. The cooperatives have about 65,970 godowns with a capacity of about 14.12 million tonnes. These godowns are used for storage of food-grains, fertilizer and other commodities.
Essay # 5. Agricultural Machinery and Implements:
Agriculture machinery is an important part of agribusiness. It consists of hand tools, animal drawn implements and power-operated equipment. Farm machinery helps reduce drudgery and improves efficiency and saves on inputs. Tractors, irrigation equipment, power tillers, combine harvesters, fodder cutters, sprinkler systems and tractor-driven implements form part of machines that farmers use.
Singh (2009) makes a distinction between machinery that requires power and that are operated by humans. Energy intensive operations such as land preparation, tilling, milling, grinding and transport require power-operated machines. Seeding and harvesting come next, which are done manually but machines are also available for these tasks. Weeding, transplanting, cotton and fruit harvesting are examples of mostly human labour and is mechanized the least.
Agricultural machinery is used for harvesting, transport, seeding and planting, fertilizer application and plant protection and horticulture machinery. Since much of the machinery is made by small-scale manufacturers, testing and standardization is an important component.
Essay # 6. Agro-Inputs:
Marketing of Seeds:
The Planning Commission, in its mid-term appraisal of the 10th Five Year Plan (2002-07), said that despite a huge institutional framework for seed production both in the public and private sector, availability of good quality seeds continues to be a problem.
It emphasized the need to rejuvenate the seeds sector through revamping the public sector seed companies, including the State Seed Corporations. Farmers rely on seeds saved from their earlier crop and seed replacement rate continues to about 2-10 percent in certain states for certain crops, which is much below the desired level of 20 percent for most crops.
The supply of seeds is also governed by several laws and orders of the government, such as the Seeds Act, 1966; the Seeds (Amendment) Act, 1972; the Seeds Rules, 1968; the Seeds (Amendment) Rules, 1973 and 1974; the Seeds (Control) Order, 1983; National Seeds Policy, 2002; Seed Control Order (Amendment) 2006; Essential Commodities Act, 1955 and the Seeds Bill, 2004.
Government has set up the National Seeds Corporation (NSC) in 1963 under the Ministry of Agriculture. Its objective is to undertake production of foundation and certified seeds. Its website states that, at present, certified seeds of nearly 600 varieties of 60 crops are being supplied through its 8,000 registered seed growers all over the country.
It supplies high quality oil seeds, pulses and hybrids including vegetables to farmers. The corporation has established five quality control laboratories for seed testing and to monitor the quality of seeds. NSC is also involved in the production of tissue culture plants like banana and supplies seedlings/saplings of fruits crops through procurement from the MOU partners.
However, one reason that Indian agriculture has remained backward is because of the dominance of the public sector and interference by the government. At least in seeds production and marketing, the seed policy aims to reduce the direct involvement of government and to actively encourage the private sector to research and develop new varieties. As a result, a number of private sector firms are now supplying seeds to farmers.
Seed marketing is carried out through three channels:
1. Sale through dealers/distributors.
2. Sale through Central or state governments.
3. Sale through NSC-owned sale counter.
The corporation has about 2,500 dealers who account for more than 69 percent of the sales. It has regional offices and area offices all over the country.
The National Seed Project (NSP) was established in 1974 and NSC was assigned the lead role to develop the seed industry in the country. It has helped in establishing various state seed corporations. It also implements schemes of the government such as the Integrated Scheme for Oil seeds, Pulses, Oilpalm and Maize (ISOPOM), National Food Security Mission (NFSM) and National Horticulture Mission (NHM), which provide technical support to seed producing agencies. It also imparts training, creates infrastructure facilities for processing plants and storage in states, and helps in exports of seeds.
Essay # 7. Agro-Processing:
Agro-processing is a set of techno-economic activities for conservation and handling of agricultural produce and to make it usable for later use. It includes all operations from harvest till the material reaches the end users in the desired form, packaging, quantity, quality and price.
Agro-processing offers a way to use the harvested agricultural products for long-term consumption. Since India has only limited processing facilities, losses in farm produce have been estimated at Rs. 75,000-100,000 crore per annum. A portion of these can be contained if agricultural produce is processed for future use.
Agro-processing can be divided into three categories – primary, secondary and tertiary. Primary processing consists of sorting, grading and storage. Secondary processing means re-shaping of food for ease of consumption, while tertiary processing includes value-added food such as ready-to-eat items, juices, jams, and so on. This holds around 38 percent share in the total processed food market.
All agricultural produce requires some kind of processing to make it suitable for consumption. A large number of people depend on it for their livelihood. The class of produce and its derivatives are shown in Table 8.5.
Much of the processing is done in the unorganized sector: retailers do some processing and grading to sell food items, while restaurants and sweet shops process and serve ready to eat products. A large number of small and medium enterprises (SMEs) are also engaged in food processing.
The sector has gained the attention of a large number of companies, both Indian and foreign. Companies such as Pepsi, Britannia, ITC, General Mills, Haldiram’s, Patanjali, Cavin Kare, Mohun’s, Kellogg’s and many others buy a variety of agricultural products and convert them into snacks, drinks and breakfast cereals.
Milk is processed and sold as packaged milk or derived products by Amul, Mother Dairy, Parag, Nestle, Cadbury’s, Cavin Kare, and so on. Pickles, jams, juices and allied products are provided by ITC, Pepsi, Coca-Cola, Mother’s Recipe, Tops, HUL, and many others. Fish processing is done by cooperatives, while meat and poultry products have players such as Venky’s and Godrej.
Processed food products are exported by these companies as well. Pharma companies such as Dabur and Himalaya source raw materials from agricultural producers and convert them into organic medicines and products. Food chains such as McDonald’s, KFC, Shree Ratnam, Dunkin Donuts, Burger King and Domino’s process huge quantities of agricultural products daily.
While these companies provide packaged products for further processing or direct consumption, the Indian food processing industry accounts for 32 percent of the country’s total food market, according to the website of Ministry of External Affairs. It is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.
A cold chain is a logistics system that provides a series of warehouses and transport facilities for maintaining ideal storage conditions for perishables from the point of origin to the point of consumption in the food supply chain. It is a temperature-controlled supply chain, consisting of storage and transportation, and maintains products within an ambient range of temperature.
A cold chain is essential for the transport of perishable goods, which would get destroyed if exposed to room temperature even for a short time. That is why, unbroken cold chains are required, which consist of uninterrupted series of refrigerated trucks and warehouses where products are stored within a given temperature range till they reach the customer.
Cold chains are of great value for agricultural produce and are especially useful in transporting food items, which would perish otherwise at the farm. They help in storing goods, extending their shelf life and increasing their markets. They are especially useful in agriculture, enabling goods to be stored at the time of harvest (when prices are low) and used throughout the year at places where they are required. The development of cold chains helps in reducing wastages of perishable commodities and thus providing remunerative prices.
India has a paucity of cold chains. Singh (2015) writes in Forbes, “Because the cold chain in India is patchy, US$13 billion of fresh food goes waste every year.” Bad roads from villages, lack of proper transport, several stages in the distribution chain—all add up to produce from farmers reaching consumers after a long time, and by that time some of the produce have been destroyed.
The country has 32 million tonnes of cold store capacity, but much more is required, which calls for huge investments in the cold chain. Apart from increasing the capacity in cold storage, thousands of refrigerated vehicles and improvement of roads is required.
India’s cold chain sector has been growing at a CAGR of 13.4 percent in 2013-16. The cold chain market in India is Rs. 624 billion in 2017, according to a report by Onicra Credit Rating Agency (2014). India has 6,300 cold storage facilities with an installed capacity of about 32 million metric tonnes, mostly used for storing potatoes.
Uttar Pradesh and West Bengal have more than half of the cold storage facilities in India, while other states still have to develop the infrastructure. Government policy has been restrictive; several initiatives taken by private and foreign retailers to start ‘farm-to-fork’ chains were nipped in the bud because of restrictions on FDI in retail.
Much of the cold stores and trucks are owned by the unorganized sector, with organized players contributing to about 10 percent of the cold chain industry market. Cold storage warehouses of public sector undertakings such as Central Warehousing Corporation (CWC), the FCI and State Warehousing Corporations (SWCs) have about 70 percent capacity in cold storage.
The National Centre for Cold Chain Development has been established as an autonomous centre for excellence to promote and develop integrated cold chains in India. The main objectives of the centre are to recommend standards for cold chain infrastructure and to recommend policy framework for development of cold chains. The government has also opened investment in cold chains under the automatic route for 100 percent FDI participation.
The major organized sector players in the industry are GATI-Kausar, Gateway Distriparks Ltd., Transport Corporation of India, Container Corporation of India Ltd, Fresh and Healthy Enterprises Ltd. (FHEL), Kelvin Cold Chain Logistics Pvt. Ltd., Crystal Logistic Cool Chain Ltd., Cold EX Logistics Pvt. Ltd., and many others.
However, the industry faces many challenges, which are summarized here:
i. High in Investment:
Cold chains call for heavy investment in fixed assets such as plant and machinery, building and insulation panels. This deters many private players.
ii. Low Returns:
Cold chains call for high investments but offer low returns. It is a capital-intensive industry and hence returns are low. Private companies raise funds through debt, which adds heavy interest burden on them.
iii. High Energy Costs:
Cold chains have high energy requirements and these results in high operating costs. Energy expenses make up about 30 percent of the total expenses.
iv. Very High Real Estate Costs:
The country has very high real estate costs, which increases investments.
Refrigerated trucks burn excessive diesel, resulting in high pollution levels. With awareness about pollution rising, the industry will have to look for a trade-off between transportation and reduction in pollution levels.
Essay # 8. Diversified Farming:
Floriculture consists of cut flowers, pot plants, cut foliage, seeds, bulbs, tubers, rooted cuttings and dried flowers or leaves. The important floriculture crops for cut flowers are rose, carnation, chrysanthemum, gerbera, gladiolus, gypsophila, liatris, nerine, orchids, achillea, anthurium, tulip and lilies. Floriculture crops such as gerberas and carnation are grown in green houses.
Chrysanthemum, roses, gaillardia, lily, marigold and other flowers are grown in the open. There has been a steady increase in demand of flowers and this has motivated many farmers to diversify. It has today become an important component of agribusiness. DNA India (2016) reports that floriculture has attracted farmers in states such as Tamil Nadu, Karnataka, West Bengal, Madhya Pradesh and Maharashtra. The north-eastern states, especially Mizoram, are also cultivating flowers.
The government has identified floriculture as a sunrise industry and accorded it 100 percent export-oriented status. Flowers require great care and some have to be grown under controlled conditions, but it is a lucrative business. Much of the production is exported.
After liberalization, cut flowers can be exported while seeds of international varieties can be imported. The APEDA is responsible for export promotion and development of floriculture in India. The country has exported 22,947.23 million tonnes of floriculture products to the world worth Rs. 460.75 crore in 2014-15.
The major export destinations are: United States, United Kingdom, Germany, Netherland and United Arab Emirates. Floriculture flourishes in Maharashtra, Karnataka, Andhra Pradesh, Haryana, Tamil Nadu, Rajasthan and West Bengal. However, though the country had exported floriculture products worth over Rs. 460 crore in 2014-15, its share is miniscule in world trade of nearly US$ 40 billion or nearly Rs. 272,000 crore.
Meat and Poultry Products:
Next to crops, livestock has been the major occupation of the rural population. There has been an increase in demand for meat in the country as well as for exports. India has the world’s largest population of livestock and is world’s 5th largest producer of meat.
The total processing capacity in India is over 1 million tonnes per annum, of which 40-50 percent is utilized, according to the MoFPI website. Traditional agricultural exports are now competing with new sectors such as buffalo meat exports. At least 70 percent of the buffalo meat is exported. The major areas for buffalo meat production are Uttar Pradesh, Andhra Pradesh, Maharashtra and Punjab, with Uttar Pradesh being the top buffalo meat producing state producing 0.3 million tonnes in 2011.
Meat production has grown from 2-3 million tonnes at the end of Tenth Five Year Plan (2006-07) to 5.5 million tonnes at the end of the Eleventh Five Year Plan (2011-12). The annual growth rate for meat production in 2011-12 was about 13 percent.
Indian buffalo meat is witnessing strong demand in international markets. Goat and lamb meat are relatively small segments. Rajasthan, Jammu and Kashmir, Uttar Pradesh, Gujarat, hilly regions of North and Eastern Himalayas are the Indian regions with maximum livestock population. The production levels in these two categories have been almost constant at 0.95 million tonnes with annual exports of less than 10,000 tonnes.
The industry is suffering now since the growth of vigilantes under the garb of ‘cow protectors’. The government has been unable to control them. Transportation of livestock and processing has been targeted, causing harm to the industry.
Poultry is one of the fastest growing segments of the agricultural sector in India today: the growth rate of eggs and broilers has been 8 to 10 percent per annum. India is now the world’s fifth largest egg producer and the eighteenth largest producer of broilers. Poultry demand is driven by rising incomes and change in eating preferences of the population.
The industry consists of small poultry farms to integrated production units producing chilled and frozen products. These plants produce dressed chicken, chicken cut parts and other chicken products and also manufacture egg powder and frozen egg yolk for export.
The maximum egg production takes place in Tamil Nadu, whereas Hyderabad has the maximum poultry and hatcheries. Besides Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Gujarat, Madhya Pradesh, Odisha and north eastern states are the major egg contributors.
Genetically Modified Crops:
GM crops are also part of agribusiness. GM crops are defined as plants in which the genetic material or DNA has been altered in a way that does not occur in nature. Scientists are able to use gene technology or genetic engineering to modify or transfer genes one organism into another, or between nonrelated species. Foods produced from or using GM organisms are often referred to as GM food.
GM technology is able to modify crops so that they can be kept for longer time, or become resistant to pests, or even have greater nutritional value. GM crops have increased farm outputs in countries where they have been introduced. According to the World Health Organization (WHO) website, resistance against insects is achieved by incorporating into the food plant the gene for toxin production from the bacterium Bacillus thuringiensis (Bt).
However, there is controversy with regard to the introduction of GM crops in India. One view is that GM crops are needed to feed a growing population. It is argued that by opposing this technology, India is poised to miss the GM technology revolution just as it had missed the industrial revolution earlier and could not reap the benefits of rapid industrialization. Already, the US Food and Drug Administration, WHO and European Commission have concluded that genetically modified organisms (GMOs) are safe to eat.
The contrary view, supported by NGOs and activists, is that GM crops encourage monocultures, are unsuited to our environment and will make us dependent on foreign companies who provide a package of seeds, fertilizers and pesticides every year to make huge profits. Fears about long-term human and environment safety, market monopolies in seeds and food sovereignty, have also been expressed. The arguments for and against GM technology have been summarized in Table 8.6.
Bt cotton was the first GM crop approved for cultivation in India in 2002. It caught on, and at present, 97 percent of India cotton cultivation area is under Bt cotton. Gulati (2016) estimates the benefits of Bt introduction in the country. He writes that India gained roughly US$55 billion over the period from 2002 to 2015 from exports of raw cotton, additional yarn shipments, and savings in potential imports as a direct result of introduction of Bt cotton in the country.
Farmers have seen a 3.5-fold increase in profits alone and that is the reason that more than 95 percent of India’s cotton area is under Bt, representing the fastest spread of the technology anywhere in the world. Seed costs for farmers, which were 6.14 percent of farmers’ total revenues in 2001-02, came down to 4.78 percent in 2012-13.
Though cotton yields have more than doubled in the first decade since its introduction in 2002, it was also shadowed by controversy. Issues of pricing and IPR issues, protests by social activists and government price interventions as well as subsequent litigation have restricted growth of GM crops in the country.
For example, Bt brinjal was cleared for commercialization in India by the Genetic Engineering Appraisal Committee in 2009 after studying the biosafety data and field trials by two expert committees. But, following protests by social activists, the government withheld the permission.
Studies have shown that GM foods do not have any human or ecological ill effects and are beneficial to farmers as they result in increased yields and resistance to pests, reports Mint (2016). A wide-ranging study conducted in Germany in 2014 had found that use of GM technology increased crop yields by 22 percent, reduced chemical pesticides by 37 percent and increased farmer profits by 68 percent, with better results in developing countries than in developed ones.
But these studies have been questioned by opponents of GM crops, who say that the studies, regulatory bodies and scientific publications are working in tandem with multinationals providing GM technology.
Successive governments have failed to provide direction to the controversy. They have tried to regulate GM crops and their prices, but this has not helped. The government has to be more transparent, introduce the Biotechnology Regulatory Authority of India Bill and resolve contentious IPR issues that and resolves contentious IPR issues. It has kept biosafety data out about GM mustard a secret.
GM crops with increased drought resistance and reduced pesticide dependence can be developed by working with Indian and foreign research institutions. But increasingly this technology will come from foreign MNCs. As pointed out by Gulati and Sarkar (2016), the entire ICAR budget for the country was around Rs. 4,840 crore (US$0.8 bn) in 2014-15. But Monsanto alone had spent US$1.7 billion in R&D in 2014.