To arrive at the contribution of various sources to agricultural growth, the ratio between the value of output from different segments and the total value of output from agriculture and allied activities (at current prices) has been calculated. To determine the sources of growth, we have deflated the current series of each segment by the WPI at 2011–12 prices and then decomposed the year-on-year growth in the GVO from agriculture and allied activities by taking the absolute year-on-year difference in GVO from each segment as a proportion of the previous year’s GVO from agriculture and allied activities.
Figure 7.14 shows the shares of different sectors in the value of output of agriculture and allied activities for two periods—TE 2002–03 and TE 2015–16. There is a significant decline in the share of food grains in the value of output from agriculture—the share of cereals declined from 30% in TE 2002–03 to 20.6% in TE 2015–16, and that of pulses declined from 4.1 to 2.1%. The share of fruits and vegetables has also declined from 13.8% to 13.4% during this period. The decline in the contribution of these sectors has been picked up by livestock and fisheries. The value of output from the livestock sector has increased from 24.7% to 33% between TE 2002–03 and TE 2015–16, and that of fisheries from 1.0% to 1.2% during this period.
In the 16-year period between 2000–01 and 2015–16, the value of agriculture and allied activities in UP grew at an average annual rate of 5.1% at 2011–12 constant prices. Decomposing this growth into various sectors, the largest share (41.9%) comes from the livestock sector, followed by fruits and vegetables (17%). Sugar contributes 11% of the value of agriculture and allied activities—almost all of it coming from sugarcane and gur. Forestry is the next most important contributor (8.9%), followed by drugs and narcotics (7.6%) cereals (6.9%) and fisheries (1.4%). Oilseeds contribute a meagre 0.3% to agricultural growth. Within the livestock sector, milk has the highest share in agricultural growth followed by meat (Fig. 7.15).
Within UP, there is wide regional variation in the value of output from agriculture and allied activities. The Western region contributed 49.6% of the total value of output from agriculture and allied activities, followed by the eastern region (27.7%), central region (17.2%) and Bundelkhand (5.5%) in TE 2015–16 (Fig. 7.16). In the western region, most of the value of output was from livestock (34%), followed by cereals (16%) and sugarcane (15%). In the eastern region, livestock and cereals together contribute 62% of the total value of output. In the central region, livestock accounts for 27%, followed by cereals (22%) and sugarcane (16%). In the Bundelkhand region, which is the lowest contributor to UP’s agriculture, livestock and cereals contribute about 46% to the value of output from agriculture and allied activities(Fig. 7.17). Thus, most of the value of output in agriculture in UP comes from the livestock, cereals and sugarcane sectors.
4.1 Food Grains
Food grains are an important source of agricultural growth in UP, contributing 7.2% to agricultural growth between 2001–02 and 2015–16. The state is the largest producer of foodgrains in the country, producing 17% of the total produce and accounting for 15.8% of the total area under food grains in TE 2015–16. Wheat is the most important crop in UP, covering 31.5% of the total area (9.7 mha) under wheat in the country and contributing 28.1% of the total production (26 million tonnes) in TE 2015–16. However, its yield is 3113 kg/ha lower than the all-India average of 3200 kg/ha. Rice is the second most important crop, contributing 12% of the total produce and covering 13.5% of the total area under rice cultivation in TE 2015–16. UP is one of the few states in the country that recorded an increase in the production of coarse cereals from 3.7 million tonnes in 2012–13 to 3.9 million tonnes in 2016–17. Its productivity is higher at 1947 kg/ha in 2016–17 against the all India average of 1750 kg/ha. Thus, despite being a high producer of foodgrains, the state is grappling with the issue of low productivity.
4.2 Fruits and Vegetables
With its varied agro-climatic zones, UP is able to produce a wide variety of horticultural crops. These include fruits, vegetables, flowers, medicinal plants, mushrooms, honey and spices and so on. In 12th five-year plan, special emphasis was given to the development of horticulture in UP. It was envisaged that an increase in production and productivity will not only result in additional income for farmers but will also provide them with better nutrition.
UP is the third-largest producer of fruits in the country with 11.2% (10.35 MMT) of total fruit production in 2016–17. The state is the largest producer of vegetables, accounting for 13.6% of the all-India area under vegetables. UP produced 15.1% (26.4 MMT) of the country’s total vegetable production in the same year. Fruits and vegetables together contributed 17% to overall growth in agriculture in UP between 2000–2001 and 2015–16. However, the share of fruits and vegetables in the value of agricultural output has declined marginally from 13.8% in TE 2001–02 to 13.4% in TE 2015–16. UP is the largest producer of mango, guava, muskmelon and watermelon among fruits, and potato, peas and bottle gourd among vegetables.
Potato is the major horticultural crop in UP. In 2016–17, UP produced 15.54 million tonnes of potato, which was 31.9% of India’s production. UP has created large infrastructure for cold storage. It has 31.6% of the total cold storages that account for 42.8% of the total capacity (Task Force on Cold Chain, MoFPI). Based on current consumption patterns, a 2015 study done by NABCONS estimated that 10.56 million tonnes of bulk cold storages, 1.09 lakh tonnes of hub cold storages, 72,945 tonnes of onion storage and 10,691 tonnes of ripening chambers will be required in UP (NCCD—All India Cold Chain Infrastructure Capacity—Assessment of Status Gap, 2015).
In March 2017, potato prices in UP crashed to Rs. 200–250 per quintal, forcing farmers to dump potatoes on the streets. Many farmers did not lift their potato stored in cold storage. On April 11, 2017, the state government announced a plan to procure one lakh tonnes of potato at Rs. 487 per quintal but there were problems of quality specifications and ultimately, only 13,000 kg of potatoes were procured. By December 2017, cold storages started dumping potato on the streets and fields.
Although UP is the largest producer of potatoes, there are only a few processing units in the state. UP produces the table variety of potato while processable varieties (kufri, chipsona I and II, Rosetta and Santana) are not produced in large quantities. In 2014, the UP government announced Aaloo Vikas Neeti for seeds of varieties of potato that can be used by food processing industry. Under the scheme, a grant of Rs. 10,000 per hectare was to be given to farmers on a first come first serve basis in identified districts.
Mango is the major fruit produced in UP. The state produces the best of succulent varieties—dussehri, chausa, langda. The productivity of mango in UP at 17.14MT/ha is almost twice the all-India average of 8.71 MT/ha. UP contributed the largest share of the value of output from mango at the all-India level, accounting for 22.8% in 2015–16. In 2016–17, India exported 52,761 tonnes of mangoes (valued Rs. 443.66 crore) but mango exports from UP were negligible. The value chain for the export of mango varieties produced in UP has not been developed and the grading facilities developed by UP Mandi Parishad near Lucknow remain grossly underutilised. For the export of mango to the USA, registration of orchards with pack houses and irradiation at minimum absorbed dosage of 400 GRAYS is mandatory. Interventions similar to those taken in grapes in Maharashtra are needed for mangoes, if UP has to emerge as a significant exporter of mangoes. In the case of grapes, the Government of Maharashtra and ICAR have set up a comprehensive system of traceability and testing of grapes. In 1997, ICAR set up a national research centre for grapes at Pune. In 2016–17, India exported 2.32 lakh tonnes of grapes and earned foreign exchange of USD 314.11 million.
Banana has also emerged as a major fruit crop in the state and its production has gone up from 1.9 MMT in 2014–15 to 3.1 MMT in 2016–17.
UP is the largest producer of sugarcane in the country and it plays a critical role in UP’s economy, especially in Western UP. The area under sugarcane is largely irrigated. There has been a decline the area under sugarcane from 22.47 lakh hectare in 2006–07 to 21.6 lakh hectare in TE 2016–17. The yield of sugarcane in UP was 59.6 tonne/ha in 2006–07; this increased to 64.7 tonne/ha by TE 2016–17. The recovery rate of sugar from sugarcane has almost always been lower than that in Maharashtra. In 2006–07, the average recovery rate in UP was 9.47% while it was 11.39% in Maharashtra. The recovery rate of sugarcane in UP has risen to 10.61% while that in Maharashtra was still 11.34v in 2016–17.
In 2006–07, sugar production in UP was only 84.8 lakh tonnes; this increased to 119.2 lakh tonnes in 2017–18. The increase in production, productivity and recovery of sugar from sugar cane is attributed to the development of a new variety of sugarcane—Co-0238—by Dr Bakshi Ram of the sugarcane breeding institute, Karnal. The variety gives a yield of 80 tonnes per hectare, which is about 10 tonnes higher than the yield of CoS 767, CoSe 92423 and other varieties that were grown in UP until recently. In 2017–18, the area under this variety reached 12.08 lakh hectares, which is 52.6% of total cane area in UP.
The processing of cane and payment of sugarcane price continue to be major challenges for any government in UP. The FRP (Fair and Remunerative Price) for 2017–18 was Rs. 255 per quintal, based on a recovery rate of 9.5%. Every increase in recovery of sugar by 0.1% increases the FRP by Rs. 2.68 per quintal. For a long time, the Government of UP has been declaring a SAP (state advised price) for sugarcane, which is higher than the FRP. The following figure (Fig. 7.18) shows the FRP and SAP price of sugar.
The announcement of SAP has remained a sore issue between sugar mill owners and farmers. Since the SAP is not linked to the market price of sugar, mill owners keep complaining that they are unable to pay the SAP to farmers for many years as their realisation from sugar was not enough. For the 2018–19 season, the UP government has retained the SAP at Rs. 315 per quintal although farmers were demanding Rs. 340 per quintal.
The entire livestock sector in UP registered a high rate of growth between 2001–02 and 2015–16. Milk contributed the most to agricultural growth followed by meat. Other livestock products such as wool, skin, eggs, etc., made small contributions to agricultural growth.
UP faces a shortage of green as well as dry fodder since the area under fodder (8.78 lakh hectares) has remained almost stagnant. Therefore, animals largely eat agricultural crop residues.
The poultry sector in UP has not witnessed the fast growth observed in the milk sector and UP has to import about one crore eggs and 972 lakh broilers every day from other states including AP, Haryana and Punjab (Annual Plan Document 2016–17, Government of UP).
Goat rearing is another major occupation of the poorer sections of UP’s rural population. There are 155.85 lakh goats, which are mostly reared for meat.
Livestock is a major occupation for small and marginal farmers who combine it with growing crops. It is mostly women who are engaged in the care and management of livestock. The development of the livestock sector, therefore, can help reduce poverty and add to the income of farmers. Male buffalo calves are not nurtured by farmers to save on milk and the cost of feeding. If slaughter of buffaloes is not discouraged, it is quite possible that farmers will rear male calves for the production of meat, adding to their income.
NABARD launched a scheme for salvaging and rearing of male calves under which loan and interest subsidy were available for financing and rearing of male calves. However, the scheme did not take off and the cumulative sanctions until November 2017 were only Rs. 40 lakh in the entire country.
UP is the largest producer of milk in the country. In 2016–17, milk production in UP was 27.5 million tonnes, which was 16.8% of India’s milk production. About 70% of milk produced in UP comes from buffaloes. The processing of milk in the organised sector in UP is only 12% while the all-India average is 17% and that of Gujarat, 49%. UP announced a milk policy in January 2018 that proposed increasing the processing of milk in the organised sector to 30%. The policy objectives include an increase in the production of processed milk and milk products, remunerative prices to dairy farmers, increase in their income and improvement in infrastructure to attract private investment. It also aims to create awareness about the quality of milk and milk products and develop marketing and research & development in the milk sector.
In order to attract investment, the policy provides a 25% subsidy (with a cap of Rs. 50 lakh) for the establishment, expansion and modernisation of milk processing units to be given on a first-come, first-serve basis. Further, the policy provides for interest subsidy to tiny and small milk processing units for loans taken for plant and machinery, civil works, etc. The entire interest paid by such units can be claimed as subsidy. For other milk processing units, interest subsidy of 7% can be claimed for five years with a cap of Rs. 50 lakh per year. The impact of this policy will be known only after a few years.
The co-operative sector in UP has not been doing very well. The Pradeshik Co-operative Dairy Federation (PCDF) has seen a decline in the number of village dairy co-operatives from 16,856 in 2006–07 to 7255 in 2015–16. Farmers’ membership in the village dairy co-operatives (VDCs) has also come down from 5.9 lakh in 2006–07 to 3.1 lakh in 2015–16. The PCDF has been incurring huge losses.
The biggest challenge to the dairy sector in UP is the widespread adulteration of milk. In a Public Interest Litigation (PIL) petition in the Supreme Court, the UP government’s food safety assistant commissioner himself admitted (India Today: Drink milk from UP at your own risk, January 30, 2014) that out of 4503 samples collected between January 2012 and May 2013, 1280 samples were found adulterated with detergent, starch, carbohydrates and whitener.Footnote 2
Setting up of modern milk processing plants can help UP shed this image of being at the centre of milk adulteration. In recent years, UP has been able to attract a number of dairy projects in the private sector. MoFPI has sanctioned grants to six dairy projects in UP under its cold chain scheme. NABARD recently sanctioned projects of Rs. 766 crore to set up eight new milk processing units. In addition, NABARD is funding the refurbishment of four existing milk processing units. However, the reach of the co-operative sector is quite limited and the state needs to aggressively pursue private investment in the dairy sector.
In the last few years, the Gujarat Co-operative Milk Marketing Federation (GCMMF), the owner of brand Amul, has entered UP through the Banas Dairy Co-operative. It has already commissioned milk processing units at Lucknow and Kanpur with a capacity of 5 lakh litres per day. GCMMF also proposes to increase milk procurement to 20 lakh litres per day by 2021. However, of about 8 crore litres of milk produced per day, PCDF and Amul procure just about 3 lakh litres per day. Even though PCDF is implementing the Rs. 983 crore NABARD-funded expansion project, the co-operative sector is not truly independent of government intervention and there is no stability in the tenure of its chief executive. It is unlikely that PCDF can find the resources to substantially increase procurement of milk by setting up additional processing units. Therefore, investment by the private sector in milk processing is the only way UP can substantially increase the processing of milk in the organised sector.
In 2014, India became the largest exporter of bovine meat (USD 4.78 billion), higher than the traditional earning from the export of rice (USD 4.5 billion). In the entire country, there are 78 export-oriented abattoirs (as on July 4, 2018) from where buffalo meat is exported. These are registered with APEDA and they have integrated facilities for animals waiting to be slaughtered (lairage), stunning, slaughter lines, dehiding, washing, deboning, chilling, blast freezing and packaging. Of these, UP has 42 export-oriented integrated abattoirs with processing units. All these projects are in the private sector and they exported 67% of India’s buffalo meat from UP.Footnote 3
In the last three years, several cases of violence against cattle traders have been reported from UP. The production of buffalo meat in UP decreased from 14.17 lakh tonnes in 2015–16 to 13.46 lakh tonnes in 2016–17. Restrictions on the transportation of animals are likely to affect the income of small and marginal farmers due to the lower market price for animals because of the fear of violence during transportation. It is also likely that due to the closure of municipal abattoirs, small meat shops may be slaughtering animals in residential localities, thus causing the pollution of drains. It is necessary that the state government invests in the modernisation of municipal abattoirs so that the local population can get clean and hygienic meat and the pollution of drains and rivers is minimised. In fact, there is a need to ensure that even poultry slaughtering is done in approved municipal abattoirs.
Another option for the state government is to invite private investment in the public-private partnership mode under which private investors are invited to invest in the modernisation and upgradation of municipal abattoirs. Under this model, the private investor is allowed to use one shift of the abattoir for export while another shift is used for local consumption. In UP itself, the Bareilly Municipal Corporation modernised its abattoir in the PPP mode at a cost of Rs. 23.62 crore. It has a capacity to slaughter 200 buffaloes and 550 sheep or goat each day. The entire investment in this project has been made by a private investor.
The contribution of fisheries in UP was 1.4% to overall growth in agriculture and allied activities between 2000–01 and 2015–16 and its share in the value of output of agriculture and allied activities has risen significantly from 0.98% in TE 2002–03 to 1.19% in TE 2015–16. Fish production in UP has increased from 28,958 tonnes (4.4% of all-India production) in 2005–06 to 504,808 tonnes (4.7% of all-India production) in 2016–17. The state ranks ninth in fish production in the country.
Uttar Pradesh has a vast area of freshwater resources in terms of a network of rivers and canals, flood plain wetlands, reservoirs, ponds and tanks that can be used for fishery. Some of the challenges faced by Uttar Pradesh may be attributed to non-availability of quality fish seeds, feed, non-scientific fish farming practices and low subsidy for fish farming that is limited to only a few selected species.