Policy Recommendations for Sustainable Agricultural Growth in India

India’s agriculture sector employs nearly half the country’s workforce but contributes under a fifth of its GDP. That gap didn’t appear overnight. It’s the result of decades of policy built around one goal: keeping cereal granaries full. Rice and wheat gave India food security, but the same policy push has drained groundwater, kept farm incomes flat, and left the country producing far more of a few staple grains than its people, water tables, or export markets actually need. Correcting this needs more than a tweak here and there. It calls for a genuinely different policy direction, one that treats farming as a business decision as much as a food-security one.

Why the old approach needs rethinking 🔗

For most of independent India’s history, agricultural policy revolved around minimum support prices, subsidised inputs, and procurement systems built almost entirely for rice and wheat. This worked well when the priority was avoiding famine. But the side effects have piled up: deteriorating soil and water resources, more frequent droughts and floods, and shrinking landholdings have combined with weak non-farm job creation to keep large numbers of families dependent on farming that barely pays. Average landholding size in India has fallen below 1.1 hectares, which means most farmers are working plots too small to profit from grain alone.

A single-minded focus on cereals also distorts what actually gets grown. Punjab and Haryana, for instance, keep growing water-guzzling paddy because procurement guarantees a buyer, even as their groundwater tables fall by the year. Policy has to stop rewarding this pattern and start rewarding crops and practices that make both economic and ecological sense.

Crop diversification: growing what pays and what lasts 🔗

The single biggest shift recommended by agricultural economists is moving farmers away from cereal monocultures and toward high-value crops – fruits, vegetables, spices, oilseeds, pulses, and plantation crops that fetch better prices and use less water per rupee of output. The Union Budget 2026-27 has already leaned this way, with a dedicated programme for high-density orchards and region-specific crops such as coconut, cashew, cocoa, sandalwood, and premium nuts like walnuts and almonds, aimed at matching crops to local agro-climatic strengths instead of pushing the same staples everywhere.

The water and income logic 🔗

Coarse cereals like millets and sorghum survive dry spells that ruin paddy. Pulses and oilseeds fix nitrogen in the soil and need a fraction of the water rice does. Fruits, vegetables, and spices, meanwhile, simply sell for more per acre. A field survey among farmers in Haryana found that many are already shifting from pure grain cultivation toward mixed cropping with water-efficient or high-value options like bajra and mustard, even while sugarcane – water-heavy but reliably profitable – stays in the mix. That mix of caution and ambition is exactly what good policy should support, not fight against.

Why diversification hasn’t scaled faster 🔗

If high-value crops are so much better, why hasn’t every farmer switched already? Three reasons keep coming up in the data: price volatility for perishables, poor cold-chain infrastructure that causes heavy post-harvest losses, and the fact that over half of India’s farmland is rain-fed, making a shift toward thirsty high-value crops risky without assured irrigation. None of these are reasons to abandon diversification. They’re the specific problems policy needs to solve before diversification can spread beyond farmers who can already absorb the risk.

Fixing the market infrastructure gap 🔗

Growing better crops means nothing if farmers can’t sell them at a fair price. India’s agricultural marketing system has long suffered from fragmented mandis, licensing monopolies, and a shortage of the physical infrastructure – cold storage, grading facilities, warehousing – that connects farm gate to consumer.

What e-NAM got right, and where it’s stuck 🔗

The Electronic National Agriculture Market, or e-NAM, was designed to turn India’s scattered mandis into one connected marketplace, offering quality assaying, a single trading license valid statewide, and direct online payments, provided states amend their APMC laws to allow e-auctions and a single-point market fee. It’s a genuinely useful reform on paper. The problem is the back end. A review of e-NAM mandis found that covered or open auction platforms exist in only about two-thirds of regulated markets, while cold storage is available in fewer than one in ten. A digital trading platform can’t fix what’s missing on the ground – warehouses, refrigerated transport, and testing labs still need serious capital investment, and that’s squarely a policy and public-spending question, not a technology one.

Research and development: the quiet lever 🔗

Diversification and market reform only go as far as the seeds, techniques, and knowledge available to farmers. India’s public agricultural research system has historically been weighted toward raising cereal yields, which made sense during the Green Revolution but leaves gaps in breeding, pest management, and post-harvest technology for horticultural and high-value crops. Building region-specific R&D – better nut and spice varieties for hill states, drought-tolerant millet strains for rain-fed belts, and faster grading and assaying technology for mandis – needs to be treated as core agricultural policy, not an afterthought layered on top of it. Startups and research institutions working on this, whether it’s faster produce testing or precision irrigation, deserve direct government backing rather than having to compete for scraps of a fixed research budget.

Farmer Producer Organisations: collective strength for small holdings 🔗

With most Indian farms under 1.1 hectares, individual farmers simply can’t negotiate prices, buy inputs in bulk, or invest in processing equipment on their own. This is exactly the gap Farmer Producer Organisations, or FPOs, are meant to close by pooling farmers into a single legal, business-like entity.

How the scheme works 🔗

Under the Central Sector Scheme for the Formation and Promotion of 10,000 FPOs, launched in 2020, the government works through Cluster-Based Business Organisations that register and mentor FPOs for five years, with financial assistance of up to Rs 18 lakh per FPO over three years, plus matching equity grants and a credit guarantee facility of up to Rs 2 crore to help these organisations access institutional credit. The approach follows a “one district, one product” model, encouraging each cluster to specialise rather than compete on the same crop.

What the numbers show so far 🔗

The scheme has outpaced its own targets. By late 2024, more than 35,000 FPOs had been formed against an original goal of 10,000, under a programme built to improve market access, productivity, and farmer income through collective action. The reach is substantial: roughly 30 lakh farmers are now linked to FPOs, almost 40% of them women, with a combined turnover crossing Rs 5,000 crore and thousands of FPOs now trading directly on e-NAM. That’s a meaningful shift from farmers selling individually to traders, toward farmers negotiating as organised businesses.

But scale isn’t the same as strength. Many FPOs remain financially fragile once government handholding ends after five years, and turning a farmer collective into a professionally run agribusiness takes more than registration paperwork. Policy support needs to extend beyond formation – toward management training, access to working capital, and long-term market linkages that outlast the initial subsidy period.

Bringing it together: a balanced, non-agricultural push too 🔗

None of this works if agriculture is treated in isolation. India’s farm distress is as much a rural employment problem as a cropping-pattern problem. Every acre shifted from paddy to millets or vegetables reduces water stress, but it also needs somewhere for the labour saved by less water-intensive farming to go – food processing units, cold-chain logistics, agri-input businesses, rural services. A policy mix that pairs crop diversification and FPO strengthening with investment in agro-processing and rural non-farm jobs addresses both sides of the problem at once: it raises farm incomes directly, and it creates an economic cushion so families aren’t entirely dependent on the next harvest.

Taken together, these four levers – diversifying away from cereal dominance, fixing market infrastructure, investing in targeted R&D, and strengthening FPOs – aren’t separate reforms competing for the same budget. They reinforce each other. Better crop choices need markets to sell into; markets need infrastructure to function; infrastructure and new crop varieties need research behind them; and none of it reaches small farmers without collective institutions like FPOs to carry it to the field.

What do you think? If you were designing agricultural policy for your home state, would you prioritise water-saving crop diversification or building out mandi infrastructure first? And do you think FPOs can genuinely replace the bargaining power that only large-scale procurement currently offers small farmers?

References

1. https://www.sciencedirect.com/science/article/abs/pii/S0264837719312578
2. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2253483&reg=3&lang=1
3. https://www.cgiar.org/news-events/news/crop-diversification-for-sustainable-farming-what-do-farmers-think
4. https://www.drishtiias.com/daily-updates/daily-news-analysis/expansion-of-national-agriculture-market-e-nam
5. https://naarm.org.in/wp-content/uploads/2021/07/2020_eNAM_Report.pdf
6. https://www.pib.gov.in/FactsheetDetails.aspx?Id=148588&reg=48&lang=2
7. https://www.ifpri.org/blog/navigating-growth-challenges-strengthening-farmer-producer-organizations-in-odisha-india/
8. https://www.impriindia.com/insights/policy-update/farmer-producer-orgs/