The economics of hybrid rice in India

Hybrid rice has the potential to increase yields by 15-30% and help India meet its food security demand.

With the Lok Sabha recently passing the National Food Security Bill (NFSB) that promises subsidised foodgrains to 75% of the rural population and 50% of the urban population, India is under huge pressure to significantly increase its cereal grains production. One such method of doing so is through the accelerated adoption of hybrid technologies, including hybrid rice.

Hybrid rice has the potential to significantly increase rice yields, often to the order of 15-30% relative to local or even modern high yielding varieties. These higher yields allow for more intensive rice production, thus allowing farmers to either produce more output on a particular plot of land or to diversify into higher-value crops like vegetables and other horticulture crops. Both strategies potentially result in higher farm incomes and more abundant food supplies that can stabilise prices for both urban and rural food-insecure households.

The government of India has set an ambitious target to increase the area under hybrids to 25% of total rice area by 2015. Despite these promising results, the pace of hybrid rice adoption in India has been slow, particularly in comparison with experiences in China. At present, over half of all rice area in China is under hybrid rice, resulting in improved food security for an estimated 60 million people per year. The adoption of hybrids has been much slower in India, with only about 7% of rice area under hybrids. The low rate of adoption is largely due to poor grain quality and the resulting low market price, difficulties in achieving high rates of heterosis in tropical hybrids, high hybrid seed cost, limited availability of quality seeds, and hybrids not suited to ultimate consumers’ tastes and preferences. These are just a few of the main challenges facing the expansion of hybrid rice in India.

Most of the India’s hybrid rice is currently grown in the eastern and northern parts of the country, where yields have historically been low and where the yield gains attributable to hybrids are most apparent; currently 80% of India’s hybrid rice is limited to areas such as Jharkhand, Bihar, Uttar Pradesh and Uttarakhand. There have been significant efforts by state governments to encourage hybrid rice adoption, but uptake has been slow. For instance, Uttar Pradesh provides a 25% subsidy on hybrid seeds. In Uttarakhand, farmers get either R200 per quintal or 50% of the cost, whichever is less. And this year’s budget allocated R1,000 crore to help farmers in eastern India to boost the adoption of hybrid rice varieties.

While early efforts to develop and deliver hybrid technologies were due to the public sector and international research organisations, most of the new hybrids that have been released in recent years have been the result of private sector research. Because hybrids offer a form of biological intellectual property rights protection, they appear an ideal technology for further private sector investment. It is estimated that about $9 million was invested in research and development to improve yield performance, reduce yield variability and improve grain quality in 2009, with plans to invest further in marketing and distribution network. Similar investment to improve taste and cooking quality could also be initiated, addressing one of the major challenges constraining rapid adoption of hybrids throughout India. In addition, because of the intellectual property rights protection conferred by hybrids, they offer a platform through which improved traits can be almost immediately remunerative for private firms willing to make the upfront investments in the development of these improved traits (e.g., drought tolerance).

Ultimately, for the technology to be a viable solution for transforming rice cultivation throughout the country, increased public sector and private sector investments in the discovery, development and delivery stages of the innovation process will be needed to produce better adapted and commercially accessible hybrid rice that could translate into a wide range of positive impacts for both farmers as well as end consumers.

There is a limited scope to increase land under rice cultivation in India—it is difficult because 60% of farms depend on monsoon for rains and land and resources are increasingly under pressure from urbanisation. So, hybrid rice may contribute to addressing India’s serious food security concerns, including contributions to meeting the demands arising from the upcoming national food security programme that guarantees subsidised grains to millions of India’s poor.

---- Patrick Ward, Post-doctoral fellow at International Food Policy Research Institute-----------