The economy of Kerala is primarily driven by the services sector, which contributes 66% to the Gross State Domestic Product (GSDP). In contrast, the primary sector, including agriculture, accounts for only 8.52% of GSDP. Despite this low percentage compared to other states, this sector has significant potential for growth.

Agricultural sector

Agriculture is a vital part of Kerala's economy, employing a significant portion of the population. However, the sector's Gross Value Added (GVA) has seen a decline over the years although the sector employs more than 27.27% of the state’s population. In 2022-23, the share of agriculture and allied sectors in Kerala's total GVA was 8.52%, down from 8.97% in the previous year. The Agricultural and Allied Sector (including livestock, forestry and fisheries) is contributing INR 45,400.51 crore (8.52%) to the Gross State Domestic Product (GSDP) of the state in 22-23.

However, Kerala's diverse agro-ecological conditions present numerous opportunities for sustainable agriculture. The state is focusing on climate-resilient farming practices and modernising agribusiness. For instance, the World Bank's USD 200 million KERA project aims to support climate-smart agriculture and improve agribusiness infrastructure. This initiative is expected to benefit around 400,000 farmers by promoting sustainable practices and enhancing the agricultural value chain.

Government initiatives

The Government of Kerala is committed to building a New Kerala (Nava Keralam) by investing in welfare and income growth. In 2022–23, the state’s GSDP at constant prices increased to INR 6.16 lakh crores, registering a growth of 6.6 % over 2021–22. The Agricultural and Allied Sector (including livestock, forestry and fisheries) contributed INR 45,400.51 crore (8.52%) to the GSDP in 2022–23 of the state.

Agricultural marketing

Marketing of agricultural commodities is facilitated through a network of wholesale and retail markets. In 2022-23, the Vegetable and Fruit Promotion Council, Kerala (VFPCK) contributed significantly to strengthening the agricultural marketing system of the state through the initiation of the state's agricultural marketing system by initiating 180 farm gate collection centres to facilitate marketing of excess produce from households and rural areas. Trading of vegetables and fruits were carried out through 292 Swasraya Karshaka Samithis established at the production centres.

Agricultural credit and infrastructure

In 2022-23, agricultural credit flow in India amounted to INR 21.67 lakh crores, with Kerala utilising 68.08% for crop loans. The state has 346 wholesale markets, 60 warehouses, 136 public sector godowns, and 6 e-NAM mandis. Food product exports from Kerala grew by 8.57%, yielding INR 3,860.29 crores.

Crop insurance schemes

The crop insurance schemes under implementation in the State state are the State Crop Insurance Scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS). The State Crop Insurance covers risks to crop production due to vagaries of nature and attacks of pests and diseases. A total of 27 major agricultural crops, namely coconut, banana, rubber, black pepper, areca nut, cardamom, cashew, pineapple, coffee, ginger, tea, tapioca, turmeric, cocoa, groundnut, sesamum, vegetables, nutmeg, clove, betel leaf, pulses, tuber crops, sugarcane, tobacco, paddy, mango and millets are covered. The scheme covers losses caused by natural calamities such as drought, flood, landslide, earthquake, sea erosion, storm, hurricane, lightning, wildlife menace and forest fire. In 2022-23, 2,38,666 farmers were enrolled under the scheme.

State government initiatives

The state government has initiated the Kerala Climate Resilient Agri-Value Chain Mechanisation (KERA) project with assistance from the World Bank, focusing on replantation, value addition, and climate-smart agriculture practices. The KERA and Kerala Agro Business Company Limited (KABCO) initiatives, along with a range of public business development service (BDS) providers, will facilitate efficient twinning of state and central credit and investment subsidy programmes with farmers in Kerala.

The KERA and KABCO initiatives may be also viewed as ones to up-scale the laudable interventions of the state government. The KABCO also aims to harness the potential of vacant, fallow and underutilised land for hi-tech commercial farming twinning with the “NAWODHAN” programme. This report also delineates the circumstances and potential for the state in this context.

Challenges

The agricultural sector in Kerala faces several challenges such as:

High wages compared to the national average

Post-harvest losses from inadequate storage and processing

96% of operational landholdings are marginal

Decline in gross crop area

Unplanned production causing gluts

Low profitability and increasing production costs

Price instability and inadequate market linkages

Rapid urbanisation

Land and soil degradation and climate change

Achievements

Despite these challenges, the agribusiness ecosystem in Kerala has been ranked among the top ten states in India according to high per-capita GSDP. The state also excels in the NITI Aayog’s Multidimensional Poverty Index and Sustainable Development Goals Index. Kerala holds the highest rank in India on the Human Development Index (HDI) and has a highly employable youth population.

Conclusion

Kerala's economy, driven by the services sector, has immense potential for growth in agriculture. With government initiatives like KABCO and KERA, the state aims to overcome challenges and harness its agricultural potential, ensuring sustainable development and increased farmer incomes.

Competitive and sustainable agriculture in Kerala

Competitive and sustainable agriculture in Kerala

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