As long as the government adopts temporary policies and plans, doubling farmers’ income will still be a dream
Post Date – 23rd Monday 24th July 11:50pm
go through Sira Suba Rao
In 2013-14, the federal agriculture sector budget allocation was Rs 27,049 crore and this expenditure has more than quadrupled to Rs 1,23,017.57 crore in 2020-21. Institutional credit (banks and other financial institutions) in the sector increased from Rs 7.3 billion in 2013-14 to Rs 16.5 billion in 2020-21.
In line with the increase in production, India’s grain production has also increased to an all-time high, from 265.05 million tons in 2013-14 to 305.4 million tons in 2020-21. Similarly, horticultural production increased from 280.99 million tons in 2014-15 to 320.48 million tons in 2020-21, also an all-time high.
Farmers’ income for certain crops such as soybeans in Maharashtra and cotton in Karnataka has doubled in five years from 2017-18 to 2021-22. In all other crops, however, incomes increased by only 1.3 to 1.7 times. So despite government efforts such as doubling institutional credit, allocating large budgets to agriculture, and improving physical infrastructure, doubling farmers’ incomes remains a dream. Various farmer organizations/groups believe that ad hoc policies and programs will not help as long as the government intervenes in the market, controls prices, and satisfies consumers at the expense of farmers.
investigative report
Data on rural household income in India were first published by the National Sample Survey Office (NSSO) in 2002-03. It is also commonly known as a Situation Assessment Survey (SAS). The NSSO released the second SAS data series for 2012-13 and the third survey for 2018-19 in September 2021. Analysis of these SAS reports shows that between 2002-03 and 2012-13, the average annual growth rate of total farm income was 20.38%, before decelerating to 11.9% between 2012-13 and 2018-19. It further revealed that among different income sources such as planting, wage income, animal husbandry, and non-agricultural operations, the growth rate of income from planting slowed down significantly from 2012-13 to 2018-19.
According to the SAS report, the average monthly income per farming household in the country was Rs 10,218 in 2019 compared to Rs 6,427 in 2014. In 16 of the 28 states, crop cultivation accounts for less than 40% of the total monthly income. There are several reasons why income levels from crop farming are so poor. First, the government has been taking a production-centred approach rather than a market-centred one. Second, simply declaring minimum support prices (MSPs) does not help farmers because they do not get any benefit as there are not enough procurement centers on the ground.
Third, the need to reduce planting costs has dragged down farmers’ income growth. Fourth, during times of oversupply, farmers sell their produce at low prices. Fifth, natural disasters occur frequently, causing adverse effects on crop production.
ashok darwai group
To study issues related to doubling farmers’ income and make strategic recommendations, the government formed an inter-ministerial committee headed by Ashok Dalwai in April 2016. The committee identified seven sources of income growth, namely increased crop productivity, livestock production, increased crop intensification, diversification into higher-value agriculture, remunerative prices for farmers’ products, lower production costs, and shifting surplus labor from agriculture to non-farm occupations. The committee submitted its report in September 2018, which made a number of recommendations.
Some of these include:
• Create better physical infrastructure, improve price communication and reform regulations that force farmers to sell to local monopolies.
• Formation of Farmer Producer Organizations (FPOs), Village Producers Organizations (VPOs), which can play a key role in integrating small and marginal farmers into agricultural markets.
• The committee estimates that the country needs close to 10,000 wholesale markets and 20,000 rural retail markets to achieve the market density required to create a pan-India system.
• Placement of agricultural commodity markets under the simultaneous list may benefit from the “One India” market concept. State governments can transform markets and submarkets managed by the Agricultural Market Board into full-fledged independent markets.
• Storage warehouses including cold storage should be upgraded in accordance with the standards set by storage development and regulatory agencies so that they can issue transferable warehouse receipts to farmers to avoid selling at low prices.
the road ahead
Some of these recommendations have already been adopted, while others are yet to be considered. Initiatives taken by the government have begun to yield positive results. The average annual income (at current prices) of farming households across India increased from Rs 77,112 in 2012-13 to Rs 1,22,616 in 2018-19. It is necessary for the government to encourage the cultivation of crops that are environmentally friendly and consume less resources such as water and fertilizers. Carbon credits are available for millet, pulses, oilseeds and horticultural crops to encourage their cultivation. Subsidies/support should be crop-agnostic, or biased toward crops that are good for the planet’s resources.
Farmers should diversify and grow high-value crops that are in better demand and at higher prices. This can be achieved by introducing better seeds, irrigation facilities and training in sustainable farming practices. Governments can work with businesses/institutions to provide farmers with better market access and guaranteed buyback arrangements to reduce their market risk.
Companies can also offer better prices to farmers by using agricultural products to produce value-added products such as tofu, soy milk powder and soy ice cream. More investment in research and development can help farmers increase productivity and profitability. As importing countries prefer high-quality products free from chemicals, more organic food must be produced for export. In 2021, India ranks eighth among exporters of agricultural products. Currently, there are about 6,000 FPOs (including Farmer Producer Companies) in the country and there is a need to increase this number as FPOs have the potential to be change agents in India’s rural economy.
Everything must be done to provide agricultural producers with better access to good prices for their products. Otherwise, farmers will continue to fall victim to the hands of middlemen and resort to underselling.
