farm-income-rose-16-but-share-from-cultivation-dropped

Context

  • Farm incomes rose 57% between 2018-19 and 2012-13, at a compounded annual growth rate of 7.8%, and the inflation adjusted numbers work out to 16% at a CAGR of 2.5%.

Key Highlights

  • Interestingly, much of the increase seems to have come from wages and animal husbandry, with the share of income from cultivation actually declining from 48% to 38%.
  • The numbers are the first indication from the National Statistical Office’s (NSO) results of the “Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India” (SAS) survey conducted in 2019.

Findings of the survey

  • According to the survey, the average debt of a farm household increased by 58% to ₹74,100 in 2018-19, from ₹47,000 during 2012-13. In real terms, that’s a 16.5% increase. 
    • But the share of agricultural households with outstanding loans decreased marginally from 51.9% to 50.2%.
  • The numbers indicate that agriculture has not fared badly, although their income from the production of crops or allied activities has actually declined in real terms.
    • They are also a reflection of the fact that the monsoon has not let down farmers in the past seven years (except in certain parts of the country, but regional variations in income and indebtedness will become clear only in a disaggregated analysis).
  • The survey is the most comprehensive one on the condition of agricultural households and gives data for the July 2018-June 2019 period. 
  • The previous round of this survey was conducted in 2013 and collected data for the July 2012-June 2013 period.  
  • CAGR of the gross value added or GVA added in agriculture was 3.6% between 2012-13 and 2018-19 (considering a July-June year), the latest two rounds of the SAS rounds. But that doesn’t say much about the condition of farmers in India. 
  • The SAS gives data on average income of agricultural households. 
  • The average household income in 2018-19 is ₹10,084. This is a 57% increase (CAGR of 7.8%) over the nominal income of ₹6,426 in 2012-13. Adjusting with CPI rural for inflation, makes the growth 16% or a CAGR of 2.5%.
  • In absolute terms, the nominal income from crop production or cultivation per agricultural household was ₹3,798 in 2018-19, 23% higher than in 2012-13. However, in real terms it has declined by 8.9%.

Shortcomings of survey

  • Not all farmers are part of an agricultural household. The survey defines an agricultural household as one which produces field or horticultural crops, livestock or products of other specified agricultural activities even if it does not possess or operate any land. 
  • To exclude households with insignificant production, only households receiving value of produce more than ₹4,000 and having a member self-employed in agriculture in the previous 365 days are considered. 
  • The income cutoff in 2018-19 has been adjusted for inflation – it was ₹3,000 in 2012-13 – and the definitions are identical to that in 2012-13, the report shows.

Assessment of Farm Income

  • The Government of India in its Annual Budget 2016-17 set a policy target of doubling farmers’ income by 2022.
  • Agriculture sustains livelihood for more than half of India's total population. Doubling farmers’ income in such a short period is an overwhelming task for decision makers, scientists and policy makers because of its continued role in employment, income and most importantly in national food security.

Steps Taken by Government:

  • Institutional Reforms: 
    • Pradhan Mantri Krishi Sinchai Yojana, Soil health card, and Prampragat Krishi Vikas Yojana: Aiming to raise output and reduce cost.
    • Pradhan Mantri Fasal Bima Yojana: To provide insurance against crop and income loss and to encourage investment in farming.
    • Interlinking of rivers - To raise output and farm incomes.
    • Operation Greens: To address price volatility of perishable commodities like Tomato, Onion and Potato (TOP).
    • PM Kisan Sampada Yojana: To promote food processing in a holistic manner.
  • Technological Reforms:
    • Initiating E-NAM: The National Agriculture Market (eNAM) is a pan-India electronic trading portal which networks the existing Agricultural Produce Market Committees (APMCs) mandis to create a unified national market for agricultural commodities.
    • Technology mission on cotton: It aims to increase the income of the cotton growers by reducing the cost of cultivation as well as by increasing the yield per hectare through proper transfer of technology to the growers.
    • Technology Mission on Oilseeds, Pulses and Maize (TMOPM): Few schemes implemented under TMOPM are: Oilseeds Production Programme (OPP), National Pulses Development Project (NPDP), etc.
    • Mission for Integrated Development of Horticulture (MIDH): It is a scheme for the holistic growth of the horticulture sector covering fruits, vegetables, root & tuber crops, mushrooms, spices, flowers, aromatic plants, coconut, cashew, cocoa and bamboo.
    • In addition, schemes relating to tree plantation (Har Medh Par Ped), Bee Keeping, Dairy and Fisheries are also implemented.

Challenges

  • Extension of Irrigation Facilities: The coverage of irrigation facilities needs to be extended while ensuring an effective water conservation mechanism.
  • Improve Agricultural Credit: An inclusive approach to provision for agricultural credit has to be undertaken to address the issue of skewness in its regional distribution, it said.
  • Land Reform: As the proportion of small and marginal holdings is significantly large, land reform measures like freeing up land markets can help farmers improve their Income.
  • Boost to Allied Sectors: Allied sectors, such as animal husbandry, dairying and fisheries, need to be given a boost to provide an assured secondary source of employment and income, especially for small and marginal farmers.
  • Farm Mechanisation: There is also a need to address the issue of lower farm mechanisation in India which is only about 40% as compared to about 60% in China and around 75 % in Brazil.
  • Improving Food Processing Sector: More focussed attention" is required to be given to the sector due to its significant role in reducing post-harvest losses and creation of an additional market for farm outputs. The food processing sector is growing at an average annual growth rate of more than 5% over the last six years ending 2017-18.
  • Exploring Global Markets: There is a need to give increased focus on exploring global markets for agricultural commodities to give an additional source of market for the surplus of agricultural produce India currently has.
  • Reallocation of Labour: There is also a need to reallocate labour resources to other sectors. Though the structural transformations involved a falling share of the agriculture sector and rising share of services sector jobs, more needs to be done to create manufacturing jobs to absorb the large pool of workers.
  • Other Issues: Issues such as investment in agriculture, insurance coverage, water conservation, improved yields through better farming practices, access to market, availability of institutional credit, increasing the linkages between agricultural and non-agricultural sectors need urgent attention.

Way Forward

  • To secure the future of agriculture and to improve the livelihood of half of India's population, adequate attention needs to be given to improve the welfare of farmers and raise agricultural income.
  • It is essential to mobilize States and UTs to own and achieve the goal of doubling farmers' income with active focus on capacity building (technology adoption and awareness) of farmers that will be the catalyst to boost farmers income.

Mains Question

The Government of India in its Annual Budget 2016-17 set a policy target of doubling farmers’ income by 2022. Is it possible to achieve it by 2022 or not ? why? What are the challenges and opportunities of the food processing sector in the country? How can income of the farmers be substantially increased by encouraging food processing? (15 Marks)

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