The report ‘Assessment of the State of Household, Farmland and Household Property in Rural India 2019’ released by the National Statistics Office in September 2021 reveals the pathetic income level of Indian farmers.

The average monthly income from different sources for each farming household in the period from July 2018 to June 2019 is only $10,218, where the net receipt is obtained given the “expenses paid” approach. This amount of income also falls to ₹ 8,337 when net receipt is obtained considering both expenses paid and imputed.

This means that the daily income of farm families is only about 277 euros, which is not much different from the minimum wage rate paid under the National Employment Guarantee Scheme.

Why is the farm’s income pathetically low? What is the income level of different countries?

Income data for farming households in India was first released by the NSSO in 2002-2003, at the initiative of the Ministry of Agriculture. It is also known as the Situation Assessment Survey (SAS) of farm households. Subsequently, the second SAS data series was published by the NSSO for the period 2012-2013, and now the third SAS survey for the year 2018-19 has been released.

all india scene

Average annual income (at current prices) per farm family from all sources nationwide increased from $25,380 in 2002-03 to ₹77,112 in 2012-13 onwards to ₹1,22,616 in 2018-19 . But, unexpectedly, the rate of increase in income slowed down between 2012-13 and 2018-2019, compared to 2002-03 to 2012-2013. The average annual increase in total farm income was 20.38% between 2002-2003 and 2012-2013, which slowed to 11.90% between 2012-2013 and 2018-2019.

What is even more shocking is that among the various sources of income (wages, growing crops, animal husbandry and non-farm business) for farming households, the growth of income from growing crops slowed sharply between 2012-2013 and 2018-2019. The annual increase in income from growing crops was only 4.65 percent between 2012-2013 and 2018-19, while in 2002-03 to 2012-2013, it increased by 21.80 percent.

Given the poor income growth from growing crops, the question now is where do farming families get their income from? SAS data clearly show that income does not come from growing crops, but mainly from wages and animal husbandry; They recorded average annual increases of 19.24 percent and 21.47 percent, respectively, between 2012-13 and 2018-2019. But for income from these two sources, annual income of farm families had slowed significantly in 2018-2019.

state status

The average monthly income of farm households varied widely across states in 2018-19, ranging from ₹4,013 in Odisha to ₹26,973 in Meghalaya. But, similar to the national picture, farm household incomes across the states are also poor.

Of the 28 states for which SAS data is available for 2018-2019, the median monthly income is just over $10,000 in 12 states, of which four are from the Northeast. The incomes of the remaining 16 states range in the range of ₹4,013-9,995. Income is below the national average in seven states which include Bihar, Jharkhand, Madhya Pradesh, Odisha, Telangana, Uttar Pradesh and West Bengal; All of which are important in terms of agriculture (Chart 1).

The picture is unfortunate in most countries when one looks at income from the source of crop production. And in just five states, the share of crop income is more than 50 percent of the total monthly income of agricultural households. And in 16 out of 28 states, the share of crop income is less than 40 percent of total monthly income. Even more shocking, the share of crop income is less than 25 percent in nine states. It is clear that the data indicate that the income from growing crops by farm families in most states is very poor.

what should be done

With such an unfortunate level of income from growing crops, it will be very difficult to double farm income by 2022-23, as the government envisioned in 2015-2016. It would also be difficult to force farmers to remain in cultivation.

Although the government has given top priority to increasing farm income through various interventions, SAS data shows a sharp slowdown in farm income in 2018-2019 compared to the previous 2012-2013 period. Several price and market-related interventions are needed to increase farm income.

First, the government must move away from a production-focused approach to a market-centric approach. Experience indicates that increased production of agricultural commodities does not guarantee increased income for farmers even in heavily irrigated areas.

Second, simply advertising for SMEs will not help farmers unless procurement infrastructure is strengthened. The level of purchase in most crops (except for rice and wheat) is poor, which is evidenced by the SAS data as well. Therefore, it is necessary to purchase 20-25 percent of the production in each delegated crop to benefit the farmers.

SAS data for 2012-2013 shows that due to the lack of purchasing centers, farmers did not benefit from SMEs. Except for a few areas and crops, this happens all over India. Therefore, procurement infrastructure must be strengthened.

Through the PM-AASHA scheme, the center provides incentives to states for three schemes – (1) the price support scheme (which promises to offer farmers a guaranteed price and protect them from making distress sales during bumper harvests), (2) the price shortage scheme (which offers compensation when they go down) market prices for MSP); and (iii) the most profitable private procurement system (which allows entry of private actors into the procurement of oilseeds on a trial basis). The state governments must implement these schemes with full force for the benefit of the farmers.

Farmer-run markets in states like Tamil Nadu and Andhra Pradesh are a win-win for farmers and consumers. Therefore, markets for producers across the country should be encouraged to improve farm incomes and eliminate middlemen as emphasized in the 2000 National Agricultural Policy.

To protect farmers from tight selling during periods of glut, swift action must be taken through a ‘Market Intervention Scheme’ (MIS), as suggested by the Expert Group Committee on Indebtedness headed by Prof. Radhakrishna (2007). Besides price incentives and market support, there is also a need to reduce the cost of farming which reduces the growth of farm income.

The writer is a former full-time member (official), Committee on Agricultural Costs and Prices, New Delhi. The opinions expressed are personal

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