Doubling Farmers Income

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Doubling Farmers Income

• The most vital point of the ambitious goal to double farmers’ income (DFI) by 2022 — the 75th year of India’s Independence — set by the Prime Minister Narendra Modi is the paradigm shift in the agricultural policy space that it entails. The focus is now on the “profitability” rather than simply the “productivity” aspect of farming.

• The government has further launched a number of schemes such as Pradhan Mantri Krishi Sinchayee Yojana, Pradhan Mantri Fasal Bima Yojana, Soil Health Card, Neem-coating of Urea and e-NAM (electronic National Agriculture Market) for achieving sustainable agricultural growth.

• It is important to point out that what is sought to be doubled is the income of farmers, not output or value added or the GDP of the agriculture sector.

o If technology, input prices, wages and labour use could result in per-unit cost savings, then farmers’ incomes would rise at a much higher rate than the rate of increase in output.

o Another very important source of an increase in farmers’ income is the relative increase in prices of farm products compared to non-agricultural commodities. Past estimates of farm incomes show a significant difference between growth in output and growth in farmers’ income.

o Between 2004-05 and 2011-12, agricultural output at constant prices increased by 34 per cent while real farm income per farmer increased by 63 per cent. In nominal terms, the output became 2.65 times while farmers’ income tripled in the eight-year period. Therefore, a doubling of farmers’ income should not be viewed as the same as a doubling of farm output.

Attainable aims

• Moreover, the government’s intention is to double the income of farmers from farming in real terms.

• Thus it is important to look at the possible drivers of income growth for farmers.

o The first source is diversification of farm activities towards high-value crops and enterprises. National-level data reveals that shifting to high-value crops can more than quadruple income from the same piece of land.

o The second source is irrigation, which can double productivity.

o The third source is better price realisation for farmers through competitive markets, value chains and improved linkage between field and fork.

o The fourth source is an improvement in the terms of trade for agriculture. The fifth source is technology upgradation.

o Another important source is the shift of cultivators from farming to non-farm occupations. State-level data shows that agricultural income in real terms, including the effect of improvement in terms of trade, doubled between 2006-07 and 2013-14 in Gujarat, Jharkhand, Madhya Pradesh, Rajasthan and Telangana.

o Few states, namely Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Rajasthan and Telangana, are experiencing a transition towards doubling farmers’ income in seven years while Uttar Pradesh and Maharashtra are showing the potential to do so.

• In conclusion, if the above-mentioned six measures are implemented sincerely at the state-level, then farmers’ income can be doubled by 2022-23 in most of the states.

Actionable strategy

Institutional and Governance Reforms

• There are many reforms — relating to agricultural marketing, warehousing, land leasing, contract farming, etc. — that have been recognised as key to meeting the DFRI objective. Similarly, replacing open-ended subsidies with direct benefit transfers for fertilisers and seeds would not just help target the right end-users and plug pilferages in the system, but also promote more efficient and judicious application of these inputs.

o In addition to these are issues concerning revitalising the farm extension network, skilling youth for setting up scientific agri-food system enterprises, strengthening the institutional credit structure, improving post-harvest management and promoting farmer producers’ organisations/companies (FPO/FPC).

• Agriculture in India is a state subject. Past experience shows that no agricultural development on the ground is possible without meaningful interventions by state governments.

o To bring them on board on the above institutional and governance reforms, which will align their policies to a broad framework and yet allow for adoption of state/region-specific strategies, there is need to convene a meeting of the NITI Aayog or the National Development Council.

o Such a meeting, chaired by the Prime Minister and with all chief ministers in attendance, would provide necessary impetus to the process – similar to what the GST Council has achieved in the field of indirect taxation.

Climate-smart agri-technologies

• Adaptation and mitigation strategies to address climate change challenges have to be at the fore-font of any agricultural policy agenda today.

• Research, too, has to be designed to suit local crop ecology and promote sustainable farm management in terms of soil, water and energy use. Fortunately, a large gene pool is available in many crop species, which allows for breeding and developing new varieties/hybrids tolerant to multiple stresses, both biotic and abiotic.

• The rationale of climate-smart-agriculture (CSA) has to be appreciated by decision-makers and stakeholders at all levels. DFI by 2022 is not achievable, without making farmers resilient to climate change impacts and promoting CSA practices that sustainably increase their productivity and incomes.

Food and Nutrition Security

• There can be no inclusive growth without nutrition security. That would entail a shift in focus from calorie intake towards delivering nutrition. The DFI initiative offers an opportunity to align even farm policies in that direction.

o Neglected crops such as pulses and millets are fortunately now receiving attention, not only because of their high protein and nutrition-dense characteristics, but also for their climate resilience and low carbon and water foot-prints.

• Moreover, consumer demand and dietary patterns are slowly changing, creating a potential market for growers of these “smart crops”. The government should also move from a “cereal-centric” policy focused on subsidised procurement and distribution of rice and wheat to a diversified mix of nutritious millets and legumes.

• The recently launched National Nutrition Mission, procurement operations/buffer stocking of pulses, inclusion of millet-based food products in mid-day-meals programmes and additional incentives beyond support prices for growers of these crops in some states have sent positive signals that align farm policies to strategies for combating hunger and malnutrition.

Stable Farm Export Policy

• India ranks second in overall agricultural production, next only to China. But the country’s export basket hardly reflects its huge crop diversity and potential to generate a significant farm trade surplus.

• Without an open and stable farm export policy, there’s no predictability for farmers to access global markets and obtain the best possible prices for their produce.

• Movement to high-value crops (in protected cultivation, wherever possible), developing and exploiting the market for organic produce, creating farm export clusters, complying with international food-safety requirements, and doing away with multiple authorities for monitoring/regulating agricultural trade are the need of the hour. It calls for an aggressive agricultural trade policy.

An integrated value-chain approach

• Farmers must be integrated into modern value chains that can raise their incomes and also minimise the risks arising from middlemen and markets.

• There should be integration of post-harvest, marketing and processing infrastructures, adding value and quality to the raw produce of farmers.

• Also, technologies suited to respective agro-ecologies need to be put in place here and demonstrated to growers whose produce can be aggregated through FPOs/FPCs.

Digital Agriculture as backbone for modern farming

• Use of ICT has been successfully tested for timely delivery of cropping, weather and price information to farmers.

o While information on markets leads to better price discovery and enables producers to capture a higher proportion of the marketable value, delivery of advisory services through digital and social media platforms can take care of the inadequacies of traditional farm extension delivery systems.

• All these digital agriculture initiatives require a robust data infrastructure, which, when integrated with Aadhaar, will also make for a monitoring and evaluation system to track farmer incomes and implementation of various government programmes and subsidy-linked schemes.

o Private agri-business agencies should also be made meaningful partners in this endeavor.

• Two years have passed since the Prime Minister first gave the clarion call for DFI. The latest Union Budget for 2018-19 has proposals taking this vision forward, while rightly emphasising growth in farm incomes, as opposed to just production.

• But for these to translate into results on the ground requires actionable strategies on the lines suggested.

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