Climate change may hit farm income

Climate change may hit farm income

Context

The Economic Survey 2017-18 said farmer income losses from climate change could be between 15% and 18% on an average, rising to anywhere between 20%-25% in unirrigated areas of the country.

Technologies like drip irrigation hold key to future of agriculture; ‘replace power subsidy with DBT’

• “[The] Prime Minister’s goal of doubling farmers’ incomes — increasingly runs up against the contemporary realities of Indian agriculture, and the harsher prospects of its vulnerability to long-term climate change,” pointed out the survey, adding that India needed to expand irrigation – and do so against a backdrop of rising water scarcity and depleting groundwater resources.

Full Irrigation a problem

• “Fully irrigating Indian agriculture, that too against the backdrop of water scarcity and limited efficiency in existing irrigation schemes, will be a defining challenge for the future.
• Technologies of drip irrigation, sprinklers and water management — captured in the “more crop for every drop” campaign — may well hold the key to future Indian agriculture,” said the survey

Power subsidy needs to be removed

Power subsidy needs to be replaced by direct benefit transfers so that power use can be fully costed and water conservation furthered.

Temperature shocks

Extreme temperature shocks reduce farmer incomes by 4.3% and 4.1% during kharif and rabi respectively, whereas extreme rainfall shocks reduce incomes by 13.7% and 5.5%. “Once again, these average effects mask significant heterogeneity, with the largest adverse effects of weather shocks being felt in unirrigated areas, it said

Supply shock dominates

• Ex-ante it is not clear which direction farm revenues should move in — on the one hand, these shocks reduce yields, but on the other, the lower supply should increase local prices.
• The results here clearly indicate that the “supply shock” dominates — reductions in yields lead to reduced revenues,” said the Survey

Different agricultures and different challenges

The Survey observes that while thinking about agricultural policy reforms in India, it is vital to make a clear distinction between two agricultures in India.

Two Types:

Northern India: Cereals based

“There is an agriculture — the well-irrigated, input-addled, and price-and-procurement-supported cereals grown in Northern India — where the challenge is for policy to change the form of the very generous support from prices and subsidies to less damaging support in the form of direct benefit transfers.

Central, Western and Southern India

On the other hand there is another agriculture (broadly, non-cereals in central, western and southern India) where the problems are very different such as inadequate irrigation, continued rain dependence, ineffective procurement, and insufficient investments in research and technology (non-cereals such as pulses, soyabeans, and cotton), high market barriers and weak post-harvest infrastructure (fruits and vegetables), and challenging non-economic policy (livestock),” it said.