Declining farm income: Reasons and solutions – Explained, pointwise

Introduction

The agriculture industry employs around 58% of the Indian population, contributing significantly to the Indian economy at around 18% of the country’s GDP. But, despite playing a major role, recent reports have revealed serious issues that need to be addressed by policymakers.

Firstly, average farming household incomes have increased relatively slowly when compared to India’s real GDP over the past six years, as per a survey report by the Ministry of Statistics and Program Implementation,

Secondly, millions of women for whom agriculture is the only source of income in rural India are now struggling with diminished savings and lost livelihood opportunities.

Let’s have a detailed look.

What are the issues and concerns linked to farm income?

i). Slow increase in farming household income: The earning of an average farming household in India has increased by 60% over six years (from 2012-13 to 2018-19). However, after adjusting for inflation using the rural consumer price index, farmers’ incomes have grown only 21% in real terms in the period. India’s real gross domestic product (real size of the economy) grew 52% in the same period.

ii). Farming or crop production as an occupation is on the decline. Not only do agricultural households not earn even a majority of their incomes from cultivation, but it also is not even their largest source of income. The average Indian farmer is more of a laborer now, as he earns more from wages than from cultivation, and this has happened for the first time ever. Income from wages, on the other hand, doubled from Rs 2,071 to Rs 4,063 in six years.

iii). Rise in debt level: An average farm household in India owed Rs 74,121 worth of debt in 2018-2019, compared to Rs. 47,000 in 2012-2013. Thus, as income grew, average debt, too, rose with a similar degree, by 57%.

iv). Landlessness has increased: Average land held by a land-owning farmer household has shrunk from 0.806 hectares in 2003 to 0.558 hectares in 2019.

v). Employment crisis for rural women farmworkers: There is a drop in the demand for women farmworkers in migration source states.

So, on the one hand, we have problems of a slow rise in farm income coupled with the simultaneous rise of debt levels, on the other hand, we have issues of increasing unemployment of women farmers.

What are the primary reasons for the increase in agricultural unemployment?

The following major internal & external factors are responsible:

Internal factors: Insufficient public investment for agrarian development, Inadequate access to institutional credit, Inadequate irrigation facilities, Government’s poor agriculture-related marketing policies, Low return from agriculture

External factors: Besides, external factors such as excessive economic liberalization in the Indian economy and low import tariffs in agricultural products have also played a critical role in the declining share of employment in the rural agriculture sector.

Other factors: Apart from the external and internal factors, exogenous shocks such as frequent droughts, floods, and cyclones are also responsible for the falling employment share in the agricultural sector. These natural calamities cause extensive damage to crops, which in turn disincentivizes the rural workforce to take up farming.

Covid Induced Lockdown: The nationwide lockdown announced in March 2020 led to an exodus of millions of migrant workers from cities to villages, adding to India’s overpopulated and agriculture-reliant rural economy. This employment crisis has disproportionately affected women farmworkers in rural India. Reverse migration and increased availability of employable men in villages have led to a drop in the demand for women farmworkers in migration source states.

What steps can the government take?

Education to farmers– Many farmers are not aware of crop rotation. Though education in urban areas has improved a lot, the government has ignored the same in rural areas in general & in the agriculture sector. So government agencies need to start an efficient mechanism in this regard.

Irrigation infrastructure– Small land farmers are unable to arrange irrigation systems. They need proper irrigation. So government should have to take initiative for providing irrigation to the small landowners.

Processing industries and cold storage facilities– Today 90% of farmers want processing units and cold storage facilities in the villages, especially for vegetables and fruits. So that farmers will get proper marketing & rates. This will reduce middlemen’s exploitation. Government should incentivize the industry to open food processing units and cold storage facilities near villages.

Developing an alternate sources of income for farmers:- The Government should take up the responsibility for providing training to the farmers to acquire new skills to reduce the dependence on agriculture. New areas like horticulture, aquaculture, fishery should also be promoted.

Sustainable farming methods– Organic farming is the way out for sustainable farming. The organic certification process should be faster. Precision farming can help farmers to get out of drought adversities by targeted input delivery. It requires minimum input and also reduces the cost of production. Already, Micro-irrigation is helping rained farmers in drought conditions. These methods should be promoted.

Support to women– Women farmers don’t enjoy entitlement to their land. Govt is in process of digitization of land records.

Climate Resilience farming (CRF)– It depends mostly on technological tools like smart weather forecasts using Big data analytics. Plant biotechnology by developing short-duration varieties, submerged crop varieties for coastal regions, drought-resistant varieties for arid areas can further promote CRF.

Digitalisation in agri sector: Digitalising facilitates networking and a well-connected and coordinated agri-value chain by removing multiple middlemen and the lack of transparency. This also solves the ‘access’ and ‘visibility’ issues with respect to the market and demand faced by farmer producer organizations. By investing in the digital agriculture ecosystem, India can support marginal farmers by providing them with a platform to voice their concerns and have these addressed in real-time.

Agri-tech startups: Agritech startups must be incentivized to come up with innovations. These firms can tap into the evolving infrastructure in regional markets, by sharing useful tips and information with farmers via SMS or helplines in their local languages.

Way forward

Farming has been a traditional occupation for most of rural India. But, this is changing now. Farmers are quitting agriculture and joining non-farm jobs. It is an economic decision, since the income of a farmer is around one-fifth of a non-farmer.

Thus, the Government’s objective of doubling farmer’s income is well-intentioned, but it must be equally backed by robust policies and incentives.