Farm Distress:An analysis

News:Thousands of farmers and agricultural workers marched towards the parliament recently to demand debt waivers and higher crop prices, highlighting the acute farm distress.

Facts:

• Agriculture grew at meagre 2.1% when national GDP grew at 6.5% in 2017-18
• Contribution of agricultural output in total GVA is one third
• Agriculture share in economy has fallen from 17.6% in 2004-05 to 12.2% in 2016-17, thus non-farm activities have fared much better than agriculture.
• GDP deflator for agriculture is negative for the first time in many years, hence farmers are earning lesser than before.
• Income of almost 70% of farm households is less than their consumption expenditure (NSSO)
• Income from cultivation for farmers, having a hectare of land or less, is less than half their total income while remaining coming from wage labour, animal husbandry and other non-farm businesses.

India agriculture is afflicted with multiple bottlenecks across all stages of agricultural production, right from the farm to the market.

Agricultural assets:

• Shrinking land-holding size:
  • Average size of landholdings have shrunk from 2.28 hectares in 1970 to 1.08 hectares in 2015 (NABARD)
  • 5% farms are marginal or less than one hectare in size (NSSO)
  • Fragmentation forces farmers into subsistence farming which affects their capacity to invest in land and productivity, hence perpetuating poverty
  • small holding size makes the diffusion of advanced technologies difficult

Agricultural inputs:

• Fertilizer: Fertilizer consumption has increased exponentially in India causing serious environmentalproblems.
  • Fertilizers in India are mainly nitrogenous, which affects availability of soil specific fertilizers.
  • Excessive control of urea price and procurement by government promotes black marketing and diversion of urea, thus creating deficiency in local markets
  • Chemical fertilizers can make the topsoil acidic, lowering pH of the soil, which in long term decreases the yield of crops.

• Seeds: Good quality seeds are out of the reach of small and marginal farmers:
  • High cost of hybrid as well as genetically modified seeds especially with respect to the seeds of commercial crops.
  • High fertilizer and irrigation requirement of hybrid seeds.
• Irrigation:
  • Around 52% farm area is still unirrigated and dependant on rainfall.
  • Access to drip irrigation and sprinkler is limited to 1.6 per cent and 0.8 per cent families respectively.
  • In India Ultimate Irrigation Potential is 139.9 million hectares but irrigation potential utilized [IPU] is 80 million hectares
  • Excessive use of underground water for agriculture erodes top soil through surface run-off and also enhances problem of soil salinity.
• Labour:
  • Half of India’s arable land remains in the hands of 7% of the big land-holders, which is cultivated by landless workers without entitlement and tenancy rights
  • Availability of surplus farm labour leads to disguised unemployment causing wastage of human capital
  • Feminisation of agriculture without ownership rights affects their ability to avail credit and other essential inputs
• Credit availability:
  • Non-institutional credit to agriculture is around 40%, which not only has exorbitant interest rates but also is exploitative resulting in reduced farm incomes and increased farmer suicides
• Insurance:
  • Less than 24% of the gross cropped area (against a target of 40%)is covered under government-run crop insurance schemes leaving the rest farmers vulnerable to farm risks.

Agricultural Practices:

• Indian agriculture is witness to unsustainable cropping patterns and practices wherein adherence to water-use efficiency, agro-climatic based cropping and crop rotation practices is elusive.
• With advent of climate change and associated vagaries, essential practices including dry farming, climate smart agriculture, crop diversification and allied activities are necessitated but are found wanting in Indian scenario.
• Agriculture in India is mainly carried out manually for subsistence without farm mechanisation or technological inputs.

Harvest and Post-harvest:

• In India post-harvest losses in food and food grains are around 40-50%.
• Inefficient forward linkages including marketing and logistics, processing and value addition and preservation infrastructure facilities.
• Fragmented market:Owing to lack of unified agriculture market monopoly of traders over local agricultural markets bars farmers from selling directly to consumers.
• MSP:
  • Only 22 crops are covered under MSP scheme and only about 10% farmers are aware of existence of MSP.
  • Trade policy also works independently of MSP policy
  • Absence of adequate state infrastructure for procurement and storage of produce
  • Crop specific MSP policy has promoted mono-cropping culture (wheat and rice) thus contributing to soil deterioration and eventual decline in soil productivity
• Apart from MSP, other price support/stabilisation mechanisms have repeatedly failed to arrest price volatility as was recently observed during surplus production of various crops across the country.
• Share of agriculture in India’s export has gradually reduced post liberalisation from 20% to 10%.

Way forward:

• Currently, the marketed surplus data are available at the aggregate level. It would be appropriate if the marketlevel surplus is assessed, for managing and balancing supply and demand.
• Reorienting the current price policy in an effective and sustainable manner through Minimum Insured Price (MIP) and Deficiency Price Payment (DPP) as suggested by NITI Aayog
• There are 29 districts which are highly vulnerable and disadvantaged in terms of doublestress created from low income as well as high climate vulnerability. Specialprogrammes need to be designed to support these disadvantaged districts.
• Number and network of FPOs need to be expanded to enable farmers to reduce transaction costs, access technology, raise their negotiation power and integrate withvalue chains
• Promoting cooperative farming, for instance, will allow small and marginal farmers to take the advantage of their family labour. Corporate farming, meanwhile, could allow economies of scale to kick in at lower thresholds.
• Agriculture must be implemented in the concurrent list from state list, hence making it a matter of concern for both the Union and the states.
• Doubling of farmers’ income requires not only interventions to develop the agricultural sectorbut it also requires strong linkages with manufacturing and service sectors to transform the‘agricultural units to agricultural enterprises’.
• Government must extend help to farmers in reducing price volatility by implementing ‘price deficiency payment scheme’ as done by Haryana and Madhya Pradesh( Bhavantar Bhugtan Yojana).
• Farmers need to have assured access to and control over rightful basic resources like land, water, bio-resources, credit and insurance, technology and knowledge management, and markets.
• Inculcation of productivity enhancing agri-technologies like use of drones to enable farmers in adding corrective fertilizers (as done by Switzerland), crop management, crop damage assessment etc.
• Government must incentivise farmers to diversify their incomes through non-farm and allied activities (livestock, fisheries, agro-forestry) can help realise the goal of doubling farmer’s income by 2022.
• Government must establish efficient and effective linkages between farm and research institutions to not only make agriculture climate smart, resilient but also sustainable.
• Integrated watershed management should be proactively factored in agriculture related policy interventions for enhanced water use efficiency and soil management.