Doubling Farmers’ Income by 2022: A Reality Check

Dr. MruthyunjayaFormer National Director, NAIP, ICAR

Indian Weed Science Society Conference, MPUAT, Udaipur

1st March, 2017

Backdrop• PMs dream, FMs Budget Proposal in 2016 and is now a policy

• Triggered by sudden spurt in farmers suicides in recent yearssubstantiated by findings of Task Force on Agriculture of NITI Aayogpointing out serious implications on food security and economy

• The task Force suggested rising agricultural productivity, givingremunerative prices, bringing 2nd green revolution in dry land areas ingeneral and eastern India in particular, helping small & marginalfarmers by reforming tenancy laws (Model Tenancy Act) and providingquick relief to farmers in times of natural disasters

• Union Minister of State for Finance said in a NABARD Seminar: Farmershave given us food Security and we have to give them income securityas gift for their hard work under difficult conditions

• Farmers’ income not production is the most appropriate measure offarmers wellbeing and its growth has seen ups and downs in the last 3decades plummeting to less than 1% growth since 2011-12

Backdrop

• India lived with frequent food deficits before and even afterindependence

• The worst Bengal Famine wiped out 4 million people and hugelivestock in 1943

• Soon after independence in 1947, GoI launched GMF campaignwith emphasis on program of crop production, fielddemonstration and contact with farmers

• Soon followed with measures like rationing of food grains,introduction of PDS, miss a meal movement, eat forest productsduring Vanamahotsav week, etc. with not much success

• Public revolt mounted, opposition told: Give us food or leaveoffice, appealed to people to give “Ek Ghanta Deshko” for buildingcanals, irrigation tanks, compost pits to increase food production

• Import a meal, barter food deal with surplus countries( PL 480,USA), “ Begging Bowl” status shamed the nation for bold decisions

Backdrop

• Genesis of Green Revolution-droughts of 1965-66 &1966-67, India imported 10 million tons of food grains, politicalawakening to stop import and accelerate agri.growth

• By then, India had established a strong agricultural researchsystem with ICAR at the apex and SAUs at the state level,AICRPs with imported HYV seeds played a crucial role inlaunching Green Revolution, seeds of transformation sown

• Technology (seed, fertilizer, irrigation), institutions (APC,FCI, CDP, Co-ops), policies (price, investment, credit)combined with hard work of farmers contributed toincreased production, from 50 MT in 1950s to an estimatedrecord 272 MT in 2016-17 (more than 5 times increase!)

• India attained self sufficiency, remarkable transformation!

Backdrop• The transformation journey passed through several phases: limits to area

growth, flattening yields, increasing costs, falling profits, rising demandsfor exports, fast changing diets, agric. diversification, nutritionalinsecurity, price shocks, climate change

• Studies and surveys suggested several policy changes from time to time• NAP-2000, targeted 4% annual growth and recommended several

corrective measures, but farmers distress continued unabated• NPF-2007, focus on increasing farmers income and suggested slew of

measures, but India failed to maintain sustainable long term growth inproduction and farmers income, deficits in oilseeds and pulses, naturalresource depletion and degradation, decreasing farm size, input deliveryand institutional problems, monsoon and market failures, technologyfatigue, problems of liberalization and globalization

• Emphasis on Special policies-Oilseeds, pulses, maize mission, doublingfood production slogan, NHM, RKVY, NFSM, MGNREGA, NICRA, doublingagricultural credit, sub-mission on farm mechanization, decentralizedprocurement, National Watershed Program, Rainfed Area Program, etc

Backdrop

• Quality of implementation of special programs betterbut not matched with potential and need, no sizeableimpact experienced

• Even Ex-PMs announcement of doubling foodproduction by 2009 could only increase production by15%, sustainable growth elusive

• Around 2011-12, farmers distress increased, disparitybetween agric. income and non-agric. income furtherwidened, surveys indicated farmers desire to quitfarming, youth were un-attracted to farming

• Thus came the PMs dream and FMs Budget Proposal-2016, now a policy

The Proposal: Debate

• Policy debate started: whether it is real income; is it feasible to double it

• Debate settled to real income (constant prices)

• Several scholars doubted about doubling: lowerTFP growth rate, low and unrealizable MSP, non-remunerative price, low share of farmers inconsumer rupee, high and rising input cost,absence of market infrastructure, past growthonly modest as compared to needed 12% innominal terms and 20 to 30% in real terms, etc.

The Proposal: Suggested Strategy

• PMs suggested strategy emphasized:irrigation, supply of quality seeds andbalanced nutrients based on soil health cards,large investments in warehousing and coldchains, promotion of processing and valuechain, creation of e-NAM, introduction of newcrop insurance scheme (PMFBY), promotion ofancillary activities(poultry, beekeeping,fisheries)

The Proposal: Problems

• Firstly reliable, credible farmers income data not exist

• Using available data, studies have shown: Farmersnominal income between 1983-84 to 2011-12multiplied 20 times in nominal terms and by only 3times in real terms; growth in farmers income post2011-12 plummeted to around 1%; about 53% of farmhouseholds live in poverty (less than 0.63 ha) if they donot have non-farm income and their consumptionexpenditure exceeds income; Rs.1 invested in farmingpaid back Rs.1.7 indicating no squeeze in profitability,

The Proposal: Problems

• Another study of 2003-13 indicated: average total monthlyfarm income increased by a factor of only 1.34; among the4 components of farm income, only income from animalsdoubled; providing blend of short and long term credit andcrediting to farmers accounts; constraints to income growthfrom non-farm business at the household level, ifconsumption expenditure is considered (health andeducation), farmers have no surplus

• Problems of strong comprehensive policy reforms,ambiguity, scaling up and replicating, sustained politicalcommitment and administrative capacity, failing to deliveruniformly across all the states and diversities

The Proposal: Prospects and Roadmap

• Prospects abound in terms of technologies, institutionsand policies

• The road map: development of skill andentrepreneurship among farmers, youth in enterpriseslike meat, diary, etc

• Double public investment in infrastructure foragriculture

• Permit leasing of land, remove all restrictions andcomputerize all land records

• Speedy implementation of APMC Act in all states• Active involvement of private sector in product market,

agro-processing, delivery of inputs

The Proposal: Road Map

• Strengthen marketing reforms, legal framework for marketing ofagric. produce, processing industry, retail chain, aggregator

• Mass awareness among farmers on schemes and opportunities forcommercialization, diversification, better technologies, facilities,markets, prices, farm inputs and timely delivery at farmers doorsteps

• Synergy among all development programs, departments, statesand centre

• Computing and publishing state wise farmers income on annualbasis and make date public

• Creation of Special Agri. Zones with emphasis on export crops• “Gram Panchayat’s) and Rural Hats as Agri-Business hubs• Agriculture particularly post harvest aspects to be included in the

concurrent list

The Proposal: Action Plan

• GoI and State Governments are gearing up withplan, strategies, initiatives and action

• MoA, GoI has established the Task Force tosuggest strategy and action framework

• State Governments also initiated action. GoMPhas initiated a strategy with different actioncomponents of income rise: increase inproductivity (30%), reduction in input cost (15%),increase in area under cultivation (14%), agric.diversification(20%), reduction in post harvestlosses ( 6%), remunerative prices(15%)

Budget 2017-18: Boost to Rural and Agriculture Development

• Continued thrust on Rural and agri.sector: Total support to rural and agri.sector up by 24% to Rs.1.87 trillion

• Additional Rs.20,000 crore for long term irrigation fund, Rs.5000 crore forsetting up a dedicated irrigation fund

• Push to reforms in agri. marketing, new model law on contract farming tointegrate F&V farmers with agro-processing units

• Delisting F&Vs from APMCs and allow farmers to sell directly to consumersto get better price

• Agril. credit disbursement target of 10 trillion, up from 9 trillion lastbudget

• Rs.9000 crore for crop insurance, up from 5500 crore in 2016-17• Assistance to rural entrepreneurs to set up soil testing labs in KVKs• Rs.19000 crore support for bringing cooperative banks under core banking

system• Rs.8000 crore for dairy processing and infrastructure development fund

Conclusions

• In view of low and unsustainable growth of production and income of farmers,increasing productivity and doubling of farmers income are necessary to retainfarmers in farming and attract youth to agriculture particularly to ensure foodsecurity and faster economic growth

• It is no doubt a challenge by 2022 but prospects exist, concerted efforts cansignificantly enhance if not double

• Strategy should revolve around increasing productivity, increasing prices, inputsupply, infrastructure, value chain, market and value chain, credit, insurance

• Most important is synergy, coordination, collaboration, among all schemes of govt.departments at all levels, clarity of objectives of interventions, prioritized &focused interventions, scaling up of success, proven examples, regular monitoringof programs and mid-course corrections, improving the development culture,governance and implementation, culture of accountability for sustainable resultsand building ownership among all the key stakeholders

• Can our intent and investment/budget results in impact? Proper implementationholds the key to success!