Farmers, cultivators and their issues: India

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Contents

Backgrounder

The number of farmers/ dependence on agricultural income: 2004-19

Nov 21, 2021: The Times of India

Change in the share of prime Working Age population (20-59 years) between 2004-05 and 2018-19
From: Nov 21, 2021: The Times of India
No. of villages (in lakh), 1981- 2021
From: Nov 21, 2021: The Times of India
% of population according to age group working in agriculture, 2004-05- 2018-19
From: Nov 21, 2021: The Times of India
% of population aged 20-29 years working in the following sectors, 2004-05- 2018-19
From: Nov 21, 2021: The Times of India
% of prime working age population (20-59 years) according to gender, 2004-05- 2018-19
From: Nov 21, 2021: The Times of India
% of prime working age population (20-59 years) in agriculture employment, 2004-05- 2018-19
From: Nov 21, 2021: The Times of India
Change in the share of prime Working Age Population (30-50 yrs) between 2004 and 2019
From: Nov 21, 2021: The Times of India

Agriculture has long ceased to be a prime income generator for the Indian economy, with less than 15% of GDP coming from the sector. But it still employed more people than other sectors. A new study finds that to be no more the case with the share of youth working on farms falling below 15%

The repeal of farm laws may appear like a victory to some farmer leaders, but it’s not. By blackmailing the government—which was guilty of passing the laws without adequate outreach to farmers—into withdrawal, farmer leaders have ensured that farming remains inefficient, unrewarding, dependent on subsidies funded by the middle-class and damaging to the environment.

Worse, farming won’t become attractive for young Indians who have been turning away from agriculture given the mess it is trapped in for years. A recently released study shows that the share of 20-to-29 years old working in agriculture has collapsed from 34% to 14.4% in just 14 years. Here are the key details.

These numbers highlight the declining primacy of agriculture in India’s economy. Yet, about 40% of the total employment continues to be in agriculture, it is often said. At the same time, we hear about shortages of farm labour. How do the two go together? To find out the true extent of India’s dependence on agriculture and how it varies across age groups and states, a team of three researchers looked at the unit-level data of the Employment and Unemployment Survey, 2004-05, and the Periodic Labour Force Survey, 2018-19. The researchers – Vidya Mahambare of Great Lakes Institute of Management and Sowmya Dhanaraj and Sankalp Sharma of Madras School of Economics – considered only the 20-to-59-year age group, which they call prime working age segment, because while older people do work on farms, it is the people in the working-age group who are expected to move into an alternative job if the opportunity cost of working on farms rises. Here are some important findings of their report.

The missing farmers

The share of the working-age population (20-59 years) employed in agriculture has fallen to 23.3% in 2018-19 from 40% in 2004-05. Even in rural India, their share has fallen to 33.2% in 2018-19 from 53.7% in 2004-05. The decline is sharper in the share of the younger segment of the working-age population (20-29 years) who work in agriculture. Only about 14.4% of young adults were working in agriculture in 2018-19, down from 34% in 2004-05. “A decline of young people in agricultural work partly explains the incidents of the shortage of agricultural labour that are often reported,” the report says.

The decline of the share of young people in agriculture has also increased the median age of agriculture workers to 40 years in 2018-19 from 35 in 2004-05. The average age of agriculture workers was 46.7 and 43.4 years in Kerala and Tamil Nadu respectively in 2018-19, the highest among major states. “The ageing agriculture workforce would necessitate faster mechanisation of Indian agriculture going ahead, but fragmented farm sizes in India may pose a problem,” says the report.

Where are they going?

The reduction in the share of young adults in agricultural employment has been accompanied by a rise in those who report being in education (13.4% in 2018-19). However, the proportion of young adults employed in industry and services has remained stagnant. Since educated young adults would be looking to work in non-farm sectors, unemployment among them could rise if non-farm job creation isn’t fast enough, say the researchers.

Another part of the decline in the share of the working-age population in agriculture employment can be explained with the increase in the share, mainly of women, who no longer look for paid work. The share of working-age women out of the labour force has risen to 70%. This could be because of women dropping out of work as family incomes went up.

Where farms matter more

There is wide variation in the dependence on farm employment across states. While on the one end is Kerala where only 8.5% of the state’s prime working-age population was working in agriculture in 2018-19 (down from 20.3% in 2004-05), on the other is Madhya Pradesh where 35.3% of the population (down from 51.7% in 2004-05) is working on the farms. Surprisingly, even in states like Punjab and Haryana, where agriculture has a bigger share in the state economy, less than 1 in 5 prime working-age people are engaged in agriculture. This reflects higher farm productivity and incomes that allows women to exit paid farm work. On the other hand, in states like Karnataka, Maharashtra and Gujarat, 40-45% of the rural working age population was still employed in agriculture in 2018-19, pointing towards a lack of enough non-farm jobs.

Good news or bad?

That India has too many farmers working on its too small farms has been reported. That we can do with fewer farmers and more efficient farming is also known. In that sense the decline in the farm employment in of working age population doesn’t seem to be alarming. Fewer farm hands may force Indian farms to become more mechanised and improve their yields too. The decline in agriculture employment also fits in with the country’s structural transformation towards an industry and services-driven economy.

However, as the youth get educated and have higher ambitions or move out of farming because their land holdings have dwindled down to unviable sizes, they need to find suitable non-farm jobs. That is not exactly the case in India. The decline in farm employment is mirrored more in the share of the working-age population leaving the market than its share in taking up non-farm jobs.

The success in raising non-agriculture employment varies widely across states. While states like Bihar, Punjab, Orissa, West Bengal, and Tamil Nadu have seen an increase in industrial employment, partly driven by the construction sector, the southern states of Kerala, and Karnataka have witnessed the highest increase in the share of employment in services since 2004-05. The largest increase in the working-age population leaving the labour market has been in the three relatively prosperous states – Gujarat, Haryana, Karnataka - and more worryingly in a relatively poor state of Uttar Pradesh, says the report.


Agitations

History

Jnauary 1, 2021: The Times of India

Mridula Mukherjee taught modern history at JNU. Her area of expertise includes peasant struggles in India and agrarian movements in Punjab. In an email interview with Avijit Ghosh, she links the ongoing farmers’ movement with similar protests in the past:

Which were the major peasant movements of Punjab? Geographically, which areas in the state were the hotspots?

Punjab has a long tradition of peasant protest going back to at least the first decade of the 20th century. Beginning in 1907 with the Swadeshi Movement or Pagri Sambhal O Jatta movement, as it was popularly called in the Punjab, the tradition of peasant or kisan protest was strengthened by the Ghadar movement of 1914-15, the Akali movement from 1920-25, the activities of the Kirti Kisan Party and Naujawan Bharat Sabha, founded by Bhagat Singh in the late 20s, the major national struggles such as the Civil Disobedience Movement of 1930-32 and the Kisan Sabha movements against high land revenue, water rates and indebtedness during the years 1931-36, to name some. In the post-independence period, the biggest movement was in 1958-59 against the imposition of a Betterment Levy to meet the costs of the irrigation part of the Bhakra Nangal project.

Their greatest strength was visible in the Central districts, most of which constitute present day Indian Punjab, followed by the south-eastern part, which is Haryana today. Much of Western Punjab, which went to Pakistan, was home to a very backward, rack-rented tenant population dominated by big feudal landlords, and remained outside the influence of modern politics.

What has been the most recurring cause of peasant discontent?

The most recurring cause of peasant discontent were those government legislations which were seen as adversely affecting peasant interests or those tax demands that were seen as unjust or oppressive by the peasants. In the preindependence period, the movements were also imbued with antiimperialist, or nationalist sentiment, and often peasants participated in movements which had no specific peasant demands, as for example in the Ghadar movement or the Akali movement or the Civil Disobedience Movement, because they were, like other Indians, convinced that British rule had to go if India and Indians were to prosper.

What are the ideological moorings of these movements?

The ideological moorings have been anti-imperialist, secular and egalitarian. Beginning with 1907, the Congress remained the strongest influence, as it represented the most powerful historical urge of the age, that is, anti-imperialist nationalism. The Akalis, of various strands, some pro-Congress, others more loyalist, also were an important force because of the impact of the Akali movement of 1920-25 for the liberation of the Gurdwaras from feudal and loyalist elements, which had involved the Sikh peasants in a big way. From the late 1920s, and especially from the mid 1930s, parties, groups and individuals with left wing ideologies, such as the Kirti-Kisans, Communists, and Congress Socialists emerged as the strongest influence among the peasants.

Bhagat Singh remains a popular figure among farmers. Why?

Bhagat Singh remains a very popular figure because he symbolises the pinnacle of sacrifice for a cause. This is also in keeping with the Sikh tradition of veneration for martyrs, for example, of Guru Tegh Bahadur. Possessing an extraordinary intellect, he proclaimed himself an atheist and a socialist while in jail awaiting his hanging at the age of 23. He is also the nephew of Ajit Singh, the leader of the 1907 Pagri Sambhal O Jatta movement, who was exiled by the British along with Lala Lajpat Rai.

Is there a link between the ongoing farmers’ strike with previous such efforts in the 20th century?

I am surprised by the extraordinary way in which this current protest resonates with the past. The greatgrandparents and grandparents and even parents of some of the older participants fought against government legislation or measures that they did not like, as in 1907, 1934-39, 1946 and 1958-59, demonstrating enormous capacity for struggle and sacrifice.

We even have examples of cultivators revolting against the exploitation by private companies who leased the land. As we witness today, the peasant protest was then too led by an intellectually sophisticated and mature leadership, willing to make tremendous sacrifices. The tradition of contribution by the community, symbolised by the langar, to keep the protest going, is also an old one. Kisan activists would go house to house collecting grain for the langar at the big conferences which were a staple of the movement. Jathas going for a morcha (or struggle) would be fed and housed by villages en route.

2011-20

November 26, 2020: The Times of India

Number of farmers’ protests, 2014-18
From: November 26, 2020: The Times of India

Why farm protests have become more frequent

NEW DELHI: Armed with sticks and rocks, thousands of farmers from various states are marching towards Delhi to protest against the new farm laws cleared by Parliament in September. The protest march is reminiscent of several agitations held by farmers in recent times over a range of issues, including land allocation deals, loan waivers, suicide rates, and minimum support price (MSP). In fact, India has witnessed a worrying rise in protests, clashes and riots related to agrarian distress over the past few years, shows data.

As per data from 2014 to 2018, there have been more than 13,000 protests by farmers on various agrarian issues. These protests have seen a sharp increase over the years, having escalated by eight times from a little over 600 in 2014 to more than 4,800 in 2016.


Major farm protests, 2011-20 

When
Where
What
Why
2018
Delhi
On November 29, farmers and farm organisations gathered at Delhi's Ramlila Maidan.
Demanded a 3-week special Parliament session to discuss agrarian crisis.
2015
Delhi
Thousands of farmers from 15 states gathered at Jantar Mantar in Delhi.
Demanded moratorium on land acquisition; farmers' suicides, falling incomes and GMOs.
2015
Delhi, other states
On Mar 18, farmer unions launched an agitation against Land Acquisition ordinance.
Protest against the Land Acquisition, Rehabilitation and Resettlement Bill, 2015.
2016
Karnataka
In March, farmers parked their tractors willy-nilly on the busy thoroughfares of Bengaluru.
Demands included irrigation projects, increasing ground level water.
2012
Kolhapur/Sangli, Maharashtra
In November, sugarcane farmers protested in western Maharashtra.
Sugarcane farmers demended better prices for their produce.
2017
Madhya Pradesh
Six farmers were killed and eight were injured in two separate incidents of firing in Mandsaur.
Demanded market driven price for their produce
2018
Maharashtra
In March, farmers reached Nashik and marched towards Mumbai.
MSP, unconditional waiver on loan, electricity bills
2018
Nationwide
In June, 10-day 'Gaon Bandh' farmers' agitation saw cultivators taking to the streets
A blanket waiver of farm loans; MSP; and milk at Rs 50/L.
2013
Noida, Uttar Pradesh
In December, Bharatiya Kisan Union protested in front of SP's residence.
Demanded better compensation for their lands acquired for Yamuna e-way.
2014
Punjab
A person was killed and several farmers, police officials were injured in the protest.
Protested against snapping of power connection
2020
Punjab, Haryana & other states
Farmers protested across the nation.
Against three farm bills
2019
Uttar Pradesh
In September, UP farmers marched towards Delhi. They weren't allowed to enter Delhi.
Demanded money from sugarcane sales & against hike in power tariffs.
2011
Uttar Pradesh
In May, there were land acquisition protests in UP.
Farmers believed that compensation paid by the state govt for their land was inadequate


Government officials admit that frustrated farmers have taken out their anger on the roads in the last couple of years with some major protests reported from states like Madhya Pradesh, Bihar, UP. They said it's due to issues like shrinking of farmlands, failure of crops, poor irrigation facilities, bad seeds, drought, debts etc.

According to 2017 NCRB report, the maximum number of riots related to agrarian distress were reported from Bihar (2,342 cases), almost double the number registered in 2015 (1,156 cases). This was followed by 1,709 riots involving farmers reported from Uttar Pradesh in 2016, while only 752 such incidents were reported from the state in 2015.

A look at the timeline of farmers' protest over the last 10 years show that the minimum support price (MSP) for various crops has been a major grouse. Another issue has been that of land acquisition, with farmers complaining that compensation for land acquired for industrial projects was not in tune with market rates.

Causes

2017: caused by RBI's strong inflation targeting?

`Farmer strikes may have roots in RBI's strong inflation targeting', Jun 10 2017: The Times of India


Food Prices Lower Than Three-Year Average: SBI Report

The recent farmers' agitations across various states may have its roots in the Reserve Bank of India's (RBI's) aggressive stance to target lower retail inflation as this has led to prices, especially of food items, currently being lower than the three-year average.

On the one hand while the government's agri sector reforms are showing results to smoothen out the supply side hurdles, slide in food prices have been much faster because of the RBI's aggressive policies to contain retail inflation, a report by SBI noted.

Food items have about 46% weight in retail infla tion. So to keep the consumer price index (CPI) under the RBI's target of 4%, the rise in food prices should be in the 5-6% range, which has happened at ground level.

Within this category , cereals & products have a 9.7% weight, followed by milk & products with 6.6%, vegetables with 6% and meat & fish with 3.6% weight.

“The interesting part is that even if we compare the October 2016 food prices with the three-year average, the prices have barely moved.This indicates both permanent and transient impact on food prices,“ the report pointed out.

“The permanent factors include the effective supply response by the government in the last three years, while the transient factor is the demonetisation impact,“ the report by Soumya Kanti Ghosh, group chief economic adviser, SBI, pointed out. SBI believes that any rush towards the 4% inflation target “will put further pressure on keeping a vigil on food prices. This is all the more relevant, given the agitations for farm loan waivers in different parts of the country as signs of rural distress, a flip side of the crash in food inflation over the last several months,“ the report noted. “This also shows the dangers of targeting food inflations consistently at very low levels as a part of the overall mandate for inflation targeting without adequate agri reforms.“

‘Farmer agitations reflect clout more than distress’

SA Aiyar, April 8, 2018: The Times of India


The farmers’ march in Maharashtra last month got much sympathy from a public fed on stories of rising farm suicides. But the agitating farmers demanded waivers of all farm loans and electricity dues. Such outrageous demands for freebies may impress politicians wooing the farm lobby, but will not improve justice or fairness.

Rising farmer agitations are not good indicators of rural distress. Rather, they reflect high returns to agitations, increasing the incentive to organise and make new demands. Farm loan waivers have been granted by UP, Maharashtra, Rajasthan, Karnataka and Punjab. Many states provide free farm electricity. Meanwhile non-performing bank loans for agriculture are up from 2% to 6%. One reason is that farmers default, hoping their dues will soon be waived.

The biggest farmers get the biggest bank loans. Marginal farmers and labourers get little or no formal credit, and borrow at extortionate rates from moneylenders. Waiving bank loans will fatten the richest while neglecting those in real need.

Some farm families own hundreds of acres, and one farmer in Punjab has 150 tubewells. Most small farmers have no tubewell at all. So free electricity benefits the biggest and richest farmers. Landless labourers are far poorer than farmers, but get no benefit from loan waivers or free electricity. The Modi government promises higher food prices to help farmers, but this will hit labourers, for whom cheap food is a blessing.

Farmers are a powerful lobby across the world, even in rich industrialised countries like the US. In India, rural areas represent two-thirds of the population and almost half of all employment, so they have much political clout. State governments have been falling over one another to woo the farm vote bank. The fact that loan waivers and free power mostly benefit large farmers and not poor labourers is hardly mentioned in media debates.

One reason is that the public has been fed with stories of rising farm suicides, so nobody wants to be accused of promoting such suicides. Sorry, but there is nothing special about suicide rates of farmers, and they are not rising. The national suicide rate has historically been in the region of 10-11 deaths per one lakh of population, not very different from the rate globally or in rich countries like the US. Indian farmers have a lower suicide rate than non-farmers.

In a 2012 research paper in The Lancet, Vikram Patel and others found that suicides among unemployed persons and those professions outside agriculture were, collectively, thrice as frequent as among farmers and agricultural labourers. Suicide rates are 10 times higher in southern states than northern ones, mainly for cultural reasons. Former Niti Aayog chief Arvind Panagariya showed that barely 25% of rural suicides were farm-related.

Some other studies using a narrow definition of farmers claim that farmers have a higher suicide ratio than others. The question remains whether farmers should be defined as self-cultivators, cultivators plus agricultural workers, or all persons connected with agriculture. Broadly speaking, almost half of Indian households claim to be employed in agriculture. On any broad basis, the farm suicide rate is lower than the non-farmer rate.

Puducherry, with little agriculture, has the highest suicide rate among states, followed by Kerala. This surely has nothing to do with low farm prices. Anuradha Bose in The Lancet in 2004 found that the suicide rate among Tamil girls aged 10-19 was 148 per lakh people. This is over ten times the farm suicide rate, yet the latter hogs the headlines. Depression and mental health are the main causes of suicides, which is why rich nations also suffer, but nobody discusses this problem. Official data shows farm suicides rose from around 11,000 in 1995 to 18,241 in 2004, and then fell substantially. Farm suicides fell to 12,602 in 2015 and 11,370 in 2016. This is hardly 8% of total suicides, although almost 50% of the population is engaged in farming. The accuracy of suicide data can be questioned, but the overall trend shows declining, not rising distress.

A reply to a Lok Sabha question showed suicides rising among agricultural labourers (from 4,595 in 2015 to 5,019 in 2016) even as they fell among land-owning farmers (from 8,007 to 6,351). This suggests rural distress is greater among labourers than farmers.

Let me repeat a suggestion made in an earlier Swaminomics column. If farmers are to be aided, the best way is a flat subsidy of Rs 4,000 per acre per cropping season, up to a limit of five acres, while ending other subsidies. This will provide a safety net without distorting farm prices and production.

The agitation of 2020

See Farmers' agitation, 2020-21: India

The root cause

Bloomberg, February 13, 2021: The Times of India

The root of the conflict lies in a system that evolved over more than half a century after the Green Revolution of the 1960s slowly transformed the nation from a land of frequent famines to an agricultural powerhouse. India is now the world’s biggest exporter of rice and the second-largest producer of wheat and sugar. At the same time, a complex and inefficient system of state support, controlled markets and government welfare grew up that Modi is trying to unpick.

Under the present system, the government sets minimum prices for about two dozen crops and buys large volumes of rice and wheat for its welfare programs. While traders aren’t legally obliged to pay the government-set rates, the sheer volume of state purchases creates de facto price support for key grains from small farmers, who sell their produce through licensed traders in designated markets. These markets were set up to open up the industry and prevent exploitation of smallholders, but over time many became effective monopolies, with traders pulling together to stifle competition. As a result, prices of rice and wheat have remained stable over years, while other crops such as soybeans, corn and rapeseed have seen sharp price swings.


Farmers like the arrangement because the government provides them with a guaranteed buyer, allowing them to easily secure informal short-term loans to buy farm inputs like seeds in a country where rural banking services are often inadequate.

The new rules intend to liberalize trading by allowing farmers to sell crops outside the designated markets. Modi’s administration has promised that the welfare support mechanism will remain, but protesters aren’t convinced.


Many believe the reforms are designed ultimately to cut the government’s food subsidy bill— expected to be $33.4 billion in 2021-22— by allowing market forces to drive down prices. The current support rates reflect the cost of production plus a 50% profit, which, along with assured purchases, has encouraged farmers to overproduce some crops. With India growing more wheat, rice, sugar cane and cotton than it needs, a free-for-all could cause prices to slump.


Worse still, 86% of India’s farmers cultivate plots of about 2 hectares (5 acres) or less, while the other 14% own more than half the cultivated land. In an unfettered market, large landowners with lower costs per acre and better access to funds could end up dominating markets, forcing smallholders to sell their land. That’s a shift that took decades in many developed nations as rural residents migrated to cities to work in factories. But an accelerated transition on the scale of India’s population risks a major humanitarian crisis.

Migrating Farmers

Jokhu Ray, who grew corn and rice in the eastern state of Bihar, has had a taste of what a free market could mean. Bihar abolished its government-managed market in 2006 and Ray says the result was disastrous for him. In the 2019-20 crop year, he could only get 10 rupees (14 cents) a kilogram for his corn, less than the support price of 17.6 rupees or the 15 rupees he got the year before. Like many others, Ray left his village to seek work elsewhere and now works on a construction site in Rajasthan.

Stories like Ray’s have fueled farmers’ fears. Protesters around the country held 3-hour “chakka jams” at the weekend, holding up traffic. The government blocked the internet at major protest sites and deployed some 50,000 police and paramilitary, along with riot control vehicles in and around Delhi, according to local media. After violence broke out at a Republic Day rally in the capital in January, the United Nations urged farmers to keep protests peaceful.


“The government has shut down the Internet here out of fear,” said Singh, by phone. “We are not scared. We are informing people through phone calls.”

“We are urging those involved in agitation to end protests,” Modi told lawmakers in parliament on Feb. 8. “We should give these agriculture reforms a chance.”

Farmers instead are demanding new legislation that makes it illegal to pay less than the minimum support rate, a policy analysts say would distort the market even more. Private buyers could be scared off, forcing the government to have to step in and buy even more. That would worsen a fiscal deficit that is already expected to widen to 9.5% of GDP due to the coronavirus.


State-run Food Corp. of India, the nation’s biggest food-grain buyer, is already stretched after buying 39 million tons of wheat and 52 million tons of rice from last year’s crop of about 108 million tons and 118 million tons respectively. Recent bumper harvests have filled many state granaries to bursting.

Raising minimum prices each year could also hit exports, said B.V. Krishna Rao, president of the nation’s Rice Exporters Association. “The moment we make minimum prices a legal obligation, we are bound to lose our share in the global market.” He suggested that support prices should be set close to global levels and farmers compensated if needed for any losses.


And there are other, even more serious long-term consequences if India doesn’t find an equitable way to reform its agriculture, especially in states like Punjab and Haryana, where the protests began.

Green Revolution

India’s Green Revolution in the 1960s brought a surge in grain output in Punjab thanks to high-yielding seeds, mechanization and increased application of pesticides and fertilizers. Known as India’s bread-basket, the state supplied about one third of the 62 million tons of water-intensive paddy that the government purchased from monsoon-sown crops so far this year, according to the food ministry.

“States like Punjab grow more rice than they consume despite unfavorable terrain, which has resulted in a drastic depletion of their water tables,” Rini Sen, an economist with ANZ Banking Group, said in a report.


India has only about 4% of the world’s fresh water and farmers tap almost 90% of the groundwater available. Growers say they can’t afford to switch from water-intensive crops such as rice and sugar cane unless the government ensures the same kind of price support for more sustainable crops like soybeans, mustard or pigeon peas (used to make dal).

Finding a compromise that would reassure farmers they can still make a decent living while dismantling an archaic and inefficient agriculture market may be Modi’s hardest task to date. But as the two sides dig in for what could be a long and bitter stand-off, it’s one that India must solve.

The agrarian crisis and the political class

India Today

Average monthly farm income and average monthly consumption expenditure, Graphic courtesy: India Today

May 11, 2015

Ravish Tiwari

The political class has read the agrarian crisis wrong. It's about time rhetoric met reality

Gajendra Singh : In his death, Gajendra Singh gave the political class much to outrage over. And outrage they expressed, but mostly over the wrong reasons. The middle-aged man from a farming family in Rajasthan's Dausa district hanged himself at a farmers' rally organised by Delhi Chief Minister Arvind Kejriwal at Jantar Mantar on April 22, 2015. Almost immediately, the televised suicide was taken over by the opposition parties to rail against the Narendra Modi government's land acquisition ordinance, equating Singh's death, and those of other farmers, with the law.

There's very little, however, to suggest any connection between land acquisition and either the rising level of agrarian crisis or the overall number of farmers who took their own lives. And those numbers have in fact declined in the last 10 years until 2013, says the National Crime Records Bureau. But in their attempt to score brownie points, the politicians seemed to be barking up the wrong tree. Discussions in both houses of Parliament focused mostly on easy solutions to the crises, virtually ignoring deeper structural issues that need political solutions.

Not that agrarian crisis is a non-issue. Far from it. The 2011 Census estimates 168 million of India's total 247 million households are in rural areas. The "Situation Assessment Survey of Agricultural Households", conducted during the 70th round of the National Sample Survey Office (NSSO) held in 2013, says only 90.2 million of those 168 million rural households are engaged in agriculturally productive operations. But that's not the problem. The assessment survey suggests that farmers involved in farming operations on land up to 2 hectares (ha)-the small or marginal farmers-cannot meet even their average monthly consumption expenditure from only incomes generated from farming (cultivation and animal husbandry). It says as many as 78.1 million of the 90.2 million farming households (86.6 per cent) do not earn enough from farming to meet their expenses. And that is where the problem lies.

Fragmented ownership

A NABARD paper released in February 2015 suggested that the average size of operational landholdings has reduced by half in the last 40 years-from 2.28 ha in 1970-71 to 1.16 ha in 2010-11. As a result, the number of landholdings in the marginal and small categories have swelled by 56 million and 11 million, respectively. NABARD's assessment of unviability of smaller farms, in a way, has been validated by NSSO survey results made public in December 2014, which say only farms more than 2 ha are yielding more income than farmers' consumption expenditure.

The solution then lies in arresting this fragmentation and consolidation of farms-a task the political class needs to take up forthwith. "The answer lies in farmers getting together to collectivise farmlands; not Soviet collectivisation but taking the shape of producer companies. (It requires a) limited form of cooperation where a farmer does not give his land away but cooperates for input purchases and selling of the produce," says noted agricultural economist Y.K. Alagh.

Ramesh Chand, director, National Centre for Agricultural Economics and Policy Research (NCAP), suggests a regulatory framework to facilitate legal leasing of farmland to ensure security and stability for farmers. India's land lease laws are based on conditions dating back to Independence, which makes many farmers unwilling to lease out land. "Or those who want to take farms on lease don't get it," Chand says. "Farmers prefer to keep land fallow rather than lease them out; they fear they would lose control."

For the political class, the challenge lies in fragmentation of landholdings that are getting unviable. Agriculture administrators recommend proliferation of oral or informal leasing/renting of farmland to advocate a legal framework to protect landowners and facilitate consolidation of landholdings.

Race for insurance

If this was the winter of discontent for farmers in most parts of north India, the spring arrived with little hope. The unseasonal rain and hailstorm in patches ravaged standing crops on nearly 189 lakh ha of about 606 lakh ha of rabi acreage. The twin demands that arose as a result were of central relief by state governments and relaxation of procurement norms by farmers to ensure their spoilt crop is assured of a market.

As expected, the political rhetoric has hit the high notes: in Parliament, ruling NDA MPs were keen to highlight the Centre's call to relax relief disbursement norms, while the Opposition panned the government for its failure to release more funds to states promptly. Lost in this politicking was the fine difference between relief and compensation. Lesson for politicians: the Centre provides relief if crops fail, but the need of the hour is to insure them.

Farmers are hardly out of the woods once the yield comes out good and is harvested. The next part of the harrowing journey only begins then. And one merely needs to follow the Gangetic plain eastward to hear complaints of farmers in Uttar Pradesh, Bihar and West Bengal about their produce remaining unsold, or being sold below the minimum support price (MSP).

"Farm holdings are so fragmented in eastern India that farmers find little merit in incurring transportation cost to procurement centres. This allows aggregators, traders to purchase the produce at the farm gate instead of the mandi (wholesale), and that is usually below the MSP," says Ashish Bahuguna, former agriculture secretary.

While the political leadership of Punjab and Haryana, the original Green Revolution states, have institutionalised their procurement networks, political leaders elsewhere, especially in the Gangetic plain, need to learn a lesson from Madhya Pradesh and Chhattisgarh Chief Ministers Shivraj Singh Chouhan and Raman Singh respectively. The two CMs have given a sustained push to a sound procurement network for wheat (MP) and paddy (Chhattisgarh) farmers, and thereby good price for their crops.

Not unlike the politicians, the prevailing laws also do not help much. Both the Agricultural Produce Market Committee Acts and the Essential Commodities Act have patronised traditional and entrenched traders and have not allowed modern trading, and need to be amended. Political leaders need to mull over how to modernise domestic trade to facilitate modern capital infusion to create logistics and storage facilities.

Fight for inputs

The entire political class may take pride in India's agricultural tradition, but most farmers still continue to struggle for basic inputs such as seeds, fertiliser pesticide, irrigation, power and credit. There was a large-scale disruption in fertiliser supply only last year, raising the political heat in several parts. "Inputs such as seed and fertiliser need to be available on time. Fertiliser requirements for kharif crops should be tied up at the end of the previous rabi crop," points out Gurbachan Singh, for-mer federal agriculture commissioner and now chairman of the Agricultural Scientists Recruitment Board.

"The political class should be alive to the demand forecast rather than react to a crisis generated by (their) misgovernance. Political pressure should ensure proactive coordination between placing orders, ensuring movement (of fertiliser) and timely distribution," says Ajay Vir Jakhar, chairman, Bharat Krishak Samaj.

The political class also needs to learn from state governments such as Shivraj Singh Chouhan's to expand irrigation coverage to reach the benefits to farmers. Similarly, for power supply for irrigation and other operations they need to look at Rajasthan, Gujarat, Andhra Pradesh, Haryana, Punjab, Karnataka, Maharashtra and Madhya Pradesh, which have demonstrated efficacy of separate agricultural feeders for farmers.

As for agriculture credit, though it has jumped to more than Rs 8 lakh crore, Ramesh Chand underlines the wide inequality in institutional credit between states.

There's a lot to be learnt for politicians to address the varied crises farmers face. As India looks at a year of below-normal monsoon, it's important that they show outrage over deaths such as that of Gajendra Singh's. But that fury has to be for the right reason for it to have any lasting effect.

Political parties unaccountable to farmers

The Times of India

Apr 27 2015

Dhananjay Mahapatra

Parties must rise above politics over farmer deaths

We have been told that agriculture is the mainstay of the Indian economy . Monsoon gives life to agriculture. The agricultural workforce reinforces India's granaries and ensures its food security . If agriculture occupies a pivotal role, why have governments in 65 years not been able to improve the plight of the farm workforce? At the same time, land owners have flourished. They own huge tracts of land, which helps them acquire money , muscle and political influence. In contrast, farmers have remained on the fringes. Over the years, ruling parties have tom-tommed policy decisions to sanction easy farm loans and later, write them off. Who benefits ­ the land owners or the farmers? To take a loan, a farmer has to show that he has land. A small percentage of farmers own land. So, loans are cornered by land owners. When loans are written off, its double benefit for them.

Most land owners give their land for farming on contract basis. The usual contract is the farmer will till the land, sow the seeds, water the crop and look after it. At harvest time, the land owner will take either onethird or half the crop. To buy seeds, fertilizer and other farm requirements, the farmer needs money . He takes loan, not from banks but village money-lenders at hefty rate of interest. Given the inadequate irrigation system, most farmers feel the heat in a bad monsoon year. Failed crop means loan defaults. Spiraling interest soon overtakes the principal, due to which the trapped farmers seek release by embracing death.

A farmer's death at the AAP rally at Jantar Mantar showed us yet again the eagerness of parties to score brownie points, unmindful of the fact that our policies have failed to ensure a better life for those who take care of our food and fill our granaries.

All parties behaved as if this death exemplified the present situation of farmers.Irrespective of the party in government in various states, thousands of farmers have ended their lives over the years to escape the debt trap. The party which sold dreams to hitch a ride to power says it is not even a year-old and blames the previous party which was in power. But no one has given a concrete policy framework providing farmers an honourable release from the debt trap.

The farmers' plight was explained vividly by the Supreme Court in its December 14, 2010 judgment in Maha rashtra vs Sarangdhar Singh Shivda Singh Chavan case. It was about the illegal money lending (at the rate of 10% interest a month) racket in Maharashtra. The petitioners said, “Nearly 300 farmers have committed suicide in Vidarbha as victims of such illegal money lending business and the torture perpetrated by the recovery of such money . A complaint has been made that the farmers do not get the benefit of various packages announced by the government and the state machinery is ruthless against farmers.“

The collector of Buldhana, on instructions of the then Congress CM, had ordered non-registration of police case against a money lender, Gukulchand Sananda, and his family , despite 50 complaints against them.The SC had sought explanation from the ex-CM, who in 2010 was Union minister for heavy industries. The exCM didn't deny the charge of his office asking the collector not to register a case against the Sananda family .

The SC quoted National Crime Records Bureau data to say that nearly 2 lakh farmers committed suicide in India between 1997 and 2008. Two-thirds of the 2 lakh suicides took place in five states ­ Maharashtra, Andhra Pradesh, Karnataka, MP and Chhattisgarh. The SC drew a pathetic contrast, saying, “Even though Maharashtra is one of the richest states in the country and 25,000 of India's one lakh millionaires reside in its capital Mumbai, the Vidarbha region is today the worst place in the whole country for farmers. The position is so pathetic in Vidarbha region that families are holding funerals and weddings at the same time and some times on the same day .“

In the verdict's concluding paragraph, the SC had said, “This court is extremely anguished to see that such an instruction could come from the chief minister of a state which is governed under a Constitution which resolves to constitute India into a socialist, secular, democratic republic. CM's instructions are so incongruous and anachronistic, being in defiance of all logic and reason, that our conscience is deeply disturbed.We condemn the same in no uncertain terms.“

Such serious judicial condemnation did not cast any shadow on the politician's career. He merrily continued in the UPA cabinet. None ­ he himself, his party or the prime minister -suffered any moral pang.

“ BJP’s rural votes indicate farm crisis exaggerated”: 2018-19

SWAMINATHAN S ANKLESARIA AIYAR, June 2, 2019: The Times of India

BJP’s rural votes show talk of farm crisis misleading

Annual GDP growth fell from 6.9% in 2017-18 to 6.8% in 2018-19. Worse, GDP in the latest January-March 2019 quarter slowed to just 5.8%. Yet Narendra Modi swept the general election. The BJP’s national vote share rose from 31.3% to 37.5%. In the seats it contested, its vote share rose to 46%. Contradicting conventional wisdom on agrarian distress, the BJP actually boosted its vote share in rural areas to roughly 46%, double the Congress’ 23%.

This suggests that talk of agrarian distress is much exaggerated. The latest data shows that agricultural growth in 2018-19 was 2.9%. Growth fell quarter after quarter — 5.1%, 4.9%, 2.8% and -0.1%. Clearly a good rabi and summer crop in 2018 was followed by serious slowing because of drought.

But the annual average of 2.9% is the highest ever in a drought year. This heart-warming achievement reflects increasing irrigation plus diversification into animal husbandry, fisheries and tree crops that are less monsoon-dependent. Indeed, traditional crops now account for barely half the agricultural output. Maharashtra was the worst-hit drought state in India, yet the NDA won 41 of the 48 seats there, and the Congress only one.

Congress apologists argue that Modi diverted voter attention from agrarian distress to the Balakot bombing, highlighting the need for a strongman to enhance national security. But the very fact that economic issues could so easily be overwhelmed by security issues proves that the economy is not in such bad shape. Yes, there is a slowdown. That always causes some pain. But it does not amount to a crisis. That word is seriously overused.

No country has managed more than 3% agricultural growth over a long period. The main reason is that you can build more factories to boost industry and more offices to boost services, but you cannot create more land to expand agriculture. Indeed, with growing urbanisation, India’s cultivated area is falling. So, all gains have to come from higher productivity.

Globally, agricultural productivity has grown historically at barely 2% a year. India’s potential is higher than in some other countries because of catch-up possibilities. Yields in India are far below those in China or Egypt. Even so, calling India’s agricultural growth of 2.5 -3% in the last decade an “agrarian crisis” is simply wrong.

Between 2004-05 and 2011-12, India raised 138 million people above the poverty line. We still await the 2017-18 data. But the World Poverty Clock, an internationally recognised source of quick estimates, says the number in India below the World Bank’s poverty line of $1.90 per day has fallen from 218 million in 2011-12 to barely 50 million in 2018. That would be impossible if India really had an agrarian crisis.

Farmer agitations have risen. They are equally common in rich countries where farmers earn 100 times more. Rising agitations reflect rising returns from demonstrations as governments give in, not distress. Distress was worst in the twin droughts of 1965-66 but there were no agitations, just starvation.

The main rural problem is that rising population has reduced the average farm size to 1-2 acres. Prosperity on such tiny plots is impossible. Agriculture accounts for barely 13% of GDP today but almost 50% of employment. The answer is to move people massively out of agriculture into industry and services.

India has failed there. Its labour laws have prevented the emergence of giant factories (as in China and Bangladesh) with tens of thousands of workers. So, ironically, the biggest rural problem is labour legislation. A massive shift of people out of agriculture would help double or triple farm size.

In poor Bihar and eastern UP, villagers say farming and MNREGA occupies them for only a few months in the year. This looks insufficient to account for rising ownership of cellphones, TVs and motor cycles. Villagers say this is explained by virtually every rural family having one or more members working in a town, often within commuting distance, sending or bringing home remittances. This rural diversification is not captured by statistics. Besides, the arrival of roads, electricity and telecom in almost all villages has created many new rural economic opportunities, from dhabas and repair shops to agro-processing. Doubtless Modi’s charisma is the overwhelming reason for the BJP’s electoral success. It lost state elections in Rajasthan, Madhya Pradesh and Chhattisgarh five months ago when voters were choosing a chief minister. But even there the BJP vote share was almost as high as the Congress. There is indeed short-term distress because of the drought and long-term distress because of shrinking land per person. But to call this a crisis is very misleading. Modi’s victory proves that. 


Agrarian crises, flashpoints, distress signals

As in 2018

Surojit Gupta, 10 REASONS WHY FARMERS ARE IN DISTRESS, December 13, 2018: The Times of India

Madhya Pradesh, Rajasthan, Chhattisgarh, 2011-18
Value of agricultural output
Value of manufacturing production
Share of agriculture & manufacturing in states' GDP
Per capita GDP
From: Surojit Gupta, 10 REASONS WHY FARMERS ARE IN DISTRESS, December 13, 2018: The Times of India


1 Two years of drought

Two successive years of drought (2014, 2015) have taken a toll on the farm sector. The government has allocated significant funds for the sector but slow implementation of projects has not eased the pain. Drought in Maharashtra, Gujarat and Karnataka have also added to farmers’ woes


2 Collapsing farm prices

Prices have collapsed for farm commodities. Low international prices have meant exports have been hit while imports have hurt prices at home. For example, there was a bumper production of pulses in 2016-17 but imports of nearly 6.6 million tonnes arrived, compounding the problem. In 2017-18, another 5.6 million tonnes flowed in, depressing domestic prices further. The government delayed imposing tariffs on imports, which heightened the problem of prices for farmers. According to a Niti Aayog paper, on average, farmers do not realise remunerative prices due to limited reach of the minimum support prices (MSP) and an agricultural marketing system that delivers only a small fraction of the final price to the actual farmer


3 Insurance fails to serve

The Pradhan Mantri Fasal Bima Yojana was launched in 2016 to provide insurance and financial support to farmers in the event of failure of any crops due to natural calamities, pests and diseases. It was also meant to stabilise the income of farmers and ensure they remain in farming. But the scheme has seen lower enrolments due to a string of factors, including high premiums and lack of innovation by insurance firms


4 Irrigation takes a hit

Irrigation is crucial for the farm sector, where large tracts of land still depend on monsoon rains. The Centre launched the Rs 40,000-crore Long-Term Irrigation Fund, operated by the National Bank for Agriculture and Rural Development (Nabard). Under this programme, 99 large irrigation projects were to be completed by December 2019 but the progress so far has been limited. Experts say a number of factors, including bureaucratic delays and slow implementation by states, have hurt progress for this crucial input

5 Marketing is ignored According to a Niti Aayog document, farm sector development has ignored the potential of marketing. Archaic laws still hobble the sector. Access of farmers to well-developed markets remains an issue although several initiatives have been launched to develop an electronic market place. Reforms to the APMC Act have been slow and most states have dragged their feet on it. Experts suggest an entity such as the GST Council to bring together states and the Centre to jointly take decisions to reform the sector and provide better access to markets for farmers. According to the Organisation for Economic Cooperation and Development (OECD), the combination of market regulations and infrastructure deficiencies leads to a price depressing effect on the sector


6 Modern tech missing

Introduction of latest technology has been limited due to a number of reasons. Access to modern technology could act as a boost to productivity through improved variety of seeds, farm implements and farming technology. According to a Niti Aayog paper, there has been no real technological breakthrough in recent times


7 Fragmented supply chains

Large gaps in storage, cold chains and limited connectivity have added to the woes of farmers. It has also added to the significant post-harvest losses of fruit and vegetables, estimated at 4% to 16% of the total output, according to the OECD


8 Lack of food processing clusters

This has meant that there is little incentives for farmers to diversify. According to an OECD document, share of high-value sectors in food processing is low with fruit, vegetable and meat products accounting for 5% and 8% of the total value of output compared to cerealbased products at 21% and oilseeds at 18%


9 Delayed FCI reforms

A government-appointed panel had recommended that FCI hand over all procurement operations of wheat, paddy and rice to states that have gained sufficient experience in this regard and have created reasonable infrastructure for procurement. These states are Andhra Pradesh, Chhattisgarh, Haryana, Madhya Pradesh. It had suggested a complete overhaul of FCI and recommended that farmers be given direct cash subsidy (of about Rs 7000/ha) and fertiliser sector deregulated. The panel had said direct cash subsidy to farmers will go a long way to help those who take loans from money lenders at exorbitant interest rates to buy fertilisers or other inputs, thus relieving some distress in the agrarian sector. The report has been put in cold storage


10 Low productivity

The share of the farm sector in GDP has declined from 29% in 1990 to about 17% in 2016, but it remains a major source of employment. According to OECD data, 85% of operational land holdings are less than 2 hectares and account for 45% of the total cropped area. Only 5% of farmers work on land holding larger than 4 hectares, according to the Agricultural Census, 2016. Productivity lags other Asian economies such as China, Vietnam and Thailand and average yields are low compared to other global producers. Wheat and rice yields are nearly 3 times lower than world yields while those for mango, banana, onion or potato are between 2 and 7 times lower than the highest yields achieved globally, according to the OECD

=Agribusiness/ Agriculture business

Some possibilities, as in 2020

Prabhu Pingali and Mathew Abraham, December 26, 2020: The Times of India

As India continues its rapid urbanisation, supplying cities and district towns with food provides a new growth opportunity for rural areas. Urbanfacing agribusinesses and value chains offer employment opportunities in aggregation, logistics, storage and processing. In city centres, food-related services such as restaurants, organised retail, and food delivery will increase in importance as a channel of employment generation.

Coupled with income and population growth, urbanisation is also changing food preferences. The share of rice and wheat in Indian diets has declined, while the consumption of fruits, vegetables, and livestock products has increased. According to NSSO surveys, monthly expenditure on cereals and cereal products fell from 41.1% to 10.8% in rural India and from 23.4% to 6.6% in urban areas between 1971-72 and 2011-12.

The rising demand for diversified agricultural products is an opportunity for smallholder farmers to commercialise, improving agricultural incomes and nutritional status at the household level. However, smallholders face obstacles in accessing credit, purchased inputs, technology and extension services to produce the quality required for urban consumption.

High transaction costs resulting from a low volume of produce, poor connectivity to markets, difficulty finding buyers and low bargaining power limit their market participation. This empowers intermediaries, who purchase from farmers at the lowest competitive price at the farmgate and sell in markets in their stead.

India’s market structure has long favoured staple grains. MSP incentivises farmers to grow staples and the APMC enables procurement into PDS, ensuring a productivity increase in staple grains. But the system is inadequate for marketing higher value crops. Only 6% of Indian farmers benefit from the MSP, and there are few alternative value chains for quality, high-value produce.

Though permitted in 2003, onerous requirements and fees have limited contract farming, except for a few crops like cotton and barley. The most significant challenges have been collective action problems of companies having to form contracts with hundreds of small farmers in informal groups, poor contract compliance by buyer or seller with low accountability, and the limitation of procuring from the area of a particular market’s jurisdiction.

The Producer Companies Act of 2002 made provisions for small producers’ aggregation into companies, allowing farmers to jointly access inputs, credit, farm machinery, and together sell in the markets. These FPOs can address contracting and adherences problems in contract farming with small farms. Although the initial uptake has been slow, government schemes and corporate, NGO, and private foundation interests have led to a rapid increase in FPO formation. Only 445 FPOs were registered in 2013, but since 2016, over 5,881 have been registered.

Despite the increased focus, success stories have been few. The extended gestation period required for FPOs to become self-sustaining, limited financing opportunities, weak linkages to markets, high coordination costs, and inadequate managerial expertise remain significant challenges.

This is where the FPTC and FAPAFS acts play essential roles. FPTC allows the creation of ‘trade areas’ where any corporate buyer, processor, private trader, or agri-entrepreneur can buy directly from farmers. Referred to as the ‘Contract Farming Bill’, FAPAFS allows for noncompulsory written contracts between buyer and seller across the country, beyond the purview of APMCs. While this freedom is a welcome change, FAPAFS excludes land leasing and prevents sponsors from constructing structures on farmland.

The easing of market restrictions will result in a private sector response in agricultural value chains. Cold chains, better connectivity, the establishment of grades and standards, and storage infrastructure will be in the private sector’s best interest while linking directly to farms. But without strong FPOs, FAPAFS and FPTC will do little to improve smallholder market access by themselves.

Prabhu Pingali is Director, Mathew Abraham is Assistant Director of Tata-Cornell Institute for Agriculture and Nutrition, Cornell University

Agriculture census

2010-11

9th December 2018: Press Information Bureau


Department of Agriculture, Cooperation& Farmers Welfare has released Agriculture Census 2010-11(Phase-II). Highlights of the Census are:

Highlights

As per Agriculture Census 2010-11,

· Total number of operational holdings were estimated as 138.35 million.

· The total operated area was 159.59 million hectare.

· The average size of the holding has been estimated as 1.15 hectare. The average size of holdings has shown a steady declining trend over various Agriculture Censuses since, 1970-71.

· The Size Group wise percentage of number and area of operational holdings are given in the following table.


Sl.No

Size-Group

Percentage of number of operational holdings to total

Percentage of area operated to total

1

Marginal (below 1.00 ha.)

67.10

22.50

2

Small (1.00 - 2.00 ha.)

17.91

22.08

3

Semi-medium (2.00 - 4.00 ha.)

10.04

23.63

4

Medium (4.00 - 10.00 ha.)

4.25

21.20

5

Large (10.00 ha. & above)

0.70

10.59



· The Gross Cropped Area (GCA) was estimated at 193.76 million hectare.

· The nine States, viz., Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh, Punjab, and West Bengal together account for about 78 per cent of the Gross Cropped Area in the country.

· Out of the total 64.57 million hectare Net Irrigated Area, 48.16 percent is accounted by Small and Marginal holdings, 43.77 percent by Semi-medium & Medium holdings and 8.07 percent by Large holdings.

· The Cropping Intensity as per Agriculture Census 2010-11 works out to 1.37.

· For 96.95 per cent of operational holdings, entire operated area was located within the village of residence.

· Among various sources of irrigation, Tube-wells was main source of irrigation followed by canals.

All India level, during 2010-11, the proportion of net irrigated area to net area sown was 45.70 percent.

Agriculture Census in India is conducted at five yearly intervals for collection of information about structural aspects of agricultural holdings in the country. The basic statistical unit for data collection is ‘Operational Holding’. The reference year for the present Census was Agriculture Year 2010-11 (July-June). Agriculture Census data is collected in three phases. During Phase-I, data is collected on primary characteristics such as number and area of operational holdings. In Phase-II, detailed data is collected on sample basis from 20 per cent villages covering characteristics such as tenancy, land use, irrigation, cropping pattern, dispersal of holding etc. During Phase-III, generally referred to as Input Survey, data is collected on pattern of use of inputs.


Sl.No.

Category

Operated Area

1

2

3

1

Marginal holdings

Below 1.00 hectare

2

Small holdings

1.00 -2.00 hectares

3

Semi-Medium holdings

2.00 - 4.00 hectares

4

Medium holdings

4.00 - 10.00 hectares

5

Large holdings

10.00 hectares and above


The concept of agricultural operational holdings does not include those holdings which are not operating any agricultural land and are engaged exclusively in livestock, poultry and fishing etc. On the basis of operated area, operational holdings in Agriculture Census are categorized as follows:-

The results of Phase-I and Phase-II of Agriculture Census 2010-11 have already been finalized and released. The detailed data /tables of Agriculture Census are available in the website of the Department at http://agcensus.nic.in. The All India Report of Agriculture Census 2010-11 is based on the data collected during Phase-II of the Census.

1970-2016: farm size shrinks, women landowners rise

Vishwa Mohan, Slide in farm size, but women land owners rise: Agri census, October 2, 2018: The Times of India


The increase in farmland holdings, a consistent trend since the 1970s, has been slowing down in the past 20 years but there is a rise in the number of female landholders, a possible indicator of higher involvement in farm activities, the provisional agriculture census 2015-16, has revealed.

The trend could mean the association of farming with “kisan bhai (farmer brothers)” might be less exclusively a male domain than popular belief has it. The trend may reflect migration of men to cities for non-agricultural activities and also explain slowing down of land division as rural people seek alternate livelihoods.

The figures show landholdings have doubled in past 45 years (from 71million in 1970-71 to 146 million in 2015-16), resulting in decline in average size of farms by more than 50% — a real worry for policy-makers as this makes agriculture unremunerative for farmers.

But the pace of such division is declining. Number of land holdings increased by 12% from 1995-96 to 2000-01, 7.5 % after that till 2005-06, 6.9% by 2010-11and 5.33% till 2015-16.

The agriculture census is carried out at five-year intervals as part of the world agriculture census programme. The first census in India was conducted in 1970-71. Data provides valuable inputs to policy makers as they plan various intervention.

The current agriculture census is the 10th in the series whose final figures, comprising other details, are expected to be released by December. According to provisional data, the percentage share of female land holders increased from 12.79% (17.65 million) in 2010-11 to 13.87% (20.25 million) in 2015-16. Their numbers were nearly 11% ( 15.11 million) in 2005-06.

Decreasing size of land holdings, however, remains a serious challenge. Being the final unit for agriculture-related decisions, an operational holding has been taken as statistical unit at micro-level for various policy interventions.

Landholdings

Vishwa Mohan, UP to gain most from PM’s farm proposal, February 3, 2019: The Times of India

Landholders and landholdings: all- India and state-wise: 2015-16
From: Vishwa Mohan, UP to gain most from PM’s farm proposal, February 3, 2019: The Times of India

In Percentage Terms, Kerala Top Beneficiary

Uttar Pradesh may be the biggest beneficiary of the Centre’s assured income support programme due to sheer number of small and marginal landholders in the state, but it is Kerala which figures at the top if one looks at the data in percentage term as over 99% of the farmers there have landholdings of less than five acres.

Under the income support programme (PM-KISAN), announced in the government’s interim budget on Friday, the Centre will annually provide Rs 6,000 each to only those over 12 crore landholders who have cultivable land of less than five acres (two hectares).

State-wise figures of such landholders show that over 50% of total beneficiaries will collectively be from five states with the highest of them (2.21 crore) coming from UP, followed by Bihar (1.59 crore), Maharashtra (1.18 crore), MP and Andhra Pradesh (over 75 lakh each). Over 80% of total beneficiaries will come from 10 states where Kerala figures at the top in percentage terms followed by Bihar, West Bengal, UP and Tamil Nadu. Except Bihar and West Bengal, all the states in the list along with Telangana have adequate digital land records.

These figures are part of the 2015-16 agriculture census, released late last year, which will be the basis of implementing the assured income support programme while arriving at corroborative land data.

Union agriculture minister Radha Mohan Singh confirmed to TOI about making the 2015-16 census as the basis of implementing the programme. The ministry on Friday wrote to all states asking them to share their digital land data base comprising details of beneficiaries including name, gender and SC/ST status. States which don’t have complete records in digital formats may share their data of beneficiaries of various schemes.

The Centre will issue detailed guidelines for the implementation of the scheme in the next two-three days and appoint link officers in agriculture ministry for each state for monitoring.

Asked how the Centre would arrive at exact data of beneficiaries for properly implementing the scheme, additional secretary in agriculture ministry Ashok Dalwai said, “It’ll be implemented through electronic medium so that money is transferred directly to the farmers’ ‘Jan Dhan’ accounts”.

Agriculture reforms

The best performing states, 2015

Agriculture reforms: The best performing states, presumably in 2015

Maha tops Niti Aayog's agriculture reforms index. Nov 01 2016 : The Times of India


66% Of States Fail To Reach Half Way Mark

Maharashtra is on top of the ladder, followed by Gujarat and Rajasthan, in Niti Aayog's index reflecting states' performance in undertaking agriculture and farm sector reforms.

The first-ever such index, by Niti Aayog, is aimed at ranking states on the basis of implementing agriculture marketing reforms and ease of doing agri-business.

States like Bihar, Kerala and Manipur are not included in the ranking because they either did not adopt Agricultural produce market committee (APMC) or revoked it. “We are talking to them as we think this is not the best thing to do,“ said Ramesh Chand, member of Niti Aayog. Almost two-third of the states could not reach even half way mark of reform score of the index. Major states like UP , Punjab, West Bengal, Assam, Jharkhand, Tamil Nadu and J&K, have poorly performed .

As per the states' score in the in dex, Madhya Pradesh ranked fourth, followed by Haryana, Himachal Pradesh, Andhra Pradesh, Karnataka, Telangana, Goa and Chhattisgarh.An official said, “The index is aimed at helping the states to identify and address problems in the farm sector, which suffers from low growth, low income and agrarian distress.“

Stressing on urgent need to push reforms in the farm sector, Niti Aayog vice-chairman Arvind Panagariya said that post 1991, reforms focused on non-agriculture sector. “Reforms did not focus on the agri sector. One effort was made in 2003 through the model APMC Act reform and some progress was made but not enough and that has led to gap between industry and services on one hand and agri on other hand,“ he added.

The areas identified by Niti Aayog with a view to double farm income include agriculture market reforms, land lease reform, and reforms related to forestry on private land.

Use of modern techniques

The Times of India, Apr 27 2015


Between the 1940s and 1960s, research helped many countries increase agricultural yields. The yield per hectare is an indicator of the use of modern techniques like mechanisation and use of high-yielding varieties as well as improvement of traditional infrastructure like irrigation. The World Bank includes wheat, rice, maize, barley, oats, rye, millet, sorghum, buckwheat and mixed grains to calculate cereal yields. A comparison of India with other major economies shows that India's cereal yield is among the lowest. In 2013, cereal yield in the US was about two and half times that of India.

‘Big’ landholders

2015-16

Vishwa Mohan, June 4, 2019: The Times of India

Total no. of landholders, state-wise, 2015-16
From: Vishwa Mohan, June 4, 2019: The Times of India
Categories of landholders, 2015-16
From: Vishwa Mohan, June 4, 2019: The Times of India

Though such big landholders account for merely 0.6% of total farmers in India, their numbers in some states, such as Rajasthan, Madhya Pradesh, Maharashtra, Punjab, Karnataka, Haryana and Gujarat, are high.

Analysis of state-wise figures on landholders shows that 5.3% of total farmers in Punjab are large ones. Similarly, 4.7% of total farmers in Rajasthan and 2.5% in Haryana are big in terms of their landholdings. In other states, however, big landholders make up less than 1% of the total number of farmers due to fragmentation of holdings.

Large landholdings in Rajasthan may not be comparable with similar size of land in Punjab and Haryana in value terms (productivity) if one takes irrigation facilities and soil fertility into account, but the number of large farmers in the arid state presents an interesting picture. Rajasthan alone has 43% (3.6 lakh) out of the 8.3 lakh big farmers in India.

The top 12 states, including Rajasthan, collectively account for 93% of total big farmers in the country. On the other hand, there are 13 states/UTs, including Goa, Sikkim and Delhi, where number of large farmers is negligible. Other than UTs, most of such states are from the north-east. Though Nagaland and Arunachal Pradesh have big landholdings, they are mostly community land.

Among the remaining states, Telangana has 9,000 large farmers followed by Assam and Odisha (4,000 each), Bihar and Himachal Pradesh (3,000 each), Kerala (2,000), and Uttarakhand, West Bengal and J&K (1,000 each).

The figures are part of the Agriculture Census 2015-16.

Contract farming

2018: Centre releases a model act

Vishwa Mohan, May 23, 2018: The Times of India

What is contract farming? What are its benefits?
From: Vishwa Mohan, May 23, 2018: The Times of India

Amid estimates of record production of agricultural and horticultural produce in 2018, the Centre released a model act on contract farming and asked states to adopt it to save farmers from price volatility.

The proposed model law - State/UT Agricultural Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018 - intends to integrate farmers with agro-industries and exporters for better price realisation by mitigating market and price risks.

Once adopted by states, it will formally facilitate entry of private players into the farm sector as it would induce competition and ensure assured and better price of farm produce to farmers through advance agreements. It can offer assured price to farmers and save them from a problem of plenty -- a situation where farmers opt for distress sale when bumper crops cause a glut in the market. “There is unanimity among the states to adopt the ‘model contract farming and services’ act in its true spirit so as to ensure assured market at pre-agreed prices,” said Union agriculture minister Radha Mohan Singh.

The proposed law was unveiled here in presence of agriculture marketing ministers from several states including Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Haryana, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh.

Economic issues

Input Costs And (Low) Returns

2017: Mismatch Between

Subodh Varma, Farmers' ire not about loans alone, June 10, 2017: The Times of India


Key Reason Behind Anger Is Mismatch Between Input Costs And Low Returns

The farmers' agitation in MP, and before that in Maharashtra, has pushed a simmering agrarian crisis into the spotlight.Earlier, the newly elected UP government announced a loan waver for small and marginal farmers, Maharashtra government said it was exploring the possibility. The Centre itself had announced that it would strive to double farmers' incomes by 2022. All these were raising expectations of farmers, especially after enjoying a good monsoon and record harvest in 2016-17, after two consecutive years of drought. Yet why are farmers ­ the lifeline of India ­ angry and resentful?

One of the key factors fuelling agrarian anger is that good year or bad year, they are unable to earn enough. There is always a mismatch between their cost of production and what they get in the mandis.

A quick comparison of cost of production and farm harvest prices as data collected by the agriculture ministry reveals the mismatch for 201415, the last year for which such information is available. In several states, for several widely cultivated produce like paddy and wheat, prices at which farmers are selling their harvest are actually lower than what they spent in cul tivating the crop.

In Madhya Pradesh, the epicenter of current agitation, paddy was fetching 15% less than cost of production while wheat was giving them just 2% profit. MP has emerged as a major player on the national scene exhibiting an agricultural growth rate of 9.7% between 2005-06 and 2014-15 compared to 3.6% for India as a whole. Share of agriculture in MP's gross state domestic product has increased from 25% to over 30% in this period. Area under vegetables and fruits has increased by 78% since 201011. According to a study done by Ashok Gulati and his colleagues at ICRIER, expanded irrigation, strong procurement system for wheat and bonus over its minimum support price and expansion of all-weather roads to connect farmers to markets have led to this boom in agriculture.Yet, after enjoying the boom for several years, the state's farmers have ended up in the same trap that has been haunting their brethren in other states.

The reason why farmers don't get suitable margins is because of their input costs -water, diesel, fertiliser, etc.

For cultivating wheat in MP, Rs 1,241.34 were spent on fertilisers per hectare in 2004-05 which has more than doubled to Rs 2,695.27 per hectare in 2014-15. Similarly , cost of seeds used in one hec tare increased from Rs 998 in 2004-05 to Rs 2,653 in 2014-15.Even cost of irrigation has jumped from Rs 1,961.50 to Rs 2,599.55 in this period. These and other costs like labour, agricultural machinery hiring charges, pesticides, rents, have all gone up while prices that farmers get have lagged behind. As recently reported, support prices may be higher than what farmers get but getting payments is so difficult that farmers often have to sell to traders at lower prices.

This dire situation is also causing mounting indebtedness of farmers with over half of agricultural households in debt as per an NSSO survey for 2012-13. MP was reported to have 46% debt ridden farmers.

Should farmers diversify to get more value for their crops? This would appear to be a way out except that even in those cases, farmers' margins plummet after some time.UP's potato farmers were getting a measly 5% profit, while in Punjab, cotton farmers have suffered enormous losses of as much as 20%.

Farmers’ earnings

2008-16: How they are eaten away

2008-16: How farmers’ earnings are eaten away
From: December 15, 2018: The Times of India


See graphic:

2008-16- How farmers’ earnings are eaten away

Productivity, returns, income issues

2020

Atul Thakur, December 10, 2020: The Times of India

Graphics: Nirmal Sharma


The productivity of Indian farmers vis-à-vis select countries, as in 2018, crop-wise.
From: Atul Thakur, December 10, 2020: The Times of India
2015-20:
The impact of MSP on domestic Indian prices of foodgrains;
domestic Indian prices of foodgrains vis-à-vis international prices.
DESPITE HIGH PRICES, FARMERS WANT MSP…
1. The government sets minimum support price (MSP) based on input costs and appropriate margins needed to keep farming viable
2. Without MSP, a bumper harvest would be disastrous for Indian farmers, who cannot sell abroad, because it would push domestic prices lower
3. In recent years, paddy, groundnut, sunflower seed and rapeseed/mustard have sold below MSP while maize jowar, cotton, wheat and barley have sold above MSP
4. Even farmers who do not get MSP benefit from it as it keeps market prices higher than they would be without it
From: Atul Thakur, December 10, 2020: The Times of India
Income per hectare as % of input and labour cost, 2011-19
A farmer growing paddy earned more per quintal in the last year of the UPA government than four years later, in 2017-18, the latest market data shows
For most crops across both Kharif (July-October) and Rabi (October-March) seasons, the profit margins have either declined or stagnated in the last five years
From: Atul Thakur, December 10, 2020: The Times of India
2018
The share of agriculture in
the GDP, and
employment
in India and select other countries, presumably as in 2019
From: Atul Thakur, December 10, 2020: The Times of India

OUR PRODUCTIVITY IS LOW, VERY LOW...

A Dutch farmer grows more than 20 times as much tomato on a hectare of land as an average Indian farmer does. A Kuwaiti farmer reaps three times more potato on his farms than his Indian counterpart. A Chinese farmer grows twice the amount of rice on his farm than Indian farmers.

In fact, India's yields are among the lowest for most crops when compared to all other major countries, In other words, India uses more land and labour to produce lower yields than other countries. That explains why its agricultural products are expensive.


...WHICH KEEPS THE PRICES HIGH

Indian farmers cannot compete in the international market because of their high prices. With a few exceptions like paddy and cotton, international prices are much lower than the government-mandated price in India.

That's because Indian farming is labour-intensive and so crop production usually costs more than it does abroad.

Plus, developed countries keep crop prices down artificially by giving their own farmers subsidies based on international prices rather than the cost of production.

...BECAUSE THEIR RETURNS ARE FALLING

While farmers' earnings, in absolute terms, have risen for some crops, increases in input and labour costs have meant the actual returns for farmers have fallen as profit margins have shrunk.

In 2013-14, the market price of paddy was 58% higher than input and labour costs. In 2017-18, the margin shrank to 41%. The margin on maize declined from 43% to 35.6% in the same period.

THERE ARE TOO MANY FARMERS…

Nearly all large economies started with most hands in agriculture but gradually shifted their workforce to manufacturing, and then services. However, 41% of India's workforce is still involved in agriculture that contributes only 16% of the GDP. This leads to smaller farms, less mechanisation, lower yields and very thin profit margins. That's why Indian farming is always in crisis.

... AND THAT'S GOOD FOR POLITICS

About half of India's workforce depends on agriculture for a living. In comparison Chinese farms employ 25% of its workforce and in Brazil only 9% of the workforce depends on farming.

The economics of farming

2012> 2016

July 6, 2019: The Times of India

Source: Kharif Report 2018-19, FAO, World Bank


Average monthly income for kharif season- 2015-16
From: July 6, 2019: The Times of India
Government purchase of wheat under MSP as % of total sales during 2018-19
From: July 6, 2019: The Times of India
High price- low income paradox, 2018-19
From: July 6, 2019: The Times of India
Yield of major crops in kg per hectare, 2018-19
From: July 6, 2019: The Times of India
Employment in agriculture as % of total in 2018
From: July 6, 2019: The Times of India

Average farmers' income is low, yet their produce is priced out of the market. Crop productivity is abysmal by global standards but higher produce often leads to distress sales. Leaning on govt support at every level — from sowing to sale — Indian agriculture has moved away from value-creating enterprise to vote-catching opportunity.


A solution is to compensate some farmers to abstain from farming, allowing a few big ones to do large-scale modern farming.

Returns/ income from farming

2013>18

Returns/ income from farming, crop-wise, 2013>18
From: December 8, 2020: The Times of India

See graphic:

Returns/ income from farming, crop-wise, 2013>18

Farmers’ margins: 2008 – 22

August 20, 2023: The Times of India

Indian Farmers’ margins- 2008 – 22, sugarcane, cotton
From: August 20, 2023: The Times of India
Indian Farmers’ margins- 2008 – 22, paddy, maize, arhar, groundnut
From: August 20, 2023: The Times of India
Indian Farmers’ margins- 2008 – 22, wheat, lentil, rapeseed & mustard
From: August 20, 2023: The Times of India


Around 2010-11, India’s sugarcane farmers earned roughly 2.8 for every rupee they invested in their crop. By 2020-21, they were making only about 2.1 on every rupee. For cotton farmers, profitability has declined even more. They earned about 1.8 on every rupee spent around 2009-10. By 2020-21, it was down to 1.3. This has happened because agricultural costs have risen faster than farmers’ earnings per hectare. For crops like cotton, the earnings have, in fact, stagnated.

Incentives for farmers

Criteria For Loan Advances: Maharashtra, 2017

Bhavika Jain, Maha bows before farmers, again, June 21, 2017: The Times of India


Revises Criteria For Loan Advances Of Rs 10,000

Following pressure from farmer groups, the state government decided to revise the criteria under which the Rs 10,000 loan advance will be given to prepare for the upcoming agricultural season.

Farmers with four wheelers, who until now were not eligible for the loan advance, have also been made eligible for the scheme.The revised rule allows farmers owning vehicle up to Rs 10 lakh to take loan advance under the inititaive.

The state government had last week announced that while the larger issue of the loan waiver is being dealt with, it would give Rs 10,000 to farmers to begin preparation for this year's kharif season. However, the core committee of ministers under revenue minister Chandrakant Patil fixed some eligibility criteria for this loan advance and some of the norms were not acceptable to the farmers groups that are holding talks with the government.

Most of these norms were revised on Tuesday and a fresh notification will be issued incorporating them. One of the condition was that farmers with four wheelers will not be eligible for the advance loan, This norm has been revised and to say that farmers own who any vehicle up to Rs 10 lakh will be eligible for this instalment. Similarly , the government had decided that farmer families whose member(s) are government servant or are members of the panchayat samiti or the sugar mills administrative body will not get the benefit.Even these norms were revised -a government servant who draws a salary less that Rs 20,000 and is also a farmer can avail of this scheme. Members of the panchayat samiti and those of the administrative body of sugar mills have also been included in the eligiblilty list.

After the protest by the farmers representatives on Monday against the government's decision to cap the loan waiver at Rs 1 lakh and set the cut off date to June 30,2016, the government has said that they will no longer hold talks with the co-ordination committee of the farmers.

Income growth

2009-18: higher incomes; also higher costs

February 2, 2018: The Times of India

2009-18- higher incomes for food producers were accompanied by higher costs as well-Part I
From: February 2, 2018: The Times of India
2009-18- higher incomes for food producers were accompanied by higher costs as well-Part II
From: February 2, 2018: The Times of India

See graphics:

2009-18- higher incomes for food producers were accompanied by higher costs as well-Part I

2009-18- higher incomes for food producers were accompanied by higher costs as well-Part II


2018-22

July 18, 2022: The Times of India

The growth of farmers’ incomes in certain districts, 2018-22
From: July 18, 2022: The Times of India

New Delhi: Farmer income doubled in fiscal 2021-22 as compared to FY18 for certain crops in some states. In all other cases, it rose in the range of 1. 3-1. 7 times, a study conducted by SBI has shown. 
The study said that the increase in farmers’ incomes, engaged in cash crops, has been more prominent compared to those growing non-cash crops. Allied/non-farm income showed a significant increase of 1. 4-1. 8 times in the majority of states in tandem with farm income during the same period. This substantiates the trend according to the 77th National Sample Survey that source of farmer income has become increasingly diverse apart from crops, the SBI report said.


The study is based on primary data of SBI agri portfolio across states. It contains granular data of various crops from agri-intensive branches, and analyses the change in incomes of farmers over the last five years. “Minimum support price (MSP), increasingly aligned with market-linked pricing and increasing by 1. 5-2. 3 times since 2014, has been pivotal in ensuring passage of better prices to farmers and has led to optimal price discovery, setting ‘floor price benchmark’ for multiple crop varieties (23 as on date), also encouraging farmers to gradually move over to crop varieties that have better yield/value,” according to the report.

“The farm sector is currently in the throes of a significant structural shift on the back of a plethora of government policies and has emerged as the known unknown of the India growth story. From a manifold and a statistically significant jump in income (both farm and non-farm, that has even doubled in some cases) to imbibing an entrepreneurial spirit, to a jump in agri exports, the farm sector has been witness to tectonic shifts of late,” said Soumya Kanti Ghosh, group chief economic adviser at SBI.

The report said that despite much hype and political patronage, farm loan waivers by sta- tes have failed to bring respite to intended subjects, sabotaging credit discipline in select geographies and making banks financially wary of further lending. Since 2014, out of about 3. 7 crore eligible farmers, only around 50% of farmers received the amount of loan waiver (till March 2022). Though in some of the states more than 90% of farmers received the debt waiver amount, according to the report.

It said that the aspirational districts programme has been ahuge success in just a period of 4 years at least in respect of self-help group (SHG) financing. Of the total SHG financing in the country, 18% outstanding belongs to these 124 aspirational districts with a share in excess of 30% in select districts, the report said.

Land holdings

The size, as in 2019

Sep 11, 2021: The Times of India

A total of 54% of the rural families are agricultural households, with 70% of them possessing land less than 1 hectare, the latest survey on land holdings and rural households has found. It is further been found that just 0.4% of the agricultural households possess land above 10 hectare.

In contrast, of the total non-agricultural households, which forms 46% of the total rural households, those possessing land less than 1 ha is almost 99%. The survey, carried out by national statistical office for the year 2019, has found that nearly 77% of the agricultural households are self-employed, with 69% into crop production. The remaining households which are into employment include 7.7% as into regular salaried work while a high 14% is into casual labour.

Among the non-agricultural households, 48.6% are into casual labour while nearly 18% are into regular salaried work. Importantly, it has been found that 8.2% of rural households are landless — the category defined as owning less than 0.002 ha of land.

The scheduled castes own 10.2% of rural land while the scheduled tribes own 14.1% of total land. In contrast, the “other backward classes” own 47% of the land and “The others” own 28.5% of the land. The SCs account for nearly 16% of agricultural households while scheduled tribes are 14% and OBCs are nearly 46%. “Others” account for 24%. TNN

Minimum Support Price

A backgrounder

Jun 12 2017: The Times of India



Fixation of Minimum Support Price, the procedure; Jun 12 2017: The Times of India

See graphic:

Fixation of Minimum Support Price, the procedure


What is minimum support price?

The government fixes minimum support prices or MSPs for a selected list of crops that account for the bulk of India's cropped area. These prices are announced at the beginning of each sowing season. The government essentially guarantees to buy any of the harvest that is offered to it at this price. The assurance of remunerative prices are supposed to encourage farmers to invest more and hence increase production of these crops. If the market price after the harvest is more than the MSP , farmers would be able to get a higher return but if not, the MSP is supposed to provide a safeguard against prices falling too low.

What are the factors that determine MSP?

The MSP is fixed for 23 agricultural commodities for which the Commission for Agricultural Costs and Prices (CACP) is required to give recommendations to the government. Various criteria encompassing the interests of both producers and consumers are used for fixing the MSP . The commission assesses demand and supply by sending questionnaires and holding discussions with government agencies and various trade and industry bodies.

Do all farmers get benefited by MSP?

A 2016 NITI Aayog evaluation report on MSP that studied 36 districts in 14 states showed a mixed picture. While there is general consensus among farmers that MSP should continue, there are huge implementation issues. Only 10% of the farmers surveyed were aware of MSP before the sowing season, which meant there was no incentive to have a particular crop. Also, despite knowing about MSP many farmers could not sell their products to FCI because of various logistical issues like transportation and storage. A vast majority of Indian farmers are small farmers and a delay in official procurement (which is quite frequent) forces them into distress sales of their product due to urgent need of money .Also, public procurement at MSP is largely focused on certain crops like paddy , wheat and sugarcane and on cer tain states like Punjab, Haryana, Uttar Pradesh and so on.

Why do some criticise the concept of an MSP?

They argue that political pressure increases the MSP without considering the size of the harvest. As a result, prices may not fall despite a good harvest and there could be inflationary pressure on consumers. The middle men who procure crops from marginal farmers and sell it to FCI centres would be the ones to benefit as the farmer gets a low price because of the high yield and prices will not fall correspondingly for the consumers. Also, they say large scale procurement effectively reduces the amount of the produce that reaches open markets and hence creates an artificial shortage in these markets, thereby pushing up prices.

The states and farmers that benefitted

2014-20

Atul Thakur, February 19, 2021: The Times of India

Percentage of wheat and rice crop procured, state-wise, 2014-20
From: Atul Thakur, February 19, 2021: The Times of India


Why MSP matters to some states, not so much to others

Farmers From Punjab, Haryana Are The Only Ones Selling More Than Half Their Wheat, Two-Thirds Of Their Rice To Govt At MSP

Punjab and Haryana are the only states in which the bulk of the wheat and rice produced is procured by the government, which helps explain why farmers from these states are at the forefront of protests, fearing a disruption of the procurement under the MSP regime.

Data from the Ministry of Consumer Affairs, Food and Public Distribution, shows that between 2014-15 and 2019-20 the average production of wheat was 169 lakh tonnes in Punjab, of which 69% was procured, and 114 lakh tonnes in Haryana, of which 66.5% was procured. Among other major producer states, farmers in MP managed to sell 37% of their produce to the central pool, while the proportion was 14% for Rajasthan and under 10% for UP. Gujarat, Bihar and Maharashtra are the other states that produced an average over 15 lakh tonnes during this period. These states, however, managed to sell less than 1% of their produce to the central pool. Overall, the six-year average procurement was 300 lakh tonnes of wheat (30.6% of the country’s total production), of which over 64% came from Punjab and Haryana.

In the case of rice, Punjab on an average grew 121 lakh tonnes between 2014-15 and 2019-20, of which 86% was procured. The corresponding figures for Haryana were 44 lakh tonnes and 78% procured. There are 15 major rice growing states each accounting for annual average production of over 30 lakh tonnes during this period. The average procurement figures as a proportion of total production during this period was 73% for Telangana, 61% for Chhattisgarh, 55% for Andhra Pradesh, and 51% for Odisha. Farmers in only six of these 15 states managed to sell more than half of their produce at MSP. The procurement was between 20% and 30% for MP and UP, between 10% and 20% for Tamil Nadu, Bihar, Maharashtra and West Bengal and less than 10% for Jharkhand, Karnataka and Assam.

Among major wheat- and rice-producing states, it is only in Punjab and Haryana that the government procures almost 70% of the wheat and about 80% of the rice. Any disruption in the MSP procurement would impact a large number of farmers in these states.

An analysis of the number of farmers benefiting from MSP and per farmer procurement also shows why these two states are the most prominent in the ongoing protests. When it comes to wheat, there were only four states where more than one lakh farmers on average benefited from MSP between 2016-17 and 2019-20. Punjab has 8.5 lakh such farmers while the corresponding figures are 7.3 lakh for Haryana, 8 lakh for Madhya Pradesh and 7 lakh for Uttar Pradesh. Among these states, the average procurement per farmer was over 100 quintals only in Punjab and Haryana. In the case of rice, there were five states where about 10 lakh or more farmers benefited from procurement at MSP, and Punjab and Haryana figure in the list along with Telangana, Chhattisgarh and Odisha. Once again, Punjab leads in per farmer procurement with an average of over 100 quintals.


2018-19

Vishwa Mohan, October 3, 2020: The Times of India


Just about 12% or 97 lakh of India’s over 8 crore paddy farmers benefitted from procurement operations during 2018-19 with large variations across states, reflecting the limited utility of the current minimum support price structure that seems more geared for high-volume states like Punjab and Haryana seen as the country’s granaries.

The Centre’s decision to proactively begin procurement of paddy to allay fears of protesting farmers over the fate of minimum support price (MSP) in the wake of newly enacted farm laws may not prove effective beyond a handful of states, going by an analysis of rice procurement data for 2018-19.

More than 95% paddy farmers in Punjab and about 70% farmers in Haryana were covered under procurement operations while in other major rice producing states like Uttar Pradesh (3.6%), West Bengal (7.3%) Odisha (20.6%) and Bihar (1.7%) — a very small number benefited from procurement operations. These figures can well explain why the current protests against the farm laws have not engaged farmers in these states compared to counterparts in Punjab and Haryana chiefly as also Telangana, Andhra Pradesh and Chhattisgarh.

Procurement figures of 2018-19 show that about 89% of total production of Punjab was procured while 85% of Haryana. Other states, where more than half of total rice production was procured included Telangana (62%), Chhattisgarh (57.4%) and Andhra Pradesh (50.7%). Though West Bengal (13.8%) and Uttar Pradesh (13.3%) are largest rice producing states and account for 11.2% and 11.7% of total marketed surplus of rice, their share in procurement was much lower at 4.6% and 7%, respectively.

Flagging these variations and lop-sided procurement operations in most states, the Commission for Agricultural Costs and Prices (CACP), the agriculture ministry’s body which calculates MSP, in its 2020-21 price policy for Kharif crops noted how poor access to procurement in UP, West Bengal, Odisha, Bihar and other eastern and north-eastern states forces farmers to resort to distress sale at lower than the MSP. Since, majority of farmers in these less privileged states in terms of procurement are small and marginal, they have poor access to procurement at MSP. “Therefore, concerted efforts should be made to extend the benefits of procurement to small and marginal farmers in general and eastern and NE states in particular,” said the CACP. Though the coverage of paddy procurement has expanded to more states and farmers over the years with India recording 44.4 million tonnes of procurement of rice in 2018-19 (up from 38.2 million tonnes in 2017-18), the entire operation continued to be limited to certain states despite availability of marketed surplus in other states. On the other hand, in case of top two paddy producers, West Bengal and Uttar Pradesh, less than 20% of total production was procured.

Quantitatively, the total quantity of rice procured was the highest in Punjab (11.4 million tonnes) in 2018-19 followed by Andhra Pradesh (4.2 million tonnes), Telangana (4.1 million tonnes) and Haryana (3.8 million tonnes). Punjab has the highest share of marketed surplus (13.1%) as well as procurement (28.4%), much higher than production share (11%)— indicating effective procurement systems in these two states.

1958-2017, a timeline

Minimum Support Price in India, a timeline, 1958-2017; Jun 12 2017: The Times of India

See graphic:

Minimum Support Price in India, a timeline, 1958-2017

1985-2018: increase in MSP

How MSP has increased over the years, 1985-2018
From: January 17, 2019: The Times of India

See graphic:

How MSP has increased over the years, 1985-2018


Fixing the minimum support price (MSP) to deliver remunerative prices to farmers have been at the forefront of the debate on the farm crisis. In July 2018, the govt implemented a budget promise that the govt will fix MSP at 50% over the cost. The big question is, will higher MSP end farmer crisis? Here's a look at how MSP has risen over the years.

1985-2018, MSP for wheat, paddy and coarse cereals, year-wise

Minimum Support Price- wheat, paddy and coarse cereals: 1985-86 to 2001-02, year-wise
From: January 17, 2019: The Times of India
Minimum Support Price- wheat, paddy and coarse cereals, 2002-03 to 2017-18, year-wise
From: January 17, 2019: The Times of India


See graphics:

Minimum Support Price- wheat, paddy and coarse cereals: 1985-86 to 2001-02, year-wise

Minimum Support Price- wheat, paddy and coarse cereals, 2002-03 to 2017-18, year-wise

2018: India giving rice, wheat excess support, US tells WTO

May 10, 2018: The Times of India


India is supporting its rice and wheat farmers with payments that are far higher than the amounts allowed by the World Trade Organization (WTO), the US said in a statement published by the WTO on Wednesday.

“It appears that India provides market price support (MPS) for wheat and rice vastly in excess of what it has reported to the WTO,” the US statement said. “India’s apparent MPS for wheat appears to have been over 60% of the value of production in each of the last four years for which India has notified data. Its apparent MPS for rice appears to have been over 70%.”

Anything over 10% would break WTO rules, it added. India has made reform of agricultural subsidies a major negotiating issue at the WTO in the past five years.

It has won preliminary WTO backing for a system of public stockholding of farm produce for food security purposes, but the US and others have been wary of its plans, warning that payments which encourage production could lead to oversupply and potentially a spillover onto world markets. In its analysis, the United States looked at India’s payments for the four most recent years that it had notified to the WTO, from 2010-11 to 2013-14.

The US statement said that India was the world’s second or third largest agricultural producer.

‘Kharif MSP to be 150% of production cost:’ PM, 2018

June 30, 2018: The Times of India

MSP for Kharif; Commodity MSP (per quintal) 2017-18
From: June 30, 2018: The Times of India

Prime Minister Narendra Modi said the government would fix the minimum support price (MSP) for kharif crops at 150% of the production cost, in line with the promise to compensate farmers and tackle distress in rural areas.

The government will announce the MSP for kharif crops next week after the Union cabinet approves the move, Modi told sugarcane farmers in an interaction at his residence. This is part of the government’s effort to double farmers income by 2022, a poll promise of BJP, and ends speculation regarding the delay in fixing MSP rates. The PM also said the government would raise fair and remunerative price for sugarcane for 2018-19 in the next two weeks.

“It will provide incentive for those farmers whose recovery from sugarcane will be higher than 9.5%,” he said, adding that recent measures undertaken by the government had helped reduce cane arrears by more than Rs 4,000 crore in the past 7-10 days.

The Union budget for 2018-19 had unveiled the idea of raising the MSP for farmers. In the past months, a highpowered committee of ministers has held several meetings to work out the MSP proposal considering this will require government spending from the exchequer and is likely to impact inflation.

Modi called for use of sprinkler and drip irrigation, latest farming techniques, solar pumps and solar panels in their farms. He also emphasised on value addition of crops, judicious use of farm waste, and up to 10% reduction in use of chemical fertilisers by 2022.

The MSP in 2018

Vishwa Mohan, MSP of 14 kharif crops hiked, millet growers to benefit, July 4, 2018: The Times of India

The Minimum Support Price for various cereals and pulses, as till 2017 and proposed for 2018-I
From: Vishwa Mohan, MSP of 14 kharif crops hiked, millet growers to benefit, July 4, 2018: The Times of India
The Minimum Support Price for various cereals and pulses, as till 2017 and proposed for 2018-II
From: Vishwa Mohan, MSP of 14 kharif crops hiked, millet growers to benefit, July 4, 2018: The Times of India


The Centre hiked the minimum support price (MSP) of 14 kharif (summer sown) crops for the 2018-19 marketing season, syncing it with BJP’s 2014 poll promise to provide farmers a profit margin of at least 50% over their cost of production for all the notified crops across the country.

Seven of these 14 crops have reported hikes of nearly 20% or more as compared to the MSP of these crops in 2017-18. The most popular kharif crop, paddy, has, however, got a hike of nearly 13% (from Rs 1,550 per quintal in 2017-18 to Rs 1,750 per quintal in 2018-19).

The new MSPs of these crops were approved by the Cabinet committee on economic affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday. Modi later called it a “historic increase” and tweeted that the government has fulfilled its promise of increasing the MSP to the tune of one and a half times of the cost of production.

The announcement comes against the backdrop of the political imperative to fulfil the commitment to improve the deal for farmers ahead of the crucial round of state elections and the 2019 battle for the control of the Lok Sabha.

Interestingly, less-water-consuming and climate-resilient millets (jowar, bajra and ragi) — recently notified by the government as “nutri-cereals” due to their very high nutritional value — got substantial hikes as compared to the water-guzzling paddy. As compared to the acreage of paddy (396 lakh hectares), the millets currently cover nearly 120 lakh hectares of land during kharif season — less than one-third of the acreage of paddy.

The move on millets may help the government politically in the three poll-bound states of Madhya Pradesh, Rajasthan and Chhattisgarh where water-stressed farmers invariably go for cultivation of coarse cereals, but would also be welcomed by those who have been calling for greater support for the producers of coarse grains citing their nutritional value as well as the fact that they are consumed by the “not-so-privileged”.

Analysis of new MSP shows that paddy farmers will get a return of 50% over the cost of production, but the ones who opt for bajra (pearl millet) will get nearly 97% returns and those who go for arhar (pulse) will get returns of over 65%.

The larger message of the new MSP regime is to encourage farmers to cultivate pulses, oilseeds and millets. Pulses and millets will ensure nutritional security while more oilseed production will help reduce the import bill.

Among nutri-cereals, the MSP of Bajra has been increased by Rs 525 per quintal, jowar (hybrid) by Rs 730 per quintal and ragi by Rs 997 per quintal in absolute terms as compared to the support price of 2017-18. However, the highest percentage increase in MSP over the previous year is seen by ragi (52.5%). As far as returns over the cost of production are concerned, bajra farmers will get the highest profit of 97%.

“This will increase the income of farmers and purchasing capacity, which will have an impact on wider economic activity,” Union home minister Rajnath Singh said.

Experts and farm activists, however, flagged the issue of poor procurement and inadequate cost of production formula.

“The much-hyped MSP increase is of little use for farmers unless supplemented with a robust procurement system. Such a system exists only for paddy at the moment and that too in selected states,” said Sudhir Panwar, former member of the UP planning commission.

Avik Saha, national convener of the Jai Kisan Andolan, said, “While the announcement sounds grand and farmer-friendly, let us not forget that announcing MSP and not doing anything to ensure that farmers get MSP has become a political tool.”

Both agriculture minister Radha Mohan Singh and food minister Ram Vilas Paswan, however, expressed their confidence on the procurement front.

Many farm activists expressed unhappiness over the formula to arrive at the cost of production. They said the government should have taken C2 (comprehensive cost including imputed rent on owned land and interest on value of owned capital assets) formula into account instead of the A2+FL formula.

The A2+FL includes all paid-out costs such as those incurred on account of hired human labour, bullock labour/machine labour, rent paid for land, expenses incurred on use of material inputs like seeds, fertilisers, irrigation charges, depreciation on implements, miscellaneous expenses, and imputed value of family labour.

2018: The MSP approved by the govt.

Vishwa Mohan, MSP of 14 kharif crops hiked, millet growers to benefit, July 5, 2018: The Times of India

The ‘cost’ of various kharif crops, and the profit assured by the minimum support price regime of 2018
From: Vishwa Mohan, MSP of 14 kharif crops hiked, millet growers to benefit, July 5, 2018: The Times of India

The Centre hiked the minimum support price (MSP) of 14 kharif (summer sown) crops for the 2018-19 marketing season on Wednesday, syncing it with BJP’s 2014 poll promise to provide farmers a profit margin of at least 50% over their cost of production for all the notified crops across the country.

Seven of these 14 crops have reported hikes of nearly 20% or more, compared with the MSP of these crops in 2017-18. The most popular kharif crop, paddy, has, however, got a hike of nearly 13% (from Rs 1,550 per quintal in 2017-18 to Rs 1,750 per quintal in 2018-19).

The new MSPs were approved by the Cabinet committee on economic affairs, chaired by Prime Minister Narendra Modi, on Wednesday. Modi later called it a “historic increase” and tweeted that the government has fulfilled its promise of increasing the MSP to the tune of one-and-a-half times of the cost of production.


Bajra farmers to get 97% returns over input cost

The announcement, which was made by home minister Rajnath Singh, comes against the backdrop of the political imperative to fulfil the commitment to improve the deal for farmers ahead of the crucial round of state elections and the 2019 battle for the control of the Lok Sabha.

Interestingly, less-waterconsuming and climate-resilient millets (jowar, bajra and ragi) — recently notified by the government as “nutri-cereals” due to their very high nutritional value — got substantial hikes as compared to the water-guzzling paddy. As compared to the acreage of paddy (396 lakh hectares), the millets currently cover nearly 120 lakh hectares of land during kharif season — less than one-third of the acreage of paddy.

The move on millets may help the government politically in the three poll-bound states of Madhya Pradesh, Rajasthan and Chhattisgarh where water-stressed farmers invariably go for cultivation of coarse cereals, but would also be welcomed by those who have been calling for greater support for the producers of coarse grains citing their nutritional value as well as the fact that they are consumed by the “notso-privileged”. Analysis of new MSP shows that paddy farmers will get a return of 50% over the cost of production, but the ones who opt for bajra (pearl millet) will get nearly 97% returns and those who go for arhar (pulse) will get returns of over 65%.

The larger message of the new MSP regime is to encourage farmers to cultivate pulses, oilseeds and millets. Pulses and millets will ensure nutritional security while more oilseed production will help reduce the import bill.

Among nutri-cereals, the MSP of Bajra has been increased by Rs 525 per quintal, jowar (hybrid) by Rs 730 per quintal and ragi by Rs 997 per quintal in absolute terms as compared to the support price of 2017-18.

Rabi

Vishwa Mohan & Dipak Dash, MSP for rabi crops hiked after kisan fury, October 4, 2018: The Times of India

The MSP for rabi crops in 2017-18 vis-à-vis the MSP in 2018- 19
From: Vishwa Mohan & Dipak Dash, MSP for rabi crops hiked after kisan fury, October 4, 2018: The Times of India

A day after facing intense farmers’ protests over multiple issues at Delhi-Uttar Pradesh border, the Centre hiked the minimum support price (MSP) of all six rabi (winter sown) crops. The move will ensure minimum 50% return to farmers over cost of production of all notified crops.

The rabi crops, covered under the hike, include wheat, barley, gram, lentil (Masur), mustard and rapeseed and safflower. The MSP of 14 kharif (summer sown) crops had been increased in July for the marketing season which began this month.

“The MSP hike of both kharif and rabi crops this year will give additional return of Rs 62,635 crore to the farmers as now all the notified crops will fetch them minimum 50% return over cost of production,” said Union agriculture minister Radha Mohan Singh.

Officials in the agriculture ministry said the move of MSP hike had nothing to do with the farmers’ protests. “The matter was scheduled in advance for approval by the Cabinet on Wednesday. Since the government in its budget promised return of minimum 50% to farmers over their cost of production of all notified crops, the hike for rabi crops has been in the pipeline in tune with the increase in support price of kharif crops,” said an official.

An analysis of cost of production of rabi crops shows that the farmers will get maximum return of 112.5% if they opt for cultivating wheat followed by 89.9% for mustard and rapeseed, 76.7% for lentil, 75.2% for gram, 67.4% for barley and 50.1% for safflower.

As against the cost of production of Rs 866 per quintal for wheat, the government fixed its new MSP at Rs 1,840 per quintal — return of 112.5% over cost. Similarly, the new support price of rapeseed and mustard will be Rs 4,200 per quintal as against cost of production of Rs 2,212 per quintal; Rs 4,475 per quintal against cost of Rs 2,532 per quintal for lentil; Rs 4,620 per quintal against cost of Rs 2,637 per quintal for gram; Rs 1,440 per quintal against cost of Rs 860 per quintal for barley and Rs 4,945 per quintal against cost of Rs 3,294 per quintal for safflower.

Except for safflower, all other rabi crops had provided more than 50% return to farmers even last year.

Crops that were the biggest and smallest gainers

Coarse grains get farmers good returns, November 17, 2018: The Times of India

The Minimum Support Price for crops in 2018: The crops that were the biggest and smallest gainers
From: Coarse grains get farmers good returns, November 17, 2018: The Times of India


Earlier in 2018, FM Arun Jaitley had announced that the government would increase minimum support price for agricultural products this kharif season to ensure that farmers get at least 50% higher returns than the cost of production. Coarse grains, this year, have seen the highest jump in returns and grains like ragi, sunflower seeds, jowar and bajra have grown fastest. The states that have benefited from this the most are Rajasthan, Maharashtra, Karnataka which have the highest acreage--186.8 lakh hectares--growing coarse grains.

2019

Soya bean, water-efficient crops get bigger MSP hikes

Vishwa Mohan, July 4, 2019: The Times of India

Hike in MSPs of Kharif (Summer-sown) crops, 2018>19
From: Vishwa Mohan, July 4, 2019: The Times of India

Syncing its efforts to promote ‘nutri-cereals’ with the support price mechanism, the Centre increased minimum support price (MSP) of all 14 Kharif (summer sown) crops with less water consuming and climate resilient millets (Ragi and Jowar) getting bigger hike than water-guzzling paddy.

While the MSP of common variety of paddy got a hike of 3.7% (from Rs 1,750 per quintal in 2018-19 to Rs 1,815 per quintal in 2019-20), the support price of Ragi got raised 8.7% and the popular variety of hybrid Jowar by 4.9%.

In percentage terms, the MSP of key oilseed, Soya bean (yellow), got the highest increase (over 9%). The move may spur farmers to opt for this crop which may, in turn, reduce India’s import of edible oil. The government had notified millets (Jowar, Bajra and Ragi) as ‘nutri-cereals’ due to their high nutritional value early last year. Analysis of the new MSPs, approved by the cabinet on Wednesday, shows that farmers opting for Bajra will get highest return (84%) over their cost of production which was calculated on the same basis as last year before announcing a bigger hike to ensure minimum 50% profit for farmers. Besides Bajra, farmers opting for pulses like tur (arhar) and urad will get return of 60% and 64%, respectively, over their cost of production — a move which may encourage farmers to opt for pulses. The government invariably announces new MSP at the beginning of the sowing season as any hike is viewed as a signal to farmers. Announcing the new support price, agriculture minister Narendra Singh Tomar said the Centre had increased the MSP of kharif crops for 2019-20 in line with the principle of fixing MSPs at a level which is at least 1.5 times the cost of production, which was announced last year.

Though the MSP mechanism provides a price guarantee to farmers for their produce, procurement of farm produce at such price has always been a problem. In 2018, the government had come out with a new procurement mechanism (PM-AASHA) which resulted in relatively higher procurement during 2018-19 as compared to previous years.

“The central government should also ensure that procurement agencies have sufficient funds so that procurement is smooth and without the usual obstacles that farmers have to face like limit on quantity, delay in payment etc,” Swaraj India president Yogendra Yadav said.


India’s sugarcane subsidies are 1,000% of permissible limits: Australia

Australia drags India to WTO on sugar subsidies, November 17, 2018: The Times of India

2014-18: sugar production and the retail sugar price in India
From: Australia drags India to WTO on sugar subsidies, November 17, 2018: The Times of India


India’s annual subsidies to sugarcane producers have breached the allowed limits by 10-fold in the past six years, Australia told the World Trade Organization (WTO) in a document published by the world body. India’s support for producers is supposed to be capped at 10% of the value of production, but it had paid between 77.1% and 99.8% since 2011, with payments between $9.3 billion and $11.8 billion, Australia said.

The Australian challenge to India follows a US call for transparency at WTO, which President Donald Trump has threatened to quit if it does not “shape up”. Australia said India had not reported any subsidies for sugarcane or its derived products since 1995-96, when WTO was created, but evidence Australia had collected showed the actual payments were “vastly in excess of the limits”.

Australia said it was ready to discuss its findings with India and other WTO members, as well as the impact of the payments on global markets. “As the world’s second largest sugar producer and fourth largest exporter, dynamics in India's sugar market have significant implications for both prices and trade in the global market,” it said.

Government officials said India’s production subsidies to cane growers and some internal freight incentives do not violate WTO rules. Although Australia’s analysis looked at the national picture, state-level payments made the breach even bigger, it said. Major sugar producing states of UP, Maharashtra and Karnataka had state-advised prices above the national minimum, adding a further Rs 12250 crore in 2016-17 alone, Australia said. Washington has demanded transparencyfrom WTO’s 164 members, which are obliged to promptly report subsidies and other trade-related policies, to stop them hiding illicit practices or breaches of the rules.

The US has published “counter-notifications” on behalf of China, India and Vietnam to highlight what it says are failures to report honestly at WTO, and it has urged others to do the same.

MSP issues, as in 2020

December 2, 2020: The Times of India

Here’s why farmers fear states may junk MSP system under new laws

What is Minimum Support Price (MSP)?

A stable price environment is considered important to boost agricultural production. To bring that about, a central government body, Commission for Agricultural Costs & Prices (CACP), recommends MSP for 23 commodities. MSP is decided on the basis of seven criteria, of which cost of production is the most important. MSP is a part of the package to ensure food security and keep adequate food stocks in the public distribution system. After harvest, the Centre’s Food Corporation of India (FCI) procures commodities at MSP for use in the PDS.

In practice, MSP and procurement are effective for only two commodities, paddy and wheat.

Do all farmers get to sell at MSP?

No. Barely 12% of paddy growers, for example, benefit from procurement at MSP. This is because the effort put in by state governments influences where the grain is procured. The last mile aggregation is often done by state governments. Where they have been successful, the farmers benefit more. But the bill for the procurement is picked up by the Centre.

In Punjab, more than 95% of paddy growers benefit from MSP, whereas in UP only 3.6% of farmers benefit.

What are Agricultural Produce Marketing Committees (APMCs)?

They are physical markets regulated by respective state governments under the APMC Act. These legislations are not uniform across states. The Centre told the Lok Sabha in March 2017 that India has 6,630 APMCs. On an average, one APMC serves a geographical area of 496 sq km. Typically, it’s only stocks brought to APMCs and other designated purchase centres that are procured at MSP.

Does MSP make a difference to the farmer?

In the case of paddy, the average market price of paddy remained below MSP for the last five seasons. In the case of wheat, there was a lot more convergence of market price and MSP. CACP data however shows that where MSP works, like Punjab, market price is usually in line with it. Where procurement at MSP is limited, like UP and West Bengal, the market price on most days is below MSP. Where the procurement system works well, it seems to favour all farmers as the market price and MSP largely converge.

What are the new central farm laws?

It’s a package which dilutes essential commodities regulations, helps contract farming and provides for setting up new agricultural markets under central legislation as competition to APMCs.

The last part, which goes under the name Farmers’ Produce Trade and Commerce (Promotion & Facilitation) Act, is the one that has triggered anxiety. It creates an entirely new market space with practically no entry barriers for traders. But more importantly, it does not provide for taxes or levies on transactions.

Why shouldn’t farmers welcome competition?

To go back to the MSP system, it works well where states have made the effort. They usually levy taxes on the procurement that may be used to provide infrastructure. Punjab and Haryana, for example, levy a standalone rural development fee of 3% and 2% respectively. The fear comes from the possibility that if there are two markets buying the same commodities but only one of them levies a tax, trade will inevitably shift to the one without a tax.

The fear appears to be that states without enough tax revenue or resources may be disinclined to keep the existing MSP system going. For other products such as fruits and vegetables, most states had earlier removed the legal monopoly APMCs originally had. By 2019, 17 states had removed fruits and vegetables’ monopoly from APMCs and 19 had provisioned contract farming into their respective APMC Acts.

If MSPs have led to environmental damage in Punjab and Haryana and pushed down water tables, why don’t farmers switch to other crops?

The collateral damage of the current system is widely acknowledged, including by the farmers. The reluctance to shift out to a less resource intensive cereal like maize is because the prices are not remunerative. CACP admits farmers in Punjab and Haryana don’t have an incentive to switch.

The lure of the current MSP system for farmers is best brought out by the trends in Madhya Pradesh, the emerging star in the procurement system. In MP, the state government carries out procurement of wheat and paddy. This year, MP surpassed Punjab in wheat procurement, topping the list. More importantly, in just two years, wheat procurement at MSP in the state has increased from 46% of total production to 70% of production.

Other states have joined the bandwagon. In 2018-19, 9.7 million farmers benefitted from paddy procurement at MSP, an increase of 34.2% in a year. Most of the new beneficiaries were from states such as Chhattisgarh, Telangana, UP and West Bengal.

The govt’s expectations from the 3 new laws

The govt’s expectations from the 3 new farm laws of 2020
From: December 9, 2020: The Times of India

See graphic:

The govt’s expectations from the 3 new farm laws of 2020

THE POSITION IN INDIVIDUAL STATES

Bihar, 1998-2017: harvest prices vis-à-vis MSP

Atul Thakur, January 3, 2021: The Times of India

Harvest prices vis-à-vis MSP in Bihar, 1998-2017
From: Atul Thakur, January 3, 2021: The Times of India

Bihar’s farmers got the ‘freedom of choices’ in selling their produce 14 years ago with the scrapping of the APMC (agricultural produce marketing committee) Act in the state in 2006, but that has not yielded better prices for them, an analysis of price trends before and after the scrapping of the Act shows. The gap between farm harvest prices and MSP for three major crops — paddy, wheat and maize — has either widened or remained at the same level.

What’s more, it appears that low harvest prices have caused agricultural wages in Bihar to remain suppressed as compared to Punjab and Haryana and resulted in labour migration from the state.

The analysis of farm harvest prices and MSP for wheat in Bihar from 1998-99 to 2016-17 shows that for nine harvest seasons from 1998-99 to 2006-07, the harvest price remained above MSP in three, from 90% to 100% of MSP in three, and below 90% of MSP in three. During the same period, the prices in Punjab remained above MSP in three seasons and 90% or more of MSP in the remaining six seasons. In Haryana, the prices remained above MSP in five seasons and 90% or more of MSP in the remaining four.

Farm harvest prices collated by the agriculture ministry are averages of wholesale prices at which the farmer sells to the trader at the village site.

In the ten marketing seasons between 2007-08 and 2016-17 (the latest data available), not a single season saw prices in Bihar go beyond MSP. Prices remained 90% or more of MSP in four seasons and fell even below that level in the remaining six. In Punjab, on the other hand, there were two seasons when prices went beyond MSP, while only one saw them fall below 90% of MSP. Similarly, for seven seasons during this period, farmers in Haryana sold wheat at higher prices than MSP, while two seasons saw prices at between 90% and 100% of. Data was not available for one marketing season in Haryana.

The trends are in harvest prices for paddy. Paddy is cultivated in both autumn and winter in Bihar and the higher of the two prices is taken for this analysis. Haryana is excluded from this comparison because the cultivation of high-quality rice in the state has pushed farm harvest prices to a much higher level than the MSP.

In Bihar, in the nine harvest seasons between 1998-99 and 2016-17, only one saw prices nearly on a par with MSP (99.5% of MSP), for three prices were within 80-90% of MSP and for the remaining five farmers got 70-80% of MSP. In the ten seasons between 2007-08 and 2016-17 after APMC act was abolished, prices were within 70-80% of MSP in three and between 80-90% of MSP in the remaining six.

This raises questions about the claim that farmers are trapped in the MSP and APMC mandis system and opening up the market leads to corporates and private buyers giving higher prices. It also helps explain the farmer anguish over uncertainty of MSP and distrust of ‘free markets’.

In Punjab, for the 16 marketing seasons for which data is available since 1998-99, the paddy harvest price fell below MSP (96.6%) only once and remained higher than the MSP in the rest.

The patterns hold even in maize which unlike paddy and wheat doesn’t have government procurement and is sold mostly to private buyers. In the nine seasons before the abolition of the APMC act, there were two when maize was sold higher than MSP in Bihar. In the ten seasons after abolishing the mandis, again only two saw prices go beyond MSP. For the last four seasons, it has remained below 90% of MSP. In contrast, farmers in Punjab sold maize above MSP in 14 of the 18 seasons for which price data is available. Prices fell below MSP only four times but remained between 90% and 100% of it. In Haryana, prices never fell below MSP.

Data on average daily wages of male ploughman or field Labour (data for female labour was not available for all the years) between 2005-06 and 2017-18 shows that the lower price of output might have suppressed agricultural wages in Bihar. In 2006-07, the average wage in Bihar was 79% of wages in Punjab and 66.8% of wages in Haryana. Today, farm labour in Bihar earns 61% of what it could in Punjab and 50-60% of wages in Haryana, the latest figure being 59.1%.

2021-22 kharif MSPs

Vishwa Mohan, June 10, 2019: The Times of India

New MSP od kharif crops in 2021-22
From: Vishwa Mohan, June 10, 2019: The Times of India

With the Centre having emphasised its commitment to minimum support prices in the face of an agitation by farm unions against the central farm laws, the Union cabinet on Wednesday announced new support prices for 14 kharif (summer sown) crops with boosts to oilseeds, pulses and less waterconsuming nutri-cereals such as Bajra and Jowar.

The MSP of most popular crop paddy got a modest hike of Rs 72 per quintal for 2021-22 marketing season compared to the previous year while the highest absolute increase in MSP over the previous year was for sesamum, a nutritional oil seed, of Rs 452 per quintal, followed by tur and urad dals (Rs 300 per quintal each).

The expected returns to farmers over their cost of production will be highest in case of bajra (85%), followed by urad (65%) and tur (62%). For the rest of the crops, return to farmers over their cost of production is estimated to be at least 50%, as has been the policy of the government. The announcement comes at the heels of a Rs 76,000 crore procurement at the end of the Rabi season, which included a Rs 26,000 crore direct payment to Punjab farmers without being routed through arthiyas (market middlemen).

Asked about possibility of resuming talks with farm unions, mainly from Punjab, Haryana and west UP, who are demanding repeal of the farm laws and a legal guarantee to MSP, agriculture minister Narendra Tomar said the government is ready for discussion while adhering to the proposal of keeping implementation of laws on hold for 18 months and discussion on all the issues by a committee during the period to arrive at a solution.

The overall hike, approved by the Cabinet, is in sync with the government’s plan to encourage farmers to go for coarse cereals (nutri-cereals), oilseeds and pulses in a big way by moving away from water-guzzling paddy. “Concerted efforts were made over the last few years to realign the MSPs in favour of oilseeds, pulses and coarse cereals to encourage farmers shift to larger area under these crops and adopt best technologies and farm practices, to correct demand-supply imbalance,” said Tomar while announcing the Cabinet’s decision.

On the MSP hike, farm activists said it’s still not in tune with what the farmers have been demanding.

2021-22: Madhya Pradesh, Chhattisgarh, Rajasthan, Telangana

Farm Gate prices, % difference vs MSP, Madhya Pradesh, Chhattisgarh, Rajasthan and Telangana, 2021-22
From: [From the archives, Oct 16, 2023: The Times of India]

See graphic:

Farm Gate prices, % difference vs MSP, Madhya Pradesh, Chhattisgarh, Rajasthan and Telangana, 2021-22

2022-23, kharif

MSP for 2022-23, kharif
From: June 9, 2022: The Times of India

See graphic:

MSP for 2022-23, kharif

Number/ population of farmers

1951-2011

1951-2011: The falling number of cultivators and agricultural labour

See graphic, 1951-2011: The falling number of cultivators and agricultural labour.

2001> 2011: Farmer population falls by 9m

Absolute Number Of Cultivators Has Fallen First Time In Four Decades, Stands At 119m

By Rukmini Shrinivasan, The Times of India , 2013/05/01

There are now nearly 9 million fewer farmers than there were in 2001, the first time in four decades that the absolute number of cultivators has fallen.

Census data released on Tuesday shows that while the proportion of cultivators to the total workforce has been falling steadily, this is the first time since 1971 that the number of cultivators has fallen in absolute terms.

The office of the Registrar General of India on Tuesday released the primary abstract of census data, which gives the final numbers for India’s population, literacy rates and sex ratio, as also the number and types of workers. Workers are split into four industrial categories: cultivators, agricultural labour, household industry workers and others. Cultivators remain the second-largest group at 119 million after ‘others’ but are now less than a quarter of the total workforce, a decline of over 7 percentage points over 2001.

Over the last 50 years, the proportion of farmers to the total population has been in steady decline, but the fall has not been big enough for the absolute number to go down, given population increases. But in the last decade, the fall in farming has combined with the slowing rate of population growth to create a fall in the absolute numbers of farmers.

As in previous decades, the proportion of agricultural labour has increased; there are now 144 million agricultural labourers, 30% of the total worker population against 26.5% in 2001. “The rise in agricultural labour could be explained by the falling size of land holdings over time,” census commissioner C Chandramouli suggested.

Between cultivators and agricultural labour, there are now 263 million people working in agriculture, over half of all workers. Even as there has been a 3.6 percentage point decline in the proportion of people working in agriculture over the last decade, their absolute number has increased from 234 million a decade ago.

The census also confirms trends thrown up by the National Sample Survey Organization, which is the rise of casual and irregular work. The proportion of ‘main workers’ – those who have worked at least six of the last 12 months – has fallen by 2.6 percentage points, while the proportion of marginal workers – those who worked between 0 and six of the last 12 months – has risen. Within marginal workers, over 80% had worked for at least three months, Chandramouli said.

The census also confirms that female participation in the workforce has fallen slightly while it has risen for men. Delhi, Punjab and Chandigarh have India’s lowest female workforce participation rates, Delhi being the nation’s lowest.

1987-2019

Ambika Pandit, April 8, 2021: The Times of India

The Number of workers in agriculture, 1987-2019
From: Ambika Pandit, April 8, 2021: The Times of India


In a reflection of the changing socio-economic dynamics, the report on “Women and Men In India 2020” shows that while share of male and female workers in agriculture has shown a steady decline from 1987-88 till 2018-19, there is an increasing trend for both in trade, hotel and restaurant sectors.

The report released by the ministry of statistics and programme implementation draws upon available nationally representative data sources to give an insight into the gender dynamics and shifts across sectors ranging from employment, education, health and decision-making.


GENDER GAPS

59% of female, 57% of male workers self-employed in rural areas: Survey

The report also dedicates a chapter to the impediments in the way of empowerment.

In the chapter on education, data from NSS 75th round (2017-18) shows that among ever enrolled persons in the age group 3-35 years, 30.2% of females were not pursuing education due to domestic activities. In case of men, 36.9% of ever enrolled males in the 3- 35 years’ age group were not attending education due to engagement in economic activities.

Among the never enrolled persons of 3-35 years age group, 13.6% females and 14.9% males were never enrolled in education due to financial constraints, whereas 11.7% females and 1.5% males were never enrolled due to their engagement in domestic activities.

As far as employment goes, in the chapter on employment a data sheet on the broad-based industry-wise classification of workers presents data from NSS 43rd round in 1987-88 to Periodic Labour Force Participation 2018-19 to indicate the trends.

In agriculture in rural India, it turns out that in 1987-88 share of women workers was 84.7% which as per PLF survey 2018-19 is 73.2%. The share of male workers in agriculture was 74.5% in 1987-88 and was recorded at 55% in 2018-19.

On the other hand, the percentage of men in trade, hotels and restaurants grew from 5.1% in 1987-88 to 9.2% in rural areas in 2018-19. In urban the percentage rose from 21.5% to 24.5%. In case of women workers too there is an increase from 2.1% to 4% in rural and 9.8% to 13% in urban areas.

The labour force survey 2018-19 data highlight that on the whole results indicate that in the rural sector, the workerpopulation ratio (WPR) was 19.0 for females and 52.1 for males. In urban sector, the ratio is 14.5 for females and 52.7 for males. As per PLF survey (2018-19), 59.6% female and 57.4% male workers were selfemployed in rural areas.

Power supply to agriculture

2019, Apr-Jun

2019, Apr-Jun: The number of hours per day that Indian states provided uninterrupted power supply to agriculture
From: August 2, 2019: The Times of India


See graphic, ‘2019, Apr-Jun: The number of hours per day that Indian states provided uninterrupted power supply to agriculture ’

Subsidies

India and the world: 2019

Farm Subsidies in India and the world: 2019
From: March 25, 2021: The Times of India


See graphic:

Farm Subsidies in India and the world: 2019

See also

Agriculture: India

Agriculture: Indian government data

Agriculture in India: 1911

Farmers' agitation, 2020-21: India

Farmers, cultivators and their issues: India including Farm loans

Farmer suicides: India

Foodgrains and their management: India

Insurance (general): India

Monsoons: India

Kharif crops: India

Sugar, sugarcane: India

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