India's agriculture growth not helping farmers, prices at 10-year low

India's agriculture growth is projected at 3.8 per cent during the 2018-19 financial year, almost 0.4 per cent more than last year. However, the rise isn't expected to fetch any remunerative return for farmers for the second year in a row. 

Data from Central Statistics Office (CSO) showed that Gross Value Added (GVA) for agriculture and allied activities in 2018-19 is expected to remain flat at 3.8 per cent, both at current and constant prices. This also suggests that farm product prices, which rose by just 1.1 per cent in 2017-18, would show a zero per cent rise this year. 

This, as many experts said, was the lowest in 10 years, reflecting the continued distress in rural areas. 

Agriculture prices have been constantly falling in the last five years and from a high of 8.88 per cent in 2014-15, they have slumped to 0% in 2018-19. (see chart) 

Infact, going into the crucial 2019 general elections, this could lead to big worries for the ruling BJP, particularly after it lost three state elections in 2018 largely on account of agrarian distress and falling prices of farm products. 

In the 2018-19 kharif season, prices of almost all farm goods, including horticulture crops and milk, have been far below their cost of production. Almost all kharif pulses are selling below the state-mandated minimum support price (MSP), despite government upping its procurement by several notches. 

In 2017-18, gross value added (GVA) at constant prices rose by 3.4 per cent, while that at current prices rose by 4.5 per cent, implying an inflation impact of 1.1 per cent. 

“Foodgrain during the kharif season in 2018-19 was 141.59 million tonnes as compared to 140.73 million tonnes in the same period in 2017-18. In case of livestock sector, estimates of production, mainly in the form of production targets for milk, egg, meat and wool have been used,” an official statement said. 

But the rise isn't benefitting farmers. “The most striking fact of GDP numbers is that agriculture deflator for FY19 at -0.1 per cent is lowest in 10 years, indicating continued distress (or low demand) in rural areas,” Soumya Kanti Ghosh, group chief economic advisor, Economic Research Department, at State Bank of India.