The pluses and the potential pain points for farmers in the upcoming season

While the govt has moved fast on cash support and hike in fertiliser subsidy, the spike in rural Covid cases and tapering yields could hurt

At first glance, it appears that farmers will have little to worry about as India enters yet another rain-fed farming season beginning in June. Production is rising, yields have been improving over time, monsoon rainfall is projected to be normal this year, and prices of food commodities are rising in domestic and global markets. 

Yet, there are issues. In the first wave of the Covid-19 pandemic in India, agriculture was the only sector to show growth in the gross value added to the economy. But will the momentum sustain this time, given that the second wave is turning out to be more virulent than the first?

Data suggests the following four worrying factors:

• Productivity growth of Indian agriculture is tapering
• After a phenomenal growth in 2020, tractor sales are getting on to the slow track
• Share of rural Covid-19 cases is rising late into the second wave
• Government schemes may be reaching smaller share of beneficiaries due to lockdowns and restrictions

But at the same time, the government seems to be acting with a sense of urgency, as the following four developments suggest: 

• Close to 100 million farmers are set to receive their cash support for the April-July period in May/June itself
• A higher share of insured farmers are benefitting from the national insurance scheme
• Fertiliser subsidy has been hiked 140% for this kharif season
• Direct procurement of food is at a record high

The favourable background

India will produce 305 million tonnes of food grains this agricultural year, the government recently notified in a statement. This will be 2.7 per cent more than the previous years’ production of cereals and pulses, and 14 per cent more than the average production of last decade. 

At the same time, prices of agricultural commodities are on the rise in wholesale markets in India, as are they in the international markets. And then, official forecasts are projecting a normal monsoon this year as well, third time in a row. 

These developments triangulate into a good year for farmers, in terms of production and incomes. 

The worries 

Over the last two decades, productivity, or the yield in kilograms per hectare, has improved by 30 per cent in India. 

But if we look at the four 5-year periods—2001 to 2006, 2006 to 2011, 2011 to 2016, and 2016 to 2020—the growth in productivity is tapering. 

For cereals, productivity has grown 10-11 per cent every five years. But for pulses, yield growth is down from 14 per cent in previous 5-year period to 6 per cent in 2016-2020. 

Yields on kharif crops grew 6 per cent in the most recent five-year period, compared to 14 per cent and 10 per cent in the previous two. 

Rating agency Crisil estimates that tractor sales will grow 3-5 per cent this financial year, over a strong base of 27 per cent growth last year. 

“Growth in domestic tractor sales volume will be limited to 3-5 per cent this fiscal, given the strong second wave of Covid-19 infections and rising cases in hinterland, apart from high-base effect of last fiscal,” it said in a report.

Monthly tractor sales fell from 11.5 million units in October 2020, to 6.7 million units in April 2021, according to another Crisil report. 

The report also shows how the share of rural cases in overall confirmed cases rose in the later part of the first wave last year. The second wave also seems to be on a similar track.

Fewer beneficiaries, faster support

If we look at just two important schemes of the government in the farm sector, there seems to be a fall in the number of farmers getting the benefit. 

Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), the crop insurance scheme, the number of insured farmers has declined from 58 million in 2019-20 to 42 million in 2020-21. 

A major reason for this could be that data for all farmers has not been documented yet. But part reason could also be that monsoon rains in 2019 were 20 per cent higher than the normal. 

Under the Pradhan Mantri Kisan Samaan Nidhi (PM-KISAN), the direct cash support scheme introduced in 2019, the number of farmers in the beneficiary list has dropped from 101.6 million in the 7th instalment period, to 95.1 million in the 8th instalment period. 

But this could be due to technical issues in beneficiary identification, which might get resolved over time. 

What seems to be improving for these two schemes, is the promptness and better reach. 

The ratio of farmers benefited to farmers insured under PMFBY has improved from 27 per cent in 2016-17 to 44 per cent in 2019-20. And as for PM-KISAN, most of the beneficiaries may get their instalment for the period ending July, in May itself (though the Fund Transfer Orders have not yet been generated, according to the scheme website). 

The government also hiked the fertiliser subsidy to farmers for purchase of di-ammonium phosphate from Rs 500 per bag to Rs 1,200 per bag, a staggering 140 per cent more.