Doubling farmers' income: Key concerns

In recent years, agrarian crisis has been the focal theme in media discourse. The vagaries of the monsoon, low productivity and inefficient markets have been some of the factors for this trend. However, at times bumper crops also lead to agrarian distress due to fall of crops’ prices. Thus, the real challenge in the agricultural sector is the monetisation of the output so that the farmers receive the optimum price and higher gross income. Nevertheless what matters to the farmers is the income net of costs.

It was in February 2016 that the government announced its vision to double the farmers’ income within a time frame of seven years, 2015-16 to 2022-23. Pursuant to this announcement, the committee on Doubling Farmers’ Income (DFI) was constituted in April 2016 to identify the strategic vision to achieve this goal. 

The DFI committee has worked through multiple consultations with stakeholders across the country and has co-opted more than 100 resource persons to help it in drafting the report. These members have been drawn from the areas of research, academics, non-government organisations, farmers’ organisations, professional associations, trade, industry & commerce, consultancy bodies, policymakers at central and state levels and many more with various domain strengths. 

The term ‘farmer’ in the DFI committee framework corresponds to an agricultural household, having a total produce worth more than Rs 3,000 from some agricultural activity with reference period as 2012-13. The definition has been used in the “Situation Assessment Survey of Agricultural Households”, 70th Round of the National Sample Survey Organisation, Ministry of Statistics and Programme Implementation. This being the latest available survey on farmers’ income the data used in this study has been extracted from this source. 

In the Indian context, the agricultural households derive income from four sources, viz., cultivation, livestock, non-farm business, and wages and salaries. At the national level, the aggregate average net income of an agricultural household is estimated at Rs 74,108 at 2011-12 prices. Keeping 2015-16 as the base year for doubling farmers’ income, the agricultural household income works out to Rs 96,703 at base year (2015-16) prices. This includes Rs  58,246 from farming (cultivation and livestock) and Rs 38,457 from non-farming activities. 

The share of income from farming accounts for about three-fifths of the income with non-farm activities (business, wages and salaries) accounting for the remaining two-fifths. However, there is a large divergence in this number across states. It is higher than the national average in states where farming activities are well developed and are suitably linked to markets. The shares also differ across land sizes. While the large famers with land holdings (above 10 hectares) earn more than 90 per cent of their income from farm activities, the corresponding share is less than 50 per cent for marginal and small famers. 

The natural question that arises in the context of DFI is which income is targeted to be doubled? The DFI study attempts to set up targets for to doubling farmers’ net income from farming activities in real terms. A uniform doubling in every state/ Union Territory may not be feasible. 

Some of the less agriculturally advanced states are at a greater disadvantage with their average farming income being much below the national average. The growth targets for such states must be set up at rates which would more than double farmers’ income, so as to reduce inequalities in farming income distribution across states. 

Some of major sources of growth in income have been identified in a NITI Aayog paper by Ramesh Chand (2017). These include improvement in crop and livestock productivity, resource use efficiency, i.e. saving in cost of production, increase in cropping intensity, diversification towards high value crops, improvement in real prices received by farmers and shift from farm to non-farm occupations.

  

It may be noted, that various non-farm sectors encompassing industry and service sectors, and rural development sector are focused on generating additional job opportunities and improving salaries/wages. All sectors of the society, including the farmers, shall benefit from accelerated growth in the non-farm sector. 

The DFI report examines the aggregated growth rates that need to be registered at both national and state levels, besides disaggregating them across sectors. The analysis is based on growth in the real income of the farmers and not their nominal income. As noted earlier, about 60 per cent of farmers’ income originates from crops and livestock related activities. The growth targets worked out in the report aim at doubling this component of income such that the share of income from agriculture in total income increases to 70 per cent by 2022-23. Simultaneous actions would be required on many fronts. Some of these include efficient post-production logistics systems including markets, effective input management, requisite capital formation “in” and “for” agriculture, farm-linked manufacturing activities, farmers’ risk assessment and management, research & development and providing information and communications technology-enabled services, including Direct Benefit Transfers. 

The writers are Senior Fellows at NCAER, which is one of three knowledge partners with Doubling Famers’ Income committee