Farm Incomes And Costs : Returns from Farming


- Devinder Sharma

Farmers are well known for producing food crops. But have you ever wondered what are the Indian food policy and agriculture planners known for ? What have they contributed to the wellbeing of farmers apart from words and faulty data ?


Farmer Incomes Commission
Forty years after the dawn of ‘Green Revolution’, Indian agriculture is once again at the crossroads. With agriculture becoming unremunerative over the years, and with input-output ratios faltering, the growth in agriculture has decelerated. When forests are destroyed or soil fertility is diminished or water table plummets to dangerously low levels, the rural poor often have no option but to migrate to towns and cities in search of jobs. Such inequitable development is leading to social disintegration.

For a country, which emerged from the throes of a ‘ship-to-mouth’ existence, to be subsequently able to build up foodgrain reserves, sustainable agriculture was the unmistaken path to equitable growth, development, and national food security. The green revolution technology, which ushered in ‘food self-sufficiency’, however came with enormous environmental costs. Monoculture, mechanical ploughing, soil erosion, the extension of crops into forests and the use and abuse of chemicals has contributed to the second-generation environmental impacts that the intensively farmed lands of the country are grappling with.

Green revolution has not only gone sour, it has collapsed. The unexplained number of massive farmer suicides is a testimony to the entire equation going wrong. However, the fundamental issue of destruction of sustainable livelihoods is not at all being addressed. Villages after villages around the country are turning into a cesspool of deprivation and mounting indebtedness arising from the blind adoption of intensive farming systems that the government promoted. You don’t come across villages, which are not faced with real crisis in sustainability -- yields declining drastically, soil gasping for breath, and farmers being pushed out of agriculture.

No wonder, villages are being put on sale in many parts of the country. It isn’t the spate of farmer’s suicides, on an upswing and still counting that makes the Prime Minister Manmohan Singh to admit the magnitude of agrarian crisis that prevails. The unforeseen slump in agriculture growth rate – slipping between 1 to 2 per cent – in turn affected the industrial growth rate, which restricted quantum jumps in the national economy is what makes for the PM’s concern.

In what appears to be a desperate move to prop up agriculture growth, the Prime Minister has time and again called for " reversing the declining trend in investment in agriculture "; and among the measures mentioned stepping up credit flow to farmers; strengthening future trading and contract farming and talked of creating a ‘single market’ for agricultural produce and to provide the latest technology to farmers.
Strikingly similar to the faulty Vision 2020 that the former Chief Minister of Andhra Pradesh, Mr Chandrababu Naidu, had unsuccessfully applied, and was therefore routed out in the last state elections, Prime Minister’s approach is also aimed at compounding the already existing crisis in farming.

There is therefore an urgent need to draw a national framework under which location-specific alterations and adaptations need to be tried. What is needed is a fresh approach that takes the ground realities into consideration before embarking upon any policy imperatives. Unfortunately, the Prime Minister is fostering on the nation a faulty farm strategy, which has already failed in the United States and Europe, resulting in the eviction of farmers over the years. In the US, only 7 lakh farmers now remain on the farm. In Europe, every minute one farmer quits agriculture.
The strategy for reviving agriculture in India therefore has to be different.
Citing the reasons of “price rise” and “globalisation and liberalisation”, the UPA government has spelled out terms of references for the sixth pay commission. Nearly 4.2 million central government employees, and 20 million state government employees, will receive a salary bonanza that will cost the state exchequer more than Rs 1,00,000-crore a year.
On the other hand, for the 110 million farming families all that is being promised is more credit -- doubling farm credit in the next three years. What remains unexplained is why a farmer is expected to live on credit while the rest of the society is blessed with a fixed monthly income?

No wonder, the suicide death dance continues. More than 1200 farmers in Vidharba region of Maharashtra have committed suicide (till Nov 30th) after the Prime Minister’s Rs 3,750-crore relief package was announced on July 1. In other parts of the country, the rural landscape remains equally depressing -- mounting rural indebtedness, unmanageable glut at the time of harvest, swelling rural to urban migration.
With agriculture turning into a highly losing proposition, more than 40 per cent of the farming population has expressed the desire to quit and migrate to the urban centres. Let us take a look at the latest report of the National Sample Survey Organisation (NSSO).

The average income of a farm household in 2003 stood at a paltry Rs 2,115. Compare it with the monthly salary of a peon in government service, an average monthly packet is at least five times more than what a farmer gets. While government employees look forward to a fixed monthly income packet every month and gets the benefit of an annual increment as an adjustment for general price rise, the farmer is left high and dry and at the mercy of the moneylender or the banker.

To make it still worse, farm income all over the world has remained static between 1980 and 2003. Adjusting for inflation, a recent UNCTAD report states that the prices of all major commodities showed a declining trend. The report stated that between 1997 and 2001, the combined price index for all commodities fell by 53 per cent in real terms, thereby “commodities lost more than half their purchasing power in terms of manufactured goods.” In India, the impact has been much more severe. Recurring farmer suicides is a reflection of that.

For nearly 60 per cent of the population, as much as 85 per cent of their earnings come from crop cultivation and wages earned by family members from employment generation programmes. In fact, what is more startling is that over the years the farm earnings of marginal farmers have dropped to less than that of the daily wage labourers in many parts of the country.

Uttar Pradesh farmers have the lowest income – Rs 1630 per month. Farmers in Madhya Pradesh, Rajasthan and Orissa were only a trifle better. The highest farm income was recorded in Jammu & Kashmir - – Rs 5,500 a month, followed closely by Punjab and Kerala. Subsequent studies by the Ministry of Agriculture point to declining farm incomes in the past five years. The sharp decline in farm incomes is happening at a time when urban areas are witnessing an upswing.

Farm income over the years has eroded. Let us accept that like everyone else, farmer too needs an adequate monthly take-home package that takes care of his family needs and leaves him with a little surplus to sow the next crop. While the government clerk and for that matter the government employees continue to get the benefit of unwarranted pay hikes, annual increments, medical allowances, paid holidays and of course financial loans at the drop of a hat, the farmer remains out of bound for all these bounties.
Surviving against all odds, and despite the low earnings, farmers have worked hard to ensure national food self-sufficiency.

A healthy and vibrant farm sector is to the benefit of the national economy. Probably the only way to ensure the economic viability of the farm sector is to either enlarge the scope of the 6th pay commission to include farmers or to set up a separate pay commission for the farmers. Based on the minimum land-holdings, and de-coupled from production, there is an immediate need to ensure that farmers get an assured income.

Like the minimum support price, which was applicable in reality to a few crops, the National Farmers Commission should be entrusted the task to work out a minimum farm income for the farmers. Irrespective of productivity, and depending upon the agro-climatic conditions in which a farm is situated, a formula that entails a ‘minimum take-home’ income for a farmer has to be worked out. Based on that, the government ensure that each farmer gets a monthly remunerative income.

For a country, which has been listed by the World Bank as the 12th richest nation in the world, with its GDP touching Rs 35,34,915-crore in 2005, this is the least that needs to attempted to provide the ailing farm sector a reprieve. For a country, which boasts of $ 160 billion of foreign reserves, wiping out every tear on the farm should be the top priority. There is no other way to pull agriculture from the prevailing crisis.




Transparency in food policy issues is of vital importance to the economies of South Asian countries and the well being of the population. What Indians eat cannot and must not be decided in closed secretive rooms or from other continents.

Indian farming, agriculture, food policy

    Indian Food Policy
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