Progress in agriculture should be measured by the growth rate in the
net income of farm families... moving away from an at...
PEOPLE DEPENDING ON
AGRICULTURE IN INDIA
Indian Census 1951-2011
300

(People in Million) (% of workers)
54.6%
58.03%

250...
Farmers suicides in India

1
0
2

1
0
2

1
0
2

9
0
2

8
0
2

7
0
2

6
0
2

5
0
2

4
0
2

3
0
2

0
2

1
0
2

0
2

9
1

8
9...
THE CRISIS
 Increasing costs of cultivation
 Increasing living costs
 Decreasing subsidies
 Un remunerative prices
Income and Expenditure of farmers
Land holding Category
(acre)

Total
Income
(Rs/month)

Expenditure
(Rs/month)

Percent o...
FA RM INCOMES: CONTINUING
PROBLEM
Incomes of farmers have stagnated or declined; while living
costs have increased enormou...
WHERE DO THEY GO?
From 2004-05 to 2009-10, only 2 million additional employment was generated but
55 million were added to...
POOR EMPLOY MENT IN OTHER
SECTORS
WHY FOCUS ON INCOME SECURITY?
 Large section of population derives its livelihood from
agriculture and will continue to, ...
WHY FOCUS ON INCOME SECURITY?
National Policy for Farmers: “There is a need to focus
more on the economic well-being of th...
FA RMER INCOMES FOCUS IN OTHER
COUNTRIES

Across the world governments have adopted basket of measures to ensure
income se...
OUTLINE OF INCOME SECURITY
POLICY
Farmers Income Commission: Mandate is to ensure minimum
living income to all agricultura...
INCOME SECURITY POLICY (CONTD.)
Real cultivators and workers: System covers real cultivators
and agricultural workers – no...
FA RMERS INCOME
COMMISSION
Farmers Income Commission as a statutory
body which examines the real income of
farmers every y...
BA SKET OF MEA SURES FOR FA RMER
INCOMES

Pricing policy including MSPs should be strengthened.
Price Guarantee system (or...
Price Guarantee system
• A crop-wise Minimum Target Price (MTP) is determined,
which is remunerative to the farmer
• If av...
Food Crops for which MSP is declared
Wheat

Chana/Bengal Gram

Toria

Paddy

Urad/Black Gram

Copra

Jowar

Masur/Lentil

...
QUESTIONS TO BE DISCUSSED
How to identify real cultivators including tenant farmers
and sharecroppers
How the income is as...
FURTHER DETAILS
http://www.csa-india.org
http://www.kisanswaraj.in
http://www.agrariancrisis.in
ramoo.csa@gmail.com
090006...
BASKET OF
MEASURES FOR FARM
IN COME SECURITY

Farmers Income
Security
COMPA RISION OF COSTS A ND MSP
(A .P.)
Crop
 

Avg Market
Price

Paddy

Cost/
quintal Recommended
(AP govt
MSP
est.)
1341
...
Price Guarantee system
• A crop-wise Minimum Target Price (MTP) is determined,
which is remunerative to the farmer
• If av...
Food Crops for which MSP is declared
Wheat

Chana/Bengal Gram

Toria

Paddy

Urad/Black Gram

Copra

Jowar

Masur/Lentil

...
REDUCE INPUT COSTS – PROMOTE LOW-COST
MODELS
Sustainable models with low input costs should be
promoted which make best us...
Institutional & Infrastructure Support
• Farmer institutions for collectively negotiating the
markets, planning and streng...
REDUCE INPUT COSTS - RECA ST
SUBSIDIES

Recast chemical fertilizer subsidy

 Recast fertilizer subsidy to include farmer-...
DISASTER RELIEF AND
CROP INSURANCE
• Loss of crop and livestock due to natural
disasters is a major cause for
indebtedness...
COMPREHENSIVE
SOCIAL SECURITY
• A strong social security system should be in place
to provide health-care, pensions and ac...
QUESTIONS TO BE DISCUSSED
 How to identify real cultivators including tenant farmers
and sharecroppers

 How the income ...
PRICE GUA RA NTEE
(OR “DEFICIENCY PRICE PA YMENT”)

Farmers Income
Security
LIMITA TIONS OF MSP SYSTEM
 Despite longstanding demands of farmer unions & Farmers
Commission recommendations, MSPs rema...
Price Guarantee system
• A crop-wise Minimum Target Price (MTP) is determined,
which is remunerative to the farmer
• If av...
Food Crops for which MSP is declared
Wheat

Chana/Bengal Gram

Toria

Paddy

Urad/Black Gram

Copra

Jowar

Masur/Lentil

...
Loss to
farmers Loss to
(C2+10% farmers
basis) (C2 basis)

Crop

Product C2 (state
ion
govt
(tons) estimate)

Paddy

199.2...
Price Compensation: Operational Details
• For each cultivator, record which crop and how much
area, at start of season (cr...
Advantages of the system
• Introduces clear accountability with the government. For
example, if govt doesn’t effectively d...
Price Compensation: Operational Issues
• Timely payment should be made for each season
• Target price need not have standa...
Ensuring Income Security for Agriculture Households
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Ensuring Income Security for Agriculture Households

  1. 1. Progress in agriculture should be measured by the growth rate in the net income of farm families... moving away from an attitude which measures progress only in millions of tonnes of food-grains and other farm commodities. -National Policy for Farmers, approved by Government of India in 2007. Ensuring Income Security RA MA NJA NEYULU KIRA N VISSA for Agricultural Households
  2. 2. PEOPLE DEPENDING ON AGRICULTURE IN INDIA Indian Census 1951-2011 300 (People in Million) (% of workers) 54.6% 58.03% 250 58.99% 200 69.47% 150 69.43% 100 50 69.68% 31.5 16.69% 47.5 26.33% 27.3 19.5% 69.9 99.6 78.2 60.51% 74.6 55.5 22.69% 92.5 106.1 26.38% 144.3 29.96% 23.75% 110.7 127.31 118.7 49.93% 52.78% 43.35% 37.82% 35.24% 31.65% 24.64% 1951 0 1961 1971 1981 1991 2001 2011 Cultivators • • Agriculture labour People depending on agriculture has come down from 69.43% to 54.6% in last 60yrs For the first time the number of cultivators is lower than agriculture workers both in proportion and absolute numbers • Between 2001-2011 about 86.10 lakh people have left farming in India which is about 2358/day • In 2011 main cultivators (depending on farm income for more than 6 months) are only 95.8 m which is about 8% of Indian population) Source: Census of India 1951-2011 http://www.agrariancrisis.in
  3. 3. Farmers suicides in India 1 0 2 1 0 2 1 0 2 9 0 2 8 0 2 7 0 2 6 0 2 5 0 2 4 0 2 3 0 2 0 2 1 0 2 0 2 9 1 8 9 1 7 9 1 6 9 1 5 9 1 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 No. of suicides Total 2,84,694 in 18 years Source: NCRB 1995-2012 http://www.agrariancrisis.in
  4. 4. THE CRISIS  Increasing costs of cultivation  Increasing living costs  Decreasing subsidies  Un remunerative prices
  5. 5. Income and Expenditure of farmers Land holding Category (acre) Total Income (Rs/month) Expenditure (Rs/month) Percent of farmers <0.02 Landless 1380 2297 36 % 0.02 - 1.0 Sub marginal 1633 2390 1.0 - 2.5 Marginal 1809 2672 31 % 2.5 - 5.0 Small 2493 3148 17 % 5.0 - 10.0 Semi-medium 3589 3685 10 % 10.0 - 20.0 Medium 5681 4626 6% >20.0 Large 9667 6418 Total 2115 2770 Source: Arjun Sen Gupta Commission (NCEUS), 2007 All farmers
  6. 6. FA RM INCOMES: CONTINUING PROBLEM Incomes of farmers have stagnated or declined; while living costs have increased enormously Disparity between agricultural incomes and other sectors has widened; Rs. 5511 per month for average farmer but Rs. 10,658 is starting salary of Class IV rural employee; Incomes are precarious; Risk has increased Variation of incomes based on landholding class is stark; therefore equity issues need to be addressed W here do the farmers go? To other sectors?
  7. 7. WHERE DO THEY GO? From 2004-05 to 2009-10, only 2 million additional employment was generated but 55 million were added to working age population! 25.1 million people lost their self-employment Increase in the number of casual workers by 21.9 million, while growth in the number of regular workers nearly halved between 2004-05 and 2009-10, compared with the previous 5 year period. Sector-wise employment (millions) Sector 2004-05 2009-10 Difference Agriculture 258.93 243.21 -15.71 Manufacturing 55.77 48.54 -7.23 Services 112.81 112.33 -0.48 Non-Manufacturing (construction) 29.96 56.10 26.14 TOTAL 457.46 460.18 2.72
  8. 8. POOR EMPLOY MENT IN OTHER SECTORS
  9. 9. WHY FOCUS ON INCOME SECURITY?  Large section of population derives its livelihood from agriculture and will continue to, in foreseeable future. Non-agriculture employment generation has been poor.  With secure incomes, we will see better diversification of occupations, rather than distress migration.  Experience of other countries shows: unless growth model improves farm incomes, growth is not povertyreducing.  Since Food Security is a national priority, a minimum Income Security for food producers should also be.  Precarious nature of farm incomes needs to be directly addressed; a measure of stability and security is
  10. 10. WHY FOCUS ON INCOME SECURITY? National Policy for Farmers: “There is a need to focus more on the economic well-being of the farmers, rather than just on production... The aim of the Policy is, therefore, to stimulate attitudes and actions which should result in assessing agricultural progress in terms of improvement in the income of farm families, not only to meet their consumption requirements but also to enhance their capacity to invest in farm related activities.” Let us look at it in the framework of “Peasants’ Rights”. Even the UN is talking about it now.
  11. 11. FA RMER INCOMES FOCUS IN OTHER COUNTRIES Across the world governments have adopted basket of measures to ensure income security to farmers with twin objectives a.To ensure parity of incomes between agriculture sector/ farmers and other sectors/ non-farmers, and thereby ensure equality and justice in the society b.To ensure food production and food self sufficiency Some of the popular models are 1.Decoupled Income Support: Support for farmers that is not linked to (is decoupled from) prices or production. As WTO has brought in restrictions on trade distorting subsidies and Direct Income Support comes under the blue box subsidies. Some of the countries which have adopting this model are USA, China, Australia, Korea, Japan 2.Payments for Ecosystem Services/conservation subsidies: Payments made to farmers for maintaining the ecosystem, conservation of natural landscapes, environmental friendly production etc. e.g. USA, Switzerland, Korea, Japan, Malaysia 3.Payments for less favoured areas: like rainfed areas, hilly terrains etc. eg. Korea 4.Productivity bonuses and Price Compensations: Support to farmers beyond the market price. E.g Malaysia, USA, Japan, Korea, EU, USA, Switzerland
  12. 12. OUTLINE OF INCOME SECURITY POLICY Farmers Income Commission: Mandate is to ensure minimum living income to all agricultural families. Assesses real net incomes of farm families across India. Possibly develop a Farmers’ Income Index. Makes specific recommendations to achieve minimum income. Synergy among farmer support systems: Recommendations cover many income-enhancing measures (prices, insurance, credit, low-cost agriculture etc). Instead of working separately, they will be geared to meet the common mandate of farmer incomes Accountability: Places accountability on the government to ensure that all the thousands of crores spent in the name of farmers actually results in better incomes
  13. 13. INCOME SECURITY POLICY (CONTD.) Real cultivators and workers: System covers real cultivators and agricultural workers – not absentee landlords. A differentiated approach may be needed to assess incomes of different sections. Inbuilt Equity principle: Since per-family minimum income is assured, there is equity principle built into it. E. g . A 3-acre family might fall below income threshold but 10 acre farmer is not likely to. Most other support measures are proportional to acreage. Not a single ‘silver bullet’ solution: Should not be seen as a silver bullet to address all problems. Land rights, land reforms, rights over seeds, ecologically sustainable agriculture form other dimensions that should all be pursued. Income Security system should be designed to go hand in hand with those.
  14. 14. FA RMERS INCOME COMMISSION Farmers Income Commission as a statutory body which examines the real income of farmers every year across the states.  Make specific recommendations to ensure that agricultural families are assured a minimum income level  Based on shortfall over 3-year period, determines Farmers Income Guarantee payment to be paid to cultivators – possibly with slabs. This can be determined at aggregate level, based on an Income Index. This is periodically revised based on new data.
  15. 15. BA SKET OF MEA SURES FOR FA RMER INCOMES Pricing policy including MSPs should be strengthened. Price Guarantee system (or Deficiency Price Payments) should be used – applying to all 25 crops,independent of procurement Reduce Cost of Cultivation – promote low-cost methods Farmer collectives for production, marketing, processing – with farmers getting bigger share of value chain Access to timely credit at low interest Crop insurance & Disaster Compensation Producer Bonus for ecological farmers & rainfed agriculture
  16. 16. Price Guarantee system • A crop-wise Minimum Target Price (MTP) is determined, which is remunerative to the farmer • If average Farm Harvest Price is less than MTP, the difference should be paid to the cultivator • This provision is for all food crops in the MSP regime • Payment is calculated based on district-level or taluklevel averages of the FHP and yield • Should benefit actual cultivator, including tenants and sharecroppers
  17. 17. Food Crops for which MSP is declared Wheat Chana/Bengal Gram Toria Paddy Urad/Black Gram Copra Jowar Masur/Lentil Nigerseed Bajra Groundnut Sesame Maize Sunflower Barley Ragi Soyabean Safflower Tur/Red Gram Rapeseed Moong/Green Gram Mustard
  18. 18. QUESTIONS TO BE DISCUSSED How to identify real cultivators including tenant farmers and sharecroppers How the income is assessed. We have experience with situational assessment and different income studies. What should be the minimum income level Budgetary implications How to ensure that it doesn’t lead to control of agriculture goes to corporate agriculture and large farmers
  19. 19. FURTHER DETAILS http://www.csa-india.org http://www.kisanswaraj.in http://www.agrariancrisis.in ramoo.csa@gmail.com 09000699702 040-27017735 Centre for Sustainable Agriculture Alliance for Sustainable and Holistic Agriculture
  20. 20. BASKET OF MEASURES FOR FARM IN COME SECURITY Farmers Income Security
  21. 21. COMPA RISION OF COSTS A ND MSP (A .P.) Crop   Avg Market Price Paddy Cost/ quintal Recommended (AP govt MSP est.) 1341 1250 Jowar 1302 1500 1400 Maize 1229 1175 1244 Tur Dal 4044 4000 3826 Groundnut 3695 3700 4678 Sunflower 3706 3700 3650 Cotton 4239 3600 3884 Urad Dal 3696 4300 4103 Source: CACP Kharif Price Report,, 2012-13 1300
  22. 22. Price Guarantee system • A crop-wise Minimum Target Price (MTP) is determined, which is remunerative to the farmer • If average Farm Harvest Price is less than MTP, the difference should be paid to the cultivator • This provision is for all food crops in the MSP regime • Payment is calculated based on district-level or taluklevel averages of the FHP and yield • Should benefit actual cultivator, including tenants and sharecroppers
  23. 23. Food Crops for which MSP is declared Wheat Chana/Bengal Gram Toria Paddy Urad/Black Gram Copra Jowar Masur/Lentil Nigerseed Bajra Groundnut Sesame Maize Sunflower Barley Ragi Soyabean Safflower Tur/Red Gram Rapeseed Moong/Green Gram Mustard
  24. 24. REDUCE INPUT COSTS – PROMOTE LOW-COST MODELS Sustainable models with low input costs should be promoted which make best use of locally resources for seed, soil fertility and pest management and reduce the dependence on high-cost inputs These reduce the risk of losses for the farmer, especially suitable for small and marginal farmers to get out of debt and distress induced by high-input high-risk methods Shift from high-input model should be promoted by comprehensive programmatic approach by government with incentives and support systems
  25. 25. Institutional & Infrastructure Support • Farmer institutions for collectively negotiating the markets, planning and strengthening production systems • Systematic measures strengthening farmers' holding capacity and negotiating power with markets: • Godowns, cold storage at village and cluster-level • Processing units at cluster-level • Effective implementation of warehouse receipts • Reliable institutional credit to cover 80% of farm loans • Procurement directly from farmers at village level • Integrated support systems for livestock, cropping, dairy
  26. 26. REDUCE INPUT COSTS - RECA ST SUBSIDIES Recast chemical fertilizer subsidy  Recast fertilizer subsidy to include farmer-made organic inputs  Rs. 5000/ha as soil nutrient subsidy could be used for own inputs Labour subsidy  Subsidize Farm labor by for 50 days/ha at Rs. 120 per day (pegged to NREGS wages), for own or hired labour  This is in addition to the 100-day NREGS work guarantee  Completion of work to be certified by joint farmer-worker group  Payment to be made to workers using same NREGS mechanism  Workers can negotiate additional payment from farmer  Brings down costs of cultivation by Rs. 6000/ha Seed subsidy to include farmer’s own seed
  27. 27. DISASTER RELIEF AND CROP INSURANCE • Loss of crop and livestock due to natural disasters is a major cause for indebtedness and destitution • Timely and adequate compensation for crop loss (Rs.10,000 per acre) and livestock loss • Measures to protect crop and livestock during impending or ongoing disaster situation • Effective crop insurance which should be available for all farmers for all crops
  28. 28. COMPREHENSIVE SOCIAL SECURITY • A strong social security system should be in place to provide health-care, pensions and accident/life insurance for all agricultural workers and farmers • Education system and other rural amenities should be strengthened so that it is attractive for future generations to remain in the rural areas
  29. 29. QUESTIONS TO BE DISCUSSED  How to identify real cultivators including tenant farmers and sharecroppers  How the income is assessed. We have experience with situational assessment and different income studies.  What should be the minimum income level  Budgetary implications  How to ensure that it doesn’t lead to control of agriculture goes to corporate agriculture and large farmers
  30. 30. PRICE GUA RA NTEE (OR “DEFICIENCY PRICE PA YMENT”) Farmers Income Security
  31. 31. LIMITA TIONS OF MSP SYSTEM  Despite longstanding demands of farmer unions & Farmers Commission recommendations, MSPs remain inadequate  Paddy official C2 estimate in AP is Rs.1700. As per NFC , MSP should be Rs.2500 but is it realistic to expect?  Food inflation concerns dominate government decision; e . g . Mahendra Dev quotes analysis that higher MSPs adversely impacts poverty reduction (Parikh, 2003). (10% MSP increase leads to 0.33% GDP decline, 1.5% API increase, etc.)  MSP system mainly benefits farmers who sell major portion to the market and who can hold the stock  No accountability for govt to ensure market intervention
  32. 32. Price Guarantee system • A crop-wise Minimum Target Price (MTP) is determined, which is remunerative to the farmer • If average Farm Harvest Price is less than MTP, the difference should be paid to the cultivator • This provision is for all food crops in the MSP regime • Payment is calculated based on district-level or taluklevel averages of the FHP and yield • Should benefit actual cultivator, including tenants and sharecroppers
  33. 33. Food Crops for which MSP is declared Wheat Chana/Bengal Gram Toria Paddy Urad/Black Gram Copra Jowar Masur/Lentil Nigerseed Bajra Groundnut Sesame Maize Sunflower Barley Ragi Soyabean Safflower Tur/Red Gram Rapeseed Moong/Green Gram Mustard
  34. 34. Loss to farmers Loss to (C2+10% farmers basis) (C2 basis) Crop Product C2 (state ion govt (tons) estimate) Paddy 199.25 1341 1,250 1,300 9,923 2,441 Jowar 3.41 1302 1,500 1,400 132 8 Bajra 0.62 1338 1,175 955 46 22 Maize 36.28 1229 1,175 1,244 1,522 273 Urad 3.47 3696 4,300 4,104 350 Groundnut 8.81 3695 3,700 4,678 533 Soya 1.87 2057 2,200 2,932 Total (11 food crops) MSP (CACP) Avg Market Price Loss to farmers (C2 +50% basis) 20 571 17 - 13,078 2,866 (Rs. Cr) (Rs. Cr) 624 (Rs.Cr)
  35. 35. Price Compensation: Operational Details • For each cultivator, record which crop and how much area, at start of season (cross-checked during season) • Take Production and Yield numbers at district or Taluk level. (Already exists at district level) • Take Weighted average Farm Harvest Prices FHP (already maintained for each market in each district) • If FHP < MTP, calculate Price Compensation, PC = MTP - FHP for each crop for each district/taluk • Per-acre compensation = PC x Ave. Yield • Paid directly to the actual cultivator
  36. 36. Advantages of the system • Introduces clear accountability with the government. For example, if govt doesn’t effectively do market intervention, then they will have to pay the bill! • There is also incentive for government to ensure reduction in cost of cultivation, etc. • This will benefit farmer without directly impacting market price • It will also benefit small farmers who might not sell much in the market • In practice, in a given state in a given year, a few crops may get compensation, and it may vary from year to year
  37. 37. Price Compensation: Operational Issues • Timely payment should be made for each season • Target price need not have standard formula (C2+50%). • System should be in place for recording tenants and sharecroppers (eg. Loan Eligibility Card in AP) • Village level system for recording crop areas exists in principle. Needs improvements? • For multi-crop system, we can only record main crop • Area, Production, Yield data already maintained per district basis. Needs improvements? • Mode of payment – direct to cultivator, through village panchayat or post-office like NREGS cardholders
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