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How can the small farmer's income in India be increased?


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40 simple slides that tell you how the income of a small farmer can be increased.

Published in: News & Politics
  • Good sir, I am a farmer growing 40000 trees without water. While interacting with other farmers, they had been saying tree felling is a cumbersome process. True I realise now. I FEEL, in a way FOREST department is root cause for water scarcity. If tree growing is facilitated with a Timber Development Board, I thing many big farmers, absent landlord farmers will prefer to grow trees, which will reduce excessive ground water extraction. Representing GOI, Let's hope the best.
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  • Short Answers yes and yes. For our other info capsules we have done translations and would do so for this one too. We are very happy to do a particular language before others if there is demand.
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  • Yogesh! Are all your slides under creative commons? Can these be adapted for non english speaking users?
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How can the small farmer's income in India be increased?

  1. 1. How can the SMALL Farmer’s INCOME be increased?
  2. 2. Why care about Farmers? If so many Indians do not have basic financial security,! India cannot be considered a prosperous country. ! If that is not reason enough … 263! million Indians are farmers and! agricultural workers 430! million depend ! on farming Sources: 1. Agricultural Statistics at Glance, 2014, Directorate of Economics & Statistics, Ministry of Agriculture, Govt of India 2. Household size data from Census 2011, Govt of India Reason 1:
  3. 3. Why care about Farmers? Reason 2: Farmers are consumers and contribute to the growth of the economy.! ! ! ! ! ! ! ! Reason 3: Concerns of farmers impact politics in India … politics impact policies … which impact you even if you are not a farmer.
  4. 4. How many farmers are ‘Small’? 69% have less ! than 1 hectare 87% have less ! than 2 hectares Only Top 13% have more than 2 hectares ! (One Hectare = 100 m x 100 m | Typical Cricket Field = 1.25 hectare) 35% of farmers, have less ! than 0.4 hectare of land Source: Agricultural Statistics at Glance, 2014, Directorate of Economics & Statistics, Ministry of Agriculture, Govt of India
  5. 5. ‘Small’ translates into less Farmers with between than 1 - 2 hectares of land made Rs 50,000/year Farmers with less than 0.4 hectare of land made Rs 8,000/year To supplement this meagre income, the farmer rears cattle/sheep/ goats/poultry, etc and also has to work as a labourer under MNREGA or in cities - especially during non-farming months.! Yes, these are national averages so there is significant variation from region to region, and multiple natural factors impact an individual farmer’s income - but these numbers clearly indicate how alarmingly low a farmer’s income is. Source: 2013 NSSO data (NSS 70th Round)
  6. 6. Not only is the Income low but also it is risky! ! Some of the risks that a farmer faces are: Inadequate or untimely (early / late) rainfall Crops are prone to attack by pests Crops can also fail due to many other natural factors Crop prices can fall if there is a temporary glut when harvested Additional Worry: RISK
  7. 7. A farmer can grow his own food but requires cash for such basics as primary education and healthcare. Public education is inadequate and a farmer ! needs money for educating his children. ! ! ! ! Public healthcare services in India are unreliable and ! a medical emergency would push a farmer into debt.! ! ! ! Such is the tightrope walk of a small farmer’s life. Cash needed for Basics
  8. 8. So how can a farmer earn more? The 2 ways a farmer can earn more are: 1. GROWS ! MORE 2. GETS ! MORE Grows more crops on the same piece of land, while spending less Gets more money for ! what he grows Let us look at both
  9. 9. ! The single BIG help to Grow More is ! The Irrigation multiplier can be ! ! ! ! ! 4.5X in a season with irrigation! ! ! ! ! and 3.15X annually with irrigation 1. How to GROW MORE? + = SOURCE: India Infrastructure Report 2007, Rural Infrastructure, Oxford University Press. + =
  10. 10. ! With more ! ! ! ! ... a farmer gets better yield on his first crop, ! ! can grow a second and even a third crop. ! ! The second crop gives him a chance to take risks, and ! he could grow a crop which gets him a better price. 1. How to GROW MORE?
  11. 11. 1A GROW MORE. More Water The 4 methods for increasing Water availability Water Shed Development, Local for area water enhancement Large Irrigation Projects for Command Area Irrigation Tapping of Ground water Other methods such as! Lift Irrigation
  12. 12. 1A GROW MORE. More Water WHERE?! Dry and arid regions without irrigation ! canals, and with deep ground water! ! GOAL?! Decrease run off of rain water! Increase soil moisture levels ! Improve level of open wells and ground water! Year round availability of drinking water Water Shed Development! WHERE? Dry and arid regions without irrigation canals, and with deep ground water! ! ! ! GOAL?! • Decrease run off of rain water! • Increase soil moisture levels! • Improve level of open wells and ground water! • Year round availability of drinking water
  13. 13. 1A GROW MORE. More Water WHERE?! Dry and arid regions without irrigation ! canals, and with deep ground water! ! GOAL?! Decrease run off of rain water! Increase soil moisture levels ! Improve level of open wells and ground water! Year round availability of drinking water Water Shed Development! Ridge Area, with contour trenches and ! plantations to slow the flow of water Drainage Line Area, with loose boulder bunds and cement bunds Farm Area works including farm bunds and farm ponds
  14. 14. 1A GROW MORE. More Water 1. Costs and Benefits unevenly distributed! Example: Ridge area farmers have to give up part of their land, but biggest beneficiaries would be farmers in the valley. 2. Positioning of Bunds decides where moisture retention is maximum leading to local politics including caste / clan politics. 4. Water Shed development is a technical skill, which is in short supply 3. If more water makes some farmers switch to cash crops, then other farmers have less water Water Shed Development COMPLEXITIES
  15. 15. 1A GROW MORE. More Water A large network was created in the post independence decades, and dams and canals contributed greatly to India's green revolution and food security. But this method is untenable today because: Large Irrigation Projects COMPLEXITIES 1. Widespread opposition ! due to abysmal track record of Rehabilitation of displaced people 2. Costly maintenance becomes necessary on an ongoing basis 3. Corruption allegations in the past make it politically untenable to initiate in the present 4. Tail end deprivation as farmers closer to the dams use greater amounts leaving very little for downstream ?
  16. 16. Farmers may use more water than added by rainfall with pumps using free electricity, subsidised fuels. Ground water Tapping COMPLEXITIES Ground water collected over centuries and being replenished annually with rainfall but … 1A GROW MORE. More Water
  17. 17. Ground water Tapping COMPLEXITIES Less poor farmers often dig very deep borewells to tap out all available water, and even drinking water may dry out from the village's common open wells 1A GROW MORE. More Water
  18. 18. Overdependence:! More water can mean farmers switching to thirsty cash crops but this can make them even more vulnerable to sudden shortfalls. Need for Sustainability:! Increase in water supply can lead to a disproportionate increase in demand, and community institutions and organisation is needed to ensure sustainability. Legal Framework:! Even if Laws to curb ground water exploitation are in place - farmers seldom speak out as they see no evil in one of their own trying to improve his income. 1A GROW MORE. More Water More Water: COMPLEXITIES
  19. 19. 1A GROW MORE. More Water The Mehboobnagar Example! •Semi arid region of Telangana, with barely 600 mm / year of rainfall ! •Competitive extraction of water for water intensive crops worsened the already drought-like conditions
  20. 20. 1A GROW MORE. More Water The Mehboobnagar Example! In 2007, Watershed Support Services and Activities Network (WASSAN), a Hyderabad-based NGO, collectivised groundwater to protect rainfed crops. • Owners pooled bore wells to provide critical irrigation to an entire block of 50 - 100 acres. First priority was survival of all crops, not thriving of few. Collectivisation model based on !•!Area based irrigation approach, rather than individual farmer approach ! !•!Groundwater as common property rather than groundwater as private property !
  21. 21. 1A GROW MORE. More Water The Mehboobnagar Example! Elements of the success story! • Water grid made for the village from existing tube wells! • Technology like sprinklers and commitment of villagers to grow non water guzzling crops such as groundnut and cowpea in winter reduced water losses! • Agreement on rules such as cost sharing and no digging of new wells ! • Measures like crop diversification, biomass enhancement and soil & moisture 
 conservation through addition of organics, mulching, bunding, and water harvesting are taken up.
  22. 22. 1A GROW MORE. More Water The Mehboobnagar Example! Impact: Doubling of Irrigated area ! • A large part of pooled area (40%) provided with protective irrigation ! • Increase in grain production by 240%, and 300% increase for fodder! • Additional gross returns per borewell of Rs. 7,812! • Nearly 25% of the total pumping hours were saved resulting in a saving of both groundwater and electricity ! • Water extraction was within the safe zone
  23. 23. 1A GROW MORE. More Water Measures that increase water availability ! can transform a farmer’s income and life! • If the measures are robust technologically, and! • If demand is managed (community does not increase the demand more than the additional supply) ! ! ! Crucial elements of this are! • Benefits for all and not just a few! • Effective local leadership
  24. 24. Techniques that allow farmers to grow more crop per acre. ! • Example: Sharply increased rice yields of more than 22 Tonnes / hectare using SRI techniques Higher yielding seeds and seeds that compensate for peculiar adverse conditions in a region, ! • Example: seeds that allow paddy to grow in brackish soil Better fertilizers, herbicides and pesticides that deal specifically with the nutrient deficiency in a farmer’s land and with herbs and pests affecting his crop. Technology such as drip irrigation that allows farmers to make the most of scarce ingredients such as water. 1 B GROW MORE. Better Crop Yield The second way to Grow More: Better Crop Yield ! The following are the methods to increase income by growing more crop per sowing! ! ! !
  25. 25. 1 B GROW MORE. Better Crop Yield CONSTRAINTS Knowledge Transfer: A farmer has little knowledge about which specific seeds, fertilizers and techniques are best for him. Often, Sellers are the only source of knowledge, which is not the best scenario. Agricultural universities and institutions need to ramp up and plug this gap more effectively. Relatively more effective performance of Agriculture Universities and institutions in some states shows that this can happen in India. Very limited risk taking ability: A small farmer has very limited ability to take risks. A decision to move away from traditional practices, if it fails, can literally be a life and death decision Availability of Credit:! Many of the techniques described above would require upfront investment and for that a farmer would require credit at affordable rates.
  26. 26. 1 B GROW MORE. Better Crop Yield 1. The costs of inputs could increase sharply. ! For example, there are many country-wide instances of fertilizers being sold at much higher costs during sowing season by unscrupulous retailers. ! Also, private companies can increase the price of their high yielding seeds almost negating the benefit of the higher yield.! 2. The farmer may also take the inputs on credit, sharply increasing his risk. COMPLEXITIES Essentially an individual farmer is unable to bargain. If just a few people in the chain providing better yield inputs want a ‘bit more’, the farmers gains can be wiped out or even reversed.
  27. 27. 1 B GROW MORE. Better Crop Yield A farmer’s yield can go up with better inputs. But …! • Many of these inputs are region specific, and a company spends significantly on research for this. So, it may wish to recoup that investment by pricing the input higher.! • However, the higher input price can actually lower the farmer’s net income and along with the cost of credit for buying inputs, this may cause the farmer a lot of distress.! • Ad-hoc regulation of input costs may lead to corruption! How can the government help?! • Enable a competitive landscape for research and production of inputs! • Create a transparent policy framework for regulation of critical inputs so that a seller does not abuse its monopoly powers. Better Crop Yield: The COST Conundrum
  28. 28. ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Consumers! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Retailer! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Wholesale Buyer!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Farmers Food grown by a farmer goes through numerous intermediaries before reaching the plate of a consumer. In such a chain, a farmer may get a very small portion of the final price. ! 2 GET MORE, The System through ! Commission ! Agent 1 through ! Commission ! Agent 2 Wholesale ! Mandi! Terminal ! Mandi! Sub Wholesaler Wholesale Buyer 2
  29. 29. Why do farmers not get most of price increases? Limited Bargaining Power! Even big farmers are small producers in a typical market, and wholesale buyers quote a take-it-or- leave-it price that they are forced to accept. APMC Cartelisation ! Instead of helping farmers, APMCs now foster oligopolies where agents charge 6% to 10% for less than 5 minute auctions Lack of Storage facilities! Since storage is not available, the farmer has to sell once the the crop is harvested - he does not have the option of waiting for a better price Limited Financial capacity! With his very limited income, the farmer also has to get cash in hand as soon as possible - this also means that he cannot wait for prices to improve 2 GET MORE, Why Not?
  30. 30. 2 GET MORE, Why Not? The Onion Example! • In 2013 the mark-up between wholesale price and retail price (i.e. the amount that went to the supply chain) of onions increased from Rs. 6 to Rs. 33! ! • This shows that when the retail price increases most of the benefit does not go to the farmer. Such trends seen in other vegetables too. • To be clear - the wholesale price may go up a little but the bulk of the increase in retail price goes to the supply chain • Worth noting that in the next year, there could be a price crash and the farmer would suffer SOURCE: Have Farmers Benefited from High Vegetable Prices in 2013? Kannan Kasturi, EPW Vol. 49, Issue No. 5, 01 Feb, 2014
  31. 31. 2 GET MORE, Why Not? One unintended consequence of MSP is that farmers prefer to grow wheat and rice and good quality of land has shifted to these crops, away from pulses, oilseeds and other crops. Why is MSP not a solution?! Minimum Support Price or MSP, is announced for 2 dozen crops as price surety for farmers - but it is effective only for wheat and paddy.! Neither the Government nor anyone else, is willing to actually buy other crops at MSP!
  32. 32. 2 GET MORE, Why Not? Why not grow more remunerative crops?! In principle a farmer can grow more remunerative crops like vegetables instead of wheat and paddy, but there are overwhelming constraints to doing so in practice. Similarly while selling, an area may be ideal for growing grapes but it would not be remunerative for a buyer to buy from a single farmer growing grapes on a 1 Hectare plot. A farmer cannot go at it alone, he would need to persuade a large group of farmers. Only then can they procure good quality seeds and fertilizers for the new crop at a competitive price as well as get the know-how to produce the new crop. ???
  33. 33. 2 GET MORE, How? Create competition for APMC ! Amend Act, as well as create maximum possible options for farmers. For example: direct sales through producer companies, cooperatives, contract farming, etc.! Strictly regulate the existing mandis and make sure that usurious charges are eliminated
  34. 34. The Grow Less, Get Less Example Tur Dal Debacle: What actually happened! • In May 2015, food prices were up by only 2.3% wholesale and 5% per retail, YoY.! • However some prices, especially of urad and tur, increased by 30% over the same period. Reports suggest that retail prices of urad and tur in select cities increased by more than 50%. ! • All this happened while India imported 4.6 million metric tonnes (MMT) of pulses in 2014-15, up by 27% over the previous year.! • Very few countries in the world grow pulses and when India imports significant quantities, the global price shoots up a lot! • At the same time WPI for rice was down by 1.8 per cent. India exported 12 MMT of rice worth $7.8 billion. SOURCE: LGhKIt4BVBcZn4Ui6RYgQI/Inflation-in-prices- of-pulses-sharpest-in-a-decade-Crisil.html
  35. 35. The Grow Less, Get Less Example Tur Dal Debacle: Why it happened! • The government did not announce a significant increase in MSP for pulses and even this announcement was very late. • Farmers – especially small farmers – find the procurement backing MSP in paddy comforting. They have no surety if the MSP in pulses would be valid for them as in most places there is no procurement backing the announced price. • In absence of government procurement, the high retail price would translate mainly to high margins for the supply chain. The wholesale prices fall when the crop is reaped and most farmers don’t have the physical and financial capability to store their crop. ! • Many farmers are not able to switch even if they wish to because they do not get good quality seeds in time. SOURCE: LGhKIt4BVBcZn4Ui6RYgQI/Inflation-in-prices- of-pulses-sharpest-in-a-decade-Crisil.html
  36. 36. 2 Buyers Monopoly! means that the farmer is unable to bargain in the market 3 Limited Infrastructure! for storage, reduces the farmers bargaining power further 4 Inability to shift! to remunerative crops due to lack of knowledge and since he cannot do it alone 5 Precarious Finances! prohibits risk taking as failure can literally be a life and death situation SUMMARY of Challenges 1 Water and Water Security ! There are possible solutions but technical skills and leadership to manage demand are needed at the level of each village.
  37. 37. What Farmers can do … Collectivisation: While it has its challenges, if farmers come together then this single most critical step would help them to …! • optimally tap common resources like water! • cooperate and acquire knowledge for growing better price yielding crops! • share infrastructure like storage! • negotiate for better crop prices with buyers! • negotiate for better input prices with sellers Collectivisation models include i) Cooperatives ii) Political Parties iii) Contract farming to private players iv) Producer companies (formed by the farmers themselves v) Lease in of land. There are case studies of success, as well as failure of all of the above options.
  38. 38. What Governments can do … 1. Provide infrastructure to villages. ! This would be general infrastructure like all weather roads as well as infrastructure specifically for storage of crops grown in that area. 2. Ensure that the abuse of power of Mandis is curtailed.! ! 3. Ensure that alternate marketing mechanisms provide real competition to Mandis. 4. Rejuvenate Agricultural Knowledge creation and transfer.! Agricultural universities and new institutions need to be measured on improvement in income of farmers. Implement other measures such as soil testing which help farmers determine appropriate inputs like fertilizer for his land/crops.
  39. 39. What Governments can do … 5. Land holdings have halved in last 2 decades, which has a detrimental impact on farming. More non farming jobs need to be created to reduce this pressure on land. 6. Provide affordable crop insurance with quick settlement so that a farmer is no longer one environmental disaster away from ruination. 7. Sharply ramp delivery of basic services like health and education, so that farmers are not crippled by debt for these.
  40. 40. How will you sharply ramp up the delivery of basic government services like health and ! education? w w w .A skH ow Creative Partner! MeriMaaCineMAA More?Pleasefollow AskHowIndia on What have you done to curtail the power of Mandis and to create alternative marketing mechanisms? IN CONCLUSION, ! Please ask your Political Representatives How can you sustainably provide more water to farmers? How will you ! monitor the effectiveness of ! i) government schemes like crop insurance ii) institutions like agriculture universities? How will you encourage farmer collectivisation?