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.
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.
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.
THE CRISIS
 Increasing costs of cultivation
 Increasing living costs
 Decreasing subsidies
 Un remunerative prices

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.
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.
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.
POOR EMPLOY MENT IN OTHER
SECTORS

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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
BASKET OF
MEASURES FOR FARM
IN COME SECURITY
Farmers Income
Security

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.
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.
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.
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.
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.
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.
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.
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.
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.
PRICE GUA RA NTEE
(OR “DEFICIENCY PRICE PA YMENT”)
Farmers Income
Security

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.
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.
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.
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.
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.
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.
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