The document discusses ways to increase the income of small farmers in India. It notes that over 263 million Indians are farmers and 430 million depend on farming for their livelihood. However, the majority (69%) of farmers have less than 1 hectare of land, and their incomes are very low - between Rs. 8,000-50,000 per year. It then examines two ways for farmers to increase their income: 1) growing more crops on their existing land and 2) getting a better price for their crops. Under growing more, it discusses improving irrigation through watershed development, irrigation projects, groundwater tapping, and other methods. It also addresses increasing crop yields through better seeds, fertilizers, and techniques. However,

1. How can the SMALL
Farmer’s INCOME
be increased?

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. 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. 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. ‘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. 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. 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. 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. !
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. !
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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 !
http://www.indiawaterportal.org/articles/groundwater-commons-demonstrated-mahbubnagar-telangana

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. 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. 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. 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. 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. 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. 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. ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !
! 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. 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. 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. 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. 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. 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. 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: http://www.livemint.com/Politics/
LGhKIt4BVBcZn4Ui6RYgQI/Inflation-in-prices-
of-pulses-sharpest-in-a-decade-Crisil.html

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: http://www.livemint.com/Politics/
LGhKIt4BVBcZn4Ui6RYgQI/Inflation-in-prices-
of-pulses-sharpest-in-a-decade-Crisil.html

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. 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. 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. 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. How will you sharply
ramp up the delivery of
basic government services
like health and !
education?
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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?