All pain, no gain for farmers

Devinder Sharma

Food & Agriculture Specialist

A FEW years after the World Trade Organisation (WTO) came into existence in 1995, I was invited by The Ecologist, London, to write an essay comparing the Indian farmer with a European one. The idea was to see how the Indian farmer, considering the relatively low cost of production in India, had gained economically after the opening up of international trade.

Increasing pace of urbanisation will lead to faster economic growth, keeping agriculture impoverished and forcing farmers to abandon farming and move out.

This was the general impression that mainline economists had created to justify the need to join the trade agreement, despite the growing farmers’ opposition, with one of them going to the extent of terming the immense opportunities that WTO Agreement on Agriculture will provide for farmers as a ‘big bang’ opening. With agricultural exports expected to boom, farm incomes were slated to increase thereby transforming the face of Indian agriculture. With no such evidence available, and not finding any merit in the correlation, I actually ended up comparing an Indian farmer with a European cow.

Almost 26 years after the WTO was launched, the latest report of the National Statistical Organisation (NSO) on agricultural households and incomes in rural India, released last week, paints a rather gloomy picture. This Situation Assessment Survey (SAS) was conducted in 2018-19. While the survey report hasn’t drawn any correlation between a farmer and a cow, what it has brought out is no less frightening — an average Indian farmer fares much worse than a labourer. If 75 years after Independence, farmers are earning more from wages than from crop cultivation, it only shows that the overarching economic design of keeping farm incomes deliberately low so as to accelerate rural to urban migration, because cities need cheap labour, is on track.

In 2012-13, when the last SAS was conducted, an agricultural household earned 48% of the income from crop cultivation; which declined to 38% under the 2018-19 survey. During the same period, the share of farm income from wages alone rose from 32% to 40%. Wages have begun to form a larger chunk of an average agricultural household income, a trend that will hopefully continue in the years to come. Calculated on the basis of ‘paid out expenses’ the total monthly income has been computed at Rs 10, 218 for an agricultural household. Compared to Rs 6,426 per month in 2012-13, and adjusted for inflation, it represents a nominal increase of 16%. Using the ‘paid out expenses and imputed expenses’ approach, average income per agricultural household has been shown as Rs 8,337 in 2018-19. For this, the imputed expenses mean the input coming from home, unpaid labour, own machinery, own seed etc.

Nevertheless, as far as crop cultivation is concerned, an average agricultural household earned Rs 3,798 in 2018-19. In real terms, when adjusted for inflation, the earnings from cultivation declined by 8.9% between 2012-13 and 2018-19. Further, broken on a per day basis, a newspaper has, in an interesting analysis, worked out the income from crop cultivation at Rs 27 per day. Even a MGNREGA worker earns more. It only establishes what I have been saying for long — farmers are in reality being penalised to grow food. And in any case, income from cultivation is certainly less than the earnings from an average lactating cow on a per day basis, given the farm gate price of approximately Rs 30 per litre.

The lesser the farm income, the more is the effort to draw credit, sometimes from multiple sources. The average farm debt increased to Rs 74,100 in 2018-19 from Rs 47,000 in 2012-13. About half of the agricultural households, 50.2% to be exact, carried outstanding loans. Strangely, Mizoram sees a whopping increase of 709% in outstanding farm loans, followed by Assam and Tripura in the Northeast.

More recently, Parliament was informed that by the end of March 2021, total outstanding farm loans totalled Rs 16.8-lakh crore, with Tamil Nadu topping the chart.

Considering that nearly 77% of the agricultural households are self-employed, what is worrying is that 70.8% of the landholdings are less than 1 hectare. Only 9.9% of the landholdings are between one to two hectares. An agricultural household has been defined as a household receiving more than Rs 4,000 as value of produce from agriculture and allied activities, with at least one member engaged primarily in farm activities in a year.

With only 0.2% of the rural households having more than 10 hectares of land, it belies the narrative being drummed up accusing the farm protests to be the work of big farmers.

Big or small, the denial of rightful income to farmers goes well with the policy thrust being exercised by successive governments over the past few decades to push people out of agriculture. Following the World Bank/IMF emphasis on shifting population from rural areas, also resonating with the dominant economic thinking that increasing urbanisation pace will lead to faster economic growth, keeping agriculture deliberately impoverished creates conditions for farmers to abandon farming and move out. I will not be surprised if the findings of the SAS 2018-19 are used by mainline economists to call for policy changes to hasten the process of urban migration.

This has to be reversed. While India’s foodgrain production has hit a record 308.65 million tonnes in 2020-21, with production increasing year after year, farm incomes have been on a downward spiral. Take a look at the Producer Subsidy Estimate prepared by the Organisation for Economic Cooperation and Development (OECD) for the 20-year period, from 2000-02. It tells us that India along with Vietnam and Argentina, are the three countries that are negatively taxing their farmers. In terms of percentage of gross farm receipts, India is taxing its farmers approximately to the tune of minus 5%.

Farmers are aware that the central laws the government is promising will further exacerbate the agrarian crisis. What they are asking for is a rethinking in farm income policies, whereby farming, without non-farm wages to supplement farm income, becomes an economically viable enterprise on its own.

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