Farmers need assured price for sustenance

Though India is the second largest producer in the world of essential foods like wheat, rice, fruits, vegetables and crops like cotton and groundnut and the largest producer of milk, jute and pulses, the long strides taken by the farmers, however, have not translated into higher incomes. Growth, in this case, has not led to prosperity on the farm. The invisible hand that Adam Smith talked about has actually failed to provide living incomes for farmers, not only in India, but across the globe.

Inequality: Agriculture has been the mainstay of economy, but the lot of farmers has not improved accordingly. File photo

Devinder Sharma

Food & Agriculture specialist

We all know it by now. Agriculture was the saviour during the gloomy days of the pandemic. Not only that, an individual household got its regular supply of food during the lockdown, and those who could not afford were supplied with free rations, but agriculture also kept the wheels of economy moving. At a time when the economy had slipped by 23.9 per cent in the first quarter of the 2020 financial year, agriculture was the only bright spot, registering a gross value added (GVA) growth of 3.4 per cent.

All through the year, agriculture provided a solid foundation. Despite the Covid-19 disruptions, and at a time when all other sectors of the economy were struggling, desperately counting the emerging green shoots, the country achieved a record foodgrain production of 308.65 million tonnes. The bumper harvest reaped in 2020-21 was higher by 11.15 million tonnes over what was achieved in the previous year. In addition, the country also produced 329.9 million tonnes of fruits, vegetables and aromatic and plantation crops, including spices; around 204 million tonnes of milk, and 36.10 million tonnes of oilseeds.

Simply put, farmers produced economic wealth for the country. Not only during the pandemic, but what needs to be appreciated is that year after year, farmers have toiled hard to bring food to our table. From a stage when India was living in a ‘ship-to-mouth’ existence, and that was not too far distant in the mid-1960s, the role Indian farmers have played in turning the country self-sufficient in food is widely recognised. Agriculture has taken a quantum jump, increasing food production six times in seven decades, between 1950-51 and 2020-21.

A vibrant agriculture is what sustains a growing economy. But to believe that economic growth alone can address issues of hunger and malnutrition is nothing short of delusion. As the UN Food and Agriculture Organisation (FAO) itself acknowledges that ‘economic growth is necessary but not sufficient to accelerate reduction in hunger and malnutrition’, a study published in the scientific journal The Lancet shows a reduction in malnutrition by a maximum of 6 per cent even if the economic growth soars by 10 per cent. On the contrary, a well-fed nation builds up an efficient and productive manpower which is required to attain a higher economic growth.

Since 1950-51, if measured in terms of population growth, four times more Indias have been added. From 359 million in 1950-51, the country’s population has multiplied roughly four times to 1.4 billion. Agriculture not only kept pace, defying the predictions of the Malthusian catastrophe, but has also produced an unmanageable surplus. Not only producing enough to feed the nation, the rise in the per capita availability of foodgrains, fruits, vegetables and milk also helped in meeting the challenges of malnutrition and hidden hunger. That hunger still persists in some parts of the country is not because of any shortfall in food production, but is the outcome of the twin problems of access and distribution.

If growth and prosperity are the central theme of Adam Smith’s seminal work, An inquiry into the nature and cause of the Wealth of Nations, it has to be accepted that the remarkable transition in Indian agriculture is what has essentially not only added, but led to the wealth of the nation. Though India is the world’s second largest producer of essential foods like wheat, rice, fruits, vegetables and crops like cotton and groundnut and the largest producer of milk, jute and pulses, the long strides taken by the farmers to shatter all records, however, have not translated into higher incomes. Growth, in this case, has not led to prosperity on the farm.

The invisible hand that Adam Smith talked about has actually failed to provide living incomes for farmers, not only in India, but across the globe. One doesn’t need to apply sophisticated economic models to find out how farm incomes have actually been squeezed over the years, and how free markets have sucked income from farmers. Instead, as the citation for this year’s Nobel Prize in Economics admits: “Conclusions about cause and effect can be drawn from natural experiments.” Agreeing, I feel there is no need for economists to hold econometrics studies when conclusions can be drawn easily from the available evidences.

The FAO has estimated India’s gross value of crop production in 2018 (report released in March 2021) at

$289,802,032 million, and that of gross food production at $400,722,025 million. When it comes to the gross value of agricultural production at current prices, India stands second in the world, next to China, with a gross value of $418,541,343 million. Now before you get lost in the maze of production statistics, what is important to ascertain here is the enormous economic wealth that farmers produce and eventually what the agriculture sector generates. In other words, farmers too are wealth creators.

It, therefore, requires a change in economic thinking, which has traditionally banked on the assumption that only businesses — small and big — are wealth creators. The obscene wealth inequality that prevails is the result of this outdated economic thinking. Otherwise, I see no reason why at a time when the gross value of agricultural production since 1999 has grown at an average annual rate of 8.25 per cent, farmers should be at the bottom of the ladder. In America, the share of a farmer in every food dollar in 2018 has plummeted to just eight per cent. In India, the latest Situation Assessment Survey for agricultural households computes income from crop cultivation at only Rs 27 per day.

There is enough evidence to show how free markets have devastated farming across the globe. This has to change. It can only happen when we begin to treat farmers not simply as the primary producer but also as wealth creators, and ensure their contribution in wealth generation

is adequately compensated. To sustain billions of farm livelihoods across the globe, and to celebrate the role farmers play in wealth creation, a beginning has to be made by guaranteeing an assured and profitable price for farmers.