A 5-point roadmap to doubling farmer income by 2022

Ruchi AgrawalMoneycontrol research

Having got a taste of farmer fury in the recent Gujarat polls, rural reforms could figure way up in the government’s agenda in the run up to the 2019 general elections. India is looking to double farmer income by the 2022, a plan which many experts feel is ambitious. Yet, with proper implementation of rural reforms, the target may still be within reach.

Output-income disconnect

Over the past years, rural reforms were focused on increasing crop yields. It was assumed that higher production would automatically translate into higher incomes. But that has not happened. A whopping 23 percent households in rural India still fall below the poverty line and a sizeable percentage come close to the threshold.

Deterioration of farm income overtime

Over the years, the gap between farm and non-farm income in the rural areas has been widening. Despite measures to boost crop yields and productivity, per capita income of farmers has not improved. In fact, the gap has widened with farm income now one fourth the size of non-farm income, as compared to one-third some years back.

Ways to improve farm income

Access to storage facilities: Rural distress is often triggered by crop damage resulting from non-availability of proper storage facilities for harvested produce. One way to reduce crop damage and empower the farmer to negotiate appropriate prices, would be to provide storage facilities in rural areas along with proper logistics to access them.

Increasing remunerative prices for farmers: Although output and productivity has improved over the years, the income in the hands of farmers has not improved. Increasing the remuneration of the farmers depends on facilitating a proper marketing environment for the sale of the produce. The central government has already introduced eNAM, a system of an online marketplace where the farmers across the country can trade their harvest. A similar system has already proved successful in Karnataka. However, pan-India success depends highly on internet penetration and farmer education about the system. Along with this there is a need for proper implementation of minimum support prices and crop insurance to ensure steady income for farmers when the weather turns against them. Moreover, agriculture is a state subject and pan-India implementation of reforms depends particularly on how state governments adopt the policies.

Improving farm productivity and crop intensity: Even after high percentage of arable land in India, aggregate crop productivity remains low. Due to high demand for land, further expansion of area under cultivation looks difficult and productivity improvement would depend on improving yield per acre. Modern technology, land reforms and efficient use of agri inputs will be the key drivers. In addition to this, improving crop intensity and encouraging crop plantation in between major harvest seasons would help improve aggregate productivity. Better irrigation facilities are needed to make this happen.

Improving income from allied sources: Apart from farm harvest, farmer income can also be improved by improving income from allied activities like animal farming, livestock, bee culture, dairy etc which would ensure more efficient use of farm space. This, along with a focused initiative to reduce disguised unemployment by reducing the number of unproductive farmers from farms would also help in increasing per farmer incomes.

Moving to high value crops: Shift to high value crops offers great scope for improving incomes for farmers. Currently few staple crops occupy almost 77 percent of the land area, but contribute only 41 percent towards aggregate income. On the other hand, value crops like fruits, vegetable and spices contribute a similar amount by occupying less than 20 percent land area. So a move towards high value crop plantations would help improve incomes.

Improving the income of farmers cannot be viewed in isolation and an overall improvement in allied activities along with input resources would be the key. With major reforms expected to be implemented sectors like agri inputs, seeds, crop protection, agri feed, logistics, cold storages, food processing and agri equipment stand to benefit directly in the near term.

Follow @Ruchiagrawal

For more research articles, visit our Moneycontrol Research Page.