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How the govt’s goal of doubling farmers’ incomes is shaping up

Farmer leaders say the new schemes launched by the government are yet to show results on ground. Photo: Bloomberg

On 13 September, Gyan Singh, a 28-year-old young farmer from Seoni district in Madhya Pradesh, began a week- long journey, first from his village to the state capital of Bhopal, and then in a cramped general compartment of an express train to Delhi. He and his co-traveller, another farmer, wore white vests with a message in red: “Give us our payment for the chana (chick peas).”

They had sold their winter harvest to the government at minimum support prices (MSPs) almost four months back but were waiting for the payment—₹4,50,000 for both. A farmer leader and politician in Delhi helped them retrieve their large dues after they began shaming the government, posing in front of the agriculture minister’s residence and roaming the posh streets of Lutyen’s Delhi in their red lettered vests. In return they agreed to go back to their village and not instigate other farmers.

In February 2016, the Narendra Modi government in New Delhi set itself a formidable target: to double farmer incomes by 2022. The announcement was made as a crippling drought year (2015-16) neared its end. But there was bad news around the corner: normal rains meant consecutive years of bountiful harvests in 2016-17 and 2017-18, which in turn precipitated an unprecedented fall in farm gate prices, denting farm incomes. This forced the government to step up purchases from farmers at support prices. There were payment delays to farmers like Gyan Singh. In addition, the government faced the wrath of those who had missed the bus, having to sell in wholesale markets at prices that were 20-30% lower than MSP.

Targets and strategies

In April 2016, the centre set up an inter-ministerial committee to suggest ways to double farmer incomes. The committee clarified that the target is to double the incomes of farm households in real terms (or inflation adjusted) between 2015-16 and 2022-23, or within just seven years. Since then, the committee has submitted 13 volumes on status and strategies for different aspects of the farm sector—from marketing and value addition to risk management and sustainability. On 17 September, the committee submitted its 14th and final report to the government.

“The strategy for doubling farmers’ income encompasses higher productivity at cost efficiency and enabling the farmer to capture maximum value on every grain, every drop and every ounce of his produce,” explains Ashok Dalwai, chairman of the inter-ministerial committee. Dalwai added that the income approach to agriculture is a new paradigm as production-based growth rate estimates do not reflect the true health of the sector.

Among the top recommendations of the committee is to improve value realization from farmers with an understanding that there is an inverse relationship between farm incomes and production: prices and incomes tend to fall with higher levels of production.

The committee noted in its very first report that “the success of production as of now amounts to half success, and is therefore not sustainable. Recent agitations of farmers (June-July 2017) in certain parts of the country demanding higher prices on their produce following record output or scenes of farmers dumping tractor loads of tomatoes and onions onto the roads or emptying canisters of milk into drains exemplify neglect of other half segment of agriculture.”

To improve post-production value-addition, the committee suggested pooling of land and aggregation of farmers’ produce to give growers better bargaining power in the market. Alongside, it recommended a move from a supply push to a demand pull cropping pattern, where farmers would grow what India’s and world’s changing consumer preferences demanded—by shifting, for instance, from grains to horticulture and diversifying into livestock and fisheries.

The committee has also suggested creating a new market infrastructure by replacing existing marketing laws which are restrictive and where cartels of traders determine prices opaquely. To maximize their earnings potential, it suggested “upgrading and harmonizing agri-logistics, agro-processing and marketing.”

Steps so far

The government has set the ball rolling by initiating several steps. In April 2016, it launched an electronic national agriculture market or eNAM to facilitate online trade to give more choice of buyers to farmers. This was followed by a revamped crop insurance scheme launched in the kharif season of 2016 which promised reduced premiums and higher coverage of risks. In April 2017, the centre rolled out a new agriculture marketing Act and urged states to adopt it for making wholesale markets more competitive and transparent.

In May this year, the government finalized a Model Contract Farming Act to integrate farmers with bulk purchasers and agro-industries.

In the budget this year, the centre announced it will set MSP for crops so that farmers can get at least 50% returns over the cost of production, and rolled out a new scheme, Operation Green TOP, to set up value chains for the most commonly consumed horticulture products—tomatoes, onions and potatoes.

To ensure that farmers receive the promised MSP—for oilseeds and pulses—the government also launched a scheme, PM-AASHA in September which involves a mix of direct procurement, reimbursement of losses to farmers when they sell at prices lower than MSP, and encouraging private participation in MSP-based procurement.

Expert view

Despite several steps taken by the government, many are sceptical. Agriculture economists point to the fact that it is not possible to double farm incomes by 2022, due to the dismal agriculture growth rates in recent past.

“Doubling of farmers’ incomes by 2022-23 was expressed as his ‘dream’ by the Honourable Prime Minister Narendra Modi in February 2016. Given that only five years are left, and so far agriculture growth has been just 2.5% per annum in the first four years of Modi government, what would be needed is almost 13% growth in real incomes of farmers in remaining years. This is not feasible with existing set of policies,” said Ashok Gulati, agriculture chair professor at the Indian Council for Research on International Economic Relations.

Farmer leaders say the new schemes launched by the government are yet to show results on ground.

“Two-and-a-half years have passed by but what we have so far is a report with no prospective landmarks, prioritisation strategy or resource plan,” said Yogendra Yadav, founder-member of Jai Kisan Andolan, a farmer’s body. “The reality that farmers are now selling their kharif harvest of pulses, oilseeds and coarse grains at less than MSP after all the promises and schemes shows a lack of seriousness.”

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