Minimum Support Prices for Agricultural Produce

Agriculture policy should target India’s actual farming population

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Agriculture households in India

Mains level : Paper 3- Need to focus on India's actual farming population

The article highlights the ambiguity about the number of farmers in India and related issues.

How many farmers does India really have

  • The Agriculture Ministry’s last Input Survey for 2016-17 pegged the total operational holdings at 146.19 million.
  • The NABARD All India Rural Financial Inclusion Survey of the same year estimated the country’s “agricultural households” at 100.7 million.
  • The Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) has around 111.5 million enrolled beneficiaries.
  • Agricultural households, as per NABARD’s definition, cover any household whose value of produce from farming activities is more than Rs 5,000 during a year.
  • That obviously is too little to qualify as living income.

Who is real farmer

  • Agricultural households, as per NABARD’s definition, cover any household whose value of produce from farming activities is more than Rs 5,000 during a year.
  • That obviously is too little to qualify as living income.
  • A “real” farmer is someone who would derive a significant part of his/her income from agriculture.
  • This, one can reasonably assume, requires growing at least two crops in a year.
  • The 2016-17 Input Survey report shows that out of the total 157.21 million hectares (mh) of farmland with 146.19 million holdings, only 140 mh was cultivated.
  • And even out of this net sown area, a mere 50.48 mh was cropped two times or more, which includes 40.76 mh of irrigated and 9.72 mh of un-irrigated land.
  • Taking the average holding size of 1.08 hectares for 2016-17, the number of “serious full-time farmers” cultivating a minimum of two crops a year  would be hardly 47 million.
  • The above figure is also consistent with other data from the Input Survey.
  • These pertain to the number of cultivators planting certified/high yielding seeds (59.01 million), using own or hired tractors (72.29 million) and electric/diesel engine pumpsets (45.96 million), and availing institutional credit (57.08 million).
  • Whichever metric one considers, the farmer population significantly engaged and dependent on agriculture as a primary source of income is well within 50-75 million.
  • The current agriculture crisis is largely about these 50-75 million farm households.

Lack of price parity

  • At the heart of farmers’ crisis is the absence of price parity.
  • In 1970-71, when the minimum support price (MSP) of wheat was Rs 76 per quintal, 10 grams of 24-carat gold cost about Rs 185.
  •  Today, the wheat MSP is at Rs 1,975/quintal, gold prices are Rs 45,000/10g.
  • The absence of farm price parity didn’t hurt much initially when crop productivity was rising.
  • Since the 1990s, yields have further gone up to 5.1-5.2 tonnes/hectare in wheat and 6.4-6.5 tonnes for paddy. But so have production costs. 
  • The demand for making MSP a legal right is basically a demand for price parity that gives agricultural commodities sufficient purchasing power with respect to things bought by farmers.

Way forward

  • Most government welfare schemes are aimed at poverty alleviation and uplifting those at the bottom of the pyramid.
  • But there’s no policy for those in the “middle” and in danger of slipping to the bottom.
  •  When crop prices fail to keep pace with escalating costs — of not only inputs, but everything the farmer buys — the impact is on the 50-75 million surplus producers.
  • Any “agriculture policy” has to first and foremost address the problem of price parity.
  • Farmers’ interest be even better served by the government guaranteeing a minimum “income” rather than “price” support.
  • Subsistence or part-time agriculturalists, on the other hand, would benefit more from welfare schemes and other interventions to boost non-farm employment.

Conclusion

Whether it is crop, livestock or poultry, agriculture policy has to focus on “serious full-time farmers”, most of them neither rich nor poor. This rural middle class that was once very confident of its future in agriculture today risks going out of business. That shouldn’t be allowed to happen.

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