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Subject: Agriculture

  • Beed Model of Crop Insurance in Maharashtra

    Maharashtra CM has urged the Prime Minister for state-wide implementation of the ‘Beed model’ of the crop insurance scheme Pradhan Mantri Fasal Bhima Yojana (PMFBY).

    Consider this question:

    Q.Payouts released often exceed the premium collected in PMFBY. Discuss this limitation of the PMFBY where insurance firms refuse to bid in drought prone regions.

    What is PMFBY?

    • Launched in 2016, the flagship PMFBY insures farm losses against inclement weather events.
    • Farmers pay 1.5-2% of the premium with the rest borne by the state and central governments.
    • It is a central scheme implemented by state agriculture departments as per central guidelines.
    • For farmers, the low rate of premium and relatively decent coverage make the scheme attractive.
    • Prior to 2020, the scheme was optional for farmers who did not have loans pending, but mandatory for loanee farmers.
    • Since 2020, it has been optional for all farmers. In Maharashtra, over the years, more non-loanee farmers have enrolled, although it was optional for them.

    Issues faced in Maharashtra

    • Voices were raised in Maharashtra about the need to change the scheme.
    • Delay in claim settlement, failure to recognize localized weather events, and stringent conditions for claims were among the concerns. Another complaint was about alleged profiteering by insurance companies.
    • For Maharashtra, where farmers predominantly depend of monsoon rains to water their crops, the scheme soon turned out to be non-profitable for insurance companies given the high payments they had to make.
    • Payouts were close to or exceeded the premium collected in some years, leading to losses to insurance companies.

    What is Beed model the state government wants implemented?

    • Located in the drought-prone Marathwada region, the district of Beed presents a challenge for any insurance company.
    • During the 2020 kharif season, tenders for implementation did not attract any bids. So, the state Agriculture Department decided to tweak the guidelines for the district.
    • The state-run Indian Agricultural Insurance Company implemented the scheme.
    • Under the new guidelines, the insurance company provided a cover of 110% of the premium collected, with caveats.
    • If the compensation exceeded the cover provided, the state government would pay the bridge amount.
    • If the compensation was less than the premium collected, the insurance company would keep 20% of the amount as handling charges and reimburse the rest to the state government.

    Greater role for States

    • In a normal season where farmers report minimal losses, the state government is expected to get back money that can form a corpus to fund the scheme for the following year.
    • However, the state government would have to bear the financial liability in case of losses due to extreme weather events.

    Why is the government pushing for it for the entire state?

    • The reason why Maharashtra is pushing for this scheme is that in most years, the claims-to-premium ratio is low with the premium being paid to the company.
    • In the Beed model, the profit of the company is expected to reduce and the state government would access another source of funds.
    • The reimbursed amount can lead to lower provisioning by the state for the following year, or help in financing the paying the bridge amount in case of a year of crop loss.
    • For farmers, however, this model does not have any direct benefit.

    Challenges ahead

    • The chances of the model being implemented for the present Kharif season appear slim.
    • Questions remain on how the state government is going to raise the excess amount, and how the reimbursed amount would be administered.

  • Centre announces hike in MSP

    The Central government has hiked the minimum support price (MSP) for the coming Kharif season. The decision was taken by the Cabinet Committee on Economic Affairs.

    Answer this PYQ from CSP 2018 in the comment box:

    Q.Consider the following:

    1. Areca nut
    2. Barley
    3. Coffee
    4. Finger millet
    5. Groundnut
    6. Sesamum
    7. Turmeric

    The Cabinet Committee on Economic Affairs has announced the Minimum Support Price for which of the above?

    (a) 1, 2, 3 and 7 only

    (b) 2, 4, 5 and 6 only

    (c) 1, 3, 4, 5 and 6 only

    (d) 1, 2, 3, 4, 5 and 7

    What is the Minimum Support Price (MSP) system?

    • MSP is a form of market intervention by the Govt. of India to insure agricultural producers against any sharp fall in farm prices.
    • MSP is price fixed by GoI to protect the producer – farmers – against excessive fall in price during bumper production years.

    Who announces it?

    • MSP is announced at the beginning of the sowing season for certain crops on recommendations by Commission for Agricultural Costs and Prices(CACP) and announced by Cabinet Committee on Economic Affairs (CCEA) chaired by the PM of India.

    Why MSP?

    • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.
    • They are a guaranteed price for their produce from the Government.
    • In case the market price for the commodity falls below the announced MSP due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced MSP.

    Historical perspective

    • Till the mid-1970s, Government announced two types of administered prices:
    1. Minimum Support Prices (MSP)
    2. Procurement Prices
    • The MSPs served as the floor prices and were fixed by the Govt. in the nature of a long-term guarantee for investment decisions of producers, with the assurance that prices of their commodities would not be allowed to fall below the level fixed by the Government, even in the case of a bumper crop.
    • Procurement prices were the prices of Kharif and rabi cereals at which the grain was to be domestically procured by public agencies (like the FCI) for release through PDS.
    • It was announced soon after harvest began.
    • Normally procurement price was lower than the open market price and higher than the MSP.

    Crops Covered

    1. Government announces minimum support prices (MSPs) for 22 mandated crops and fair and remunerative price (FRP) for sugarcane.
    2. The mandated crops are 14 crops of the kharif season, 6 rabi crops and two other commercial crops.
    3. The list of crops is as follows:
    • Cereals (7) – paddy, wheat, barley, jowar, bajra, maize and ragi
    • Pulses (5) – gram, arhar/tur, moong, urad and lentil
    • Oilseeds (8) – groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed
    • Raw cotton
    • Raw jute
    • Copra
    • De-husked coconut
    • Sugarcane (Fair and remunerative price)
    • Virginia flu cured (VFC) tobacco

    Exception for Sugar

    • The pricing of sugarcane is governed by the statutory provisions of the Sugarcane (Control) Order, 1966 issued under the Essential Commodities Act (ECA), 1955.
    • Prior to 2009-10 sugar season, the Central Government was fixing the Statutory Minimum Price (SMP) of sugarcane and farmers were entitled to share profits of a sugar mill on 50:50 basis.
    • As this sharing of profits remained virtually unimplemented, the Sugarcane (Control) Order, 1966 was amended in October 2009 and the concept of SMP was replaced by the Fair and Remunerative Price (FRP) of sugarcane.

  • Growth of farm sector during COVID-19 Pandemic

    2020-21 saw the Indian economy register its worst-ever contraction since Independence and also the first since 1979-80. There has been recording economic contraction, however, the farm sector actually grew by 3.6%.

    Growth in Farm Sector

    There are two main reasons why agriculture didn’t suffer the fate of the rest of the economy last year.

    (1) Better monsoon and yields

    • 2019 and 2020, by contrast, were above-normal monsoon years, with the country receiving an area-weighted rainfall.
    • It led to the filling of reservoirs and recharging of groundwater tables and aquifers, unlike after the deficient monsoons of 2014 and 2015 and the near-deficient one of 2018.
    • Not surprisingly, 2019-20 and 2020-21 produced back-to-back bumper harvests.

    (2) Ease during lockdowns

    • The second reason had to do with agriculture being exempted from the nationwide lockdown that followed the first wave of Covid-19.
    • Lockdown restrictions only spared PDS ration shops and other stores selling food, groceries, fruits & vegetables, milk, meat and fish, animal fodder, seeds and pesticides.
    • But within days, an addendum was issued, extending the lifting of curbs to fertilizer outlets, all field operations by farmers and farmworkers, intra- and inter-state movement of agricultural machinery, sale of produce in wholesale mandis and procurement.

    Inherent resilience of India’s farm sector

    • Simply put, farmers made sure they did not waste a good monsoon, finding ways to even mobilize harvesting and planting labor during peak lockdown.
    • The inherent resilience and adaptability of rural economic actors — meant that the farm sector was relatively insulated from lockdown-imposed supply-side

    What were the issues faced?

    • The problems agriculture encountered due to the lockdown had more to do with the demand
    • The closure of hotels, restaurants, roadside eateries, sweetmeat shops, hostels, and canteens — and no wedding receptions and other public functions — resulted in a collapse of out-of-home consumption.
    • This was demand destruction not from rising prices — “movement along the demand curve”.
    • Instead, it was from forced consumption reduction, translating into lower demand for farm produce even at the same price — “a leftward shift in the demand curve”.

    Various successes

    (1) Success of MSP procurement

    • MSP procurement was effective largely in crops and regions where the institutions undertaking such operations — be it the Food Corporation of India, NAFED, Cotton Corporation of India or even cooperative dairies.
    • These all were active and could stem price declines during the period of demand destruction.
    • Such intervention wasn’t possible in non-mainstream produce (vegetables, fruits, poultry, fish, flowers, spices, etc) and regions (maize in Bihar), where the corresponding institutional mechanisms were non-existent.
    • The demand situation improved, though, with the gradual lifting of lockdown restrictions and also the recovery in global agri-commodity prices.

    (2) MGNREGA

    • While agriculture grew amid an unprecedented economic contraction, 2020-21 was also notable for the record person-days of employment generated under MGNREGA.
    • This flagship employment scheme was yet another source of liquidity infusion and, again, a pre-existing program that the government could deploy to support rural incomes during a crisis.
    • Rural consumption, in turn, provided some cushion to the economy and preventing a bad situation from turning much worse.

    Prospects for this Year

    The one obvious difference between now and last year is Covid-19 cases. Covid’s impact on agriculture per se would depend on the spread, intensity, and duration of the infection.

    • Rural areas were mostly unaffected by the pandemic’s first wave.
    • Farm-related activities could, then, go on relatively unhindered, which government policy, whether to do with lockdown or public procurement, also facilitated.
    • That situation has changed with the second wave and rising share of rural districts in total cases, even without factoring in the higher probability of underreporting in these places.

    What next?

    • While fear of the virus may induce precautionary behavior and economic growth, it is unlikely to affect normal agricultural operations.
    • And if last years’ experience is any guide, the adaptability of farmers and myriad rural economic agents should not be underestimated.

    (1) The first factor to be considered is the monsoon. The good news this time is that there is no El Niño.

    • There are increasing chances of a La Niña — El Niño’s counterpart that is associated with above-normal rains and lower temperatures in India — for the autumn and winter months.
    • El Nino is the abnormal warming of the tropical central and eastern Pacific Ocean surface waters, resulting in increased evaporation and cloud-formation activity around South America and away from Asia.

    (2) Uncertainty is prices

    • Global prices — be it of wheat, maize, soybean, palm oil, sugar, skimmed milk powder or cotton — have scaled multi-year highs in the recent period, helping India’s agri-commodity exports.
    • But export demand alone cannot sustain prices, especially in a scenario where job and income losses, accelerated post the pandemic that has severely dented domestic purchasing power.
    • Diesel prices alone have gone up by over a third in the last year; so have that of most non-urea fertilizers.

    Way forward

    • The real challenge for Indian agriculture and farmers will be on the demand side.
    • That is specifically going to come from declining real incomes and particularly affecting demand for milk, pulses, egg, meat, fruits, vegetables and other protein/micronutrient-rich foods.
    • While rising rural wages and overall incomes is what propelled the demand for these foods in the past — in turn, contributing to dietary and cropping diversification — the ongoing slide presents a frightening proposition.

  • Why are edible oils getting costlier?

    Edible oil prices have risen sharply in recent months.

    How much have edible oil prices rising?

    • The prices of six edible oils — groundnut oil, mustard oil, vanaspati, soya oil, sunflower oil, and palm oil — have risen between 20% and 56% at all-India levels in the last year.
    • The prices of soya oil and sunflower oil, too, have increased more than 50% since last year.
    • In fact, the monthly average retail prices of all six edible oils soared to an 11-year high in May 2021.
    • The sharp increase in cooking oil prices has come at a time when household incomes have been hit due to Covid-19.

    Trends of oil consumption in India

    • With rising incomes and changing food habits, consumption of edible oils has been rising over the years.
    • While mustard oil is consumed mostly in rural areas, the share of refined oils —sunflower oil and soyabean oil — is higher in urban areas.

    How much is produced domestically and how much is imported?

    • In 2019-20, domestic availability of edible oils from both primary sources (oilseeds like mustard, groundnut etc.) and secondary sources (such as coconut, oil palm, rice bran oil, cottonseed) was only 10.65 million tonnes against the total domestic demand of 24 million tonnes.
    • Thus, India depends on imports to meet its demand.
    • In 2019-20, the country imported about 13.35 million tonnes of edible oils or about 56% of the demand.
    • This mainly comprised palm (7 million tonnes), soyabean (3.5 millon tonnes) and sunflower (2.5 million tonnes).
    • The major sources of these imports are Argentina and Brazil for soyabeen oil; Indonesia and Malaysia palm oil; and Ukraine and Argentina again for sunflower oil.

    Answer this PYQ from CSP 2019:

    Q.Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

    (a) Spices

    (b) Fresh fruits

    (c) Pulses

    (d) Vegetable oils

    Global prices rising

    • The increase in domestic prices is basically a reflection of international prices because India meets 56% of its domestic demand through imports.
    • In the international market, prices of edible oils have jumped sharply in recent months due to various factors.
    • Even the FAO price index (2014-2016=100) for vegetable oils, an indicator of the movement of edible oil prices in the international market, has soared to 162 in April this year, compared to 81 in April last year.

    But why are international prices rising?

    • One of the reasons is the thrust on making biofuel from vegetable oil. There is a shifting of edible oils from food basket to fuel basket.
    • There has been a thrust on making renewable fuel from soyabean oil in the US, Brazil and other countries.
    • Other factors include buying by China, labour issues in Malaysia, the impact of La Niña on palm and soya producing areas, and export duties on crude palm oil in Indonesia and Malaysia.

    What are the options before the government?

    • One of the short-term options for reducing edible oil prices is to lower import duties.
    • However, the edible oil industry is not in favor of reducing duties.
    • If import duties are reduced, international prices will go up, and neither will the government get revenue nor will the consumer benefit.
    • The government can rather subsidize edible oils and make them available to the poor under the Public Distribution System.

  • [pib] Shahi Litchi from Bihar exported to the UK

    In a major boost to the export of GI-certified products, the season’s first consignment of Shahi Litchi from Bihar was exported to the United Kingdom by the air route.

    Tap here to read about all GI-tagged products in news.

    Shahi Litchi

    • India is the second-largest producer of litchi (Litchi chin) in the world, after China.
    • The translucent, flavored aril or edible flesh of the litchi is popular as a table fruit in India, while in China and Japan it is preferred in dried or canned form.
    • Shahi litchi was the fourth agricultural product to get GI certification from Bihar in 2018, after Jardalu mango, Katarni rice, and Magahi paan.
    • GI registration for Shahi Litchi is held with the Muzaffarpur-based Litchi Growers Association of Bihar.
    • Muzzafarpur, Vaishali, Samastipur, Champaran, Begusarai districts and adjoining areas of Bihar have favorable climate for growing Shahi Litchi.

    Back2Basics: Geographical Indication (GI)

    • The World Intellectual Property Organisation defines a GI as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”.
    • GIs are typically used for agricultural products, foodstuffs, handicrafts, industrial products, wines and spirit drinks.
    • Internationally, GIs are covered as an element of intellectual property rights under the Paris Convention for the Protection of Industrial Property.
    • They have also covered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

  • [pib] Fertilizer Subsidy in India

    A historic decision was taken to increase the subsidy for DAP fertiliser from Rs. 500 per bag to Rs. 1200 per bag, which is an increase of 140%.

    Hike in subsidies

    • It was discussed that the price of fertilizers is undergoing an increase due to the rising prices of phosphoric acid, ammonia etc internationally.
    • Despite the rise in international market prices of DAP, it has been decided to continue selling it at the older price of Rs.1200 and the central government has decided to bear all the burden of price hike.
    • The amount of subsidy per bag has never been increased so much at once.

    Fertilizer Subsidy in India

    • Subsidy as a concept originated during the Green Revolution of the 1970s-80s.
    • Fertiliser subsidy is purchasing by the farmer at a price below MRP (Maximum Retail Price), that is, below the usual demand-and-supply-rate, or regular production and import cost.
    • Fertiliser subsidy ultimately goes to the fertiliser company, even though it is the farmer that benefits.
    • Before 2018, companies were reimbursed after the material was dispatched and received by the district railhead or designated godown.
    • 2018 saw the beginning of DBT (Direct Benefit Transfer), which would transfer money directly to the retailer’s account.
    • However, the companies will be paid only after the actual sale to the farmer.

    Put answers in the comment box for this PYQ:

    Q.What are the advantages of fertigation in agriculture? (CSP 2020)

    1.Controlling the alkalinity of irrigation water is possible.
    2. Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
    3. Increased availability of nutrients to plants is possible.
    4. Reduction in the leaching of chemical nutrients is possible.

    Select the correct answer using the code given below:
    (a) 1, 2 and 3 only

    (b) 1,2 and 4 only

    (c) 1,3 and 4 only

    (d) 2, 3 and 4 only

    How is the subsidy paid and who gets it?

    • The subsidy goes to fertiliser companies, although its ultimate beneficiary is the farmer who pays MRPs less than the market-determined rates.
    • Companies, until recently, were paid after their bagged material had been dispatched and received at a district’s railhead point or approved godown.
    • From March 2018, a new so-called direct benefit transfer (DBT) system was introduced, wherein subsidy payment to the companies would happen only after actual sales to farmers by retailers.
    • With the DBT system, each retailer — there is over 2.3 lakh of them across India — now has a point-of-sale (PoS) machine linked to the Department of Fertilizers’ e-Urvarak DBT portal.

    How does this system work?

    • A popular example of how this system works is that of the neem coated urea fertiliser.
    • Its MRP (Maximum Retail Price) is fixed by the government at Rs. 5922.22 per tonne.
    • The average cost of domestic production is at Rs 17,000 per tonne. The difference is footed by the centre in the form of subsidy.
    • This fertiliser has high Nitrogen content and is cheaper than usual fertilizers.
    • While this may be perceived as a good thing, excess of Nitrogen can disrupt the NPK (Nitrogen, Phosphorus and Potassium) balance in the soil.

    What about non-urea fertilizers?

    • The non-urea fertiliser is decontrolled or fixed by the companies.
    • However, the government pays a flat per tonne subsidy to maintain the nutrition content of the soil, and ensure other fertilizers are economical to use.
    • The non- urea fertilizers are further divided into two parts, DAP (Diammonium Phosphate) and MOP (Muriate of Phosphate).

    Issues with such subsidies

    • A flawed subsidy policy is harmful not just for the farmer, but to the environment as well.
    • Indian soil has low Nitrogen use efficiency, which is the main constituent of Urea. Consequently, excess usage contaminates groundwater.
    • The bulk of urea applied to the soil is lost as NH3 (Ammonia) and Nitrogen Oxides. The WHO has prescribed limits been breached by Punjab, Haryana and Rajasthan.
    • For human beings, “blue baby syndrome” is a common side ailment caused by Nitrate contaminated water.
    • This hampers the ability of the body to carry Nitrogen, with a high probability of death.

  • [pib] GI certified Gholvad Sapota

     

    In a major boost to exports of Geographical Indication (GI) certified products, a consignment of Dahanu Gholvad Sapota from the Palghar district of Maharashtra was shipped to the United Kingdom.

    Gholvad Sapota

    • GI certification of Ghovad Sapota is held by Maharashtra Rajya Chikoo Utpadak Sangh and the fruit is known for its sweet and unique taste.
    • It is believed that the unique taste is derived from the calcium-rich soil of Gholvad village.
    • Currently, in the Palgahr district, around 5000 hectares of land is under sapota or plantation.
    • Sapota is grown in many states- Karnataka, Gujarat, Maharashtra, Tamil Nadu, West Bengal and Andhra Pradesh.
    • Karnataka is known to be the highest grower of the fruit, followed by Maharashtra.

    Do you know?

    Earlier this month, a consignment of 2.5 Metric Tonne of GI certified Banganapalli & Survarnarekha mangoes sourced from farmers in Krishna & Chittor districts of Andhra Pradesh was exported to South Korea.

    Back2Basics: Geographical Indication (GI)

    • The World Intellectual Property Organisation defines a GI as “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”.
    • GIs are typically used for agricultural products, foodstuffs, handicrafts, industrial products, wines and spirit drinks.
    • Internationally, GIs are covered as an element of intellectual property rights under the Paris Convention for the Protection of Industrial Property.
    • They have also covered under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

  • Mini-Seed Kits to boost pulses output in kharif 2021

    Central government to distribute mini-kits of seed

    • The government on said it will distribute over 20 lakh mini-kits of seeds worth Rs 82.01 crore as part of a strategy to boost pulses production in the kharif season of the 2021-22 crop year.
    • The total cost for these mini-kits will be borne by the central government to boost the production and productivity of tur, moong and urad.
    • In addition to this, the usual programme of inter-cropping and area expansion by the states will continue on a sharing basis between the Centre and state, it said.

    Increasing production and productivity

    • From a meagre production of 14.76 million tonnes in the 2007-08 crop year, pulses production has now reached 24.42 million tonnes in the 2020-2021 crop year, which is a phenomenal increase of 65 per cent.
    • India is still importing around 4 lakh tonnes of tur, 0.6 lakh tonnes of moong and around 3 lakh tonnes of urad for meeting its demand.
    • The special programme will increase the production and productivity of the three pulses of tur, moong and urad to a great extent and will play an important role in reducing the import burden.

  • [pib] India’s Agriculture trade grows during 2020-21

    Consistent trade surplus in agricultural products

    • India has consistently maintained trade surplus in the agricultural products over the years.
    • The export of Agri and allied commodities during Apr, 2020 – Feb,2021 were Rs. 2.74 lakh Crore as compared to Rs. 2.31 Crore in the same period last year indicating an increase of 18.49%.
    • The imports of Agri and allied commodities during April, 2020 – Feb, 2021 were Rs. 1.41lakh Crore as compared to Rs. 1.37 lakh Crore in the same period last year witnessing a slight increase of 2.93%.

    Commodities that posted positive growth

    • India has witnessed tremendous growth of 727 % for Wheat export.
    • On specific demand from countries, NAFED has exported 50,000 MT wheat to Afghanistan and 40,000 MT wheat to Lebanon under G2G arrangement.
    • Country has witnessed significant growth of 132% in export of (Non-Basmati) Rice.
    • Export of Non-Basmati Rice has gone up from Rs 13,030 crores in 2019-20 to Rs 30,277 crores in 2020-21.
    • This increase in exports is on account of multiple factors, mainly being India capturing new markets namely, Timor-Leste, Papua New Guinea, Brazil, Chile, and Puerto Rico.
    • Exports were also made to Togo, Senegal, Malaysia, Madagascar, Iraq, Bangladesh, Mozambique, Vietnam, Tanzania Rep and Madagascar.
    • India also enhanced export of Soya meals by 132%. Soya meal has gone up from Rs 3087 crores in 2019-20 to Rs 7224 crores in 2020-21.

  • Agriculture policy should target 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.