Income Security to Farmers

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Income Security to Farmers
Ramanjaneyulu
Kiran Vissa
Alliance for Sustainable and Holistic Agriculture
Understanding the crisis
 Ever increasing costs of cultivation due to
externalization of inputs specially seeds and
pesticides and increasing labor costs
 Increasing tenancy and tenancy costs…
 Dependency on traders and dealers for credit
 Increasing ecological costs due to high
chemical use
 Decreasing margins to farmers-reducing
incomes
Manifestation of the Crisis in Agriculture
•
•
•
•
Farmers’ Suicides
Migration
Cultivated Fallows
Crop holiday
Crop holiday
•
•
•
•
Total are in Konaseema-1.9 lakh acres
Current crop holiday-90,000 acres
Total mandals in WG konaseema 16
Crop holiday in completely in Allavaram,
Uppalaguptam, I.Polavaram, Katrenikona and
partial in other mandals
Income and Expenditure of farmers
Land
holding
Category
Total Income
(Rs/month)
Expenditure
(Rs/month)
Percent of
farmers
<0.01
0.01-0.4
Landless
Sub marginal
1380
1633
2297
2390
36 %
0.4-1.0
Marginal
1809
2672
31 %
1.0-2.0
Small
2493
3148
17 %
2.0-4.0
Semi-medium
3589
3685
10 %
4.0-10.0
Medium
5681
4626
6%
>10.0
Large
Total
9667
2115
6418
2770
All farmers
Source: Report “On Conditions Of Work And Promotion Of Livelihoods In The Unorganised Sector” Arjun Sen
Gupta Committee, 2007
Problems with pricing policy
• The agriculture prices are not fixed taking into
livelihood needs of the farmers.
• The rising inflation always had a double impact
on farmers with increasing costs of living and
decreasing incomes due to reduction in
agriculture prices as a result of price intervention
mechanisms of the government.
• Minimum Support Prices are announced for 25
commodities and market intervention operations
exist only for rice and wheat. So farmers growing
other crops are left to the mercy of the markets.
Paddy pricing in AP
year
Cost of Production
(Rs./q)*
MSP**
2004-05
578
560
2005-06
570
560
2006-07
580
570
2007-08
700
675 (incl. bonus of Rs. 25)
2008-09
1000
875 (incl. bonus of Rs. 25)
2009-10
1200
950 (plus of Rs. 50)
2010-11
1500
1030 (no bonus)
2011-12
1800
1080 (?)
*Cost of cultivation data from few states by DES http://dacnet.nic.in/eands/ up
to 2010 the remaining two years data is collected from field.
** MSP announced by Government of india http://www.dacnet.nic.in
Other factors influencing prices
• In 2007-08 govt of AP has re-started Rice scheme at Rs. 2/- and
restricted open market fine rice price to Rs. 20/- Which has brought
down farmers open market price
• 2009-10 warehouses full and Govt has not procured most of the
paddy from farmers
• 2010-11 govt procured only 4.7 lakh tons (of 60 lakh tons remaining
from 2009-10 and 100 lakh tons produced in kharif 2010) for want
of space. The rabi produce of about 60 lakh tons is pending.
• Government of India announces MSP for 25 crops but procures only
Rice (October-September) and Wheat (April-March). Procurement
of millets happens only on a very small scale. In that also currently
only 25.8% of of the net production of food grains are procured.
Only 18.9% of the net available food grains are distributed through
the PDS.
Procurement of various food grains by the Government
(2004-05 to 2010-11)
Year
Rice
Wheat
Coarse grains
Produc Procure
tion
ment
Product Procure
ion
ment
Producti
on
Procure
ment
produc Procure
tion
ment
2004-05
885.3
246.85
721.5
167.95
276.0
8.27
1882.8
423.07
2005-06
831.3
276.56
686.4
147.87
334.6
11.51
1852.3
435.94
2006-07
917.9
251.06
693.5
92.26
340.6
0.00
1952.0
343.32
2007-08
933.5
287.36
758.1
111.28
339.2
2.03
2030.8
400.67
2008-09
966.9
336.85
785.7
226.89
407.6
13.75
2160.2
577.49
2009-10
991.8
301.34
806.8
253.82
400.3
4.08*
2198.9
555.08
2010-11
Total
225.25*
Source: Koushik Basu (2010) Economics of Food grain management in India and Data from Directorate
of Economics and Statistics and updated from Ministry of Food and Civil Supplies website.
Profitability in agriculture
Name of the Crop States where the C2 cost projection by CACP for 2005-06 were not covered by
MSP of 2004-05
Paddy
A.P, Assam, Haryana, Karnataka, Kerala, M.P, Tamil Nadu & West Bengal
Jowar
A.P, Karnataka, M.P, Maharashtra & Tamil Nadu
Bajra
Gujarat, Haryana, U.P, Maharashtra
Maize
A.P, H.P, Karnataka, M.P, Rajasthan & U.P
Ragi
Karnataka, Tamil Nadu
Tur [Arhar]
A.P, Gujarat, Karnataka & Orissa
Moong
A.P, Maharashatra, Orissa & Rajasthan
Urd
M.P, Maharashtra, Orissa, Rajasthan & Tamil Nadu
Gram
Haryana, Rajasthan
Barley
Rajasthan
Based on K. Ramasubba Reddy’s paper and compiled using data from Directorate of
Economics and Statistics
http://dacnet.nic.in/eands/costofcultivation.pdf
Procurement of rice during 2009-10 by FCI and State Agencies
(In '000 tonnes)
State / U.T
Andhra Pradesh
Assam
Bihar
Chandigarh
Chhatisgarh
Haryana
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Orissa
Punjab
Tamil Nadu
Uttar Pradesh
Uttaranchal
West Bengal
Total :
2009-10 *(OCTOBER to SEPTEMBER)
FCI
State agencies
6228
8
283
14
437
81
15
72
0
0
55
190
474
0
374
207
252
8690
204
0
549
0
2705
1737
7
10
261
194
156
2277
8801
1143
2317
169
914
21443
Total
6432
8
832
14
3141
1818
23
83
261
194
211
2467
9275
1143
2691
375
1166
30134
Millers makes the profit
Coarse Rice
Fine Rice
Kgs
Price Total
Rs/kg (in
Rs)
Kgs
Price Total
Rs/kg (in
Rs)
60
17
1020
62
20
1240
Broken rice
7
Fine Broken
rice
4
11
77
7
11
77
8
32
4
8
32
Bran
10
11
110
10
11
110
Husk
18
10
180
16
10
160
Rice
Total
1419
1619
Procurement of Paddy under MSP by SHG's
(Rabi and Kharif) 2006 to 2010-11
No. of
Mandals
No. of
Procurement
Centers
Qty in
Tonnes
Value in Rs in
Crores
Earned
Commission
Rs in Crores
No
Year
Season
No. of
Dists
1
2006-07
Kharif
11
159
188
63954
40.79
0.61
Rabi
13
198
316
330052
214
2.71
Kharif
12
133
257
75418
57.92
0.81
Rabi
13
200
436
334441
259.1
3.38
Kharif
8
100
272
205630
189.7
2.69
Rabi
13
233
541
584380
543.3
7.94
Kharif
7
40
61
18073.2
18.47
0.28
Rabi
13
168
296
213663
218.7
5.2
1825611
1542
23.63
2
3
2007-08
2008-09
4
2009-10
5
2010-11
Total
Remunerative pricing policy
• MSPs should take into account actual costs of cultivation and
living costs (corrected to inflation rise)
• NFC’s recommendation (Cost C2+50 %) can be used as a guide
(Rs. 1800/q for 2010 paddy and wheat based on 2009 cost
calculations)
• Price differential (MSP –actual realised/procurement price)
should be paid directly to farmer
• Producers are consumers: Only 20-30 % is procured…what
about more than 40 % produced-consumed
• Costs cannot be based only on COC as they could be low for
crops like sorghum and where people use their own inputs
Recast input subsidies
• Nutrient based subsidies to be extended to organic also
– Recast fertiliser subsidy to support farm made organic inputs
– Rs. 5000/ha which as soil nutrient subsidy which can be used for organic
inputs
• Labour subsidies
– Subsidise Farm labor by Rs. 100 per day (which is equivalent to unskilled
work under NREGA) balance if any to be borne by farmer
– Labor subsidy (40 days/crop @ Rs. 100/day) which may cost about Rs.
76,000 cr/year
– For working in their own fields or hiring labor. Generates additional labor
days
– Brings down costs of cultivation by Rs. 4000/ha
• Seed and other input subsidies
– Rs. 1000/ha
Effective Procurement system
• Today only small part of the total production is
procured by the govt.
• Government can use the women self groups, farmers
cooperatives and other community based
organisations for procurement of the paddy
• In states like Chhattisgarh state governments have
established efficient systems of procurement and
distribution.
• AP also should move into a system of procuring and
going for custom milling rather than procuring through
millers
Farmers’ income benefit
Income per ha
• At farmers level it benefits to an extent of Rs. 10,000/ha (Rs.
5000 from fertiliser subsidy and Rs. 4000 as labor subsidy)
• Benefit from price rice Rs. 13,000 (avg Rs. 600/q for 22 q of
cereal grains)
Income per family
• Rs. 10,000 from NREGA (100 days @ Rs. 100)
• Total benefit per family would be at least Rs. 25000/- in
addition to the income from farm produce bringing them out
of poverty
Direct Income Support
• If the income falls short of minimum income it needs to be
supported directly
Farmers income commission
• Farmers Income Commission as a statutory body
which examines the real income of farmers every
year across the states.
– Make specific recommendations to ensure that farmer
families are assured a minimum income (to meet living
costs per family based on current estimates it would be
about Rs. 25,000)
– Consider actual costs of cultivation, prices realized,
subsidies given and suggest mechanisms for compensating
the differential as Direct Income Support
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