What the data shows on farm incomes, and whether farmers can make ends meet
How profitable is farming? The answer to this most fundamental question about Indian agriculture can be found in the National Sample Survey Office’s new surveyof India’s agricultural households.
The average farm household makes Rs 6,426 per month. Where does this money come from? Farm households do a mix of jobs, the data shows.
How much exactly does growing a crop earn a household? The chart below shows the value of the harvested crop for a household that predominantly grows that crop, over a six-month agricultural season. Sugarcane is by far the most profitable crop to grow, while paddy (or wheat in the first half of the year) brings a household around Rs 30,000 for a six month season.
Who are most farmers selling their crops to? First of all, over half of wheat and rice grown is not sold at all, and is purely for the farm household’s consumption. Of what is sold, the vast majority is sold to the private trader, and not the state-run mandi or procurement agency. Among those who sell to the procurement agency, a minority report having got the Minimum Support Price for their produce.
Farmers often talk about the high – and rising – costs of inputs, including water, seeds and pesticides. So how does the output they earn compare with the inputs they put into the land?
Input costs work out to nearly 30 per cent of the total output an average farm household gets from a crop.
Among inputs, fertilizers are the most expensive, followed by labour.
Does this income get the family through the month? For this, I compared income and consumption expenditure for farm households by the size of their landholdings.
As you can see, a farm household needs to have at least 1 hectare of land to make ends meet every month. But given that over 65 per cent of households have less than one hectare of land, this means that two out of three farm households are simply not able to make ends meet.
Unsurprisingly, what this translates into is debt. Over half of all agricultural households are indebted, and these are not small debts; the average loan amount outstanding for a farm household in India today is Rs. 47,000. For marginal farmers, making under Rs 4,000 per month, which doesn’t even cover their consumption, loans of over Rs 30,000 must be extremely heavy burdens.
The southern states stand out for their level of indebtedness.
Who are farmers borrowing from? Marginal farmers rely chiefly on moneylenders, while those with bigger landholdings go to banks, the data shows.
Believe it or not, almost 70 per cent of the national Capital was used for organic farming in 2011-2012, according to National Project on Organic Farming (NPOF), which comes under the Ministry of Agriculture. While the total geographical area of Delhi is 1.48 lakh hectares, NPOF data shows 100238.74 hectares (almost twice the size of Mumbai) was used for organic farming during that period.
What smacks of data fudging and a gigantic scam took place between 2009 and 2012 when the Sheila Dikshit government was in power in Delhi and Congress-led UPA ruled at the Centre. As per the central government scheme, a subsidy of Rs.10,000 per hectare of land is given to a farmer for organic farming. Hence, Rs.100-crore plus subsidies in 2011-12 were given by the Union government for organic farming in the national Capital for 100238.74 hectares. And Delhi, on paper, produced 4,765 tonnes of organic products in 2009. The state of Assam produced 2,329 tonnes. In other words, urban Delhi’s output of organic products was 100 per cent higher than that of Assam. The scam was exposed by the Crop Care Foundation of India (CCFI) through an RTI.
When MAIL TODAY asked the Ministry of Agriculture if indeed such gigantic tract of land inside Delhi has been used for organic farming or if the national capital is such a big producer of organic vegetables, we got no answers. Neither did the Commerce Ministry which is in charge of export of organic products come up with any answers. Both ministries passed the buck and pointed fingers at each other.
The Delhi Agriculture department says there is hardly any organic farming done in Delhi. “There is no awareness about organic farming in Delhi. We don’t get any specific data on such farming from the government. Neither do we get any subsidy,” an official from the department told MAIL TODAY. Delhi agriculture department records show 30,922 hectares of land were used for overall agricultural activities in Delhi in 2011-12. Agriculture activity in Delhi takes place only on six blocks, out of which there is negligible farming in 50 per cent of the area. NPOF was introduced by the Congress-led UPA government during the 10th five-year plan as a central sector scheme with effect from 10 October, 2004, with an initial outlay of `57 crore for promotion of organic farming in India. Though introduced by the UPA government, the scheme continues till date with substantially enhanced budget.
Dr Krishan Chandra, Regional Director, National Center for Organic Farming (NCOF), Ministry of Agriculture, said: “Agriculture is a state subject. The Centre’s role is to help states monetarily so that they can take up organic farming. We have different schemes through which we help farmers by providing money to states. But there is no scope of organic farming in Delhi as there is meagre land available for any kind of farming. As far as subsidy is concerned, we give subsidy for the export of organic produce.” According to the data available with the Ministry of Agriculture, the annual export value of Agriorganic products for 2012-13 was Rs.1155.81 crore.
Dr Chandra said that on noticing major glitch in the data provided by the Agricultural and Processed Food Products Export Development Authority (APEDA), under the Ministry of Commerce, regarding organic farming in Delhi, he asked them for clarification.
“The data regarding land for organic farming is maintained by APEDA and not by our department. They said that earlier they used to enter the data manually but now they are doing it using computers. There may be some data manipulation as it is not possible to carry out such large-scale organic farming in Delhi,” said Chandra. “At times the state helps the farmer financially to carry out organic farming. Farmers furnish address details of the national capital, but the land is somewhere else. The responsibility to check such details furnished by farmers lies with the Commerce Ministry,” he said. Sources in the Agriculture Ministry said that there is a possibility of embezzlement of funds at the state level because who the beneficiaries would be are decided by the state.
The state agriculture department claims to have no information on organic farming in Delhi. “We don’t have any information,” said Kaushal Kishore, joint director, agriculture, Development department, Delhi government. Rajinder Chaudhry, Director (Media), Ministry of Commerce, said: “We are not aware about the disparity in data from other sources. The data provided by APEDA is sourced from TRACENET – a web-based traceability system operational under NPOP.”
The water consumed to grow India’s cotton exports in 2013 would be enough to supply 85% of the country’s 1.24 billion people with 100 litres of water every day for a year. Meanwhile, more than 100 million people in India do not have access to safe water.
Cotton is by no means India’s largest export commodity – petroleum products followed by gems and jewellery follow closely behind. All of these exports require water to produce, and the quantities needed are staggering. Not only does it take water to grow anything, it also takes water to make anything: cars, furniture, books, electronics, buildings, jewellery, toys and even electricity. This water that goes largely unseen is called virtual water.
By exporting more than 7.5m bales of cotton in 2013, India also exported about 38bn cubic metres of virtual water. Those 38bn cubic metres consumed in production of all that cotton weren’t used for anything else. Yet, this amount of water would more than meet the daily needs of 85% of India’s vast population for a year.
Doing things differently
Cotton doesn’t usually consume this much water. The global average water footprint for 1kg of cotton is 10,000 litres. Even with irrigation, US cotton uses just 8,000 litres per kg. The far higher water footprint for India’s cotton is due to inefficient water use and high rates of water pollution — about 50% of all pesticides used (pdf) in the country are in cotton production.
Most of India’s cotton is grown in drier regions and the government subsidises the costs of farmers’ electric pumps, placing no limits on the volumes of groundwater extracted at little or no cost. This has created a widespread pattern of unsustainable water use and strained electrical grids.
“India’s water problems are well-known in the country and pollution is everywhere. Disagreement lies in the solutions,” says Arjen Hoekstra, professor in water management at the University of Twente in the Netherlands.
The new Indian government’s solution to the spectre of growing severe water scarcity is the $168bn (£113bn) National River Linking Project, which will link 30 rivers with 15,000km of canals. This will transfer 137bn cubic metres of water annually from wetter regions to drier ones. However, the country exports far more water than that, in the form of virtual water, in cotton, sugar, cereals, motor vehicles and its many other exports.
All of these exports could be produced using far less water, says Hoekstra, who pioneered the water footprint concept. “It’s not just improving water efficiency that could dramatically reduce India’s water consumption, it’s growing and producing things in the right place,” he said.
Most of India’s water-rich crops such as cereals and cotton are grown in the dry states of Punjab, Uttar Pradesh and Haryana, which have very high evaporation rates, unlike wet states such as Bihar, Jharkhand and Orissa. This perverse situation greatly exacerbates India’s water problems and is largely the result of government policies, Hoekstra’s 2009 study (pdf) states.
“There’s a lot of concern about water scarcity, but little interest in changing consumption patterns,” Hoekstra said.
Rather than matching production of goods to the sustainable use of existing water resources, India, like governments around the world, hopes to use engineering to increase the amount of water, said Hoekstra. Instead, India could grow cotton in less arid regions with more efficient irrigation and fewer pesticides to greatly reduce the crop’s impact on water resources.
- World Water Day on Sunday 22 March 2015 coincides this year with the final year of the International Decade for Action “Water for Life” 2005-2015. The main official UN event is being celebrated in New Delhi, India.
Is a machine that harvests grains crops, combining three separate operations like reaping, threshing & winnowing into a single process. The straw left behind on the field can be used as a mulch or bailed for feed and bedding for live stock.
Tractor mounted on the top of the machine having a wide cutter bar moving on tractor tyres are called as wheel type / tractor driven / tractor mounted combine harvesters. Standard weight of the machine will be 3,850 kgs + tractor engine weight 3,000 kgs + grain weight 700 kgs, total weight around 8,000 kgs ( 8 tons ). It is much more than a weight of huge African elephant. It can be operated only on dry fields, can harvest one acre of paddy field in 30-90 mins, charges are 1,400 rupees per hour and the machine cost around 16 lakhs. All its weight falls on its 16 inches tyres, soil gets compacted and hardened like our tar roads when we moved on our fields. It is so close to road rollers moving while making the roads.
Track type combine harvesters have a inbuilt engine, uniform weight distribution of 3,500 kgs to 5,500 kgs (depending on the companies) on 6 feet length x 1 1/2 width rubber tracks made easy to move even on wet paddy fields. They take 40-180 mins to harvest one acre of paddy field, 2,400 rupees per hour and machine costs around 20-25 lakhs.
Combine harvester companies says these are the most economically important labor saving invention, cheap, easy & time saving.
But, the problem is we need to collect the straw from the field, grains are to be taken to drying yard to remove excess moisture in the sunlight to store, need to wait for more than 8 months to dry further in the gunny bags for milling process to get raw rice. Again we have to dry one more time to get below 10% moisture of paddy before milling process. These are all the indirect disadvantages that we need to look for.
Due to abrupt stoppage of seasoning the grains with these combines, we will loose 5% of yield from unmature grains + 10% of waste on the ground in this operation. Finally we have to compromise with keeping, cooking, texture, taste, aroma & yield of rice.
In 1999 am the first person to introduce these combines in our area, after realizing the fact, this year we harvested manually in 6 acres i.e. 1/3 of my paddy growing area. Next year am planning to harvest manually and say goodbye to combines.
Tractor driven combine harvester
Kubota track type harvester – Japanese technology weighs around 3,350 kgs with grain full tank
Reel & cutter bar in action, Track type combine harvester
Grains storing at tank
Unloading to the tractor, it can rotate 360 degrees
Loans less than Rs2 lakh comprised only 44% of total credit disbursed in 2013, down from 68% in 2000
New Delhi: Is the surge in farm credit iniquitous? Only 44% of advances are small loans to farmers. The formal credit market may have deepened, with the banked farmer availing more loans, but the informal sector is still holding fort.
Credit to the agriculture sector has grown sharply in less than a decade—from more than Rs.1 trillion in 2005 to nearly Rs.7 trillion in 2013. The Union Budget this year set an ambitious target of Rs.8.5 trillion for 2015-16. However, a dissection of farm loan portfolio of lenders shows that the inequity in credit disbursed has kept pace with the quantum leaps—the share of loans above Rs.10 lakh is going up and over a quarter of the credit is advanced from urban and metropolitan branches of banks, unlikely places for a farmer to avail a crop loan.
Moreover, in the decade between 2003 and 2013, the share of informal sector in loans to agricultural households has been steady at around 40%, implying that those who have availed a loan may be getting more loans, but ignoring those who still depend on the professional moneylender.
Loans less than Rs.2 lakh, the most likely amount to be borrowed by a small or marginal farmer, comprised only 44% of total loans in 2013, down from 68% in 2000. In comparison, loans of more than Rs.10 lakh comprise more than a quarter of the agricultural credit disbursed, compared to 21% in 2000. The declining share of small loans could be due to banks’ reluctance to lend to the small farmer, further accentuated by inherent risks (say, deficit or unseasonal rains) associated with farming. Partly, the decline could also be due to rising costs of cultivation, inflationary pressures, and more people moving out of farming (between 2001 and 2011 more than 8.6 million left farming).
Worryingly, banks lent over 46% of agricultural credit between January and March— perhaps to meet year-end targets —although farm loans are most likely required before the crop season begins, around June and November. Data on what is called the “March phenomenon” is scant; the Reserve Bank of India does not publish month-wise credit disbursed and the only source is a ministry of agriculture task force report from 2010, giving out the numbers for 2008-09. In such a scenario, what is confounding is that the share of indirect credit to agriculture hasn’t changed much. Large-sized loans taken by input dealers, agri-businesses such as food and agro-processing industries and warehousing companies, most likely to be advanced by urban and metro bank branches, fell marginally from 15.5% of farm credit advances in 2000 to 14% in 2013.
Direct credit to individual or groups of farmers, as short-term crop loans and long-term loans for fixed capital investments, still constitute 86% of the total credit to the agriculture sector. However, from 2013, loans less than Rs.2 crore to corporates, partnership firms and farmers’ producer companies engaged in agriculture and allied activities are treated as direct credit. This could have dressed up the direct credit numbers.
“Banks are more than happy to lend large amounts to fewer accounts. Small loans to a large number of farmers entail higher transaction and administrative costs alongside the risks associated with farming,” said R. Ramakumar, professor at the School of Development Studies, Tata Institute of Social Sciences in Mumbai. “The share of direct credit to agriculture rose after 2010—but other indicators like the rising share of large loans and the diversion away from rural areas show the correction is illusory,” he adds.
Preliminary reports from the National Sample Survey Organisation (NSSO) study Key Indicators of Situation of Agricultural Households in India, released in December, amply proves that the surge in agricultural credit in the last decade did not benefit farm households.
More than 40% of credit to farm households were advanced by informal sources in 2012-13- with the moneylender advancing 26% of the outstanding credit. For households with the smallest landholdings, only 15% loans were from institutional sources.
These numbers are hardly any improvement over 2003, when NSSO conducted the first such survey: back then, informal loans accounted for 42% of credit advanced to agricultural households. “What seems to have happened is a deepening of credit market with the same set of borrowers. Earlier, they were taking smaller loans and now they are taking larger loans. But the credit market has not broadened to include, say, the marginal and tenant farmers,” said Himanshu, associate professor at Centre for Economic Studies and Planning, Jawaharlal Nehru University, Delhi, and a Mint columnist. “The marginal farmer was mostly out of the formal credit sector and this was not corrected by the surge in agriculture credit,” he adds.
This story has been modified from its previous version to reflect a correction.