Does it pay to be a farmer in India?

The average farm household makes Rs 6,426 per month.

The average farm household makes Rs 6,426 per month.

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.

The Living Wage approach in agriculture

This paper explores how to apply the concept ‘Living Wage’ that is used in industry , in agriculture; Use o f t his concept may be useful to arrive at a definition o f ‘fair’ prices the agricultural producer should receive for his products.
Based on existing Living Wage definitions, a definition is proposed that can be used in agriculture and rural development. Explained is how the use of the concept is influenced by both an ethical approach and market prices that result from supply and demand. The result of the use of the Living Wage concept in agriculture and rural development may lead to better decisions at policy level.

2013 Ruud Bronkhorst Living Wage Approach to Farmers


Enhancing Farm Income of Small Holders through Market Integration: NAC Draft Report

NAC Final Draft of recos on Farm Income

Government of India
National Advisory Council
14th January, 2013
The National Advisory Council had constituted a Working Group of its Members in July, 2012 on the subject of “Enhancing Farm Income for Small Holders through Market Integration”. The Working Group looked into the issues concerning integration of small holders with organized market and has now developed a set of recommendations for policy, legal framework and implementation guidelines to create a favourable eco system that would contribute towards inclusive growth.
02.       The draft recommendations of the Working Group are now placed in public domain for comments.
03.       The  draft recommendations of the Working Group are attached.
04.       Comments may be sent to the Convener of the Working Group of NAC by  28th January, 2013 by email at wg-agri@nac.nic.inor by post to:
National Advisory Council
2 Moti Lal Nehru Place,
Akbar Road, New Delhi -110011.


Farmers find farming unprofitable

HYDERABAD: A report released by National Sample Survey Organization ( NSSO) reveals that farmers in rural India spend less than Rs 35 a day. The situation in the rural hinterland of Andhra Pradesh is no better with monthly expenditure hovering at Rs 1,234 per person (or Rs 41 per day).

This when the monthly income of farmers in rural areas is being pegged at Rs 1,054 and at Rs 1,984 for their counterparts in urban areas. Expressing concern over the widening income-expenditure gap, professor Aldus Janayya of Acharya NG Ranga Agricultural University told TOI that the incomes of 84% of the members of the farming community is less than what they spend.

How do the peasants then overcome this gap? Ryots opt for loans at high rates of interest, work as farm labourers/coolies and labour at construction sites. Analysts say that lack of support price for various crops, income security and increased input costs has led to dipping incomes, higher expenses and distress migration among farmers.

“In states like Maharashtra, there is a major shift from agricultural to the horticultural sector. Their farmers have better incomes than our ryots,” said KR Choudary, former advisor to the central government on agriculture.

Thanks to the diminishing incomes from farming, peasant migration has assumed significant proportions in districts like Mahbubnagar, Karimnagar, Anantapur, Adilabad, Prakasam, Vizianagaram and Srikakulam where cultivators are altogether shunning agriculture. “Most of the construction workers in Hyderabad hail from the north coastal districts of Andhra Pradesh while farmers from Mahbubnagar and Anantapur head towards Maharashtra and Gujarat to look for work as labourers at construction sites,” an expert pointed out.

The worst hit are the marginal and small farmers. In 2010-11, the farmers got Rs 6,500 (per quintal) for cotton, Rs 14,000 for turmeric and Rs 12,000 for chilli. But their rates fell to Rs 3,500, Rs 4,000 and Rs 5,500, respectively, in 2011-12.

“The steep fall in remunerative prices has forced us to abandon cultivation. I am working as a construction labourer but neither is that fetching me much,” said Sidda Naidu, who migrated to Hyderabad from Vizianagram.

Agricultural activists blame the government for the present mess. “Paddy is procured by the government, which fixes a low remunerative price. How do the farmers recoup their losses?” pointed out GV Ramanjaneyulu of the Centre for Sustainable Agriculture.

Green revolution never improved farmers’ condition: CD Mayee

NAGPUR: The green revolution increased productivity of all crops and helped developing countries like India feed their populations. However, sadly, it could never improve the farmers’ economic condition, said former chairman of Agriculture Scientists Recruitment Board CD Mayee on Monday. He was delivering the Juwarkar memorial lecture at National Environmental Engineering Research Institute (Neeri).

Mayee said the benefits actually percolated down more to the input industries like seed, fertilizer and pesticide industries. “Also, though the green revolution increased the production of food grains manifold, it destroyed soil fertility to an extent that scientists are now careful while working in the direction of second green revolution to conserve all natural resources like soil, water, environment,” he said.

Mayee described the second green revolution as specifically aimed at increasing productivity without compromising on soil quality, while utilizing available land and water resources. “The first green revolution was based on a tripod strategy of improving seed quality through geneticimprovement, water availability and use of chemicals (fertilizers and pesticides). This led to depletion of soil fertility, pollution of natural resources with increase in cost of cultivation. The second revolution tripod includes sustainability and environmental safety,” he said.

The second revolution should bring additional 12 million hectare waste land into net cultivable area, enhance irrigated area to 85 million hectare from existing 60 million hectare, strengthenfarmers markets and rural storages, create infrastructure, increase investment in agriculture in both private and public sector, and farm resource management. It also involves an increase of sales in seeds, fertilizers, farm mechanization, and credit flow growth rate from 25 to 40% ratio. With all these, food grain production is expected to reach 400 million tons.

Mayee said area under agriculture has increased from 131.89 million hectare in 1951-52 to 172.63m ha in 1980-81, and then to 195.10m ha in 2010-11. There was also an increase in gross irrigation from 22.56m ha to 49.78m ha and 88.43m ha during the same years. The consumption of fertilizers has increased from just 0.66kg/ha in 1951-52 to 210kg/ha in 2010-11. But the contribution of agriculture to GDP has fallen from 35% to 30 and then to 15% in 2010-11. There has been an overall growth of food grains from 203.41 million tons in 2000-01 to 320 million tons in 2011-12, an annual growth of 4.21%. These figures for fruits are 152.50 million tons in 2000-01 to 300 million tons in 2011-12, which again means an annual growth of 6.36%.

Earlier, Tapas Nandi, head of waste water technology division of Neeri and acting director, appraised the gathering about the contributions of Ashok Juwarkar, who died in a plane accident while on duty. Juwarkar is known for his immense contribution in converting barren mine dumps into fertile areas. He said Neeri continues to work in the area and has rejuvenated many mine dumps around the city into extremely fertile land and grown lush green trees on them.

Size-class and Returns to Cultivation in India: A Cold Case Reopened

Authors: Sarthak Gaurav and Srijit Mishra

Title: Size-class and Returns to Cultivation in India: A Cold Case Reopened


This paper investigates the relationship between returns to cultivation per hectare and size-class of land cultivated in India, using unit level data from the 59th round National Sample Survey, 2003. The analysis is done separately for ‘kharif’ and ‘rabi’ – for total value of cultivation from all crops at the all India level. The empirical evidence rejects the null hypothesis of no relationship and points to the existence of an inverse association. We argue that the efficiency of the small-holders has to be taken with a pinch of salt because their low absolute returns brings into focus the question of their livelihood sustainability which is further aggravated on account of higher unit costs. Being the first exercise in a series of proposed explorations into disaggregated analyses across states, and for specific crops, it opens up the classic debate on farm size and productivity in the 21st century.

Key words: agrarian crisis, agriculture, efficiency, livelihood sustainability, NSS, productivity, size-class.

JEL Codes: O13, Q12


Estimating Livelihood & Income Losses Due to Flooding – Advice; Experiences.

Summary of Responses
Solution Exchange
The PDF Version of this Consolidated Reply can be downloaded at (Size: 216 KB)

Livelihood is not just a means of earning a living and generating an income but a pattern of asset ownership, availability of required skills and knowledge to deploy those assets into a productive process, and a favorable market mechanism. It is the livelihoods, after human life that disaster prone communities strive most to protect against hazards. Macroeconomic indicators are used for assessing disaster induced damage but disruption to micro, subsistence and livelihood economies is not accounted for with the same level of detail. The query seeking advice for estimating livelihood & income losses due to flooding received a number of insightful responses on the issue.

Members highlighted the importance of understanding the difference between flood damage and flood loss. While flood damage is related to the physical damage of public and private assets, flood loss also refers to secondary or tertiary losses as well as intangible losses such as loss of human lives. For realistic estimates, it is important to consider flood damages and well as flood losses into account. Therefore importance of assessing potential flood losses becomes evident when policy makers and planners try to strike an optimal balance between the development needs of a particular area and the levels of flood risk community is ready to accept.

Discussants pointed out that loss of livelihood due to floods is an omni dimensional phenomenon in the context of flood ridden states of India. They stressed on the need to see this as a Rights & Entitlement issue of the flood affected community. Increasing commitment towards proactive disaster management, members felt has opened the vistas for preparedness towards the realistic and democratic assessment of the eligibility for the Calamity Relief Fund (CRF) and National Calamity Contingency fund (NCCF) aid. The primary challenge is to strike a balance between Covert & Overt Losses at different levels – for individuals, households, community as well as widespread economy of Village, Panchayat, Blocks, Districts, States and the Country.

Livelihood assessment in a situation of Disaster can be dealt in the following Framework of Perception:-
Step 1: Validate overt livelihood loss through initial and rapid assessment at community level by collecting primary and secondary data. This will establish the Volume of NCCF & CRF application in Relief, Response, Early Recovery, Recovery and Rehabilitation.

Step 2: Verify Covert Livelihood and validate by indepth and detailed assessment at community, household as well as individual level. The output of Step 1 will decide whether to go for this step and in what order. This process will target individuals who have lost their livelihoods and will represent the losses at Primary system of Livelihood.

Discussing options to help in assessing potential livelihood or income loss quickly and effectively, members first pointed out that disasters have both direct and indirect effects. Alteration of income flows in terms of reduced income or livelihood loss is a noteworthy direct effect, whereas indirect losses are due to disruption in regular incomes which are less evident when the assessment is carried out. Therefore, members recommended assessing direct and indirect effects in monetary terms and the damage to sectors such as agriculture, fisheries, forestry etc.

Further, respondents highlighted that in many states ‘Lekhpal’ is the final word on loss assessment and it is decided based on the revenue grid of the village. Villagers’ names have to exist in the records first as an individual family unit or else their extended family may get selected as the sole beneficiary and the blanket cash / kind package is extended to the entire household. This system of distribution, members felt rejects an individual’s existential identity and the absolute affirmation of the family as the lowest form of recipient. Further, one needs to be in the village’/ domicile zone to avail the benefits unless the civil administration comes up with a decree that allows non domiciles to avail relief. In the case of the urban areas, situation of homeless and migrants is most complex as they travel long distances in search of employment and bear the brunt of disasters in places where their existence is questioned.

In order to address this members recommended that civil administration could take the number of rainy days and the quantum of rains attained and set a threshold for the populace – beyond which relief aid should be free for all.

Discussing the scope of engaging with national schemes like Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS), members suggested that since government supported employment schemes do not operate during inclement weather periods (historically) and hence would not be able to vouch for a marginal worker’s claims under duress, cards issued by the Government be it the ration card or the MNREGS card could be used as the starting point to assess the losses. These two scaling tools would enable filtering of true claimants and serve the purpose of providing assistance to the affected in monetary terms. This, they felt can be used in case of sudden onset disasters like floods and minor earthquakes, but for slow onset events like droughts they recommended opting for cash for work activities.

Listing the items and norms of assistance given in CRF and NCCF for the period 2005-10, members highlighted the item on Employment Generation meant to meet additional requirements after taking into account funds available under various plans/schemes with element of employment generation e.g. MGNREGS, SGRY. Members recommended calculating ‘Man-days lost’ due to Monsoon in different sectors and its cost for daily workers, by mutual cooperation of District Disaster Management Authority and Project Director, District Rural Development Agency (DRDA) under Chief Development Officer of the District as they deal with various plans/schemes with elements of employment.

Discussing the livelihood linkage members observed that various livelihood activities are interlinked. Impact on any of these is likely to cause disruptions in other related activities as well. Disaster related damages in agriculture can have equally adverse implications for other sectors too. Therefore they stressed on assessing cross-cutting implications. Different occupations experience varying extents of vulnerability to different disasters.

Pointing to the information asymmetry as one of the major reasons for wrong estimation of losses-especially livelihoods, during floods, cyclone and even manmade disasters, members recommended having joint assessment of livelihood losses in the flood prone areas by involving the local community.

Apart from these members suggested the following for quickly and effectively assessing potential livelihood and income loss:
· Involving representatives of PRIs and Gram Sabha for the assessment exercise
· Making village level service providers a part of the assessment to speed up the process and support through their respective areas of work. E.g A Panchayat Rojgar Sewak can be instrumental in assessing the human days loss in the villages and an Aaganwadi Sewika/ASHA could help in assessing the health related aspect for women, adolescents and children
· Ensuring proper coordination between loss assessment and relief distribution
· Providing job cards, ration Cards, health cards for pregnant women
· Using beneficiaries’ list of Aaganwadi Centre and other social security schemes
· Providing special focus to families of elderly people, women and children where the men have migrated in search of work.
· Assessing each and every source of income and livelihood generation and also the skills that generate livelihood from even a negligible asset

· Assessing effect of disaster on market mechanism as when low commodity prices coincide with natural hazards, rural livelihoods come under high stress.

Providing inputs on kinds of losses that can be calculated and some tools which can be adapted, participants shared the following:

· Rapid livelihood assessment
· Loss of wage days
· Loss of agriculture implements
· Loss of livestock
· Loss of land registration documents
· Loss of household utensils
· Loss of damage to the shelter
· Loss of stock of seeds and grain
· Land degradation, soil erosion and replenishment of soil be estimated separately

Interestingly, participants also touched upon estimating macroeconomic effects of disasters, those that have a bearing on growth of agricultural production. They opined that an estimate of the livelihood and family income is relevant for this as these are also come under macroeconomic variables. Therefore they suggested preparing background information on how the agricultural sector was expected to evolve before the disaster based on recent performance or in accordance with goals established in this sectoral plan that officials adopted before the disaster.

Respondents brought to light the existing gaps in crop loss assessment mechanisms under CRF and NCCF. They highlighted that the loss assessment is only done for the crop no other factors are taken into consideration in detail like fodder, fruit plants, livestock death, land degradation, etc. They shared government guidelines and mandates which are quite comprehensive for the assessment of loss, including crop loss. Refer to the Recommended Resources section for more details

Finally members opined that during disasters villagers do benefit from CRF / NCCF but effective implementation is always challenging. They therefore recommended introducing social audit component for ensuring transparency and accountability in CRF / NCCF.