Resource centre on India's rural distress
 
 

Rural distress

 

KEY TRENDS

 

• The report entitled Pradhan Mantri Fasal Bima Yojana: An Assessment from the Centre for Science and Environment (released on 21 July, 2017) finds that PMBY is not beneficial for farmers in vulnerable regions. For farmers in vulnerable regions such as Bundelkhand and Marathwada, factors like low indemnity levels, low threshold yields, low sum insured and default on loans make PMFBY a poor scheme to safeguard against extreme weather events. CSE's analysis shows that farmers in these areas might not get any claim even if more than half of their crops are damaged @@

 

• The CAG report on Performance Audit of Agriculture Crop Insurance Schemes (Report no. 7 of 2017), which was tabled in the Parliament on 21 July, 2017, finds that despite the three decade long efforts of Government of India to provide crop insurance, coverage of farmers under such schemes continues to remain low. The coverage of non-loanee farmers continues to be particularly low, primarily because the schemes have been targeted at loanee farmers, for whom the schemes stipulate mandatory coverage @$

 

Within the rural households, the marginal land owners (i.e. possessing more than 0.002 but less than or equal to 1.0 hectare of land) constituted the highest proportion(75.42%) of total rural households, whereas the large land owners (possessing land more than 10.000 hectares) constituted the lowest proportion (0.24% ) of the total households. The landless category (possessing land less than or equal 0.002 hectare) constituted 7.41% of the total rural households $$


In terms of percentage of total area owned, the largest category was the marginal land owners (i.e. possessing more than 0.002 but less than or equal to 1.0 hectare of land) owing 29.75% of the total land area owned $$


• The NSS 59th round on the Situation Assessment Survey of Farmers, 2003 had revealed that at the all-India level, 60% of farmer households reported that they liked farming as a profession. The remaining 40% were of the opinion that, given a choice, they would take up some other career. The CSDS survey of farmers in 18 states has similar findings. The survey found that nearly three-fourths of farmers like their profession $

• Approximately 62 per cent of the interviewed farmers were not aware about MSP, whereas 38 per cent had heard about MSP. Only 27 per cent of the farmers have heard about the Land Acquisition law. Nearly, 83 per cent of the farmers have not heard about Foreign Direct Investment (FDI) $

• An estimated 27% of farmers did not like farming because it was not profitable. In all, 40% felt that, given a choice, they would take up some other career #

• Over the four decades, the average size of a holding came down by nearly 60% - from 2.63 hectare in 1960-61 to 1.06 hectare in 2002-03 ##

• In Punjab, extensive use of nitrogen fertilizer and pesticides has increased concentration of nitrates and pesticide residues in water, food, and feed, often above tolerance limits *# 

• In the ten-year period between 1997 and 2006 as many as 1,66,304 farmers committed suicide in India*

• Rural distress happened due to various factors such as: falling employment, declining productivity and profitability, rising indebtedness so as to finance agriculture etc*

• Farmers' suicides due to rural distress could be observed in the states of Maharashtra, Karnataka, Kerala, Andhra Pradesh, Punjab, Madhya Pradesh and Chattisgarh*

• Other factors that may contributed to rural distress are: shift in cropping pattern towards cash crops, lack of level playing field for farmers in the global market, increased dependence on high-cost inputs which increases the cost of cultivation and indebtedness, enhanced risks, falling profitability and declining public support* 

 

@@ Pradhan Mantri Fasal Bima Yojana: An Assessment from the Centre for Science and Environment (released on 21 July, 2017), please click here to access

 

@$ CAG report on Performance Audit of Agriculture Crop Insurance Schemes (Report no. 7 of 2017), tabled in the Parliament on 21 July, 2017 (please click here to access)

 

$$ Key Indicators of Land and Livestock Holdings in India, NSS 70th Round (Please click here to access

 

$ State of Indian Farmers: A Report, done by Centre for the Study of Developing Societies (CSDS), Delhi (please click here to download)

 

# Some Aspects of Farming, 2003, Situation Assessment Survey of Farmers, National Sample Survey (NSS) 59th Round, (January–December 2003)

 

## Some Aspects of Operational Land Holdings in India, 2002-03, Report No. 492(59/18.1/3), National Sample Survey 59th Round (January–December 2003), August, 2006

 

*# World Development Report: Agriculture for Development 2008, www.worldbank.org

 

* Nagaraj, K (2008): Farmers’ Suicides in India, Magnitudes, Trends and Spatial Patterns, Macroscan

 

@ NCEUS (2007), Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector

OVERVIEW

We are told that India withstood global recession on the strength of its rural market. While it is true that rural India’s potential for consumption is huge, the country is not even close to realizing it. According to NSSO almost one third farmers don’t like farming and about 40 per cent say given a choice they would do something else. Nothing reflects the farmers’ falling standards of living better than their calorie intake which has fallen (for the entire rural population) from 2309 Kcal per day in 1983 to 2011 Kcal per day in 1998, a drop of over 15 per cent in as many years.

Rural India’s perverse appetite for gold and motorbikes, mainly to be given away as dowry, is fed by borrowings and non-farm incomes. With average landholding falling from 2.6 hectares per farmer in 1960 to 1.4 hectares in 2000 due to fragmentation, farming continues to be an utterly unprofitable activity.

The wealthy and powerful zamindar of the Bollywood movies remains a creature of our imagination. The ‘poor’ rich farmer with over 10 hectares of land is below one per cent in poorer states like Bihar and Bengal and around 8 per cent in relatively prosperous Punjab and Haryana. The rest are all small, marginal and medium farmers battling for survival against tough odds.

Over 60 per cent of India’s cultivated area is rain-fed and is untouched by the fruits of the Green Revolution. The fabled Green Revolution did end India’s depended on foreign aid to feed its people. But its gains were confined to about a third of the country’s cultivated area covered under irrigation schemes. Even in these areas, the farm crisis has since deepened due to high input costs, lowering of the water table, degradation of soil fertility and unrewarding pricing mechanisms. As a result the growth in food grain production has tumbled from 3.5 per cent in the eighties to 1.8 per cent in the nineties. Farmers’ suicides, which were virtually unknown in the eighties, and which were once thought to be a regional syndrome of the poorer regions, are now spreading to relatively prosperous areas like Punjab, Haryana, Karnataka and Kerala.

For the poorest and rain dependent farmers the profitability has dropped further. Input costs have consistently risen and the crisis is further aggravated by the absence of fair credit agencies, scientific seed banks and vital services like education and health. India’s much maligned agricultural subsidy per farmer is not even one hundredth of corresponding subsidies given to the OECD farmers. (India’s per farmer subsidy is $ 66 as against $26000 in Japan, $ 21000 in the US and $ 11000 in the OECD countries)
 

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The report entitled [inside]Pradhan Mantri Fasal Bima Yojana: An Assessment from the Centre for Science and Environment (released on 21 July, 2017)[/inside], (please click here to access), provides a detailed independent evaluation and analysis of the recently launched crop insurance scheme by the NDA government.

The CSE undertook a detailed study to assess the state of implementation of PMFBY, including loopholes and challenges involved in the process. Field visits were made in Haryana, Tamil Nadu and Uttar Pradesh to get firsthand understanding of PMFBY implementation during kharif 2016. A round table was also conducted in Delhi with farmer leaders from Rajasthan, Telangana, Karnataka, Uttar Pradesh, Haryana, Maharashtra, Madhya Pradesh and Himachal Pradesh as well as civil society members. Interviews were conducted with stakeholders, including farmers and their representatives, block-, district-, state- and Central-level government officials, and representatives of banks, insurance companies and representatives of Panchayati Raj Institutions. Last, all available data on PMFBY for kharif 2016 was collected and analysed.

One of the key conclusions of the report is that PMBY is not beneficial for farmers in vulnerable regions. For farmers in vulnerable regions such as Bundelkhand and Marathwada, factors like low indemnity levels, low threshold yields, low sum insured and default on loans make PMFBY a poor scheme to safeguard against extreme weather events. CSE's analysis shows that farmers in these areas might not get any claim even if more than half of their crops are damaged.

The Government of India launched the PMFBY in the kharif season of 2016 to help farmers cope with crop losses due to unseasonal and extreme weather. The scheme came into operation from April 1, 2016. It has replaced the National Agricultural Insurance Scheme (NAIS) and the Modified National Agricultural Insurance Scheme (MNAIS). The Weather-Based Crop Insurance Scheme (WBCIS) remains in place, though its premium rates have been made the same as in PMFBY. A state can decide whether it wants PMFBY or WBCIS or both.

The PMFBY has more farmer-friendly provisions than NAIS and MNAIS. It has reduced the burden of premium on farmers significantly and has expanded the coverage of risks. It also promotes use of advanced technologies for accurate estimation of losses and quick payments to farmers.

 

The key findings of the report entitled Pradhan Mantri Fasal Bima Yojana: An Assessment from CSE are as follows:

The positives

• At the all-India level, coverage of agricultural insurance has significantly increased in kharif 2016 compared to kharif 2015. The number of farmers insured reached a little over 4 crore during kharif 2016; during kharif 2015, this number was about 3.09 crore.

• The sum insured is now closer to the cost of production than before. On an average, during kharif 2015, the sum insured per hectare of land was about Rs 20,500; during kharif 2016, it had gone up to Rs 34,370. This means that in case of losses, farmers should theoretically get significantly higher compensation than before. However, in some states like Rajasthan, the sum insured remains very low – about one-third of the cost of production.

The negatives

• Gaps in assessment of crop loss: Assessment of crop loss remains a major concern because the sample sizes in each village are not large enough to capture the scale and diversity of crop losses. In many cases, district or block level agricultural department officials do not conduct such sampling on ground and complete the formalities only on paper. CSE also noted other issues such as lack of trained outsourced agencies, huge scope of corruption during implementation as well as non-utilisation of technologies like smart phones and drones to improve the speed and reliability of such sampling.

• Inadequate and delayed claim payment: Insurance companies, in many cases, did not investigate losses due to a localised calamity and, therefore, did not pay claims. For kharif 2016, the claim payment to farmers was inordinately delayed – till April 2017; claims for kharif 2016 were not paid or were partly paid in 14 out of 21 states. Only 32 per cent of the reported claims were paid out by insurance companies, even when in many states the governments had paid their part of premium.

• High actuarial premium rates: Insurance companies charged high actuarial premium rates during kharif 2016 – the all-India rate was approximately 12.6 per cent, which was highest ever. Much higher rates were charged in some states and regions. The average actuarial rate in Gujarat was 20.5 per cent, in Rajasthan 19.9 per cent, and in Maharashtra 18.9 per cent.

• Massive profits for insurance companies: CSE’s analysis indicates that during kharif 2016, companies made close to Rs 10,000 crore as ‘gross profits’.

• Coverage only for loanee farmers: PMFBY remains a scheme for loanee farmers – farmers who take loans from banks are mandatorily required to take insurance. The percentage of non-loanee farmers availing insurance remained less than 5 per cent during kharif 2016 and 2015. Like previous crop insurance schemes, PMFBY fails to cover sharecropper and tenant farmers.

• Poor capacity to deliver: There has been no concerted effort by the state government and insurance companies to build awareness of farmers on PMFBY. Insurance companies have failed to set-up infrastructure for proper implementation of PMFBY. There is still no direct linkage between insurance companies and farmers. Insured farmers receive no insurance policy document or receipt.

The report has also identified issues like delayed notification by state governments, less number of notified crops than can avail insurance, problem with threshold yield estimation etc. that has diluted the usefulness of PMFBY.


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The [inside]CAG report on Performance Audit of Agriculture Crop Insurance Schemes (Report no. 7 of 2017)[/inside], which was tabled in the Parliament on 21 July, 2017 (please click here to access) says that the Government of India (GOI) has introduced several crop insurance schemes over the past three decades to insure the farming community against various risks like natural calamities, pests and disease that lead to partial or full failure of crops. The Comprehensive Crop Insurance Scheme (CCIS), launched in 1985, was the first nation-wide scheme. The CCIS was replaced by the National Agriculture Insurance Scheme (NAIS) in 1999, and Agriculture Insurance Company of India Ltd. (AIC), was designated as implementing agency (IA), with effect from 1st April, 2003. The GOI also introduced a Pilot Weather Based Crop Insurance Scheme (WBCIS) from kharif season 2007 in 20 states to cover the risks to farmers against extreme climatic conditions such as deficit, excess or untimely rainfall, frost, variations in temperature, etc.

The GOI introduced the Modified National Agriculture Insurance Scheme (MNAIS) and implemented it on pilot basis in 50 districts from the rabi season 2010-11. From the rabi season 2013-14, the GOI merged MNAIS and WBCIS into a new programme, the National Crop Insurance Programme (NCIP) replacing NAIS. However, at the request of states, NAIS continued till rabi season 2015-16. AIC and other empanelled private insurance companies were designated as Implementing Agencies (IAs) under NCIP. Unlike the NAIS, where the GOI and state governments subsidised insurance premium (over and above the farmers’ share) and insurance claims (above a threshold to be borne by AIC), from WBCIS onwards, government subsidy was limited to insurance premium alone. From kharif season 2016, the GOI replaced NAIS and NCIP, and introduced the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Re-structured WBCIS.

The Department of Agriculture, Cooperation and Farmers’ Welfare (DAC&FW) under the Ministry of Agriculture and Farmers’ Welfare is responsible for budgetary control, release of funds and overall administration of the schemes at the Central level. Funds under the schemes are released by both the GOI and state governments to the Agricultural Insurance Company of India Limited (AIC), who had been designated as the sole insurance company (or Implementing Agency) under NAIS and as the channelizing agency through whom insurance premia are remitted to the insurance company (including itself) from GOI and the relevant state government, under the other schemes.

The payment of insurance premium is subsidised to the farmers (over and above the farmers’ share) under the schemes, with GOI and the concerned state governments equally sharing the subsidy burden. Claim payments are equally shared by the GOI and the concerned state governments in the case of NAIS (above a threshold to be paid by AIC). In all other schemes, the burden of claim payments is entirely borne by the concerned insurance company.

The present performance audit report reviews the utilisation of governments’ funds, implementation of the schemes and monitoring during the period 2011-12 to 2015-16.

In short, the CAG report on Performance Audit of Agriculture Crop Insurance Schemes finds that despite the three decade long efforts of GOI to provide crop insurance, coverage of farmers under these schemes continues to remain low. The coverage of non-loanee farmers continues to be particularly low, primarily because the schemes have been targeted at loanee farmers, for whom the schemes stipulate mandatory coverage.

It was also found by the CAG report that the GOI and state governments did not maintain databases of insured farmers. The AIC also did not maintain comprehensive data under any of the schemes. Most of the farmers had opted for sum insured equivalent to loan amount under NAIS indicating that either the loanee farmers were intent on covering the loan amount only (in which case, the scheme acted more as loan insurance than as crop insurance) or were not aware or were not informed appropriately by loan disbursing Bank/FIs about the full provisions of the scheme.

There were discrepancies in the data relating to area sown and area insured. Further, the integrity of the data provided by the state governments in this respect and used by AIC was not ensured. The delays and omissions by state governments and by loan/insurance disbursing banks and financial institutions, resulting in denying or delaying insurance coverage to the farming community were noticed. There was no effective mechanism to monitor the implementation of the schemes.

The key findings of the Report of the Comptroller and Auditor General of India on Performance Audit of Agriculture Crop Insurance Schemes, Report no. 7 of 2017 (please click here to access), are as follows:

Financial management

• Though DAC&FW invariably released their share on time, instances of delayed release by state governments were observed. Such delays impacted on the release of insurance compensation to affected farmers defeating the objective of providing timely financial assistance to the farming community.

• The guidelines were silent on the utilisation of savings, if any, due to difference between premium collected and claims payable by AIC under NAIS and AIC retained the savings.

• AIC failed to exercise due diligence in verification of claims by private insurance companies before releasing funds to them.

• AIC failed to take reinsurance cover on behalf of GOI and state governments under NAIS despite requirement in the guidelines. At the same time, AIC took reinsurance cover for its own share of claim liability.

• AIC furnished Utilisation Certificates (UCs) to DAC&FW only at the time of demand for fresh funds and not within a week of release of funds as required in the guidelines.

• Since implementing agencies did not ensure submission of UCs by Bank/FIs, even the minimum assurance that claims had been distributed to beneficiary farmers is lacking.

Implementation of schemes

• Scheme guidelines did not require the GOI and state governments to maintain databases of insured farmers despite substantial financial contribution by way of premium subsidy (Rs. 10,617.41 crore) and claim liability (Rs. 21,989.24 crore). Consequently, GOI and the state governments were dependent on information furnished by loan disbursing branches of Bank/FI and IAs (AIC and private insurance companies).

• The coverage of farmers under the schemes was very low compared to the population of farmers as per Census 2011. Further, coverage of non-loanee farmers was negligible.

• The coverage of small and marginal farmers under the schemes was very low compared to the population of farmers as per Census 2011.

• No data of sharecroppers and tenant farmers was maintained despite the fact that the guidelines provided for their coverage under the schemes.

• Though the annual budget allocations included specific provisions for coverage of SC/ST category, no data of such coverage and utilisation of funds for this category were maintained.

• It was noticed that 97 percent of the farmers had opted for sum insured equivalent to loan amount under NAIS indicating that either the loanee farmers were intent on covering the loan amount only (in which case, the scheme acted more as loan insurance than as crop insurance) or were not aware or were not informed appropriately by loan disbursing Bank/FIs about the full provisions of the scheme.

• Even though the schemes provided for notifying the lowest possible unit of defined area, only Odisha has achieved this by defining the village as the unit for paddy.

• There were delays in issue of notifications, receipt of declaration from Bank/FIs within cut-off dates, delays in receipt of yield data from state governments, delay in processing of claims by IAs, and irregularities in disbursement of claims by Bank/FIs to farmers’ accounts.

• Deficiencies were noticed in Crop Cutting Experiments (CCEs) and functioning of Automatic Weather Stations.

• There were discrepancies in the data relating to area sown and area insured. Further, the integrity of the data provided by the state governments in this respect and used by AIC was not ensured.

Monitoring and awareness of schemes

• Monitoring of the schemes by GOI, state governments and Implementing Agencies was very poor as (i) Technical Support Unit (TSU), an independent agency under the guidance of DAC&FW, has not been set up to monitor implementation of the crop insurance schemes, (ii) Periodical Appraisal Reports were not prepared by the DAC&FW despite 14 years of operation of the schemes, (iii) State Level Coordination Committees on Crop Insurance and District Level Monitoring Committees did not carry out the work allocated to them effectively, and (iv) Implementing Agencies also did not carry out the monitoring of the schemes as assigned to them effectively.

• Despite provision of large amount of funds under the schemes to private insurance companies, there was no provision for audit by the Comptroller and Auditor General of India (even though WBCIS provided for oversight agency by independent government agency).

• Capping of premium under NCIP, introduced with the aim of restricting the liability of the governments under the schemes, also resulted in loanee farmers being denied their full entitlement.

• Two-thirds of the farmers surveyed during audit were not aware of the schemes.

• Grievance redressal systems and monitoring mechanisms for speedy settlement of farmer’s complaints at GOI and state government levels were inadequate.


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Please click here to access the key findings of the report entitled: [inside]Key Indicators of Land and Livestock Holdings in India, NSS 70th Round (published in December 2014)[/inside]. 

Please click here to access the full report entitled: Key Indicators of Land and Livestock Holdings in India, NSS 70th Round.  


The study entitled [inside]State of Indian Farmers: A Report (2014)[/inside], done by Centre for the Study of Developing Societies (CSDS), Delhi is based on a primary survey across 18 states of India, conducted between December 2013 and January 2014. The survey was conducted in 274 villages spread over 137 district of the country.

A total of 8220 randomly selected electors were approached for household interviews of which 5350 interviews were successfully completed. 2114 youth and 4298 females were interviewed.

Women respondents comprise 16.7 per cent, Scheduled Castes 19.8 per cent, Scheduled Tribes 11.9 per cent, and OBCs 40.3 per cent of the sample household. Non-Hindu constitutes 13.5 per cent of the sample household.

Key findings of the study 'State of Indian Farmers: A Report', done by Centre for the Study of Developing Societies (CSDS), Delhi for Bharat Krishak Samaj (please click here to download) are:

•    Overall 83 per cent of the farmers interviewed consider agriculture to be their main occupation. Moreover, 79 per cent said that agriculture is the main source of income of their household. For others a large part of their household’s income came from non-agricultural works.

•    90 per cent of the farmers are doing farming because it is their ancestral occupation, while only 10 per cent are new farmers who have joined farming in recent years.

•    The NSS 59th round on the Situation Assessment Survey of Farmers, 2003 had revealed that at the all-India level, 60% of farmer households reported that they liked farming as a profession. The remaining 40% were of the opinion that, given a choice, they would take up some other career. The CSDS survey in 18 states has similar findings. The survey found that nearly three-fourths of farmers like their profession.

•    84 per cent of the farmers in central India like farming while in North and East India the figures are much lower at 67 and 69 per cent respectively. When asked whether they like farming or not, 72 per cent of the farmers answered in the affirmative while 22 per cent farmers said they do not like doing farming.

Reasons for disliking farming

•    Landless farmers show least interest/likeness towards farming and the figure of likeness rises gradually as we move from landless to large farmers who seem to like farming the most.

•    Lack of a good income is the main reason for their dislike of farming. 36 per cent of the farmers cited this as the reason. 18 per cent of those who dislike farming said they are doing it only because of family pressure. 16 per cent say that they see no future in this sector. 9 per cent said that they wish to do another job, while 8 per cent consider farming stressful or risky and hence do not like doing it.

Participation of Other Family Members in Farming

•    Over two-thirds (66 per cent) of the farmers said that women from their household are also engaged in farming. Among large farmers the figure was much higher at 73 per cent. Among landless farmers it was quite low at 42 per cent.

Cropping Pattern

•    Nearly half the farmers (46 per cent) grow up to two crops in a year while 28 per cent said they produce more than two crops annually. 26 per cent of the farmers who were interviewed said they are able to produce only one crop in a year. These figures however differ from region to region due to quality of soil, irrigation facilities, climatic conditions and the fact that some regions are more prone to floods and droughts than others.

•    The Indian cropping pattern is unique in the world as it is characterized mainly by the paddywheat cropping pattern. Survey data suggests that more than 60 per cent of the farmers are practicing this rice-wheat pattern. While 41 per cent of the farmers identified paddy as the main crop grown by them, 21 per cent said it was wheat.

Seeds

•    A large proportion of farmers (70 per cent) use local or traditional seeds. On being asked further if they used Hybrid seeds, 63 per cent of the farmers answered in the affirmative. Very few (4 per cent) said that they use Genetically Modified seeds.

•    Most farmers (36 per cent) were of the opinion that Hybrid seeds are more profitable than local seeds. 18 per cent felt otherwise while 32 per cent were of the opinion that both Hybrid and local seeds were profitable.

Fertilizers

•    40 per cent of the respondents said that they use both chemical and organic fertilizers. 35 per cent said they use only chemical fertilizers and 16 per cent said that they use only organic fertilizers.

Pesticides

•    When asked how often they used pesticides, only 18 per cent farmers said they use it regularly. 28 per cent said they use it occasionally, while 30 per cent use pesticides only when the need arises. 13 per cent farmers never use pesticides in their farming.

•    54 per cent of the small farmers said they use pesticides regularly. The figure among medium and large farmers is much less at 27 per cent and 10 per cent respectively.

Irrigation

•    Only 40 per cent of the farmers said that irrigation facilities were available for their entire farming land. The most common sources for irrigation are private pumps, bore wells/boring and tube wells. 45 per cent of the farmers cited these as their main source of irrigation. 38 per cent of the farmers have access to canals in their villages for irrigation. Traditional sources of irrigation like pond and well continue to be important. 34 per cent of the farmers depend on wells while 30 per cent of the farmers said they depend on the pond to irrigate their land. Only 18 per cent of farmers said that they have the facility of Govt. tube wells for irrigation.

Electricity

•    Irrigation facilities are largely dependent on the availability of electricity. However, more than half the farmers said that there had been no electricity for farming (51 per cent) in their area in the week prior to the survey.

•    When asked if in order to receive uninterrupted power supply they were ready to pay more for it than what they pay today, 46 per cent of farmers rejected the idea, while 31 per cent said that they are willing to pay more for uninterrupted electricity supply.

Problems faced by Farmers

•    Irrigation emerged as the most important problem in East and Central India, whereas low productivity in South and West. In North India, labour related issues are the most important problem faced by the farmer.

Crop destruction and Suicide

•    Approximately 70 per cent farmers said that their crops got destroyed in the last three years. The main reasons for crop destruction are uncertain rainfall, drought and flood, destruction of crop by diseases and birds/ animal, and lack of irrigation.

•    Approximately one in every seven respondent (15 per cent) said they have heard about suicides in their area.

Non-farm Employment

•    The survey reveals that farmers who have no land (landless farmers) show a much stronger preference for city life over village life. The dissatisfaction with economic condition lies at the heart of why majority of farmers (69 per cent) think that city life is much better than village life. Very few farmers (19 per cent) were of the opinion that village life was better than city life.

•    On being asked whether they would leave farming if they get an employment opportunity in the city, 61 per cent of the farmers answered in the affirmative and 26 per cent said they would not.

Farming as a choice for children

•    When farmers were asked whether they want their children to settle in the city, as many as 60 per cent said they want their children to settle in the city. Another 14 per cent do not want their children to settle in the city, whereas 19 per cent said they will prefer their children’s choice on this matter.

•    When asked whether they would like to see their children engaging in farming, only 18 per cent responded positively. 36 per cent said they do not want their children to continue farming as their occupation and 37 per cent said they will prefer their children’s choice and go with their decision while choosing their profession.

•    The sentiment that their children should not continue farming is strongest among landless and small farmers (39 per cent) and weakest among large farmers (28 per cent).

Economic Hardships

•    In the survey, only 5 per cent respondents said that in last five years they had to sell their land.

•    Poor financial condition (27 per cent) seems to be the most important reason followed by money required for a marriage in the family. Some farmers also had to sell their land due to the pressure of land acquisition.

Loans

•    39 per cent of the respondents were not worried at all about repayment of loan. Housing and marriage in the household also seem to be a reason for worry among Indian farmers.

•    Only two out of ten farmers said that in last five years they had take loan for farming related activity. The loans were primarily taken for purchasing fertilizers, seeds, pesticides etc. or buying farming equipments like tractor, thrasher etc.

Benefiting from Government Schemes

•    Most respondents (50 per cent) feel that only rich farmers got the benefits of government schemes and policies related to farming. Only 10 per cent believe that poor and small farmers have got the benefit from farming related schemes and another 8 per cent saw no benefit whatsoever either to large farmers or marginal farmers.

MGNREGA

•    Approximately 85 per cent of the farmers have heard about the rural employment guarantee scheme.

Direct Cash Transfer

•    Most farmers (70 per cent) have not heard about Direct Cash Transfer scheme. Landless farmers are least aware about the Direct Cash Transfer scheme with only 13 per cent of them having heard about it.

Land Acquisition law and Foreign Direct Investment

•    Only 27 per cent of the farmers have heard about the Land Acquisition law. Among those who had heard about this law, only 21 per cent said that farmers stand to benefit from the law, and 57 per cent of the respondents said that farmers stands to lose from this law, whereas 22 per cent did not express their opinion on this issue.

•    The survey finds that 83 per cent of the farmers have not heard about Foreign Direct Investment (FDI). Among those who have heard of FDI, a majority (51 per cent) said that FDI should not be allowed in the agriculture sector since farmers may not be able to bargain, whereas 28 per cent said that FDI should be allowed in the agriculture sector so that farmers can sell their crops directly to the big companies. Another 21 per cent expressed no opinion on this question. Interestingly, the landless farmers are more in support of foreign direct investment in agriculture because they believe that it will allow farmers to sell their agricultural produce directly to the big companies. 40 per cent of the landless farmers supported the idea of FDI in agriculture. On the contrary, the large farmers with big landholdings do not support FDI in the agriculture sector because they believe that it would harm the bargaining capacity of the farmers.

Minimum Support Price

•    Approximately 62 per cent of the interviewed farmers were not aware about MSP, whereas 38 per cent had heard about MSP. Among those who had heard about MSP, most (64 per cent) said that they were not satisfied with the rates of crops decided by the government and only 27 per cent are satisfied with the rates of crops decided by the Government.

Political Participation

•    When farmers were asked about their opinion on whether demonstrations, strikes, gheraos etc. are appropriate ways through which farmers can fight for their rights, 67 per cent said yes they were appropriate, whereas only 7 per cent considered them to be inappropriate means.

•    Most of the farmers said that price rise will be the most important issue for them when they go out to vote in the 2014 Lok Sabha election. 17 per cent of the surveyed farmers reported price rise as an issue followed by other issues like unemployment, irrigation, and corruption.

Economic Profile of Indian Farmers

•    The penetration of the Aadhar card among farmers is much less at 50 per cent

•    Only about half the farmers in North India said they have an Aadhar card. In the Eastern part of the country, only one in ten farmers reported to have an Aadhar card.

•    Of all the regions, the proportion of farmers with a bank account is lowest in Eastern India.

•    61 per cent of landless farmers said they have a bank or post office account as compared to 73 per cent small farmers who said they have one.

•    The survey shows that 92 per cent of the farmers have a ration card. While 45 per cent of the farmers said they have a BPL ration card, 42 per cent have an APL card.

Opinion of Women and Youth from Farmer Households

•    18 per cent women of the farmer households do other non-farming work to contribute financially to the family income.

•    67 per cent women say that the income from agriculture is not sufficient to fulfill the livelihood needs of their family. Only 20 per cent found it to be sufficient.

•    63 per cent youth belonging to farmer households help the family in farming.

•    Only 24 per cent youth belonging to farmer households are interested in continuing farming while 76 per cent would prefer to do some other work rather than farming.

•    Among the youth who are interested in continuing farming, most said it is their traditional occupation and they wanted to take it forward.

•    21 per cent women belonging to farmer households said that price rice was the biggest problem being faced by their household and 13 per cent said poverty is their biggest problem.

Note: A household that has more than 10 acres of land is a Large Farmer; between 4 acre and 9.99 is a Medium Farmer; less than four acres as a Small/Marginal Farmer; and with no land as Landless Farmer.

**page**


According to [inside]Agriculture–Pathways to Prosperity in Asia and the Pacific[/inside], March 2011, http://www.ifad.org/pub/apr/pathways.pdf:   

•    Intensity of multidimensional poverty (MPI) is highest in South Asia, which houses 29.5 percent of global population, but has 51 per cent of the world’s multi-dimensionally poor. India, Bangladesh, Nepal and Pakistan have high MPIs in South Asia. 51 per cent of the population in Pakistan, 58 per cent in Bangladesh, 55 per cent in India, and 65 per cent of population in Nepal are MPI poor.

•    Living standard has the highest contribution to poverty in India, Bangladesh and Nepal. Deprivation rates in health parameters are high in Pakistan and Nepal. Deprivation in terms of nutrition is high in Nepal and India. China has only 13 per cent of the population that is MPI poor, while Thailand has only 0.8 per cent. India, Afghanistan and Bangladesh have close to 50 per cent of rural children who are undernourished.

•    More than 680 million people in the Asia-Pacific region still continues to live on less than $1.25 a day, and 70 per cent of them reside in Bangladesh, India, Nepal and Pakistan. Most of the poor from this region are either landless or own a limited piece of land, possess large families, are less educated and have limited access to credit and technology.

•    In India, a study by Gaiha and Imai (2007) based on the analysis of the 61st NSS Round (2004-05) shows both higher incidence and intensity of poverty among the marginalised groups including Scheduled Castes and Scheduled Tribes. While the overall incidence of poverty in rural India was about 25 per cent, among the STs and SCs, about 44 per cent and 32 per cent, respectively, of the households were poor. The incidence of poverty among others was 19 percent. The causes behind this phenomenon are: poor quality of education, remote locations, limited access to markets and lack of decent physical and social infrastructure.

•    In 2005, the total number of people living in extreme poverty, defined as those living on less than US$1.25/day (2005 PPP) was 1.4 billion in the world. Of these, approximately 1 billion, i.e. about 70 per cent live in rural areas.

•    The number of rural poor has declined rapidly in Asia and the Pacific Region over the past decade (from 1057 million to 687 million).

•    While East Asia had over 500 million rural poor two decades ago, the number today stands at only 117 million.

•    The incidence of rural poverty has declined from 59 per cent to 31 per cent in the last two decades for the Asia and the Pacific region as a whole.

•    While in East Asia, poverty as a share of rural population is close to 15 per cent, in South Asia over 45 per cent of the rural people are poor.

•    In East Asia the rural poverty incidence declined from over 63 per cent to 15 per cent over the past two decades. Similarly, in South East Asia the incidence of rural poverty declined from 52 per cent to about 26 per cent in the last two decades.

•    Sri Lanka, Indonesia, Vietnam, Bangladesh, Lao PDR and China have made significant progress in reducing hunger. Slower progress has been made by India, Pakistan, the Philippines and Nepal.

•    In India, over 300,000 children work in the carpet industry, many of them under conditions that amount to bonded labour.

•    Smallholders in India who operate/ own less than 2 hectares accounted for about 71 per cent of the rural households in 1993 and about 88 per cent in 2004 indicating increased land fragmentation. Nearly, 25.3 percent of the rural households in India were chronically poor during the period 1971-1982. The NCAER study shows that 30.0 percent of the rural households in India were chronically poor during the period 1969-71.

•    The average holding size is 0.5 hectare for Bangladesh, 0.8 hectare for Nepal and Sri Lanka, 1.4 hectares for India and 3 hectares for Pakistan.

•    Almost 70 percent of poor live in rural areas of Asia and they depend on agriculture for their livelihood. In South Asia, about 80 per cent of the poverty remains a rural problem despite rapid industrialization and economic growth.

•    Some of the shocks that erode poor people's assets and capabilities are: natural disasters, climate change, pest outbreaks (e.g. avian influenza), vulnerability to food price fluctuations, illness, and death. Some of the risk-coping mechanisms households usually undertake in the face of poverty are selling productive assets, borrowing, depleting savings, migrating, and reducing expenditure on food, healthcare and education (notably affecting women and children).

•    There exist gender inequalities in education, economic opportunities, wages and nature and extent of work. A study in West Bengal (as mentioned by the IFAD report) shows that among women who had taken loans for income-generating activities, only 5 per cent reported having total autonomous control over the money; 56 per cent reported that they share control over the loan money with their husbands; and 38 per cent reported that their husbands have sole control over the proceeds of the loan.

•    Women’s share in non-agricultural wage employment remains low, particularly in South Asia. For India, it is estimated that 55 per cent of the wage gap between men and women cannot be explained by productivity and endowments, which suggests the presence of systematic gender-based discrimination in pay.

•    The decline in the proportion of people living in rural areas between the period 2000-04 and 2005-09 has been more prominent in East Asia and South East Asia as compared to Central Asia and South Asia.

•    Rural population in Asia and the Pacific region is likely to peak in 2014, with the total numbering 2400 million, which would decline thereafter. The contribution of agricultural value added to GDP is low in the entire region, and declined marginally between 2000-04 and 2005-09 for South East Asia and Pacific Island, and, more significantly in East, South and Central Asia.

•    South Asia (31 percent) has seen lowest growth in per capita income between 2000-04 and 2005-09 as compared to East Asia (64 percent) and Central Asia (43 percent).

•    The effect of rise in food prices on GDP between 2006 and 2007-08 is considerable as a 50 per cent rise in food price decreases the GDP of Asia and the Pacific Region by 1.05 per cent. A combined shock of a 60 per cent rise in food and fuel prices decreases GDP by 1.41 per cent.   

•    Usage of ICTs helped farmers in terms of knowing prices of agricultural commodities or weather conditions for e.g. SEWA (India) performs this service for women and ITC’s e-choupal (India) uses SMS to inform small producers.

•    In India, the number of self-help groups linked to banks has increased from about 500 in the early 1990s to more than 3 million in 2008. The Indian Dairy Cooperatives network comprises 12 million members, including landless labourers and women, and produces 22 per cent of India’s milk supply. In order to increase the welfare of migrants, Rajasthan introduced mobile ration cards for its them, while Orissa and Madhya Pradesh introduced improvements in the safety and efficiency of remittances.

•    Diversification of agriculture into livestock and aquaculture has added to increased prosperity and food security in China, Vietnam, Sri Lanka, Laos and Philippines. It finds that the linkage between agricultural (rural) and industry (mainly around urban centres) remained weak in major South Asian countries except China and Vietnam. In India during the process of economic transition, not enough movement of labour took place from agriculture to industry.

•    On average, rural non-farm income (RNFY) constitutes roughly 50 per cent of rural household income in Asia and the Pacific Region, of which 40 per cent comes from local non-farm business and employment and the remaining from transfers and remittances. Due to paucity of human, financial and physical capital, the poor households often remain confined to the low-productivity non-farm activities, which trap them in poverty.

•    Gender, caste and social status determine one's participation in non-farm jobs. Evidence suggests that each dollar of additional value added in agriculture generates USD 0.6 to USD 0.8 of additional rural nonfarm economy’s income in Asia and the Pacific Region.

•    Based on state level time series data for India covering the period 1971-72 to 1983-84, it has been found that expansion of casual non-farm employment is strongly correlated with growth in agricultural wages.

•    IFPRI estimates that 87 per cent of the world’s small farms (those less than 2 hectares) are in Asia and the Pacific Region. Secured land rights and women having joint ownership of land can increase productive investment in agriculture.

•    There are over one billion youth in the world today. Eighty five per cent of them live in the developing world. Some 61.5 per cent live in Asia and the Pacific.

•    There has been a fall or slowing down of growth in monthly wage rates in most countries of Asia and the Pacific region including India during 2006-2009.

•    Sectoral composition of rural non farm economy indicates that rural non-farm employment is almost equally distributed between manufacturing (27 per cent), trade and transport (29 per cent) and financial and personal services (31 per cent) in Asia and the Pacific Region. In India, while the ratio of non-farm to agricultural income is 4.5 to 1 for the average household, for the poor it is only 0.75 to 1.

•    A 1 per cent growth in agricultural value added per capita results in a GDP (per capita) growth rate of 2.13 per cent.

•    South Asia (or South East Asia) would need only a 5 per cent (or 8 per cent) increase in annual growth rate of agricultural ODA, 2 per cent (or 4 per cent) increase in annual growth rate of agricultural expenditure, 3 per cent (or 4 per cent) increase in annual growth rate of fertilizer, or 2 per cent (or 3 per cent) increase in annual agricultural investment in 2007-13 over and above the baseline scenario to achieve MDG 1, at US$2 a day, by 2015.

•    On the basis of simulations the IFAD report finds that the Asia and Pacific region would require a 56 per cent increase in agricultural ODA, a 28 per cent increase in agricultural expenditure, a 23 per cent increase in fertilizer use, or a 24 per cent increase in agricultural investment during 2007-13 in order to achieve the MDG 1 (at US$2 poverty line). It suggests that investment in agriculture is the key to poverty alleviation.

•    For Asia and the Pacific region, the elasticity of the head-count ratio of poverty with respect to agricultural growth is -1.18 (at $2 a day poverty line) and -2.73 (at $1.25 a day poverty line). Government can play a pivotal role in organizing the smallholders (who face several challenges, such as high transaction costs in accessing inputs, credit and marketing facilities) so that they participate in supply chain/ supermarkets.

•    The world population is expected to be about 9.1 billion in 2050. With increasing urbanization and high income levels, food production must increase by 70 per cent to meet the food demand in 2050. Since the scope for net increase in arable land is highly limited (especially in Asia and the Pacific Region), 90 per cent of this additional food requirement has to be met through increases in yields in areas with intensive agriculture.

•    More than half the deaths caused by natural disasters in 1985-94 were concentrated in South Asia. From 1995-2004, the share of East Asia and the Pacific in the total number of deaths rose to 59 per cent while the share of South Asia dropped to about 20 per cent.


 

According to [inside]National Commission for Enterprises in the Unorganised Sector--NCEUS (2007)[/inside], Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector, http://nceus.gov.in/Condition_of_workers_sep_2007.pdf

• The National Agricultural Policy of 2000 observed "Agriculture has become a relatively unrewarding profession due to generally unfavourable price regime and low value addition, causing abandoning of farming and increasing migration from rural areas….". Several factors contribute to this situation. These include shift in cropping pattern towards cash crops, lack of level playing field for farmers in the global market, increased dependence on high-cost inputs which increases the cost of cultivation and indebtedness, enhanced risks, falling profitability and declining public support.

• When 92 per cent of the country's workforce is employed in the informal or unorganised economy (i.e. those who work in the unorganised sector plus the informal workers in the organised sector), it is but natural that there is a high congruence between the poor and the vulnerable segments of the society (who may be called the common people).

• Poor asset base and landlessness are the prime reasons why workers in rural areas work as agricultural labourers. The share of landlessness among the agricultural labourers was 19.7 per cent in 2004-05.

• About 86 per cent of the marginal and small farmers operate around 43 per cent of the agricultural land while 14 per cent of medium and large farmers operate around 37 percent of the land.

• Nearly 40 per cent of the Hindu STs engaged as agricultural labourers are below the poverty line, followed by Muslim agricultural labourers at 31.5 per cent, and SC Hindus at 31 per cent.

• Landlessness is the highest among Hindu SCs and Muslim OBCs and Others and the least among Hindu upper castes.

• 79 per cent of the informal or unorganised workers, 88 per cent of the Scheduled Castes and Scheduled Tribes, 80 per cent of the OBC population and 84 per cent of the Muslims belong to the poor and vulnerable group. They have remained poor at a bare subsistence level without any job or social security, working in the most miserable, unhygienic and unliveable conditions, throughout this period of high economic growth since the early nineties.

 

According to [inside]Nagaraj K (2008): Farmers’ Suicides in India, Magnitudes, Trends and Spatial Patterns[/inside], http://www.macroscan.com/anl/mar08/pdf/Farmers_Suicides.pdf 

• The Situation Assessment Survey of Farmers of the National Sample Survey reported that as many as 40 percent of the farmers did not like farming and  ‘were of the opinion that, given a choice, they would take up some other career’ (National Sample Survey, 2005; p11); 27 percent found it ‘not profitable’, another 8 percent reported that it is ‘risky’ and another 5 percent did not like it for ‘other reasons’

• Farmers' suicides happened in Maharashtra, Karnataka, Kerala, Andhra Pradesh, Punjab and Madhya Pradesh including Chattisgarh

• In the ten-year period between 1997 and 2006 as many as 166,304 farmers committed suicide in India. If we consider the 12 year period from 1995 to 2006 the figure is close to 2,00,000: the exact figure (190,753) would be an underestimation since a couple of major states like Tamil Nadu and Rajasthan and a number of smaller states like Pondicherry did not report any farmers’ suicides for one or the other – or both - of these two years. 

• Going by the official data, on average nearly 16,000 farmers committed suicide every year over the last decade or so.  It is also clear from the table that every seventh suicide in the country was a farm suicide. 

• The year 1998 in fact show a sharp increase in the number of farm suicides – an 18 percent jump from the previous year; and the number remained more or less steady at around 16,000 suicides per year over the next three years upto 2001.

• The average number of farm suicides per year in the five year period 2002-2006, at 17,513 is substantially higher than the average (of 15,747 per year) for the previous five year period.  Farm suicides have increased at annual compound growth rate of around 2.5 per cent per annum over the period 1997-2006

• Suicides in general, among the population as a whole, are also largely concentrated among males, but the degree of concentration here is significantly lower than in the case of farm suicides: male suicides in the general population account for nearly 62 percent of all suicides in the country.

• The farm suicide rate (suicide rate in the country is defined as number of suicides per 100,000 population) in the country in 2001 was 12.9, which was about one fifth higher than the general suicide, which was 10.6 in that year. As one would expect, the suicide rate among male farmers was much higher at 16.2, which was nearly two and a half times the rate for the female farmers (which was 6.2).

• The overall farm suicide rate in 2001 at 15.8 is around 50 percent higher than the general suicide rate in the country in that year. And for the male farmers this rate, at 17.7, is significantly higher, by about 75 per cent, compared to the females.

 

 

According to [inside]Some Aspects of Farming, 2003, Situation Assessment Survey of Farmers[/inside], National Sample Survey (NSS) 59th Round, (January–December 2003):

 

• An estimated 27% of farmers did not like farming because it was not profitable. In all, 40% felt that, given a choice, they would take up some other career.  The break-up of members of farmer households by educational level was very similar to that of the entire rural population. 

• Nearly 5% of farmer households had a member who belonged to a self-help group. Only 2% had a member who belonged to a registered farmers’ organisation.  

• About 18% of farmer households knew what bio-fertilisers were and 29% understood what minimum support price meant. Only 8% had heard of the World Trade Organisation.  Only 4% of farmer households had ever insured their crops and 57% did not know that crops could be insured. About 29% of farmer households included a member of a cooperative society. 

• Only 19% had availed themselves of services from a cooperative. Most of these households availed themselves of either credit facilities, or services related to seeds or fertilisers.   

• Almost 48% of farmer households purchased their seeds and 47% used farm-saved seeds. Whereas 30% farmers replaced seed varieties every year, another 32% replaced them every alternate year. Fertilisers were used by 76% farmer households during the kharif and 54% during the rabi season.  

• For 27% households, fertilisers were available within the village. Organic manure was used by 56% farmer households during the kharif and 38% during the rabi season. It was available within the village for 68% households during the kharif and 75% households during the rabi season.  

• Improved seeds were used by 46% farmer households during the kharif and 34% during the rabi season. They were available within the village for 18% farmer households.  

• Pesticides were used by 46% farmer households during kharif and 31% during rabi. Veterinary services were used by 30% during kharif and 22% during rabi. Only 1.5-2% of farmer households said facilities for testing of fertilisers or pesticides were available to them.

• Among the various agricultural activities covered in the survey, 96.2% of all land used for farming during the kharif and 95.1% during the rabi season was devoted to cultivation, including horticulture, sericulture and vermiculture. In case of leased-in land, 98.2% during the kharif and 97% during the rabi season was cultivated.  

• The share of orchards and plantations in total farmed land was 3% during the kharif and 4% during the rabi season.  In land farmed by Scheduled Caste households, the share of orchards and plantations was 1-2%.

• Farmer households possessing less than 0.01 hectares of land - who devoted only 14% of farmed land to cultivation - reported 69% of farmed land as used for dairying, compared to 0.35% for all farmer households taken together. 

• Almost 50% of all land irrigated during the kharif season and 60% during the rabi season was irrigated by tube-wells. Wells were used to irrigate 19% of 1and during kharif and 16% during rabi. Canals accounted for irrigation of 18% land during kharif and 14% during rabi. 

• An estimated 62% of net irrigated area during kharif and 69% during rabi was devoted to cultivation of cereal crops. Gross irrigated area accounted for 42% of cropped area during the kharif and 56%during the rabi season. About 79% of gross irrigated area during the kharif and 83% during the rabi season was irrigated without the use of any device. Around 5% was irrigated with the help of diesel pumps and 4% with electric pumps. 

• Of the farmer households using non-human energy for ploughing, about 47% used diesel tractors while 52% relied on animal power. Among those using non-human energy for harvesting, 59% used diesel-powered machines. Of those reporting non-human energy use for irrigation, 66% used diesel pumps and 33% used electric pumps.
 

The Mid-Term Appraisal (MTA) for the Tenth Five Year Plan had drawn attention to the loss of dynamism in agriculture and allied sectors after the mid-1990s. In fact, during the last decade or so Indian agriculture has faced a number of severe challenges, superimposed on the long-term demographics. According to the [inside]11th Five year Plan[/inside], http://planningcommission.nic.in/plans/planrel/fiveyr/11th/11_v3/11th_vol3.pdf, recent trends that have raised concern regarding food security, farmers’ income, and poverty are:

 

  • Slowdown in growth.
  • Widening economic disparities between irrigated and rain-fed areas.
  • Increased vulnerability to world commodity price volatility following trade liberalization. This had an adverse effect on agricultural economies of regions growing crops such as cotton and oilseeds.
  • Uneven and slow development of technology.
  • Inefficient use of available technology and inputs.
  • Lack of adequate incentives and appropriate institutions.
  • Degradation of natural resource base.
  • Rapid and widespread decline in groundwater table, with particularly adverse impact on small and marginal farmers.
  • Increased non-agricultural demand for land and water as a result of the higher overall GDP growth and urbanization.
  • Aggravation in social distress as a cumulative impact of the above, reflected in an upsurge in Growth of agricultural GDP decelerated from over  3.5% per year during 1981–82 and 1996–97 to only  around 2% during 1997–98 and 2004–05 . This deceleration, although most marked in rainfed areas, occurred in almost all States and covered almost all major sub-sectors, including those such as horticulture, livestock, and fisheries where growth was expected to be high
  • Consequently, growth of agricultural GDP has been well below the  target of 4% set in both Ninth and Tenth Plans. In fact, Tenth Plan growth averaged even less than that during Ninth Plan because, as was noted in the MTA, growth  plummeted to below 1% during its first three years, that is from 2002–03 to 2004–05.
  • The supply side performance of agriculture is affected by a large number of factors, several of which interact among each other. These factors are the natural resource base (including rainfall), technology, infrastructure (including irrigation), and the economic environment comprising price signals and institutions
  • An important reason for recent farm distress was that after improving steadily from 1980 to 1997, terms of trade (http://tutor2u.net/economics/content/topics/trade/terms_of_trade.htm) turned against agriculture from 1999 and, almost for the first time in post-Independent India, farm prices actually fell at the same time that farm production decelerated.
  • This not only depressed incomes, but also increased farm debt considerably. More generally, farmers are now subject to greater risk because variability of world prices is much higher than what Indian farmers have been used to in the past.
  • Another important development of market institutions is the rise of modern food retailing which offers the prospect of lower marketing costs and reduced spoilage leading to lower prices for consumers and higher realization for farmers. Modern retailing has become controversial partly because those involved in existing trading mechanisms feel their vested interests threatened. However, although there is room for mutually beneficial modernization in this area and this will undoubtedly evolve, a legitimate area of concern is that if front-end investment outpaces the backward linkage with farmers, the immediate outcome may simply be higher imports and lower farm prices
  • An unfortunate trend over the past two decades has been that expenditure control efforts following fiscal shocks such as the Pay Commissions awards have led to cutbacks in agricultural investment and extension, but not in subsidies. Budgetary subsidies to agriculture have increased from around 3% of agriculture GDP in 1976–80 to about 7% in 2001–03. During the same period, public investment in agriculture declined from over 4% of agriculture GDP to 2%. Most of the subsidies are on fertilizer, power, and irrigation water and these have actually contributed to the degradation of natural resources.

**page**

According to [inside]Some Aspects of Operational Land Holdings in India, 2002-03[/inside], Report No. 492(59/18.1/3), National Sample Survey 59th Round (January–December 2003), August, 2006:

A sample of 52,265 rural households and 29,893 urban households was surveyed in the sixth Land Holding Survey of NSS, carried out in 2003. The following highlights relate to rural India only.

• There were 101.3 million holdings operated during the kharif season of 2002-03 and 95.7 million holdings operated during the rabi season of the same agricultural year.

• The number of operational holdings** increased rapidly from 51 million in 1960-61 to 101 million in 2002-03, whichis understandable considering the growth of population. However, the rate of growth of operational holdings, which accelerated over the three decades from 1960-61 to 1991-92, appears to have slowed down in the decade prior to 2002-03.

• The total operated area of 133 million hectare in 1960-61 had dropped to 126 million hectare in 1970-71 - a fall of about 5.8%. It dropped by around 5.6% again between 1970-71 and 1981-82. The estimate for total operated area from the 48th round showed a rise to 125 million hectare, that is, back to the 1970-71 level, casting doubt on the 37th  round estimate. However, the present survey’s estimate of 108 million hectare amounts to a fall of about 8% since 1981-82, that is, in the last 21 years, which is consistent with the declining trend observed up to 1981-82. The overall fall over the 42-year period is about 18.5% - which is roughly equivalent to a 5% fall every decade.

• Fragmentation of holdings has been a chronic problem in Indian agriculture. The estimates available from the last four landholding survey (LHS) show that the average rural holding, though smaller, is less fragmented than it was earlier, the number of parcels*** per holding having dropped from 5.7 in 1960-61 to 2.3 in 2002-03.

• Average area operated per holding in 2002-03 was 1.06 hectares compared to 1.34 hectares during 1991-92 and 1.67 hectares in 1981-82. Over the four decades, the average size of a holding came down by nearly 60% - from 2.63 hectare in 1960-61 to 1.06 hectare in 2002-03.

• During the four decades from 1960-61 onwards, land tenure status of operational holdings has undergone significant changes. While the percentage of holdings with partly or wholly owned operated area changed little between 1960-61 and 2002-03, the proportion of holdings with partly or wholly leased in land (henceforth called ‘tenant holdings’) declined sharply from around 24% to 10% during the period after 1970-71. This trend, indicating a continuous shift from tenant cultivation to self-cultivation, has been a characteristic feature of Indian agriculture during this period.

• Over the three decades the number of marginal holdings has multiplied from 19.8 million in 1960-61 to over 71.0 million in 1991-92 – an increase of over three and a half times.

• Marginal holdings (of size 1 hectare or less) in 2002-03 constituted 70% of all operational holdings, small holdings (size 1 to 2 hectares) constituted 16%, semi-medium holdings (2 to 4 hectares), 9%, medium holdings (4 to 10 hectares), 4%, and large holdings (over 10 hectares), less than 1%.

• The share of marginal holdings in total operated area climbed by 6-7 percentage points since 1991-92 to reach 22-23%, drawing level with the shares of the semi-medium and medium holdings, which had the largest shares in 1991-92.

• Tenant holdings, that is, holdings with partly or wholly leased-in land, formed about 10% of operational holdings during 2002-03 compared to 11% in 1991-92. On an average, a tenant holding operated 0.7 hectares of tenanted land in 2002-03.

• The percentage of tenant holdings in 2002-03 was highest in Orissa (19%). It was14% in West Bengal, 12-13% in Andhra Pradesh, Punjab and Bihar, about 12% in Uttar Pradesh, and 11% in Haryana.

• The share of leased-in land**** in operated area came down to 7.2% in 1981-82 from 10.6% in 1970-71. The 1991-92 survey estimated the share to have risen to 8.5%. The share of leased-in land in total operated area, which has been declining more or less steadily from 10.7% in 1960-61, was 6.5% for the kharif season of 2002-03.

• The percentage of leased-in area, in 2002-03, was highest among the 15 States in Punjab (17%) and Haryana (14%). The same two States had reported the highest percentages of leased-in area in 1981-82 and 1991-92. Orissa, too, reported a high percentage (13%) of leased-in area in 2002-03. In all other major States, the percentage was less than 10 in 2002-03.

• At the all-India level, the size distribution of operational land holdings exhibited more or less the same degree of concentration (as measured by Gini’s coefficient of concentration) as in 1991-92.

• In West Bengal, Bihar (including Jharkhand), and Orissa, the degree of concentration of the size distribution of operational land holdings was appreciably lower in 2002-03 than it was in 1991-92. In Kerala, the degree of concentration registered a fall in each of the three decades prior to 2002-03.

• Except for a slight rise during the 60’s, the percentage of tenant holdings has been continuously declining. From over 20% in 1960-61 it has declined to 11% or less in all the size categories of holdings except the large holdings. Among the large holdings the percentage is still as high as 14%, which is an increase over the 1960-61 percentage.

• Sharecropping remained the most widely prevalent form of lease contract, covering 41% of all tenanted land. However, the shares of “fixed money” and “fixed produce” appeared to be on the increase, together accounting for over 50% of leased-in land in 2002-03.

• In Punjab and Haryana - the two most agriculturally advanced states in the country - the most prevalent form of contract was fixed rent in cash. About 79% of the tenanted land was contracted for fixed money in Punjab and about 71% in Haryana.

• Fixed crop rent was reported as the most common form of tenancy in terms of leased-in area in Gujarat, Karnataka and Andhra Pradesh. In all the Southern States except Kerala, fixed rent (cash or kind) contracts covered over 60% of tenanted land.

• Sharecropping was found to be the predominant form of tenancy in Orissa (73%), former Bihar (i.e. including Jharkhand) (67%), Assam (55%) and former Uttar Pradesh (inclusive of Uttaranchal) (53%). In Madhya Pradesh (including Chhattisgarh), Rajasthan, Maharashtra and West Bengal, too, sharecropping was the most prevalent form of contract, covering 35-40% of tenanted land.

• Net sown area constituted 87% of operated land during the kharif season and 57% during the rabi season.

• Irrigated land formed 42% of net sown area during the kharif season and 67% during the rabi season.

• In Punjab, extent of irrigation of net sown area (irrigated area as proportion of net sown area) was as high as 97-98% not only in the rabi but also in the kharif season. In Haryana and Uttar Pradesh, extent of irrigation was 91% during rabi and 78-80% during kharif. Extent of irrigation even during the rabi season was only about 22% in Assam.

• About 64% of net sown area was under cereal cultivation in both the seasons of the agricultural year.


** Operational holdings: An operational holding is defined as a techno-economic unit wholly or partly for agricultural production (defined above) and operated (directed/managed) by one person alone or with the assistance of others, without regard to title, size or location. The holding might consist of one or more parcels of land, provided these are located within the country and form part of the same technical unit. In the context of agricultural operations, a technical unit is a unit with more or less independent technical resources covering items like land, agricultural equipment and machinery, draught animals, etc. Holdings used partly or exclusively for livestock and poultry raising and for production of livestock and poultry products (primary) and/or pisciculture are also considered as operational holdings whereas holdings put exclusively to uses other than agricultural production are not considered as operational holdings. Holdings operated by cooperative farms are also not considered as operational holdings.

*** A parcel of an operational holding is a piece of land entirely surrounded by other operational holdings or by land not forming part of any operational holding. It may consist of one or more plots.

**** Lease of land: Land given to others on rent or free by owner of the land without surrendering the right of permanent heritable possession is defined as land leased out. It is defined as land leased in if it is taken by a household on rent or free without any right of permanent or heritable possession. The lease contract may be written or oral.

**page** 

 

According to the [inside]World Development Report: Agriculture for Development 2008[/inside], www.worldbank.org

 

• Diversification of Indian agriculture towards high-value crops such as horticulture and floriculture is needed so as to promote income-generation among the small and marginal farmers. Markets for higher value products such as horticulture are growing at 6 percent a year in India. Horticulture, livestock, and other high-value activities offer considerable potential for employment generation and productivity growth.

• Tenancy restrictions in India reduce productivity and equity. Lack of efficient land markets in China or and restrictions on land rental in India inhibited labor mobility. Land rental activity in India has declined sharply, from 26 percent in 1971 to less than 12 percent in 2001, contrary to trends in other countries. However, renting continues to be an important means of accessing land. More number of households rented land in 2001 than the total number that benefited from land reforms Land sales and purchases contributed more than land reform to equalize India’s land ownership.

• The average landholding size went down from 2.6 hectares in 1960 to 1.4 hectares in 2000, and it is still declining in India.

• Adoption of new technologies, especially information and communication technologies—ICTs (e-government), can reduce the scope for corruption, as with computerizing land records in Karnataka.

• In Punjab, extensive use of nitrogen fertilizer and pesticides has increased concentration of nitrates and pesticide residues in water, food, and feed, often above tolerance limits. Therefore, it is justified to adopt more diversified systems that can reduce the need for chemical fertilizers and pesticides (for example, mixed legume-cereal systems). Power, fertilizer, and output subsidies, which are provided to appease large farmers, discourage a shift to alternative cropping patterns. In the Punjab region, overexploitation of groundwater takes place thanks to the huge subsidies given on electricity. Moreover, minimum support prices (MSP) for rice increase the financial attractiveness of rice relative to less water-intensive crops, which makes depletion of ground water table more obvious.

• R&D expenditure as a percentage of agricultural gross domestic product (GDP) has increased from 0.18 percent in 1981 to 0.34 percent in 2000. China’s (US$ 3,150 million) public agricultural R&D spending was almost twice as compared to that of India (US$ 1,858 million) in the year 2000.

 

According to a paper by Prof. Utsa Patnaik titled [inside]Agrarian Crisis and Distress in Rural India[/inside], June 10, 2003, http://www.macroscan.net/fet/jun03/fet100603Agrarian%20Crisis_1.htm:

  • There are other factors behind rural distress apart from drought. Drought actually accentuated a state of distress in rural India that has been growing ever since the 1990s.

 

  • When we bear in mind the additional fact that the per capita calorie intake has gone down drastically for the entire rural population from 2309 kilo calorie per diem in 1983 to 2011 kilo calorie per diem in 1998, and hence is likely to have gone down even more drastically for the rural poor, the fact of growing rural distress stands out in bold relief.

 

  • The fact that accumulation of such enormous foodstocks has occurred despite a stagnation (or even a marginal decline) in per capita foodgrain output in the country during the 1990s, suggests that the cause of this accumulation is the absence of adequate purchasing power of the rural population. In other words, the period of neo-liberal reforms has seen a significant curtailment of purchasing power in the hands of the working people, especially in rural India, which has caused growing distress on the one hand and an accumulation of unwanted foodstocks in the hands of the government on the other

 

 

According to a presentation by Priya Deshingkar titled [inside]Migration of Labour in India: Distress, Accumulation and Policy Lessons[/inside], August 29, 2003, http://www.odi.org.uk

  • Migration is a routine livelihood strategy and not simply a response to shocks – corroborated by case studies from all over India

 

  • Migration can lead to the accumulation of wealth, particularly where there are marketable skills or established employment relationships;

 

  • Processes of social exclusion prevent people from moving from low-return and insecure migration to more rewarding types (segmented labour market)

 

  • Accumulative outmigration can occur from poor areas and distress/short term coping migration can occur from well-endowed areas.

 

According to [inside]Agriculture Sector Study: Critical Issues and Strategic Options[/inside], http://www.adb.org/Documents/Assessments/Agriculture/IND/Agriculture-Assessment.pdf:

  • Overall the agricultural sector grew at 1.85% per annum in the period 1995/96 to 2004/05. The growth rate in the period 1984/85 to 1995/96 was 3.6%. The stagnation is most evident in foodgrains–their per capita availability in 2004/07 was 186 kgs as against 207 kgs in 1991/95.

 

  • Nearly two-thirds of agricultural land is degraded to some extent. Only about one-third is in good health. Soil erosion due to rain, streams and floods is the main form of land degradation affecting 94 million hectares. 22 million hectares suffer from acidity or salinization while another 14 million hectares are water logged. Besides these forms of degradation, soil health has also been compromised by loss of macro and micro-nutrients and organic matter that occurs due to crop cultivation. The distortionary fertilizer policy has contributed to the nutrient imbalance in the soil.

 

  • Although livestock and fisheries have been growing faster than the crop sector and together account for nearly 30% of agricultural GDP, this sector has not been given its due in terms of both policy attention as well as public investment. This sector is also important from an equity point of view. Livestock ownership is widely distributed among the poor and is a valuable income supplement in mixed farming systems. Further, in arid and semi-arid environments which are not friendly to crop agriculture, there is a greater dependence on livestock agriculture. There is a strong complementarity between crop and livestock; a large portion of livestock is used as draught animals and their feed consists largely of crop residues and agricultural byproducts. In addition, the manure from livestock is a source of fertilizers and is also used as fuel.

 

A study titled [inside]The Dragon and the Elephant: Agricultural and Rural Reforms in China and India[/inside] by Shenggen Fan, http://www.adb.org/Documents/events/2005/atd/paper2-fan.pdf, finds: 

  • Inequality in China has more than doubled in the last two decades, with the Gini coefficient jumping from 0.21 in 1978 to 0.46 in 2000 and placing China among the highly unequal economies of the world. The income Gini coefficient was 0.33 in 2000 for India.

 

  • Both India and China face the thorny challenge of effectively implementing policies to conserve water and raise use efficiency without compromising food production or causing adverse welfare effects on the poorer farmers. In both countries there is vast scope for improvement in water use efficiency through institutional and management reforms of existing water systems. India’s experience with water users’ associations, participatory watershed schemes, and community-based rain harvesting can provide useful examples to learn from.

 

  • Despite their remarkable achievements both China and India continue to be characterized by some of the typical features of developing countries: low income per capita and a majority of the population living in rural areas and dependent on agriculture for their livelihood. In 2001 the rural population was 71.8 percent of the total in India and 63.3 percent in China (World Development Indicators—WDI 2004), while the share of the population engaged in agriculture was still as high as 58 percent of the overall workforce in India and 50 percent in China.

 

  • Improved terms-of-trade for agriculture during the first half of 1990s in turn resulted in an increase in the profitability of the primary sector relative to industry and led to a rise in private investments, which are now double the public investment in agriculture. These investments were increasingly directed to the production of horticulture, poultry, fish, milk, and eggs in response to booming consumer demand for these high-value agricultural produce. These commodities experienced a remarkable growth in output during the 1990s relative to the previous decade.