Farm Income

It is often argued that irrigated crops generate more income than rainfed or less irrigated crops. How far does this perception hold true? Utilizing the time series data on cost of cultivation, chapter 3 provides an in-depth analysis of the economics of five important crops, namely bajra, maize, gram, groundnut, and cotton grown under irrigated and rainfed/less irrigated states. Rejecting the age-old argument, this chapter shows that there is no marked difference in the profitability of cereal crops between irrigated and rainfed conditions. The chapter also underlines the reasons as to why irrigated crops were unable to generate significantly more income than those crops cultivated under rainfed condition.

Farm Income in India

Owing to poor income from crop cultivation, increased indebtedness and widespread suicides of farmers have been reported in different parts of the country. This has forced the researchers and policymakers to study the issue of farm income in an in-depth manner, which has previously not received adequate attention till the early 2000s. Besides the issue of estimate, many myths on farm income have not been adequately addressed with reliable and temporal data. Chapter 2 attempts to unravel the myths surrounding the issue of farm income and its estimates using data from cost of cultivation survey and the Situation Assessment of Survey of farmers. By showing the pathetic levels of farm income, it also recounts the measures that are needed to increase the farm income at the end.

Introduction

This chapter delineates the various issues and myths concerning farm income in India in an emphatic manner. Indian agriculture has made rapid progress after the introduction of the Green Revolution in terms of production and productivity of crops. But, this development seems to have not made any big impact on the income of farmers. Owing to poor remuneration from crop cultivation that lead to increased indebtedness, widespread suicides of farmers have been reported in different parts of the country. Unfortunately, comprehensive analysis covering all the pertinent issues of farm income is not available in India. Besides flagging the pertinent issues on farm income, this chapter provides a brief overview of all the chapters included in this volume.

Are Inputs Used Efficiently in Crop Cultivation?

This chapter examines how efficiently farmers are using various farm inputs in crop cultivation, which has been an important issue of research in the context of agrarian crisis and reduced farm income. Many studies from India seem to suggest that the farm inputs are mostly used suboptimally. Is this true now across different crops and states? Utilizing spatial and temporal data, chapter 12 attempts to find out the efficiency of different inputs used for cultivating different crops namely paddy, wheat, gram, groundnut, cotton and sugarcane. Estimating results from well constructed regression models, it provides solid answers whether the value of crop output per unit of input generated in terms of INR has increased consistently over the years in both foodgrain and non-foodgrain crops. Further, it also addresses the reasons for reduced input use efficiency in certain crops.

Has Agricultural Price Policy Benefitted Paddy Farmers?

This chapter looks at the impact of support price policy on the income from paddy crop. Markets for agricultural produces in India are mostly unorganized and distorted where farmers are often scrupulously exploited. Also since the elasticity of demand for agricultural commodities particularly foodgrains is less than unit, increased production during bumper harvest brings down the prices of agricultural commodities sharply. But, the support price provided to paddy has come under severe scrutiny for various reasons in recent years. Farmers have been demanding for higher support price for paddy but some economists argue that increase in paddy price is ‘dirty economics and dirtier politics’. With the help of time series data, chapter 4 provides an elegant analysis whether the support price scheme has helped paddy cultivating farmers in terms of increasing their income.

Farm Profitability in Andhra Pradesh

This chapter addresses the issue of farm profitability specific to Andhra Pradesh, one of the large agricultural states in India. Farmers in general and in Andhra Pradesh in particular are passing through a painful phase with widespread indebtedness and high proportion of farm suicides during the last two decades. What is the cause this crisis? Is it because of low remuneration from crops? Although a large number of studies have attempted to study the possible reasons for this unprecedented crisis, the issue of profit from crop cultivation covering longer period of data and crops has not been studied in detail. Utilizing time series data from eight important crops, chapter 8 examines whether farmers reap any steady profits over time. Further, it also provides an in-depth analysis of how many years farmers were able to harvest profit especially in relation to cost C2 since seventies.

Procurement of Foodgrains and Farm Income Nexus

This chapter addresses the till now hidden nexus between foodgrain procurement and farm income in India. Public procurement of foodgrains with pre-announced MSPs in many ways helps farmers to increase their farm income. Studies are seldom available relating public procurement of paddy and wheat with its farm income covering different states taking data from longer period of time. While addressing the overall trend in procurement of crops, it also underlines the gaps in procurement of foodgrains in different states over time. With the use of regression analysis, this chapter examines the impact of public procurement of foodgrains on farm income. Further, it also measures the exact impact of public procurement on farm income by every 1 per cent increase in procurement using regression analysis.

Has MGNREGS Affected Farm Profitability?

It is argued that the national rural employment guarantee scheme introduced during 2006 has increased the farm wage rate substantially by artificially increasing demand for labour. This seems to have resulted in sharp reduction in farm profitability. Is there any substance in this argument? Chapter 6 delves into this issue deeply utilizing cost of cultivation survey data from different states and different crops consisting of both low and high value crops. The chapter also narrates why the impact of MGNRGES on farm profitability cannot be the same for all crops and all states with empirical evidence. With an analysis of operation-wise cost of cultivation, this chapter also attempts to bring out the variation in its impact between high productivity states and low productivity states.

Is Sugarcane Cultivation Profitable to Farmers?

This chapter aims to provide an empirical answer to the issue of whether the sugarcane crop is still profitable to farmers. In an unprecedented manner, the country’s most viable sugarcane crop growers recently are coming out in large numbers agitating against the poor remuneration of the crop. While the sugarcane farmers are demanding a better price for their produce, the support prices announced periodically by the government reportedly fail to take into account the ever increasing cost of farm inputs. Utilizing the cost of cultivation survey data covering six important sugarcane cultivating states, chapter 7 answers questions such as: why is an unanimous call of distress heard from sugarcane fields today? Is it a justifiable claim that sugarcane crop is no more remunerative? Do the high productive states have an edge over the low productivity states with regard to sugarcane profitability?

Agricultural Market Access and Farm Income Nexus

This chapter provides an explanation as to whether agricultural market access has any relationship with farm income. A plethora of studies confirm that rural infrastructure is a sine qua non for significantly improving agricultural production. Recent literature indicates that in addition to factors like human capital, credit markets, extension services and technology, the presence of reliable infrastructures such as roads and market sites increase the efficiency of both marketing and production by bringing down the transaction costs and ensuring more competitive pricing conditions in marketing than would occur in their absence. Making a departure from earlier studies by taking 235 Indian districts as the unit of analysis, chapter 5 attempts to provide an empirical basis for the perceived nexus between market access, agriculture infrastructure and value of agriculture output (VAO) from the Indian perspective using regression analysis.