Extracts of the Discussion of Group V on Doubling Farmers' Income Stakeholder Consultation

Backdrop Past strategy: for development of the agriculture sector in India focused primarily on raising agricultural output improving food and nutrition security. did not explicitly recognise the need to raise farmers' income and did not mention any direct measure to promote farmers' welfare. Strategy involved increase in productivity through better technology and varieties -increased use of quality seed, fertiliser, irrigation and agro chemicals; incentive structure in the form of remunerative prices for some crops subsidies on farm inputs; public investments in and for agriculture; and facilitating institutions. Key Findings 45 per cent increase in per person food production : Last 50 years – food production multiplied by 3.7 times. made India food self-sufficient at aggregate level also a net food exporting country. Farmers' income remained low in relation to income of those working in the non- farm sector.

Impact of low level of farmers’ income Low level of farmers’ income and disparity between income of a farmer and non-agriculture work. Agrarian distress and sharp increase in number of farmers suicides (1995-2004) due to: Losses from farming Shocks in farm income Low farm income Government constituted “National Commission of farmers” 5 reports & “Draft National Policy for farmers”. “Success in agricultural progress should be measured by the growth of farmers incomes and not just by production figures”.

Doubling of Farmers’ Income “I wish to double the income of farmers by 2022 when India will celebrate 75 years of its Independence” Prime Minister while addressing farmers rally at Bareilly (Feb 28, 2016) Budget 2016-17 “We are grateful to our farmers for being the backbone of the country’s food security. We need to think beyond food security and give back to our farmers a sense of income security. Government will, therefore, reorient its interventions in the farm and non-farm sectors to double the income of the farmers by 2022.” Finance Minister Budget Speech, February 29,2016.

DFI Vision: The concept and Time Frame Time period 2015-16 to 2022 (2022-23) Annual growth rate of 10.4% required. What is to be doubled Income of farmers Not farm incomes only, not the output or the income of the sector or the value added or GDP of agriculture sector Real or nominal income Real incomes. (inflation adjusted). If technology, input prices, wage and labour use could result in per unit cost savings then farmers’ income would rise at much higher rate than output. Relative increase in prices of farm products compared to prices of non-agricultural commodities. During 2004-05 to 2011-12, agricultural output at constant prices increased by 34% while real farmers’ income increased by 63%.

Sources of Growth in Farmers' Income 10.4% annual growth rate required on-going and previously achieved rate of growth in farm income needs acceleration. Major sources of growth: improvement in productivity, resource use efficiency or Total Factor Productivity, saving in cost of production increase in cropping intensity, diversification towards high value crops, The sources outside agriculture include: shifting cultivators from farm to non-farm occupations, and improvement in terms of trade for farmers or real prices received by farmers.

Strategies for Improving Farmers' Income Stakeholder Consultation

Production Centric Need to raise output through concerted efforts on increasing productivity, TFP, input management, resource conservation Major contributors Pradhan Mantri Krishi Sinchai Yojana; Soil health card, Neem Coated Urea Prampragat Krishi Vikas Yojana. Focus on zonal planning in bigger states like UP Regional crop plans essential as per the resource endowments and demand situation Promoting “Niche Agriculture” and regionally important and suitable commodities like horticulture in NWH Integrated farming systems important Like paddy-cum-fish culture in eastern India and NE Investment and subsidies in few technologies like poly-houses may help multiply the returns Need for Risk Mitigation: insurance against crop and income loss Pradhan Mantri Fasal Bima Yojana Climate Smart Agriculture Role of ICAR and SAUs crucial Need for SAUs in certain states like Arunachal Pradesh

Post-harvest Management Centric Need for suitable strategies for reducing post harvest management to reduce crop losses Required value addition and processing States like MP established processing units in the major producing clusters In a short time span of 7 years, we need to find alternative to transgenic needs to be found.

Marketing Related Essential to ensure whether the increased production is converted to money? Need for integrated and value chain approach e-NAM would prove to be game changer Market linkages and reforms essential Price uncertainty needs to be given due priority “Consumer should not become the king over farmers’ welfare” Effective procurement strategies like UP Estimation of regional, national and international demand to avoid the glut situations preventing the situation of price crash Need for stable commodity trade policies Abrupt policy changes do not allow harnessing the lucrative market situation Policies affect farmers' income in a large number of ways. Particular attention needs to be paid to various types of reforms needed in agriculture sector. While reforms progressed in other sector of economy, absence of reforms in agriculture post 1991, resulted in lack of growth in agriculture.

Non-farm and other Concerns Creating suitable infrastructure In case of irrigation, requirement of capital is huge All schemes under AIBP not sanctioned, only 99 schemes are eligible Need for attracting private investment Agro-tourism can be a lucrative off-farm activity Can bring substantial income in NE and NWH to go for diversification of fruits and vegetables mainly because of the price risk and uneconomic lot for marketing. Need for separate plans for small farmers in terms of bargaining power in various transactions in the input and output market. FPOs have shown very impressive benefits to small farmers, women, tribal farmers, even in remote and disadvantaged areas.

Success Mantras Certain states have the potential to more than double provided effective plans and strategies are made e.g. Arunachal Pradesh States like Chhattisgarh and Madhya Pradesh very proactive in finalizing the strategic framework of their states Other states need to follow such path Prioritization of strategic framework Clearly bringing out the expected contribution of each strategy Breaking-up the required interventions into short term, medium term and long term Preparing the Investment plan and feasibility of financial resources

Prospects of Doubling Farmers' Income S.No. Source Scope Contribution Remarks 7 years 10 years 1 Crop productivity 70% seg 3.1 16.7 25.0 Same as in 2001-13. For crop sector (70%) ag. 2 Livestock value added 30% seg 4.5 10.8 16.6 Same as in 2004 to 2014 3 Improvement in resources use efficiency 2.26 Same as in 2005 to 12 4 Crop Intensity (70% segment) 1 percentage point 3.4 4.9 Same as during 2001-12 5 Crop diversification (70% segment) Area increase by 3.13 per cent, elasticity 0.319 5.0 7.3   6 Better price realization: crops only 13% 9.1 7 Shift to no-farm occupation 1.81% 13.4 18.6 Total 75.1 107.5

Summing Up Most of the development initiatives and policies for agriculture are implemented by the states. States invest much more than the outlay by the Centre on many development activities, like irrigation. Reform related to Agriculture Marketing, Contract Farming, Agro-forestry and land leasing: state subject Essential for states to frame suitable policy/strategy for DFI. Concerted and well-coordinated effort by Centre and all the States: Country can achieve the goal of doubling farmers' income

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