Doubling of farm income unrealistic: How agriculture fared in Covid-19 era

Even as the pandemic-led crisis shrank India's overall economy, its agriculture sector, supported by a normal monsoon, robust kharif sowing and adequate water storage in reservoirs, remained a "bright spot", as per the Reserve Bank of India.

India's gross domestic product that had grown by 5.2% and 4.4% in the first two quarters of 2019-20, contracted by 23.9% and 7.5% in the first and second quarters, respectively, of 2020-21, per government data. However, agriculture appeared to have escaped the impact of the slump caused by the pandemic--it grew at 3.4% in both quarters, close to the 2019-20 rates.

"It is true that agricultural activities are less affected, in part because it is a fallback option for those who have lost jobs in cities or those who do wage work," said Sudha Narayanan, agriculture economist and associate professor at the Indira Gandhi Institute of Development Research. Also, when other earnings fall precipitously, the logical response from landowners is to raise their own food, she added.

However, as we explain later, the growth did not result in higher farm incomes due to the rise in input costs caused by the lockdown. The agriculture sector also saw some other upheavals this year. The passage of the three farm laws during the 2020 monsoon session of parliament has led to widespread unrest over the last three weeks. The farmers are adamant that the bills be rolled back because they fear that increased privatisation of the sector will leave them vulnerable to exploitation.

Further, as we step into 2021, the government will have just one year to meet its promise of doubling farmers' incomes by 2022. Experts say this was an unrealistic target to begin with and is now looking increasingly so.

We spoke to experts on the new farm laws, the government's bid to promote farmer producer organisations (FPOs), the plans to digitise the farm economy, and what issues will need to be addressed in the new year. Here is what they had to say.

Contentious farm laws

Three farm bills--the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (FPTC), the Essential Commodities (Amendment) Act, 2020, and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 (FAPAFS)--were passed in September 2020 to "ensure a complete transformation of the agriculture sector", as per Prime Minister Narendra Modi.

In India, 44.2% of the workforce is employed in agriculture and more than eight in 10 farmers are small and marginal--owning less than two hectares of land. A rural household in India, on average, has a monthly surplus of Rs 1,413, IndiaSpend reported in September 2018. Small and marginal farmers face difficulties in selling and marketing their produce, which is a reason for low farm incomes.

"India needs a farmer-friendly and agriculture-friendly government," said Modi in March 2014 before the Bharatiya Janata Party-led government won its first term. After the legislations were passed, in a November 29, 2020 radio address, he added that the "reforms have not only served to unshackle our farmers but also given them new rights and opportunities".

However, farmers and farmer unions across India, especially Punjab and Haryana, have reservations about the impact of these laws. Thousands of farmers are protesting in the outskirts of the national capital demanding a repeal of the farm laws, as we said, and a nationwide shutdown had been declared on December 8. Farmer also went on a day-long hunger strike on December 14.

There had been widespread farmer protests in 2018 too over the implementation of minimum support price (MSP) declared by the government for 23 crops as per the MS Swaminathan Committee recommendations. In the last few years, farmers' protests have been witnessed in Uttar Pradesh, Chhattisgarh, Madhya Pradesh, Maharashtra, among other states on the issue of remunerative prices, land titles and foodgrain procurement.

Farmers fear that the new laws will damage the existing system of MSP and kill the agricultural market yards or mandis, as IndiaSpend reported on December 2. The legislations have been so contentious that Harsimrat Badal, a Union minister from Punjab's Shiromani Akali Dal, an ally of the government, resigned in protest "against anti-farmer ordinances and legislation" on September 17 after the bills were tabled in Parliament.

There is a feeling that the Centre is trampling on state autonomy by legislating on state subjects, particularly contract farming, Sukhpal Singh, an agricultural economist at the Indian Institute of Management, Ahmedabad, told IndiaSpend in an interview on December 1.

On December 8, the government said that it was willing to amend the three laws but not repeal them. But "revisions [to the laws] will not work", said Kavitha Kuruganti, social activist with Alliance for Sustainable & Holistic Agriculture (ASHA). "There needs to be a repeal of these laws, as the protesting farmers are demanding." Not much can be done to improve laws whose objective is to leave farmers and consumers to deal with market interfaces on their own, she added.

Farmers also fear and distrust the government's motives because they were hardly consulted before the passage of the laws. But farmers' demand that the MSP be made a legal right is "ill-advised", said Singh: Selling in a private market is the last option for a farmer when public procurement does not happen, but stringent rules could lead to the loss of markets, he added.

Just a year to double farm incomes

The average household income of small and marginal farmers in 2015-16 (at 2011-12 constant prices) was estimated at Rs 61,138, 17.5% less than the national average for all farming households (Rs 74,108), according to volume two of a 14-volume report of the Ashok Dalwai committee, set up to create a blueprint on doubling farmers' income.

With the pandemic-led crisis, the government will have an even harder time keeping its promise of doubling farm incomes by 2022-23. It was "never realistic to start with", said Narayanan, and "badly designed", said R. Ramakumar, NABARD chair professor at the School of Development Studies at the Tata Institute of Social Sciences, Mumbai.

"There was only limited clarity on what metric would be used--income in nominal terms or real terms, the choice of base year, and so on," said Narayanan.

Agriculture growth has remained steady despite the pandemic, as we said earlier. But this is not an indicator that agriculture is unaffected, said Ramakumar.

The pandemic pushed up labour costs and input prices and this increased the production costs for farmers, experts told IndiaSpend. The harvest costs for rabi crops increased due to the unavailability of migrant labourers in agricultural operations and a rise in machine rents. "It is unlikely that farm incomes on the ground rose during the pandemic," said Ramakumar.

Nearly 88% of farmers could not sell their produce at the regular price; 37% were unable to harvest their produce at all; 15% were unable to sell their harvest at all; and about 37% sold their harvest at a reduced price, IndiaSpend reported on May 14, based on a survey during April and May by the Centre for Sustainable Employment at Azim Premji University. In an attempt to boost farmer incomes, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme was announced in 2019 to provide Rs 6,000 per year as income support to landowning small and marginal farmers. But this is a limiting scheme as it supports only landed farmers and neglects farm labourers.

"The only new initiative was the PM-KISAN scheme, which again covers only about 80-90 million farmers as against the target of 140 million farmers," said Ramakumar.

Despite problems, rice and wheat achieved record production, according to the fourth advanced estimates for 2019-20 released in August, and the area coverage of kharif crops increased by 8.5% in 2020.

Both Ramakumar and Narayanan emphasised the need to reduce input costs in agriculture, work towards remunerative prices, achieve diversification and sustainable, higher productivity, and secure responsible private investment over the long term.

FPOs limited by definition

The government should target the establishment of at least 7,000 FPOs and VPOs (village producer organisations) by 2022-23 and in the six years thereafter, these should be doubled, as per the Dalwai committee report. FPOs look to collectivise and support small and marginal farmers into profitable business groups.

In February, a government order approved a dedicated central sector scheme for the formation of 10,000 new FPOs and allocated a budgetary support of Rs 4,496 crore ($607 million) until 2023-24, IndiaSpend reported on November 18. But it is also important to handhold FPOs and help them sustain critical human resources so that they can develop as business establishments, experts pointed out.

"At an average of 1,000 hectares of cultivated land and minimum 1,000 farmers per FPO/VPO, the organised number of farmers would be at least 7 million and resulting pooled land be 7 million hectares by 2022-23," the Dalwai committee had estimated. A doubling of the number of farmers associated with FPOs and pooled land in the next five years would "to some extent address the structural weakness of small and marginal farm holdings", the report said.

The move to invest in creating, building and sustaining FPOs is a good one, but the scheme's time window should be long so that institutions can be built, said Kuruganti. The new farm laws have "dealt a severe blow to FPOs by equating them with other conventional players and big capital", she pointed out.

Singh agreed with this view (read IndiaSpend interview)--the FPTC legislation defines FPOs as farmers and not registered companies/establishments, restricting them to the supply side and not considering them to be profit-oriented businesses.

Women farmers still marginalised

Nearly three in four women in the rural workforce work in agriculture, according to 2017-18 government data. In nearly 35 years to 2017-18, women's participation in the agricultural workforce has declined 14.3 percentage points to 73.2%. Also, despite their significant presence in agriculture, women own only 12.8% of land holdings, IndiaSpend reported on September 9, 2019.

Farmers suffered reduced income and a fall in sale of produce due to the pandemic, as we said earlier. But the lockdown also severely impacted incomes and employment opportunities for women farmers, IndiaSpend reported on June 29, citing a survey conducted in May in Maharashtra. Nearly 74% of women farmers who sold their produce said they had sold it to private vendors at lower rates than prescribed by the government markets and of these, 74% did so because they needed money urgently.

It would help if the government acknowledges that "most farm households have two farmers--male and female", said Kuruganti. It is important to visibilise women farmers, and focusing on women farmers will also double farm incomes, she added.

Digitising agri economy

The Centre is developing a collection of databases and technologies to "ease process of developing viable solutions for the agriculture sector", according to a September 2019 presentation by NITI Aayog, the Centre's policy think-tank. The technology will look to solve issues around crop waste, price discovery, climate information and farm outputs, among others.

The government will provide farmers a digital identity linked to their Aadhaar number that includes personal details, the profile of land held, and other production and financial details, according to digital freedom and transparency organisation Internet Freedom Foundation.

But experts are concerned about the lack of consultation and potential disregard for privacy implied in this move. "This is yet another example of how a policy is pushed with no consultation with the farmers or farmer's organisations," said Ramakumar.

Worldwide, there is an emerging concern that mergers in agribusiness will lead to overconsolidation of data in the hands of a few companies. Farmers in India were concerned about their data being used and were "shocked that a third party they did not know had their land records and detailed information about them", said Narayanan.

The Congress-led United Progressive Alliance government had launched Aadhaar, a biometric-based identification system mandatory for welfare-related transfers. In 2018, restrictions were placed by the Supreme Court on the use of Aadhaar.

Private technology companies may lead innovations in the creation of databases but this can create issues around data privacy similar to the apprehensions about Aadhaar. "I would like the state to lead the innovation rather than purely [play] the facilitator," said Narayanan. There is a need for consultation and a clear vision of benefits that will accrue to farmers by consolidating farm and personal data, experts said.

Bills on the anvil

The government has introduced the Pesticide Management Bill, 2020, and the draft Seeds Bill, 2019, which was open for public comments in 2019. The former has not been sent to a standing committee of parliament for discussions yet. The Pesticide Bill is long overdue and is an important step towards ensuring the health of farm workers and consumers, said Narayanan.

But aspects such as compensation for those affected by the use of pesticides, empowering of state governments to prohibit pesticides, and the regulatory role of institutions need to be reviewed, organisations such as ASHA have said.

The use of fresh certified seeds, not farm-saved ones, every season is a desirable shift in the draft seeds bill, said Ramakumar, because the former have higher and more stable yields. But this shift, he added, should be achieved through enabling, not policing. Private companies prefer a low-volume, high-value business model, so enabling public institutions must facilitate the supply of quality seeds at affordable prices.

The draft bill's provisions are at variance with the Protection of Plant Varieties and Farmers' Rights (PPVFR) Act, 2001, which had strong provisions to protect farmers' rights, Ramakumar added. It is the provisions in the new draft that whittle down these protections that other experts such as Narayanan are sceptic about, for they could "undermine farmers' ability to save, reuse, share and exchange seeds, that the PPVFR Act, 2001 addressed". Stakeholder consultations and public comment are a must to protect farmers' interests and ensure that public institutions are developed around seed research and production, both Narayanan and Ramakumar said.