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Why Indian farmers need a robust relief and compensation mechanism

Climate change will impact agriculture, resulting in increased crop damages and lower crop yields

 
By Vineet Kumar
Last Updated: Wednesday 21 June 2017 | 07:25:37 AM
Of a total US $140 billion worth of loss and damage caused by 78 disasters between 2003 and 2013, damage worth $30 billion was sustained by agriculture and its sub sectors in developing countries (Photo: Sandeep Das)
Of a total US $140 billion worth of loss and damage caused by 78 disasters between 2003 and 2013, damage worth $30 billion was sustained by agriculture and its sub sectors in developing countries (Photo: Sandeep Das) Of a total US $140 billion worth of loss and damage caused by 78 disasters between 2003 and 2013, damage worth $30 billion was sustained by agriculture and its sub sectors in developing countries (Photo: Sandeep Das)

Indian farmers are in distress. The generally poor economics of the agriculture sector, crop failures, non-remunerative prices for crops and poor returns over cost of cultivation have led them into a vicious cycle of never-ending debt. Between 1995 and 2013, 296,438 farmers committed suicide in the country, according to National Crime Records Bureau, drawing attention to their dismal condition. Now, challenges of the coming decades are likely to compound the impact on farmers.

Impact of climate change  

The number of extreme weather events has increased in the last hundred years and there is enough scientific evidence to show that the frequency and intensity of droughts, floods, heat waves, unseasonal and sudden excessive rainfall are likely to increase due to climate change. 2015 was recorded as the hottest year ever and, now, 2016 is on the path to breaking all previous records. Erratic weather patterns have become the new normal. Such extreme weather events will impact agriculture, resulting in increased crop damages and lower crop yields.

Climate change is already impacting agriculture adversely across the globe. The Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC) shows that though climate change will have both negative and positive impacts on crop yield initially, the negative impact will overshadow the positive impact by the end of this century. In case of major crops such as wheat, rice, and maize in tropical and temperate regions, climate change will negatively impact production for a temperature increase of 2°C or more above late-20th-century levels.

Projected changes in crop yields over the 21st century (Source: Food Security and Food Production Systems, Working Group 2, AR5, IPCC)

Loss and damage

As per a recent Food and Agriculture Organization (FAO) estimate, the agriculture sector, including crops, livestock, fisheries and forestry, absorbs approximately 22 per cent of the economic impact caused by natural disasters in developing countries. FAO findings show that of a total US $140 billion worth of loss and damage caused by 78 disasters between 2003 and 2013, damage worth $30 billion was sustained by agriculture and its sub sectors in developing countries. Among the sub sectors, crops incurred the most loss and damage, worth $13 billion. The livestock sub sector incurred damage worth $11 billion between 2003 and 2013.

With increasing extreme weather events, the need for a robust system for relief and compensation against crop loss will also increase. A majority of Indian farmers are already under distress and their capacity to deal with the impacts of climate change will be lower, making them more vulnerable.

As per the National Sample Survey Office (NSSO) 2013 survey, the average monthly income of an agricultural household during the agricultural year from July 2012–June 2013 was just Rs 6,426 and the average monthly consumption expenditure was Rs 6,223. The average agricultural household in India is, therefore, living a hand-to-mouth existence. And yet averages do not reflect the actual status of a large majority of farmers. Almost 70 per cent of farmers in India with less than 1 hectare of landholding are engaged in loss-making farming businesses under normal circumstances. Poor profit margins mean that the slightest variability in input factors, climate conditions and market prices can push them further into debt. 

Case study: Karnataka  

The Karnataka Agriculture Price Commission recently released a report which found that if we consider the overall cost of production for all major crops, except onion, their cultivation has incurred losses in the state. The loss suffered by farmers against the total cost was in the range of Rs 3,208 per acre (1 acre = 0.4 hectare) for soybean and Rs 48,723 for tomato.

Current status of major crops in Karnataka: 2014-15

Crops

Minimum Support Price declared by Centre 2015-16 (Rs/Quintal)

Cost of Production (Rs/Quintal) – Total Cost (C3).
Here C3 means imputed value of family labour,
rental value of land and managerial cost of farmer

Per acre profit/loss
(in Rs) over total
cost (C3)

Paddy - IRR

1,450
(Grade-A)
1,410 (Average)

1,671

-3,768

Paddy - RF

1,450
(Grade-A)
1410 (Avg.)

1,985

-12,730

Ragi

1,650

2,781

-14,380

White Jowar

1,590

2,922

-3,260

Hy. Jowar

1,570

1,919

-4,923

Maize

1,325

1,425

-3,842

Bajra

1,275

2,324

-6,936

Bengal gram

3,500

4,963

-5,621

Red Gram

4,625

6,286

-3,293

Groundnut

4,030

6,186

-8,196

Sunflower

3800

4,416

-5,214

Soybean

2,600

3,647

-3,208

Tomato

No MSP

1,086

-48,723

Onion

No MSP

1,021

17,417

Potato

No MSP

1,906

-27,960

Dry Chilli

No MSP

11,679

-13,482

Cotton

3,800
(Medium Staple)
4,100
(Long Staple)

4,528

-5,684

The Minimum Support Price (MSP) declared by the Union government is less than the actual cost incurred by the farmers in a majority of cases. It implies that farmers are being forced to keep their farm produce price low, possibly to check food inflation. However, it also means that the country’s farmers are actually subsidising the food on our plate.

Despite several claims made by successive governments, the existing relief and compensation system in the country is in a very poor state. The declaration of calamity by a government is usually a political decision and the relief mechanism against crop loss in India is ad hoc, unreliable, insufficient and inefficient.

With the impending increase in risks to farmers, any relief and compensation scheme in the country must be based on proper scientific assessment and must address the concerns of farmers. 

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IEP Resources:

State of agriculture in India

Supreme Court order on farmers suicide in Tamil Nadu, 13/04/2017

An employment guarantee as risk insurance? assessing the effects of the NREGS on agricultural production decisions

Order of the Supreme Court of India regarding farmers suicides in India, 27/03/2017

Question raised in Rajya Sabha on Implementation of crop insurance schemes, 07/04/2017

Question raised in Lok Sabha on Compensation for Damaged Crops under Insurance Scheme, 14/03/2017

State of Rural/Agriculture Banking and Crop Insurance: Standing Committee on Finance (2015-16)

Pradhan Mantri Fasal Bima Yojana (PMFBY)- Schemes

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  • Unfortunately, it has become a fashion to dump every thing on climate change without understanding the reality of present day agriculture and the subject climate change. Such writers need more training in realities of the subject.

    Dr. S. Jeevananda Reddy

    Posted by: Dr. S. Jeevananda Reddy | 2 years ago | Reply