You may pay a steep price but does the farmer make any money?

A farming household of five earns Rs 221/day, less than a person’s daily minimum wage

By Richard Mahapatra
Published: Monday 03 December 2018
A farmer at an agricultural market in Hoshangabad, Madhya Pradesh. Indian farmers struggle to earn a profit over their investments.
A farmer at an agricultural market in Hoshangabad, Madhya Pradesh. Indian farmers struggle to earn a profit over their investments. Credit: Vikas Choudhary A farmer at an agricultural market in Hoshangabad, Madhya Pradesh. Indian farmers struggle to earn a profit over their investments. Credit: Vikas Choudhary

Sanjay Sathe, an onion farmer from Nashik, Maharashtra, has reportedly sent Rs 1,064 he earned by selling 750 kilogrammes of his onion harvest to Prime Minister Narendra Modi as a mark of protest. Across the country, farmers are out on streets protesting against dipping prices for their produce (HYPERLINK: ).  From Mizoram to Karnataka, currently farmers in 11 states are demonstrating, seeking better price.

Sathe, news site reported, “was among the handful of 'progressive farmers' selected by the Union agriculture ministry for an interaction with the then US President Barack Obama when he visited India in 2010”.

“It was painful to see such paltry returns on four months of toil. Hence I have donated the Rs 1,064 to Disaster Relief Fund of the PMO as a protest. I had to pay an additional Rs 54 for sending it by money order,” he said.

Compare this wholesale price to what you pay for onion. On December 2, the vegetable retailed for Rs 25/kg—more than 20 times the rate Sathe was offered. While this explains the long chain of players that an agricultural produce goes through before it reaches the consumer, the bigger question is: do farmers make profit at their point of sale, which is the wholesale market?

Forget a decent profit, farmers have not been recovering their investments for long, according to the report of the Committee on Strategy for Doubling Farmers' Income by 2022, set up by the central government.

“The WPI (wholesale price index) of food articles was lower than that of agricultural inputs for most years, indicating that farmers received lower market prices for agricultural commodities than the prices paid for the purchase of inputs,” according to the report, based on analysis of data from 1981-82. This is mostly due to the rise in input costs like irrigation, electricity and pesticides and fertilisers.

At the same time, the prices of food articles have risen at a faster rate since 2008-09. This explains why we might be paying more as consumers but the farmers might not be the beneficiary.

“It may be observed that the all-India income of agricultural households at current prices rose from Rs 25,622 in 2002-03 to Rs 77,977 in 2012-13, amounting to an annual growth rate of 11.8 per cent at current prices and merely 3.6 per cent at constant prices. It may be noted that this is significantly lower than the agricultural GDP (gross domestic product) growth rate in real terms,” says the committee’s report.

This explains the meagre earning of farming household in India. According to government estimates, an agricultural household’s annual earning was Rs 96,703 in 2015-16. A household comprises of five members. But, a small and marginal farming household (with landholding of up to 2 hectares and less) earns just Rs 79,779 a year, or Rs 221/day for five members to survive. Such households account for 82 per cent of India’s total landholdings.    

But out of this total income, farm earning will be just around 41 per cent at an average. So, cultivation earns around Rs 90 a day.

There is a big difference between the earnings of a small farming household and a big farming one (having at least 10 hectares). A typical big farming household earns Rs 6,05,393 a year, almost eight times that of a small farming household.

Clearly, farmers are not earning a profit from their produce. A survey of 23 crops for investment and income during 2004-2014 shows that barring a few ones, a farmer is no more making any money.

In paddy, a major crop, farmers in only seven states have reported an increase in net income while in six states, including poor states like Bihar, Jharkhand and Odisha, farmers incurred losses. Similarly in wheat, profitability is coming down across India, with Chhattisgarh, Himachal Pradesh, Jharkhand and West Bengal reporting losses. In major wheat-producing states like Punjab and Haryana, the cost is recovered due to assured buy back by the government.

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