Climate change disrupts the goal of doubling farmers’ income

According to the just tabled Economic Survey, the government needs to implement “radical” actions to ensure the Prime Minister’s ambitious plan for 2022

By Richard Mahapatra
Published: Monday 29 January 2018
"Climate change might reduce farm incomes by up to 20-25 per cent in the medium term,” says the survey. Credit: North Carolina National Guard / Flickr

It was expected the Economic Survey 2017-18 would deal the farm sector with utmost seriousness given the ongoing deep agrarian crisis India is facing. But the survey’s key finding on impact of climate change on agriculture is an issue of worry for Prime Minister Narendra Modi.

Modi has made the ambitious promise of doubling farmers’ income by 2020. All programmes and schemes related to agriculture are being calibrated to this goal.

“Climate change might reduce farm incomes by up to 20-25 per cent in the medium term,” says the survey. Citing it as a big threat to the country’s most employment-intensive economic sector, it also flags red herrings for the doubling of farmers’ income goal.

“The government’s objective of addressing agricultural stress and doubling farmers’ incomes consequently requires radical follow-up action, including decisive efforts to bring science and technology to farmers, replacing untargeted subsidies (power and fertiliser) by direct income transfer,” it says.

Quoting scientific assessments by various government agencies, the survey says that “extreme temperature shocks reduce farmer incomes by 4.3 per cent and 4.1 per cent during kharif and rabi respectively, whereas extreme rainfall shocks reduce incomes by 13.7 per cent and 5.5 per cent.”

But the impact of climate change on farm income is more pronounced in the case of rain-fed areas, home to 60 per cent of operational landholdings. These areas account for more than 60 per cent of farmers in the country. “Once again, these average effects mask significant heterogeneity, with the largest adverse effects of weather shocks being felt in un-irrigated areas. Ex-ante it is not clear which direction farm revenues should move in – on the one hand, these shocks reduce yields, but on the other, the lower supply should increase local prices. The results here clearly indicate that the “supply shock” dominates – reductions in yields lead to reduced revenues,” says the survey.

According to the survey, in the year when temperatures are 1 degree Celsius higher, farmer incomes would fall by 6.2 per cent during the kharif season and 6 per cent during rabi in rainfed districts. Similarly, in a year when rainfall levels were 100 millimetres less than average, farmer incomes would fall by 15 per cent during kharif and by 7 per cent during the rabi season, says the survey.

It estimates that farmers’ income losses from climate change would be between 15 per cent and 18 per cent on an average. It would be higher between 20 per cent and 25 per cent in rainfed areas. These are stark findings, given the already low levels of incomes in agriculture in India.

It means the government’s baseline for achieving the target of doubling income for farmers is now irrelevant. The absolute number would change if losses due to climate change are also factored in. And the survey further flags a red signal. “Even more worryingly, it is possible the estimates arrived at in this chapter might be lower than the true effects of climate change, given the potentially non-linear impact of future increases in temperature,” it says.

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