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Total Recall: how the match is fixed against Indian farmers

Devinder Sharma | Updated on: 16 June 2015, 15:43 IST

Fixed dice

  • Indian farmers routinely have bumper harvests.
  • But a UP wheat farmer earns an average of Rs 1,800 per hectare per month.
  • This is often less than his input costs.
  • The minimum support price paid by governments is too low.
  • The Modi government has now further banned states from giving any bonuses.
  • Farming is unviable because of flawed policies.

Skewed board

  • Since 1970, school fees, medical costs and house rent have gone up by 200-350%.
  • But procurement price for wheat is only 19 times more than in 1970.
  • Farmers bear the burden of keeping food and raw material prices low for the rest of the country.
  • In the US, farmers earn 150 times more than the average citizen.
  • In India, farmers are at the bottom of the pyramid.

Old ideas

  • The World Bank directed India to drive 400 million people away from land into cities.
  • Successive governments have tried to make people abandon farming.

Sharp moves

  • Government should allow farm income to go up, and subsidise food costs instead.
  • Trigger a reverse migration from cities to the countryside, create employment for millions.

After the battering they received from an unexpectedly long spell of unseasonal rains, accompanied by strong winds and hailstorm, the Uttar Pradesh farmers have been able to finally harvest their wheat crop.

With the crop fields now empty, and with the sowing for the next crop some weeks away, it is time for them to assess their net income, if any.

A farmer's red book

That agricultural income has been on a steady decline was never in question.

But a detailed look at the net returns from a wheat-rice crop rotation from one hectare of land in Uttar Pradesh, as computed by the Commission for Agricultural Costs and Prices (CACP), is not only shocking but also incredulous.

According to the latest estimates, the net return from cultivating wheat in Uttar Pradesh has been worked out at Rs 10,758 per hectare. Since wheat is a six-month crop, sown in October and harvested in April, the per month income for a farm family comes to Rs 1,793 per hectare.

With Rs 1,793, or let us say Rs 1,800 per hectare per month from wheat cultivation, what kind of livelihood security are we talking about?

The average monthly bill for a mobile phone for most college students anywhere in India itself would exceed this amount.

I looked around for more details.

If the farmer is growing rice as the second crop, the average net return on it has been computed at Rs 4,311 per hectare per month.

An average wheat farmer in UP earns Rs 1,800 per hectare per month. What livelihood security are we talking about?

With such meagre incomes, a large number of farmers commit suicide at regular intervals. Others either sell their body parts or prefer to migrate to cities looking for menial jobs as daily wage workers.

Punjab farmers: the red book returns

Many economists will dismiss the UP farmer as being inefficient. I, therefore, looked at the cost and price calculations for the Punjab farmers, who are considered to be progressive, using the latest agricultural technologies.

They are also bestowed with 99% assured irrigation. The average net returns from a hectare of wheat for such farmers have been worked out at Rs 18,701.

Since Punjab predominantly follows a wheat-rice crop rotation, it becomes important to look at the annual computation of costs and prices.

Farmers commit suicide at regular intervals. Others either sell their body parts or migrate to cities for menial jobs

The net returns from the wheat-rice cropping pattern in Punjab stand at Rs 36,352 or Rs 3,029 per hectare per month. I wonder how a farmer in the economically developed state of Punjab manages to survive.

Inverted pyramid: bumper crops from the bottom

The Indian farmers have not failed the nation. Year after year, and despite being at the bottom of the pyramid, they continue to produce a bumper crop. This year too, they have done remarkably well.

In the previous kharif season that coincides with the monsoon months, they produced a bumper harvest of basmati rice, cotton and potato.

While basmati rice production doubled in Punjab and Haryana, the farmer's expectation of a higher income were dashed to the ground when global prices of agricultural commodities crashed.

In the US, farmers earn 150% more than the average citizen. In India, they're at the bottom of the pyramid

The disappointed farmers sold basmati at prices ranging between Rs 1,600-2,400 per quintal, against a price of anywhere between Rs 3,261 and Rs 6,085 they got last year.

Rice-wheat-cotton: the distress remains

For cotton too, prices slumped from an average of Rs 4,400 to Rs 5,200 per quintal last year to around Rs 3,000 this year, prompting the government to direct the Cotton Corporation of India to step in to buy at the procurement price of Rs 3,750 per quintal.

The jump in basmati and cotton production happened even though the farmers incurred an additional cost on diesel to run tube wells for irrigation.

Punjab and Haryana had recorded a 50% shortfall in monsoon.

Later, potato farmers faced a similar glut forcing them to sell their produce at a throwaway price of Rs 2 per kg.

Poor Man's Burden: consumers & industry

For years I have seen Indian farmers toil valiantly in the fields, often getting up at midnight to irrigate their fields when electricity flows to the tube wells - only to face an unforeseen disaster in the form of low prices.

Why do farmers alone bear the burden of keeping food prices low? After all, they too have to survive

The Minimum Support Price (MSP) that farmers get for wheat and rice, which becomes an assured price for their produce, is being deliberately kept low to ensure that food inflation remains in check.

Farmers are paid a low price also to enable industry to get cheap raw material. Take for instance, the case of cotton.

According to a CACP report in the early 1990s, cotton farmers were paid a 20% lower price for two decades to keep the textile industry economically viable.

Is the government anti-farmer?

This year, procurement prices for wheat and rice have been raised by a paltry Rs 50 per quintal, which corresponds to an increase of 3.2%.

States like Chhattisgarh, Madhya Pradesh and Rajasthan, which gave a bonus over and above the MSP, have now been debarred from doing so.


In fact, the government plans to withdraw the MSP in the coming years, leaving farmers to face the tyranny of markets.

Compare this with the situation of government employees who have recently been given a second Dearness Allowance (DA) installment of six per cent at a time when the wholesale price index has been officially computed at zero.

This stepmotherly treatment is the primary reason for the continuing agrarian distress in the country.

In other words, farmers are being penalised for keeping food prices low for indulgent consumers as well as the industry.

I don't know why farmers alone should bear the burden of keeping the food prices low. After all, they too have to survive.

Farm incomes: closed circuit

A closer look at the agriculture sector can yield a startling analysis.

Some colleagues of mine looked at the rise in procurement prices with the rise in incomes of employees in various sectors over a period of 45 years - between 1970 and 2015.

Since 1970, the procurement price for wheat has gone up 19 times. Corporate salaries have gone up 1,000 times

In 1970, the wheat procurement price was Rs 76 per quintal. In 2015, wheat procurement is Rs 1,450 per quintal, an increase of about 19 times.

In the same period, the average basic salary plus DA of Central government employees have risen 110 to 120 times; of school teachers 280 to 320 times; of college teachers 150 to 170 times; and of mid- to upper-level corporate employees 350 to 1,000 times.

In the same period, school fees have increased 200 to 300 times; medical treatment cost has gone up by 200 to 300%; and the average house rent in cities has risen by 350 times.

World Bank wants farmers to migrate

This is a telling insight into the deliberate effort to keep farmers impoverished.

But if you think farmers have suffered unknowingly, you are mistaken.

It is in fact part of a global design. The World Bank had directed India way back in 1996 to move 400 million people out of the villages into the cities in the next 20 years, i.e. by 2015.

Such a massive demographic translocation has also been suggested by some academic institutes in the West.

For a country to grow economically, the prescription is to reduce the dependency of a large proportion of the population on agriculture and move them to industry.

Therefore, the entire effort is to create conditions that force people to abandon farming and migrate to the cities.

How the west wins

To say that agriculture is an economically unviable profession is untrue.

If only farmers had received a wheat procurement price of Rs 7,650 per quintal - corresponding to the minimum increase in the salaries of Central government employees in the same period - then agriculture would have been flourishing.

India would have witnessed a reverse migration from the cities to the countryside, and farmers' incomes would have compared favourably with the best in the industry.

This would have provided gainful employment to millions of underemployed and unemployed people.

For the consumers, food prices could have been subsidised as is done in most of the developed economies.

In the Netherlands, the average farm household income is roughly 265% higher than the average for the entire country.

In the US, the average farm household income is about 150% higher than the national average.

In India, the average farm family income is the lowest in all categories.

It is not because the farmers in those countries are remarkably efficient. They get massive federal support in one form or the other.

In India, successive governments have worked to push farmers out of agriculture. If only Prime Minister Narendra Modi were to reverse this trend, it would truly be Sabka Saath, Sabka Vikas.

The views expressed here are personal and do not reflect those of the organisation.

First published: 27 May 2015, 18:35 IST
Devinder Sharma @Devinder_Sharma

Devinder Sharma is a distinguished food and trade policy analyst and an award-winning Indian journalist, writer, thinker, and researcher.