4-Feb-2020: Low Agricultural Income

The average income of agricultural households in the country is estimated by National Statistical Office (NSO) through the ‘Situation Assessment Survey of Agricultural Households’ conducted from time to time. The first such survey was conducted in rural parts of the country during National Sample Survey (NSS) 59th round (January 2003- December 2003). Thereafter, a repeat survey was conducted during NSS 70th round (January 2013- December 2013). As per the Survey results, which although not strictly comparable, the average monthly income per agricultural household from various sources is estimated to have increased from Rs. 2115 in 2003 to Rs. 6426 in 2013.

The Survey report has not mentioned the reasons for low level of income of agricultural households in the country. However, predominance of small and marginal operational holdings, low irrigation coverage, poor soil health, inadequate marketing facilities and post-harvest supporting services, and lack of focus on the allied sectors of agriculture, etc., may be attributed as main reasons for low level of growth of income of people engaged in the agriculture sector.   

Growth rate of Gross Value Added (GVA) in agriculture and allied sector is directly and indirectly affected by various factors, including changes in income of agricultural households. With a view to make agriculture more remunerative, various Schemes are implemented by the Government, viz., Pradhan Mantri Krishi Sinchayee Yojana (PMKSY); Soil Health Card (SHC) Scheme; National Agriculture Market Scheme (e-NAM); Pradhan Mantri Fasal Bima Yojana (PMFBY); National Food Security Mission (NFSM); Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA); Mission for Integrated Development of Horticulture (MIDH); and Rashtriya Krishi Vikas Yojana (RKVY). Besides, Government has adopted the principle of fixing Minimum Support Price (MSP) at a level of 50 per cent over the all-India weighted average cost of production of crops.

Moreover, with a view to provide income support to all farmers’ families across the country, the Central Government has started a new Central Sector Scheme, namely, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). The Scheme aims to provide a payment of Rs. 6000/- per year, in three installments of Rs. 2000/- each to the farmer families, subject to certain exclusions relating to higher income groups.

Government has also focused on the aggregation of small and marginal farmers into groups for overcoming market imperfections and to realize better prices for their produce.

3-Feb-2020: Centre urged to review open-ended procurement

The Commission for Agricultural Costs and Price (CACP) has recommended a review of the open-ended procurement policy of the government.

The Central Government extends price support to wheat and paddy through the Food Corporation of India (FCI) and State Agencies.

Procurement at Minimum Support Price (MSP) is open-ended i.e., whatever food grains are offered by the farmers, within the stipulated procurement period and which conforms to the quality specifications prescribed by the Government of India, are purchased at MSP by the Government agencies including FCI for the central pool.

Several farmers and farmers’ bodies in Punjab and Haryana have expressed concerns over the recommendations and have expressed opposition to such a move. Farmers in Punjab and Haryana are heavily dependent on the cultivation of wheat and paddy and its subsequent purchase at the MSP. Any move to stop or limit the purchase of wheat and rice at MSP by the government would severely affect the livelihood of the farmers.

Given that wheat and rice are basic food items, the current policy also helps ensure the food security of the nation by maintaining sufficient buffers. A few Agri-experts have also noted that the current open-ended procurement policy is in the best interest of the country and farmers.

The major reason behind the CACP’s recommendation was the mounting food stocks and considerable wastage due to lack of sufficient storage facilities. The present open-ended procurement policy was adversely affecting crop diversification in the country and making agriculture unsustainable in certain regions.

In order to bring crop diversification in India, the government should ensure a mechanism where farmers can get an assured remunerative price for crops cultivated by them other than wheat and paddy.

Commission for Agricultural Costs & Prices (CACP)

The Commission for Agricultural Costs & Prices (CACP) is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India. It came into existence in January 1965. Currently, the Commission comprises a Chairman, Member Secretary, one Member (Official) and two Members (Non-Official). The non-official members are representatives of the farming community and usually have an active association with the farming community.

It is mandated to recommend minimum support prices (MSPs) to incentivize the cultivators to adopt modern technology, and raise productivity and overall grain production in line with the emerging demand patterns in the country. Assurance of a remunerative and stable price environment is considered very important for increasing agricultural production and productivity since the market place for agricultural produce tends to be inherently unstable, which often inflict undue losses on the growers, even when they adopt the best available technology package and produce efficiently. Towards this end, MSP for major agricultural products are fixed by the government, each year, after taking into account the recommendations of the Commission.

As of now, CACP recommends MSPs of 23 commodities, which comprise 7 cereals (paddy, wheat, maize, sorghum, pearl millet, barley and ragi), 5 pulses (gram, tur, moong, urad, lentil), 7 oilseeds (groundnut, rapeseed-mustard, soyabean, seasmum, sunflower, safflower, Niger seed), and 4 commercial crops (copra, sugarcane, cotton and raw jute).

CACP submits its recommendations to the government in the form of Price Policy Reports every year, separately for five groups of commodities namely Kharif crops, Rabi crops, Sugarcane, Raw Jute and Copra. Before preparing aforesaid five pricing policy reports, the Commission draws a comprehensive questionnaire, and sends it to all the state governments and concerned National organizations and Ministries to seek their views. Subsequently, separate meetings are also held with farmers from different states, state governments, National organizations like FCI, NAFED, Cotton Corporation of India (CCI), Jute Corporation of India (JCI), trader's organizations, processing organizations, and key central Ministries. The Commission also makes visits to states for on-the-spot assessment of the various constraints that farmers face in marketing their produce, or even raising the productivity levels of their crops. Based on all these inputs, the Commission then finalizes its recommendations/reports, which are then submitted to the government. The government, in turn, circulates the CACP reports to state governments and concerned central Ministries for their comments. After receiving the feed-back from them, the Cabinet Committee on Economic Affairs (CCEA) of the Union government takes a final decision on the level of MSPs and other recommendations made by CACP. Once this decision is taken, CACP puts all its reports on the web site for various stakeholders to see the rationale behind CACP's price and non-price recommendations.