ecently enacted three farm sector laws have brought farmers at the center stage and a strong debate is going on the impact of such laws on farmers’ income and livelihood. The proponents of free market economy favor these laws with the argument that the laws will unshackle the APMC dominated market regulation and will help better price realization by increasing market competition. Majority of the farmers don’t buy this argument and vehemently oppose these laws. It has led to very strong protests of farmers in North India.
A perception is being created that protests are an effort to protect the MSP and its beneficiaries who are only 6% of the total farmers of the country and largely belong Punjab, Haryana and Western Uttar Pradesh. It is being argued that these farmers are rich farmers who benefit from MSP and assured procurement and are depriving their poor brethren from other states of the benefits of market efficiency likely to be brought by these laws.
DO THESE FARMERS DO NOT NEED PRICE ASSURANCE ?
The question is: are these farmers so rich that they do not need any price assurance and government support? According to NABARD Survey of 2016-17, an average farming household in Punjab earns Rs 23133 and that in Haryana Rs 18496 per month. Per capita monthly income of these households comes out to be Rs 4449 and Rs 3490 only. Is this the sufficient level of income to term these farmers and their dependents rich? Likewise, the estimate of per capita monthly income of an average non-agricultural household in India is Rs 11,677 and that in Punjab is Rs 21900. It clearly indicates that the farmers of Punjab and Haryana are not able to earn even half of the income of a non-agricultural household in India and even 1/6 th of the income of such household in Punjab. The minimum monthly salary of a worker is Rs 18600 as per the 7 th Pay Commission. These indicators fail to confirm the so-called richness of farmers of Northern India.
The misconception of richness of farmers is also refuted by farmers’ indebtedness which increased tremendously from around Rs 50000 per household during mid-1990s to more than Rs 2 lakh per household in recent times. Further, a large number of farmers have committed suicide due to low income and high indebtedness.
Dr Ashok Dalwai, Chairman of Doubling Farmers’ Income Committee, has clearly pointed out that “by and large per-hectare real value of output increased for most crops from 2004-05 to 2013 14, but the rise in input cost was much higher than the increase in value of the output, thus lowering net income from the cultivation of most crops”. Shifting to high value crops results into higher production and marketing risks. In many crops such as potato, pea, carrot, cauliflower, etc., a small increase in production results into huge fall in prices. There is a lack of processing and post-harvest management facilities as higher incentives were provided to the adjoining states for setting up of industry. Despite majority farmers not believing that income from farming alone can help improve their livelihood, they are still stuck in farming due to lack of employment in other sectors of the economy.
NEED TO HIGHLIGHT DISMAL PERFORMANCE BY THE FARMERS
It is important to highlight dismal performance towards doubling the farmers’ incomes by 2022 in Punjab as is being pursued in the country since 2016. The real value added in Punjab agriculture has increased from Rs 79763 crore in 2016 to Rs 92802 crore in 2020, an increase of just 16% or an annual increase of just 3.78%, which is nowhere near the annual increase of 12% required for doubling by 2022.
Even at nominal prices, the annual increase is only 9%. At such a slow pace, the real value added will approximately be Rs 1 lakh crore, instead of surpassing Rs 1.5 lakh crore in case of doubling.
RICHNESS OF PUNJAB FARMERS IS A MISCONCEPTION
The richness of Punjab farmers is a misconception. The financial position of marginal and small farmers is even worse as they struggle to meet their subsistence consumption requirements. The farm sector laws may further deteriorate farmers’ income and may pull majority of the marginal and small farmerstowards poverty. In Bihar, where the APMC markets are absent, the gap between prevalent prices and the MSP has widened after the abolition of APMC era, and in recent times is almost 30% lower for paddy and 10% lower for wheat.
Such trends are highly likely to spread in future to the food bowl of India and will hit their farmers hard. With current levels of production, Punjab farmers may lose Rs 13,150 crore annually and this will deplete almost half of their current income. In this case, marginal and small farmers in the state will become completely unviable and may be forced to leave agriculture, further worsening the distress situation in rural areas.
POLICY MAKERS SHOULD ACCEPT THAT FARMERS ARE VULNERABLE
In nutshell, the policy makers should accept that situation of all the Indian farmers is highly vulnerable and majority are struggling to survive with their already meagre incomes. The farmers of Punjab and Haryana are also no exception to this. Farmers cannot be categorized into rich and poor farmers as all of them need significant improvement in their income. Farm laws appear to be regressive in nature. Income of the farmers who receive MSP is likely to decline under these laws. Policies need to be progressive, ensuring better prices of the agricultural produce in other regions of the country in order to enhance their income and bring them at par with the farmers of Punjab and Haryana rather than creating a situation where relatively better off farmers suffer the income loss and plunge into poverty.
It requires region specific policy measures properly addressing the agro-ecological variations, strengthening of market infrastructure aligned with desired crop pattern, better remuneration for farmers’ produce, aggregation to increase bargaining power, skill development and generation of non-farm employment. All these measures require an active role and resources of the public sector. It will require a long-term commitment and will surely help in enhancing farmers’ livelihood.