Enhancing Farmers’ Income: Challenges and Opportunities PK Joshi International Food Policy Research Institute NASC Complex, Pusa, New Delhi India e-mail: p.joshi@cigar.org Paper presented in the National Workshop on “Doubling Farmers’ Income through Scaling-up”, organized by ICRISAT, VIF, J-Farm, on 15 March 2016 in New Delhi

Background Income sources Income from crop = Area expansion 48% cultivation; 32% wages; 12% animal husbandry; 8% non-farm activities Income from crop = (Production X Price) – Cost (Area X Yield X Price) – {(input quantities X Prices) + (wages X labor)} Area expansion Net sown area remains around 140 m ha Cropping intensity was below 140% Yield increase During last 15 years, rice yields increased only 680 kgs (45 kg/year) Wheat: 835 kg (55 kg/year) Chickpea: 250 kg (17 kg/year); Pigeon pea: 177 kg (12 kg/year)

Rising wage rates and wage-share in value of produce Year Hourly Wage (Rs) Paddyprice (Rs/q) Labor used (hour) Total wage bill (Rs) Yield (Q/ha) Gross value of produceRs/ha Wage share (%) of GVP 2004 6.21 504 875 5433 23 11494 47 2005 6.47 478 831 5379 26 12331 44 2006 6.76 531 840 5676 25 13329 43 2007 7.21 632 771 5556 29 18318 30 2008 9.32 726 797 7423 27 19344 38 2009 10.14 856 768 7784 19 16244 48 2010 11.83 968 757 8954 18680 2011 16.34 830 13023 28 22881 57 2012 18.37 977 808 14842 24 23695 63

Is agricultural diversification an important source of increasing incomes? Share of crop sector is falling Rice, wheat, coarse cereals, pulses, oilseed Livestock sector is gaining Dairy and poultry Fisheries is also improving Marine to inland Agriculture growth was largely driven by livestock and horticulture sectors

Share of different crops in value and area of all crops

Contribution of high-value crops to overall growth, % Item Compound growth in real value (per annum) Share in overall growth (%) 1980s 1990s 2000s Cereals 2.0 3.6 0.7 30.7 43.0 6.9 Pulses 1.0 3.0 4.6 0.3 4.8 Oilseeds -0.7 5.4 21.4 -2.6 13.0 Fibers 1.7 2.6 9.9 1.8 14.7 S’cane 1.2 5.0 0.0 3.8 13.1 -1.3 Horti 6.3 5.8 33.9 44.6 60.0 Other 0.9 6.8 0.8 -0.1 All 3.1 3.7 3.3 100

Contribution of various sources to overall growth

Potential and constraints Potential exists to raise income (Pratap Birthal, 2017) Low income marginal farmers: - Rs 6K/annum/holding High income marginal farmers: - Rs 50k/annum/holding) Low income marginal farmers largely concentrated in Eastern India Unorganized agriculture sector Way of life; no business model Small and fragmented size of holdings 1.84 ha in 1980/81 to 1.15 ha Average size of holding of 85% holdings is 0.61 ha 0.39 ha of 63% holdings (marginal, part of smallholding category) Poor adoption of improved varieties and technologies North-west India versus eastern India Diversion and degradation of soil and water resources Weak market linkage Low marketable surplus Climate change

Important government programs and policies Prime Minister Irrigation Scheme National Micro irrigation Mission Integrated Watershed Management Program National Food Security Mission National Horticulture Mission Bringing Green Revolution in Eastern India National Mission on Sustainable Agriculture Prime Minister Fasal Bima Yojana (Agriculture insurance) Agriculture extension system Research system KVKs ATMA Agricultural marketing: MSP, e-NAM; warehouse receipt, commodity exchange

Way forward Promote high potential allied activities Horticulture, livestock, fisheries Farming with business model Market driven agriculture Primary/secondary processing, branding and retailing Aggregation of production and marketing Farmer Producer Organizations (SFAC) Inclusive market reforms Correct frontend Invest in agriculture (investment in irrigation, agricultural research, education and health) Convergence of programs

Thank you