Agri Business

From low income to mounting debts, Tamil Nadu’s farmers have never had it worse

A Narayanamoorthy | Updated on August 12, 2021

The cost of cultivation of major crops in TN is much higher than the national average   -  THE HINDU

The new State government must act quickly to improve farm income and, in turn, the overall economy

Tamil Nadu (TN) has been known as one of the best states in the agricultural sector since the beginning of the Green Revolution, but in recent times its farmers are facing a variety of problems — from low income to high indebtedness. The newly elected DMK government must give top priority to solve farm woes, if it really wants to achieve high economic growth.

The State, of late, is not doing well in crop production as well. Although the productivity of major crops is historically high in TN, compared to many states, its share in India’s total production other than maize and some pulses has drastically declined over time. TN’s share in foodgrains production declined from 4.51 per cent to 3.73 per cent between 1980-83 and 2017-20. During this period, the share of paddy, a major crop in TN, declined from 8.62 per cent to 5.73 per cent, pulses from 2.13 per cent to 1.38 per cent, oilseed production from 9.31 per cent to 3.17 per cent, cotton from 3.52 per cent to 1.17 per cent, and sugarcane from 10.18 per cent to 4.19 per cent. An unprecedented decline in the net cropped area could be the main reason for the sharp decline in production.

Farmers’ issues

The low farm income puts farmers in tremendous hardship. The NABARD All-India Rural Financial Inclusion Survey (NAFIS) of 2016-17 shows that the monthly income of a TN farm household was only ₹9,775. Shockingly, a National Sample Survey Office survey of 2012-13 reported that income from crop cultivation accounted for just 27 per cent of the total annual income of TN’s farmers, as against the national average of 73 per cent.

Increasing farmer income by making warehousing more accessible

The high cost of cultivation appears to dampen the income from crops. The report of the Commission for Agricultural Costs and Prices (CACP) of 2017-18 shows that, per hectare, the cost of cultivation of major crops in TN is much higher than the national average. For example, TN’s farmers have incurred 26.01 per cent more cost on paddy, 67.78 per cent on maize, 33.59 per cent on black gram, 13.32 per cent on groundnut, and 42.99 per cent for cotton.

The reduced farm income increased the incidence of indebtedness among TN’s farmers. NAFIS data shows that 61 per cent of farm households are indebted in TN, as against the national average of 47 per cent. The debt per farm household too was significantly higher in TN (₹1,00,266) compared with the national average (₹70,580). Due to relentless borrowing, the debt-asset ratio of TN’s farmers reached 4.19, against India’s average of 2.46. That is, the debt size of TN farmers is 4.19 times the value of their assets.

Required action

Overall, agricultural growth and farmers’ incomes are closely related. Therefore, the new government should introduce action-oriented measures to increase farm income. First, earnest efforts are needed to expand the irrigation facility, which is stagnant from 1960-61 to 2016-17.

How to lift farm income

Second, to reduce the high labour cost of cultivating crops, agricultural operations can be linked with the Mahatma Gandhi Rural Employment Guarantee Scheme. Third, crop procurement, which has been very low in Tamil Nadu, must be increased. Only 21 per cent of its total paddy was procured by government agencies in 2018-19, much below than neighbouring states Andhra Pradesh (58.36 per cent) and Telangana (77.75 per cent).

Four, farmers in most cases are unable to secure the MSP in the market. This can be resolved through a legislative “Right to Sell at MSP” act. Like Kerala, TN should also announce MSP for horticultural crops. A State-level commission for farm costs and prices, on the lines of the CACP, is needed to fix appropriate prices. Five, the pandemic-induced lockdown has created a lot of misery for farmers; therefore, interest-free bank loans for farmers are needed at least for the next five years.

A financial assistance of at least ₹1,000 a month per farm household should be made through direct income transfer (as in Telangana and Odisha). The agriculture market infrastructure is very poor in most places and this needs to be strengthened.

Evidence suggests that the speed with which the agriculture sector reduces rural poverty is at least twice that of the rest of the economy. Therefore, the new government must take earnest steps to improve farm income in the quickest possible time.

The writer is a former member (official), Commission for Agricultural Costs and Prices, New Delhi. The views are personal

Published on August 12, 2021

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