Agri Business

‘Input prices have pulled down farm income’

TV Jayan New Delhi | Updated on January 09, 2018 Published on August 23, 2017

With hope: A farmer ploughing his filed with tractor near Reddiyarchathiram, a rain-fed area, in Dindigul district, Tamil Nadu G. Karthikeyan



A substantial increase in input costs of materials has led to a decline in crop income over the years. This has resulted in the purchasing power of farmers not improving even though there was an increase in farm output, an official report has said.

“By and large, the per hectare real value of output increased for most crops during the period 2004-05 to 2013-14, but the rise in input cost was much higher than the increase in the value of the output. This resulted in lowered net income from the cultivation of most crops,” said the draft report of the Committee on Doubling Farmers’ Income released recently.

WPI comparison

The Committee, headed by Ashok Dalwai, CEO of the National Rainfed Authority, arrived at this conclusion by comparing trends in the wholesaler price index (WPI) of food commodities such as rice and wheat with that of purchased farm inputs such as fertilisers, diesel and electricity. The report reveals that for most of the years, the WPI of food articles was lower than that of farm input materials, indicating that the farmers received lower market prices for agricultural commodities.

Another interesting observation was that the annual growth in income of agricultural households was much lower than GDP growth. The annual growth rate in all-India income of agricultural households was a mere 3.6 per cent in constant prices between 2002-03 and 2012-13, significantly lower than the GDP growth rate in real terms.

Even though there was a slight revival in growth in income from 2005-06, it declined sharply again in recent years, it showed. The analysis covered as many as 23 crops.

Farmers growing paddy in the eastern States of Assam, Bihar, Jharkhand, Odisha and West Bengal, for instance, incurred heavier losses during the recent years.

For example, the net loss per hectare for a paddy farmer in Assam increased to over ₹ 6,000 between 2009-10 and 2013-14 as compared to an average loss of ₹3,930 incurred in the preceding five years. Similarly, losses from every hectare of paddy in West Bengal went up to ₹5,625 from ₹3,146 during the same period.

There was a similar fall in average income from paddy in the States of Andhra Pradesh, Chhattisgarh, Karnataka, Punjab, and Uttarakhand as the cost of cultivation has been going up over the years. The net income from wheat, on the other hand, has shown a marginal increase in some States, including Bihar, Gujarat, Madhya Pradesh, and Uttarakhand, due to a considerable increase in the value of the output over the total cost during the period 2009-10 to 2013-14.

Gloomy picture

However, the average net income has turned out to be negative in four states: Chhattisgarh, Himachal Pradesh, Jharkhand, and West Bengal.

As regards coarse cereals, five of the six major bajra- growing states — Haryana, Karnataka, Maharashtra, Rajasthan, and Uttar Pradesh — have shown negative income during the period under study. A similar trend was observed for maize, jowar, and ragi.

In the category of pulses, all States except Andhra Pradesh have shown positive net income from the cultivation of arhar. However, moong and urad have brought negative net income for some States.

In the case of gram and lentils, the net income was positive in all the major States, but there was a declining trend.

Of the five major groundnut growing states, Karnataka and Tamil Nadu have registered negative income, while Andhra Pradesh and Maharashtra have shown some improvement during the recent period.

However, the cultivation of sunflower has turned out to be non-profitable in Andhra Pradesh and Karnataka.

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Published on August 23, 2017
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