From the Viewsroom

The misery buried under agri data

Amiti Sen | Updated on January 12, 2018


Cannot gloss over the impact of demonetisation on farm sector

Niti Aayog member and agriculture expert Ramesh Chand, in a recent blog, analysed the effect of demonetisation on the farm sector and concluded that it had had an insignificant effect on output as well as farmers’ income. However, the study itself indicates that all may not be well below the surface.

That vegetable and fruit farmers have had to sell their perishable produce at rock-bottom prices in a cash-starved market is, in fact, reflected in the report, despite its fancy packaging. Chand noted that the wholesale prices for some vegetables and fruits were lower in November compared to October, indicating that incomes of producers of perishable commodities had suffered in the wake of demonetisation. He added that a glut in the market had contributed to a crash in prices of some perishables such as tomatoes in December, and that it was difficult to ascertain to what extent demonetisation was responsible for the price fall.

The report puts the net loss in farmers’ income due to prices dropping in November and December at minus 0.26 per cent. While the report projects a 5.8 per cent increase in farmers’ income in 2016-17 in real terms, this does not diminish the misery caused to vegetable farmers whose incomes have fallen. Sowing in the ongoing rabi season is marginally higher than the previous five years’ average, but farmers complain that they had no cash to buy fertilisers and seeds. Interestingly, the report says that if the current shortfall in fertiliser consumption were to persist till the end of the rabi season, it could result in a 1.06 percentage point dip in rabi output growth.

Hence, rabi output in 2016-17 is likely to grow 4.96 per cent compared to 2015-16 (a drought year), the report projects. But the fact remains that for many farmers the output would be much lower than the potential because of their inability to purchase seeds and fertilisers, due to the cash crunch. Optimists do tend to see a glass as half full rather than half empty, but it does help to be a bit realistic for better decision-making.

Deputy Editor

Published on January 15, 2017

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