Indian farmers’ incomes are affected by various risks and uncertainties, from adequate access to quality inputs and credit to efficient production, post-harvest management and sale of produce at remunerative prices. Price risk is only one among them and legal guarantee of minimum support price (MSP) may not assure farmers’ incomes, since the remaining risks persist. Despite rise in procurement of rice and wheat to over 90 per cent of production in select States, farm incomes in Punjab, Haryana and Telangana declined in 2019 compared to that in 2013, as per Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India published by National Sample Survey Organisation (NSSO).

Further, indebted agricultural households accounted for over 90 per cent in Telangana, 50 per cent in Punjab and 47 per cent in Haryana during 2019, NSSO reports reveal. Hence, to raise farmers’ incomes, it is essential to adopt a holistic approach that can reduce production cost with efficient input use and enhanced productivity, while improving farmers’ bargaining power with efficient post-harvest management, direct market linkages and adequate market infrastructure and logistics.

Innovative solutions

To reduce the cost of cultivation, innovative solutions like precision farming and climate smart agriculture have proven to be effective. For instance, precision farming helped farmers in Madhya Pradesh cut fertilizer expenditure by ₹1,700-2,500 per hectare, according to International Center for Agricultural Research in the Dry Areas. Such farming solutions need to be customised for small farmers for widespread adoption. Further, long-range weather forecasts helped farmers in Telangana optimise production decisions, according to Energy Policy Institute, University of Chicago. With nearly 60 per cent of cultivated area being rainfed, such forecasting capabilities can be a game-changer for Indian agriculture.

Research indicates over 20 per cent of agricultural produce is lost due to inefficient post-harvest management. Despite notable efforts in recent years, there is limited progress in market infrastructure and logistics. The aggregate regulated warehousing capacity is only about 397 lakh tonnes, according to Warehousing Development and Regulatory Authority.

Further, market infrastructure facilities for grading, assaying and certification to enhance and ensure quality of produce are not adequately available in majority of mandis. Creating adequate market infrastructure and logistics can potentially strengthen farmers’ position in value chains and increase their bargaining power, while also enabling their use of electronic national agriculture market (eNAM).

The recent influx in agricultural technology (agtech) start-ups can be a potential catalyst offering innovative solutions. A 2023 report by McKinsey & Company says agtech has potential to increase Indian farmers’ incomes by 25-35 per cent by 2030. Private sector investment flows to agtech start-ups in India have increased significantly from about $8.4 million in 2017-18 to about $1,279 million in 2021-22, though they moderated to about $706 million in 2022-23, as estimated by FSG, a global consulting firm. However, nearly 80 per cent of those investments were allocated to start-ups providing input and output linkages, whereas less than 20 per cent was allocated to research and development and novel farming solutions.

The increase in agricultural research allocation by about 5 per cent to ₹9,941 crore in Interim Budget 2024 is a positive step, but it needs to be enhanced substantially to at least 1 per cent of GDP. Thus, to boost farmers’ incomes, it is imperative to address the inefficiencies prevailing across the agricultural production and marketing ecosystem

Amarender is Joint Director, School of Crop Health Policy Support Research, ICAR-National Institute of Biotic Stress Management, Raipur; Tulsi is Consultant Economist - Financial Markets, Sustainable Finance and Agriculture. Views are personal

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