Income Security to Farmers

1. Income Security to Farmers Ramanjaneyulu KiranVissa Alliance for Sustainable and Holistic Agriculture

2. Understanding the crisis • Ever increasing costs of cultivation due to externalization of inputs specially seeds and pesticides and increasing labor costs • Increasing tenancy and tenancy costs… • Dependency on traders and dealers for credit • Increasing ecological costs due to high chemical use • Decreasing margins to farmers-reducing incomes

3. Manifestation of the Crisis in Agriculture • Farmers’ Suicides • Migration • Cultivated Fallows • Crop holiday

4. Crop holiday • Total are in Konaseema-1.9 lakh acres • Current crop holiday-90,000 acres • Total mandals in WG konaseema 16 • Crop holiday in completely in Allavaram, Uppalaguptam, I.Polavaram, Katrenikona and partial in other mandals

5. Income and Expenditure of farmers Source: Report “On Conditions Of Work And Promotion Of Livelihoods In The Unorganised Sector” Arjun Sen Gupta Committee, 2007

6. Problems with pricing policy • The agriculture prices are not fixed taking into livelihood needs of the farmers. • The rising inflation always had a double impact on farmers with increasing costs of living and decreasing incomes due to reduction in agriculture prices as a result of price intervention mechanisms of the government. • Minimum Support Prices are announced for 25 commodities and market intervention operations exist only for rice and wheat. So farmers growing other crops are left to the mercy of the markets.

7. Paddy pricing in AP *Cost of cultivation data from few states by DES http://dacnet.nic.in/eands/ up to 2010 the remaining two years data is collected from field. ** MSP announced by Government of india http://www.dacnet.nic.in

8. Other factors influencing prices • In 2007-08 govt of AP has re-started Rice scheme at Rs. 2/- and restricted open market fine rice price to Rs. 20/- Which has brought down farmers open market price • 2009-10 warehouses full and Govt has not procured most of the paddy from farmers • 2010-11 govt procured only 4.7 lakh tons (of 60 lakh tons remaining from 2009-10 and 100 lakh tons produced in kharif 2010) for want of space. The rabi produce of about 60 lakh tons is pending. • Government of India announces MSP for 25 crops but procures only Rice (October-September) and Wheat (April-March). Procurement of millets happens only on a very small scale. In that also currently only 25.8% of of the net production of food grains are procured. Only 18.9% of the net available food grains are distributed through the PDS.

9. Procurement of various food grains by the Government(2004-05 to 2010-11) Source: Koushik Basu (2010) Economics of Food grain management in India and Data from Directorate of Economics and Statistics and updated from Ministry of Food and Civil Supplies website.

10. Profitability in agriculture Based on K. Ramasubba Reddy’s paper and compiled using data from Directorate of Economics and Statistics http://dacnet.nic.in/eands/costofcultivation.pdf

11. Procurement of rice during 2009-10 by FCI and State Agencies(In '000 tonnes)

12. Millers makes the profit

13. Procurement of Paddy under MSP by SHG's (Rabi and Kharif) 2006 to 2010-11

14. Remunerative pricing policy • MSPs should take into account actual costs of cultivation and living costs (corrected to inflation rise) • NFC’s recommendation (Cost C2+50 %) can be used as a guide (Rs. 1800/q for 2010 paddy and wheat based on 2009 cost calculations) • Price differential (MSP –actual realised/procurement price) should be paid directly to farmer • Producers are consumers: Only 20-30 % is procured…what about more than 40 % produced-consumed • Costs cannot be based only on COC as they could be low for crops like sorghum and where people use their own inputs

15. Recast input subsidies • Nutrient based subsidies to be extended to organic also • Recast fertiliser subsidy to support farm made organic inputs • Rs. 5000/ha which as soil nutrient subsidy which can be used for organic inputs • Labour subsidies • Subsidise Farm labor by Rs. 100 per day (which is equivalent to unskilled work under NREGA) balance if any to be borne by farmer • Labor subsidy (40 days/crop @ Rs. 100/day) which may cost about Rs. 76,000 cr/year • For working in their own fields or hiring labor. Generates additional labor days • Brings down costs of cultivation by Rs. 4000/ha • Seed and other input subsidies • Rs. 1000/ha

16. Effective Procurement system • Today only small part of the total production is procured by the govt. • Government can use the women self groups, farmers cooperatives and other community based organisations for procurement of the paddy • In states like Chhattisgarh state governments have established efficient systems of procurement and distribution. • AP also should move into a system of procuring and going for custom milling rather than procuring through millers

17. Farmers’ income benefit Income per ha • At farmers level it benefits to an extent of Rs. 10,000/ha (Rs. 5000 from fertiliser subsidy and Rs. 4000 as labor subsidy) • Benefit from price rice Rs. 13,000 (avg Rs. 600/q for 22 q of cereal grains) Income per family • Rs. 10,000 from NREGA (100 days @ Rs. 100) • Total benefit per family would be at least Rs. 25000/- in addition to the income from farm produce bringing them out of poverty Direct Income Support • If the income falls short of minimum income it needs to be supported directly

18. Farmers income commission • Farmers Income Commission as a statutory body which examines the real income of farmers every year across the states. • Make specific recommendations to ensure that farmer families are assured a minimum income (to meet living costs per family based on current estimates it would be about Rs. 25,000) • Consider actual costs of cultivation, prices realized, subsidies given and suggest mechanisms for compensating the differential as Direct Income Support