Enhancing the Farm Incomes

September 07, 2017
6 months

What is the issue?

Plan to double farm incomes needs to be implemented momentarily for an effective and stabilised economic output.

How can farm income be enhanced?

  • Farm income is the excess of income from the sale of farmer’s produce over his expenditure incurred on producing the same.
  • Measures to protect remuneration, keep input costs low and open up alternative forms of income must be carried out.
  • It involves three components they are
  1. Maximisation of revenue.
  2. Minimisation of inputs costs.
  3. Promotion of alternative sources of income.

Maximisation of revenue

  • Crop selection -India’s agri-infrastructure is geared towards procurement, storage and movement of wheat and rice.
  • This leads to surplus production, without a direct linkage to the market.
  • National crop planning bureau can be setup to address this issues.
  • Planners need to identify a few more crops – corn, soyabean, potatoes, tomatoes and onions for example, where such capabilities can be developed.
  • Yield maximisation - It is duty of the farmer to balance the crop production according to the growing population.
  • The critical component of maximisation of farmer revenue is continued research and development of higher yielding seeds.
  • Marketing the produce - FPOs (Farmer Producer Organisations/ Companies) or farm co-operatives (FCs) need to be formed.
  • These FCs and FPOs can be directly linked to the processor, exporter or retailer.
  • This will help in a higher proportion of the revenue going to the farmer.

Minimisation of costs

  • Inputs -Cost of inputs can be minimised by ensuring zero tax on all participants of the value chain of manufacturing the input.
  • Ensuring early release of subsidies to the companies or the farmers, continued priority sector lending rate benefits, rationalised subsidy calculation mechanism will address this issue.
  • Electricity and water –Government must ensure that farms shift to solar irrigation pumps, under the National Solar Mission.
  • Mechanisation - The effort needs to be scaled up to provide mechanised farm implements and precision agriculture tools, at a fraction of their cost is need of the hour.
  • Interest rates -Interest rates on loans to farmers need to be continue being the lowest.
  • Logistics -An unseen component of the overall crop economics is the cost of logistics of marketing the produce.
  • The cost of transporting higher volumes leads to lower per tonne cost of transportation.

Promoting alternate sources of income

  • Dairy and livestock -The government should establish formal breeding centres and subsequent sale of such cows and buffaloes to the farmers.
  • The government needs to bring some of the best technologies from Israel for promoting the dairy sector.
  • Financial literacy -There is a need to take financial literacy through trusted sources like the LIC to the villages,
  • So that the larger population of the country also becomes a prime participant in economic growth.
  • Crop insurance -The current models of crop insurance are factored basis rainfall, temperature and crop loss.
  • However, a more robust model should take into account losses on account of pest attacks, quality deterioration.
  • Job insurance -The overall family income of a rural household has a component of a non-farm job income from the informal economy (drivers, office boys, mechanics, salesmen, cleaners).
  • This employment needs to be formalised and job losses prevented through social security programmes.


Source:Business Line

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