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DOUBLING FARMERS’ INCOMES:
Strategies and Recommendations for Tamil Nadu
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Acknowledgements
We would like to sincerely thank NABARD for funding, and supporting this study in its entirety. In
particular, the team is grateful to Mr. S Nagoor Ali Jinnah (CGM, NABARD), Dr. BD Nayak, Mr
Sankaranarayan, Mr. Greville Kharlukhi, and all other officials from NABARD who facilitated the smooth
progress of the study. We are grateful to Mr. N Srinivasan, whose inputs and guidance have been
invaluable to the team, and Ms. Parul Agarwal, and Mr. Amulyakrishna Champatiray from IFMR LEAD for
their constant guidance and suggestions. We are extremely thankful to the stakeholders who took some
time out of their valuable schedules to speak with us, and provide inputs and comments on the topic at
hand. We also appreciate the IFMR LEAD field team’s efforts and commitment to this study – this has
been instrumental to the timely and proper completion of all data collection.
Copyrights
This study was commissioned by NABARD. The Financial Inclusion team at IFMR LEAD conducted the
study. The entire study was designed and conducted by a team of researchers comprising Dr. Ajay
Tannirkulam, Suraj R Nair, and Divya Mary, who were the primary authors of this report. Additional
support in report writing was provided by Anisha Singh, and Khushboo Gupta.
Authored by IFMR LEAD
Copyright © NABARD, and IFMR 2017. All Rights Reserved. Published in India
This publication or parts of it may not be reproduced, stored by means of any system or transmitted, in
any form or by any medium, whether electronic, mechanical, photocopied, recorded or of any other type,
without the prior permission of NABARD and IFMR LEAD.
Abbreviations
APMC - Agricultural Produce Market Committee
ATMA - Agricultural Technology Management Agency
DAC - Department of Agriculture and Cooperation
DAP - Di-Ammonium Phosphate
DFI - Doubling Farmers Incomes
E-NAM - Electronic National Agricultural Market
E-RAKAM - e-Rashtriya Kisan Agri Mandi
FPC - Farmer Producer Company
FPO - Farmer Producer Organization
GSDP - Gross State Domestic Product
GSVA - Gross State Value Added
ICT - Information and Communications Technology
IFS - Integrated Farming Systems
JAM - Jan Dhan-Aadhar-Mobile
KAPC - Karnataka Agricultural Produce Committee
KVK - Krishi Vigyan Kendra
LMT - Lakh Million Tonnes
MSME - Micro, Small and Medium Enterprises
MSP - Minimum Support Price
NABARD - National Bank for Agriculture and Rural Development
NADP - National Agricultural Development Program
NCDEX - National Commodity and Derivatives Exchange Limited
NEM - North East Monsoon
NFSM - National Food Security Mission
NGO - Non Governmental Organization
NMOOP - National Mission on Oilseeds and Oil Palm
NP/NPKs - Nitrogen-Phosphorous/ Nitrogen-Phosphorous-Potassium
NSDA - National Skill Devlopment Authority
NSSO - National Sample Survey Office
PCI - Per Capita Income
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PHH - Priority Household
PMFBY - Prime Minister's Fasal Bima Yojana
ReM - Rashtriya e Market Services Pvt Ltd.
RIDF - Rural Infrastructure Development Fund
RRB - Regional Rural Bank
SFAC - Small Farmers Agri-Business Consortium
SHC - Soil Health Card
SRI/ SPI - System of Rice/ Paddy Intensification
SSI - Sustainable Sugarcare Initiative
SWM - South West Monsoon
TANHODA - Tamil Nadu Horticulture Development Agency
TAWDEVA - Tamil Nadu Water Development Agency
TFP - Total Factor Productivity
UMP - Unified Market Platform
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Executive Summary
Agriculture and its allied sectors play a very vital role in the economy of Tamil Nadu. Around 42 percent
of the state’s workers rely on cultivation or on agricultural wage labour – a decline of 7 percentage points
when compared with the data from Census 2001. On the whole, the sector accounted for 11.6 percent of
the Gross State Value Added (GSVA) in 2016-17.
Tamil Nadu is a highly water constrained state, given that it has access to only about 3% of India’s
freshwater resources. The state has also been at the mercy of multiple weather shocks over the last
decade particularly. In 2016-17, the state faced the worst rainfall in the last 140 years. In addition to the
failure of both monsoons, there was reduced availability of Cauvery water, poor storage in all reservoirs,
the cyclone Vardah, and severe drought.
Understanding the importance of the agricultural sector to both household economies and the state
economy as well as the increasing constraints specific to the agricultural sector, the TN State government
had declared “Doubling Yield, and Tripling Income” as its goal for agriculture in the TN Vision 2023
document. The objective was to ensure that the benefits of economic growth are made available to one
and all, including the farmers and the rural poor. In this context, understanding current income levels of
farmers in the state is particularly important, as this provides a benchmark to assess the progress so far,
and understand the necessary actions and focus areas that needs to be prioritised. This also provides an
opportunity to assess strategies being followed to double farmers’ incomes across the country, in line
with the Prime Minister’s announcement, and understand which of these could be the most appropriate
given the local state context.
The study utilizes a ‘mixed methods approach’, entailing both quantitative data collected through well-
designed survey instruments and qualitative data collected through focus groups and stakeholder
discussions etc. During the period July -December 2017, quantitative data (through household surveys),
and qualitative inputs (from focus groups and stakeholder interactions) were compiled and collated into
this report. The household survey sample comprised of 854 households, spread across the four sample
districts in four agro-climatic zones of Tamil Nadu. Respective blocks and districts for the study were
selected based on relevant indicators such as ground water potential and irrigation intensity, per capita
income indicators and contribution of agriculture towards the District Domestic Product. 1
Three blocks were selected within a district based on ground water potential data (refer2); one each from
the respective zones ie., Over exploited (greater than 100 percent water consumption), Critical/Dark
1 Refer table on groundwater depletion levels between 2012 and 2013. 2 http://www.nicra-icar.in/nicrarevised/images/publications/Tbu_NRM_Guidelines%20For%20Augmentation%20Of%20Groundwater%20Resources.pdf )
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( between 90-100 percent) and Semi-critical/ Grey (70-90 percent). The following blocks were selected
within each district based on the above indicators.
Villupuram: Kallakurichi, Chinnasalem, Gingee
Dharmapuri: Pennnagaram, Hosur, Dharmapuri
Nagapattinam3: Kolidam, Mayiladuthurai and Thirumarugal
Ramnathapuram: Thirupullani, Tiruvadanai and Ramnathapuram
Two villages with reasonable total area of land under cultivation were selected within a block, one each
from the north and south of the block. Within a particular village, based on consultations with the local
agricultural officers at the village or panchayat level and the land owning criteria, 35 households were
randomly selected for the detailed household survey. An average number of farming households/farmers
identified for the household survey within land ownership categories in a village have been detailed
below:
More than 5 acres: 5 farmers (14 percent)
2.5-5 acres: 10 farmers (29 percent)
Less than 2.5 acres: 20 farmers (57 percent)
Data collected from farmers as a part of this study shows that (Section 3), there has been a decrease in
farmers’ real income in Tamil Nadu in 2016-17, mainly due to the multiple weather shocks, and related
issues. The annual income for farmers in the 4 districts is estimated to be ₹ 125,228 (2015-16 prices).
Thus, if the Doubling Farmer’s Incomes Committee’s target of ₹ 232,505 for Tamil Nadu is seen the
benchmark that has to be achieved in the next 5 years (by 2022-23), the implication is that farm based
incomes have to increase by 134% from the current level, assuming that the share of farm income in the
total income basket is around 55%. At the same time, this also places the demand of an annual 7% growth
in non-farm incomes during the period 2017-18, which is slightly higher than the DFI committee’s estimate
of 5% for the longer 7-year duration. At current income levels, therefore, a substantial amount of
coordinated effort, across various stakeholders and government agencies will be required over the next
5 years to double farmers’ incomes in Tamil Nadu. For small and marginal farmers in particular, it seems
unlikely that focusing on off-farm income sources can significantly contribute to accelerating farmers’
incomes.
3 Declared as distressed in 2016-17
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Thus in the immediate 5 years to come, the highest priority should be given to actions focused on:
- Improving resource use efficiency (Aim to achieve at least a 25% improvement in resource use efficiency)
- Focusing on diversifying to high-value crops (Aim for 14-15% contribution of diversification to high-value crops in increasing farm incomes)
- Significantly improving price realization by farmers (Developing strategies to improve price realization; 15% contribution to income growth to be the aim)
- Boosting livestock sector productivity
Towards this end, potential short term strategies that the state may undertake are:
1. Improving Cultivation Strategy in the Dry Season:
- Identification of district/ agro-climatic zone appropriate low-cost/high-return crops for cultivation
in the off season – vegetables, herbs, spices etc. is an immediate requirement in the Tamil Nadu
context. 5 to 10% of the farmers’ land must be devoted to these crops to ensure year round
income.
- ‘Machan’ based/ vertical growth based models (<100 sqft), that are cheap to implement and
utilize minimal resources, while providing high returns must be explored. They provide at least
two harvests a year, with average profit >₹ 5000 per harvest4. Immediate pilots should be taken
to ensure the scalability and easy replicability of these interventions
- Larger farmers can be encouraged to grow a larger share of tree crops on their land.
2. Improving Farming Practices through Better Nutrient Management
- The SHC scheme must cover all farmers, and soil testing facilities must be made available within
one hours’ travel from any given farm. Necessary performance indicators/ quality standards must
be maintained for Soil test labs to be enforced strictly.
- Additionally, the TN government must explore all avenues to make soil testing mandatory for all
farmers, at least twice a year, and link farmers’ access to the fertilizer subsidy (for nitrogen based
fertilizers) in particular to soil test results.
- The SHC can also be linked to other incentives in order to enforce its serious usage – like credit,
in the longer term – these linkages effectively incentivize soil health.
- The efficacy of the proposed interventions must be determined by implementing pilots
immediately.
3. Providing a strong crop insurance product to the farmers
- Better performance monitoring for both insurers and state government.
- Profits must benefit the farmers as well – as a means to improve confidence, and boost renewal
rates
- Insurance market needs to be made more competitive, especially with regards to coverage of
high-risk/ high return crops like mushrooms.
4 Data collected from field visits in Uttar Pradesh
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4. Improving the usage of warehousing infrastructure
- Immediate need to incentivize farmers to use warehouses, and for warehouses to cater to farmers
(current usage rate by farmers is under 5 per cent in Tamil Nadu)
- Various innovations may be considered to improve the value proposition for warehouses – these
could range from funding warehouses to develop their own procurement infrastructure, to adding
a number of grading/ sorting, and post-processing options on site. These additional services will
have to vary from district to district, catering to the various needs arising from the specific crops
cultivated etc. Testing and piloting of these interventions can begin on a pilot basis, on priority.
- There is a dire need for cold storage infrastructure to be scaled up immediately – however, cold
storages alone will not solve the wastage problem, without also improving the availability of cold
storage trucks, and other infrastructure that ensure end-to-end flow of fruits/ vegetables and
other produce, with little to no disruptions.
- Collective approaches will be key to ensuring that ease of access for farmers to warehouses and
other storage facilities improves, while real transaction costs for warehouses will come down
when interacting with groups, as opposed to individual farmers.
5. Revamping the Agricultural Extension System
- There is a need for constant training, capacity and knowledge upgradation for extension officers,
in order to ensure that they are able to better handle the requirements of the various farmers
they work with
- Leveraging new forms of technology to ensure that details on latest farming practices, market
prices, and other such information could be key to ensuring better output from farms in Tamil
Nadu.
- Extension workers need to be able to ensure that recommendations provided to the farmers are
aligned with the agro-climatic conditions specific to the respective areas.
6. E-NAM
- Evidence from other states has shown that relying on online marketplace type approaches has
very significant increases in prices realized by farmers, in the range of 10% on average.
- It is too early to assess the impact of Tamil Nadu’s markets under e-NAM, on price realization;
90% of the markets are yet to be brought under the e-NAM scheme. Ensuring their immediate
conversion should be a priority action point for the government.
7. Food Processing
- Value addition from food processing has the genuine potential to increase the earnings for all of
the stakeholders across various value chains in Tamil Nadu.
- In Tamil Nadu, immediate steps should be taken to improve the quality of supply chain
management.
- Tying in with the value chain approach, identifying high value crops, that have large potential for
value enhancement through food processing must be identified, and farmers encouraged to move
towards these value chains.
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8. Accelerating Income from Livestock, and Promoting Integrated Farming
- Currently, farmers in Tamil Nadu earn under 10% from the livestock sub-sector. Ensuring that the
contribution of this sub-sector is at least doubled in the immediate short term is vital in ensuring
that farmers’ incomes are enhanced.
- Particularly small and marginal farmers need to have at least a couple of milch animals, that are
sufficiently productive to ensure that commercial sale, and personal consumption are both
possible.
9. Digitizing the agricultural value chain
- As collective/ group-based approaches are increasingly being highlighted as the means to reduce
input costs, and improve profit margin for farmers, the role of digital services in improving these
outcomes even more must be considered, as a means to further reduce costs, and streamline
various processes.
- Digitized end to end platforms have the potential save huge sums of money for farmer groups,
which can be spent on various other pursuits, such as infrastructure development/ equipment
purchase, etc.
- The idea is not new – various portals have been launched in the recent years, ranging from e-Kisan
(by the SFAC), to e-RAKAM (a portal that enables farmers to sell their food produce to bigger
markets), and most recently, the e-NAM that links the various mandis. The objective must to be
to centralize these disparate approaches into one common portal, that can be administered at
the level of the state governments.
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Contents
List of Tables and Figures ............................................................................................................................ 12
1. Agriculture in Tamil Nadu – An overview ....................................................................................... 14
2. Farming Households in Tamil Nadu (4 Districts) - An Assessment ................................................. 23
2.1 Present Estimates ....................................................................................................................... 23 2.2 Methodology, and Sample Selection .......................................................................................... 24 2.3 Key Stakeholders - Agriculture in Tamil Nadu ............................................................................ 27
3. Data Analysis, and Key Observations .............................................................................................. 29
3.1 Definitions, and Reference Period ............................................................................................. 29
3.2 Key Observations........................................................................................................................ 29
4. Increasing Farmer’s Incomes – A Review of Strategies and Approaches Across India ................... 71
4.1 Doubling Farmers’ Incomes - Is There a Precedent? .................................................................. 71 4.2 Consideration of Other Determinants ........................................................................................ 72 4.3 Building a Comprehensive Roadmap to Double Farmers’ Incomes – Current Strategies .......... 73
5. Doubling Farmers’ Incomes in Tamil Nadu – The Way Forward? ................................................... 80
5.1 Short term recommendations: ................................................................................................... 88 5.1.1 Improving cultivation strategy in the dry season: .................................................................. 88
5.1.2 Improving Farming Practices Through Nutrient Management ............................................... 89
5.1.3 Providing a strong crop insurance product to the farmers ..................................................... 91
5.1.4 Improving the usage of warehousing infrastructure .............................................................. 94
5.1.5 Revamping the agricultural extension system ........................................................................ 98
5.1.6 Rethinking agricultural credit .................................................................................................. 99
5.1.7 E-NAM ................................................................................................................................... 101
5.1.8 Food processing – the untapped potential ........................................................................... 102
5.1.9 Accelerating Income from Livestock, and Integrated Farming Systems ............................... 103
5.1.10 Digitizing the agricultural value chain ................................................................................... 105
5.2 Longer Term Recommendations ............................................................................................... 105 5.2.1 Skill Development and Off-Farm Income Opportunities ...................................................... 106
5.2.2 Income support for farmers: ................................................................................................. 107
5.2.3 Addressing the issues of urea subsidy: ................................................................................. 107
5.2.4 Minimum Support Price: ....................................................................................................... 108
5.2.5 The Role of the Private Sector? ............................................................................................. 110
5.2.6 Land Reforms ........................................................................................................................ 111
6. Conclusion ..................................................................................................................................... 112
Appendix A ........................................................................................................................................... 114 Appendix B: .......................................................................................................................................... 118 Appendix C ............................................................................................................................................ 120
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List of Tables and Figures Table 1. Agricultural Land-holdings in India _________________________________________________________ 15 Table 2. Foodgrain Production in Tamil Nadu (LMT) __________________________________________________ 16 Table 3. Area, Production and Productivity (2017-2018) _______________________________________________ 20 Table 4. Sampled Districts - Key details ____________________________________________________________ 25 Table 5. Stakeholders in Agriculture- Tamil Nadu ____________________________________________________ 28 Table 6. Sample Composition ____________________________________________________________________ 30 Table 7. Cultivation Experience ___________________________________________________________________ 36 Table 8. Animal Husbandry/ Livestock Rearing ______________________________________________________ 37 Table 9. Experience in Animal Husbandry/ Livestock Rearing ___________________________________________ 38 Table 10. Livestock/ Poultry Ownership ____________________________________________________________ 39 Table 11. Value of Livestock/ Poultry Owner per HH __________________________________________________ 39 Table 12:Distribution of Number of Holdings and Area Operated (Tamil Nadu) ____________________________ 41 Table 13:Owned, and Irrigated Land ______________________________________________________________ 41 Table 14: Perennial Crop Cultivation ______________________________________________________________ 45 Table 15: Household Indebtedness ________________________________________________________________ 46 Table 16: Performance of Principal Crops in Tamil Nadu _______________________________________________ 51 Table 17: Yield Gap in Select Crops ________________________________________________________________ 51 Table 18: Yield and Revenue per Hectare ___________________________________________________________ 52 Table 19: Comparison between Prices Data from Survey and MSP _______________________________________ 52 Table 20. Post-Harvest Storage (On-farm) in the last Three Years _______________________________________ 54 Table 21. Type of Storage Facility _________________________________________________________________ 55 Table 22. Total Storage Capacity _________________________________________________________________ 55 Table 23. Post-Harvest Losses per Farmed Season ___________________________________________________ 56 Table 24. Training and Information _______________________________________________________________ 58 Table 25. Mechanization. _______________________________________________________________________ 60 Table 26. Crop Insurance ________________________________________________________________________ 61 Table 27. Mean Annual Income - Various Sources ____________________________________________________ 65 Table 28. Components of Income - Survey Data _____________________________________________________ 67 Table 29. Income Composition - by Land-holding Categories (₹ Values) __________________________________ 68 Table 30. Net Receipts from Cultivation ____________________________________________________________ 68 Table 31. Estimated Amount of Investment _________________________________________________________ 70 Table 32. Composition of Farmers' Income _________________________________________________________ 73 Table 33. Impact of Irrigation on Income (₹) (Jin et al. 2012) ___________________________________________ 75 Table 34. Prospects of growth in farm income (Satyasai & Mehrotra, 2016) ______________________________ 78 Table 35. Parameters Affecting Farm Income _______________________________________________________ 82 Table 36. Contributions to Growth in Farm Income ___________________________________________________ 82 Table 37. Revised Projections - 5 year Contributions to Growth in Farm Income ____________________________ 82 Table 38: Crop Insurance ________________________________________________________________________ 92 Table 39: Crop quantity produced and sold (in kgs), and revenue earned over last farmed season _____________ 94 Table 40: Price Realisation Crop-wise (District-wise) _________________________________________________ 108 Table 41. Fertilizer Prices ______________________________________________________________________ 114 Table 42. Fertilizer Usage ______________________________________________________________________ 115 Table 43. Fertilizer Requirements (MT) ___________________________________________________________ 115 Table 44. Nutrient Subsidy Rates ________________________________________________________________ 116 Table 45. YoY Increase in Urea MRP (Projected) ____________________________________________________ 116 Table 46:Level of Depletion of Ground Water (Difference between 2012 and 2013) ________________________ 118 Table 47. Yield and Revenue per Hectare __________________________________________________________ 118 Table 48:Type of Storage Facility ________________________________________________________________ 120
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Figure 1. Sector-wise Share of GSVA (Current Prices) ................................................................................................. 14
Figure 2. Paddy, Millets and Pulses - Total Production in TN ....................................................................................... 14 Figure 3. GSVA -Sub-sectors of Agriculture (Current Prices) ........................................................................................ 16 Figure 4. Agro-climatic zones of Tamil Nadu ............................................................................................................... 17 Figure 5. Farm Households with Income Below Poverty Line (2011-12) ...................................................................... 23 Figure 6: Agricultural Households by Social Group ...................................................................................................... 31 Figure 7. Sample Composition - Social Groups............................................................................................................. 31 Figure 8. Respondent Age ............................................................................................................................................ 33 Figure 9. Education Status ........................................................................................................................................... 35 Figure 10. Ration Card Type ......................................................................................................................................... 37 Figure 11. Average Size of Landholdings ..................................................................................................................... 40 Figure 12. Sample Composition - by Landholding Class ............................................................................................... 41 Figure 13. Main Income Earning Activities .................................................................................................................. 42 Figure 14. Crops Cultivated - Last Complete Farming Season ..................................................................................... 44 Figure 15. Loan Sources across Land Categories ......................................................................................................... 47 Figure 16. Loan Sources ............................................................................................................................................... 48 Figure 17: Loan Sources across Land Categories ......................................................................................................... 48 Figure 18. Largest Outstanding Loan - Source ............................................................................................................. 49 Figure 19. Primary Purpose - Largest Outstanding Loan ............................................................................................. 49 Figure 20. Main Information Sources for Farmers ....................................................................................................... 59 Figure 21: Average size of Landholdings ..................................................................................................................... 62 Figure 22: Durables owned by household .................................................................................................................... 64 Figure 23. Share of Income Categories ........................................................................................................................ 67 Figure 24. Income Composition - by Land-holding Categories..................................................................................... 68 Figure 25 Increasing Farmer's Incomes - Targets. ....................................................................................................... 69 Figure 26. Yield gaps (Satyasai & Mehrotra, 2016) ..................................................................................................... 74
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1. Agriculture in Tamil Nadu – An overview
Agriculture and its allied sectors play a very vital role in the economy of Tamil Nadu. Around 42 percent
of the state’s workers rely on cultivation, or on agricultural wage labour – a decline of 7 percentage points
when compared with the data from Census 2001. On the whole, the sector accounted for 11.6 percent of
the Gross State Value Added (GSVA) in 2016-17. Following a trend similar to the rest of the country, the
share of the agriculture sector in Tamil Nadu’s economy has declined sharply. In the period 1981-1993 the
share of the sector in the Gross State Domestic Product (GSDP) was 23 percent, which declined to 11.87
percent in 2004-05 and further to 7.76 percent in 2013-14. The employment in agriculture however
reduced by a mere 10 percent, from 54 to 44 percent during the period 1981-2010. The major crops
cultivated in the state include paddy, millets, pulses, oilseeds, sugarcane, cotton, coconut and
horticultural crops. Paddy is the staple food crop and is extensively cultivated in all the districts in a normal
area of 1.77 million hectares, with the production being around 6.4 million tonnes. On average, paddy
accounts for about 30 percent of the gross sown area and 50 percent of the total irrigated area of the
State.
Figure 1. Sector-wise Share of GSVA (Current Prices) Figure 2. Paddy, Millets and Pulses - Total Production in TN
Agriculture in the state is predominantly rain-fed. It depends either on irrigation through the Cauvery
system, or on the North East Monsoons (NEM). There are also 15 major reservoirs which receive inflow
mainly during South West Monsoon (SWM). As a result of these dependencies, Tamil Nadu is one of the
most water starved states in the country – it has access to roughly 3 per cent of the nation's water
resources. The per capita availability of water resources is 750 cubic meters per year as compared to the
all India average of 2,200 cubic meters. Tamil Nadu receives an annual rainfall of around 921 mm. As the
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Primary Secondary Tertiary
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2011-12 2012-13 2013-14 2014-15 2015-16
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state lies in the rain shadow region of Western Ghats, it is deprived of rains during SWM season (which is
the assured monsoon for the rest of the country, and thereby is forced to depend primarily on the NEM
in the months of October - December to recharge its water resources. Consequently, any monsoon failure
leads to acute water scarcity and severe drought, as seen during 2012-13 and 2016-17. Between 2011 and
2013, the gross area sown reduced by 12.7 percent, gross area irrigated by 15 percent and fallows
increased by 17.3 percent. The total production dropped by 45 per cent, from 101.52 lakh tonnes to 56.05
lakh tonnes. Production of paddy declined by 46 percent. In 2016-17, the state faced the worst rainfall in
the last 140 years. In addition to the failure of both monsoons, there was reduced availability of Cauvery
water, poor storage in all reservoirs, the cyclone Vardah, and severe drought etc. ultimately leading to a
decrease in cultivated area under crops. This resulted in a decline in paddy production of nearly 50
percent from 12 million tonnes to 6.5 million tonnes. This correlates with the crop coverage data, which
fell more than 40 percent from 1.27 million hectares in 2015-16 to 0.74 million hectares in 2016-17. In
this period, the area under paddy cultivation declined by 0.48 million hectares to 1.27 million hectares. In
such a scenario, the use of technology becomes vital for maximizing production. However, the pattern of
land ownership imposes limitations on the kinds of technologies that can be adopted for agricultural
development. The average size of land holding in the State is only 0.80 hectare compared to 1.15 hectare
at the National level. The Agricultural Census (2010 -11) shows that marginal and small holdings (less than
2 hectares) account for 92 percent of the total holdings and 61 percent of the total operated area in the
state. The small land sizes, being inefficient for conventional technology and machinery use, have led to
a process of marginalization of small and marginal farmers and casualization of agricultural labourers.
Table 1. Agricultural Land-holdings in India
Category Number of holdings (Millions)
Area operated (Million ha.) Average size of holdings (ha.)
2005-06 2010-11 2005-06 2010-11 2005-06 2010-11
Marginal (< 1 hectare) 6.23 6.27 2.29 2.29 0.37 0.37
Small (1 to 2 hectare) 1.23 1.18 1.72 1.64 1.39 1.39
Medium ( 2 to 10 hectare) 0.71 0.65 2.43 2.20 3.41 3.37
Big (> 10 hectare) 0.02 0.02 0.39 0.35 20.58 20.59
Total 8.19 8.12 6.82 6.49 0.83 0.8
Source: Agricultural Census (2010 -11)
During 2011-12 agricultural production made a record with food grain production exceeding 10 million
tonne mark. However, as discussed above, the drought of 2012-13 led to a growth rate of negative 10
percent highlighting the high vulnerability of agriculture to climate uncertainties and its impact on overall
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growth of the state. As per the Final Estimate of 2015-16, the food grain production of the State is 113.69
Lakh MT which is 43% increase over the food grain production achieved in 2010-11. During the period
2011-12 to 2016-17, the value added from the livestock sector has also increased, standing at 36% of the
total output from the primary sector currently.
Table 2. Foodgrain Production in Tamil Nadu (LMT)
Crop 2011-12 2012-13 2013-14 2014-15 2015-16* 2016-17**
Rice 74.59 40.5 71.15 79.49 73.57 40.38
Millets 23.24 13.4 32. 73 40.79 34.27 16.63
Pulses 3.69 2.13 6.14 7.67 5.85 3.31
Total Food grains 101.52 56.05 110.02 127. 95 113.69 60.32
*Final estimate, **Fourth advance estimate
Figure 3. GSVA -Sub-sectors of Agriculture (Current Prices)
Tamil Nadu has seven agro-climatic zones based on soil typologies, precipitation and irrigation, and
cultivation patterns. Among the various zones the Cauvery Delta zone enjoys relatively higher rainfall
when compared with the rest of Tamil Nadu. It benefits from a good share of the NEM in normal years.
Additionally, irrigation water through canals is also available for six to seven months in normal rainfall
years, in the catchment area of the Cauvery River. It is one of the most economically important zones and
is considered to be the ‘granary of Tamil Nadu’. However, the coastal parts of the region are affected by
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2012-13
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Forestry and logging Fishing and aquaculture
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salinity due to sea water intrusion. In the Northeast zone, which includes the Palar river basin and its
catchment, irrigation from natural and man-made tanks is possible. The annual rainfall of the zone
(excluding hills) varies from 800-1400 mm. The Northwest zone, which is characterized by semi-arid to
sub-humid climate with frequent occurrence of drought, has a mean Annual Rainfall of 877.6 mm. The
south zone receives on average about 816 mm of annual rainfall and like the Northwest zone is prone to
frequent droughts. The Western Zone is the only part of the state that receives some rain from both the
SWM, and NEM. It receives around 774.6 mm of rainfall on average, which is on the lesser side.5
Figure 4. Agro-climatic zones of Tamil Nadu
Despite constraints on land and water availability, Tamil Nadu registers high agrarian productivity
compared to the other states in India. For crops such as Maize, Cumbu, Coarse Cereals, Groundnut,
Oilseeds, the productivity is close to double the national average in Tamil Nadu. As far as horticultural
crops are concerned, Tamil Nadu is at the fore – it is the largest producer of Banana, Tapioca, Plantation
Crops, and Loose Flowers in the country. It is indeed noteworthy that the state has identified horticulture
crops as high-return/ high-value, and invested in promoting their cultivation.
5 Sources: http://planningcommission.gov.in; Tamil Nadu Agriculture University
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Overall, Tamil Nadu has aimed to ensure that farmers receive support from relevant schemes and policies,
in order to ensure their improved productivity and wellbeing. In 2012-2013, the annual policy note
discussed the state government’s commitment to usher in the Second Green revolution in Tamil Nadu
through various schemes targeting at improving agricultural production, food security and balanced
nutrition. The strategy has been to ‘develop agriculture at the farm level’ through farm-level
interventions such as computer-based Farm Crop Management System integrating farmers, extension
and research activities and ensuring timely availability of quality inputs, adoption of suitable technologies,
monitoring crop growth as well as pest and diseases, understanding market linkages and connectivity of
village farms to nearby markets; converting fallow lands suitable to agriculture into cultivated areas,
promoting Integrated Farming Systems and accommodating agriculture with allied activities such as
animal husbandry, poultry, aquaculture, sericulture etc. and adopting crop diversification for sustaining
farmer incomes. Initiatives such as the comprehensive Farmers Integrated Handbook providing farm-
based recommendations and suitable cropping patterns based on soil, irrigation and microclimate,
Permeation of Innovative technologies such as SRI, technologies for Improved pulses production at farm
level as a whole village concept, Sustainable Sugarcane Initiatives, Precision Farming, Micro-irrigation etc.
were implemented with the aim of doubling production and tripling farmer incomes, especially small and
marginal ones. State government has appointed specialists and other technical staff to strengthen the
farm-level extensions activities and ensure the penetration of existing schemes to deserving farmers, with
the target of doubling food grain production to 120 LMT in 2012-13 during the 12th five-year plan.
Some of the state government’s approaches towards improving the economic status of such farmers have
included increasing their net cultivable area and productivity through crop-specific interventions, soil
health and water resources management approaches, input supply management system, crop specific
strategies for bridging yield gaps, increasing productivity and farmer incomes by three-folds through
mainly farm-based interventions and IFS approach, crop diversification especially through commercial
crops, developing research and extension activities with end to end involvement of farmers and capacity
building. The thrust areas according to the government as per the 2012-13 agriculture policy note that
introduced the concept of doubling yields and tripling incomes, focusses on soil health care and per area
unit productivity, revamping agriculture infrastructure, promoting micro irrigation and water use
efficiency, increased cropping and irrigation intensity, improved access to quality inputs, and augmenting
farmer incomes. The agriculture policy note 2017-2018 details a stronger policy framework towards
achieving the second green revolution, including farmer friendly strategies for increasing cropped area,
evolving crop-specific practices to improve productivity and farmers’ income, designing infrastructure
19
that could transform subsistence farming into a commercial activity, mechanisation of agricultural
operations creating time-cost efficiencies, promoting the use of ICTs in improving farming knowledge,
fostering efficient marketing systems and extension services. Plagued with water scarcity, the state
government has taken steps to popularize micro-irrigation schemes in the state, that aims to ensure
“more crop per drop” and ensure quality agricultural produce with efficient usage of inputs. 100 percent
subsidy is extended to small and marginal farmers, while 75 percent subsidy is provided to other farmers.
Tamil Nadu “Vision 2023” aims to ensure that the benefits of its rapid economic growth to reach its
farmers, and making it one of the economically prosperous and progressive states of the county. With the
aim of developing agriculture at the farm level, the state has laid down certain objectives and strategies
towards achieving the second green revolution. The state objectives as per the recent 2017-2018 policy
note constituted revamping institutional mechanisms for ‘policy, planning, monitoring and evaluation6’,
ensuring sustainable utilization and conservation of natural resources, devising appropriate agro-climatic
and eco-friendly farming systems, increasing farmer incomes through diversification towards high value
farming and ‘retaining the competence in food crops and nutritional security’ , revamping and developing
infrastructural facilities in seeds, fertilizers, pesticides, agricultural implements, extension services, value
addition and marketing across agricultural supply chains and facilitating adaptation and mitigation
towards climate change. Some of the strategies devised towards Vision 2023 included increasing
cultivated area by bringing fallow lands under cultivation, increasing agricultural production and
productivity through improving soil health and input efficiency, devising an ecology-cum-economics crop
cafeteria in irrigated and rain-fed regions wherein poor farmers can choose crop combinations and
adopt modern crop husbandry practices, ensuring ‘timely availability of inputs’ such as seeds, fertilisers,
bio-fertilisers, biocides/ bio-agents, agricultural machinery etc., reducing cultivation costs through better
‘crop management practices’, encouraging cost-effective indigenous inputs, promoting input use
efficiency, adopting context-specific innovative technologies, creating awareness amongst farmers on
agricultural practices, promoting utilisation of non-conventional energy resources, encouraging private
participation in agriculture and agro-based infrastructure in rural areas, reducing monsoon dependency
through better irrigation and water harvesting techniques, developing climate resilient cropping systems
with protective measures such as crop insurance and generating alternate livelihood sources through
allied activities, and reducing yield gaps through improved technologies and ICT tools.
6 Adopted from the State agricultural policy note 2017-18.
20
Area, Production and Productivity Programmeme for 2017-18
The estimated area under cultivation, production and productivity of various agricultural crops during
2017-18 are given below:
Table 3. Area, Production and Productivity (2017-2018)
Crop Area (L. Ha.) Production (L. MT) Productivity (kg/ Ha)
Rice 17.8 60 3,370
Millets 9.3 34 3,656
Pulses 9.4 6 638
Total food grains 36.5 100
Oilseeds 5 12 2,400
Cotton (*) 1.8 5.77 545
Sugarcane (**) 3 309 103
Total 46.3
(*) Production (L. Bales); (**) Productivity (MT/Ha.)
With the aim of achieving food and nutritional security in the context of degrading land resources,
increasing water scarcity, depleting per capita land available, outmigration of agricultural labourers and
climate change impacts, the government aims at transforming agriculture into a ‘more productive,
resource-efficient and climate resilient’ activity through specific policies and strategies for agro-ecological
intensification. Some of the objectives included achieving food and nutritional security through
sustainable agriculture area intensification, narrowing yield gaps and input use -efficiency gaps through
agronomic revolution: precise crop management through affordable technologies, technologies for
increasing water and energy efficiency, achieving nutrient management through micro-irrigation,
conservation agriculture etc. for increased production, reducing cultivation costs through soil health
restoration, optimum fertiliser application and cautious use of irrigation water, arriving at a precise input
supply system allowing for equity in accessing critical inputs and improved delivery mechanisms,
implementing socio-economic support programmemes for farmers especially women, improving crop-
tree-livestock interactions in farming systems and optimising recycling and use of biomass for preserving
the environment, maximising the production potential of rain-fed areas, devising contingency crop plans
based on weather forecast and insurance modules for mitigating crop losses, innovating in digital
agriculture solutions through ICT tools, investing in agriculture infrastructure, fostering knowledge-
sharing platforms and equipping farmers with technology options.
21
NFSM: National Food Security Mission for Rice has been implemented across 8 districts in 2016-17, and
involved activities such as Cluster demonstrations on direct seeded rice, line transplanting and cropping
system based demonstrations, green manure planting with paddy, distribution of high yielding quality
seeds, providing assistance for custom hiring paddy transplanters and combine harvesters for an outlay
of Rs, 20.64 crore. This scheme is to be continued during 2017-18. Government has been promoting the
machine transplantation of paddy from 2014-15, and in 2016-17 the scheme covered around 1.72 lakh
hectares, while during 2017-18 this technology would be adopted across 2 lakh hectares. Direct sowing
method of paddy requires less water, involves lower cultivation costs and lesser duration crops to be
cultivated across 5.15 lakh acres across the state during 2016-17.
For pulses, NFSM has been implemented across all districts except Chennai and Nilgiris, and along with
the above techniques, incorporated efficient water application tools establishment of mills etc, and the
total outlay was around Rs 41.64 crores, and would be continued in 2017-18 with an outlay of Rs. 41.13
crore. The NFSM for coarse cereals has been implemented in 10 districts, during 2016-17 around Rs.8.22
crores were spent towards promotion of millet cultivation. This would be continued during 2017-18 also.
NFSM for Sugarcane has been implemented during 2016-17 in Cuddalore, Villupuram and Tiruvannamalai
districts. Around 47.75 lakhs has been extended towards subsidies for demonstrations on inter-cropping,
breeder seed production and state level training. This would be extended during 2017-18 with an outlay
of Rs. 49.42 lakhs. NFSM for Cotton has been implemented during 2016-17 in Virudunagar and Perambalur
districts, and around 48.42 lakhs have been spent on demonstrations on integrated crop management,
seed production etc. During 2017-18, a total outlay of 51.25 lakhs have been allotted towards NFSM for
cotton.
NADP: Through this initiative, the objective has been to encourage context and problem-specific
initiatives for paddy so as to increase productivity and farmer incomes, through components such as
incentives for certified seeds, subsidies for high-yielding varieties, popularisation of machine planting, use
of power tillers etc. The outlays for this initiative has been around Rs. 63.1 crore. Pulses Improvement
programmeme under the NADP comprised of activities such as foliar spray of DAP, production-distribution
of quality seeds, promoting redgram transplantation etc. at Rs 23.58 crores during 2016-17, and would be
continued through 2017-18. An amount of 2.69 crores were spent during 2016-17 under NADP and 4
crores during 2017-18 towards millet production.
SRI/ SPI: SRI packages a bouquet of technological practices for efficient water use, and has been
implemented across 5.81 lakh hectares during 2016-17. The state aims to promote this across 9.91 lakh
22
hectares during 2017-18. The System of Pulses Intensification scheme covered 2000 villages across an
area of 1.25 lakh hectares in 2016-17, and this would be adopted in 2000 villages in 2017-18.
National Mission on Oil seeds and Oil Palm (NMOOP) was initiated in 2014-15 to meet the edible oil
requirements, and aims to increase the vegetable oil requirements by oil seeds, oil palms and tree borne
oil seeds. Tamil Nadu ranks first in the productivity of oilseeds, and the schemes for this purpose aim at
increasing the irrigation coverage under oilseeds from 26 % to 36 %, area diversification from low-yielding
cereals to oilseeds, inter-cropping oilseeds with cereals, pulses, sugarcane and utilising fallow lands after
paddy cultivation for this purpose. Around 4.22 lakh hectares have been brought under oilseeds every
year with a production of 9.62 lakh metric tonnes. During 2016-17, the expenditure under the scheme has
been around 12.62 crores and during 2017-18 the financial allocations are around 18.77 crores.
Sustainable Sugarcane Initiatives incorporated a set of agronomic practices such as transplantation of
young seedlings, adoption of new planting methods such as wider spacing, precision farming/ drip
fertigation across 275 hectares during 2016-17. During 2017-18, an area of 16,000 hectares would be
brought under this SSI scheme, while an area of 14,000 hectares would be brought under micro-irrigation.
Overall, Tamil Nadu7 has set a target to achieve 5 percent annual average growth in the Agricultural sector
by the year 2023. The initiatives identified in this vision include promotion of market driven agricultural
produce, accelerating innovation and extension mechanism, functional consolidation of land holdings,
emphasis on mechanization, Improvement in productivity, assurance of timely irrigation, creation of a
robust supply chain, and skill development in agriculture. The total proposed investment to drive this
growth is around ₹ 40,000 Crores.
7 http://www.tn.gov.in/dear/Agriculture.pdf
23
2. Farming Households in Tamil Nadu (4 Districts) - An Assessment
The NSSO data on Consumption Expenditure Survey (2011-2012) suggests that more than 20% of rural
households that are self-employed in agriculture as their primary occupation have an income below the
poverty line; this is highest for the states of Jharkhand and Odisha. Additionally, the relative farm income
per cultivator is nearly one-third to one-fourth the income of a non-agriculture worker (as of 2015-2016)8.
Growth in farm income after 2011–12 has fallen to around 1% (Chand, 2016); low income in absolute and
relative terms is considered the primary reason for agrarian distress across India. In Tamil Nadu, close to
20% of the farmers are viewed as having income below the poverty line. Against this backdrop, the
Government has set the goal of doubling farmers income from farming in real terms by 2022-2023 as the
pivotal route to ensuring farmers’ welfare, increased income parity and reduced agrarian distress.
Figure 5. Farm Households with Income Below Poverty Line (2011-12)
2.1 Present Estimates
It must be noted that there is a serious dearth of data that captures the income of agricultural households,
over a period of time. While the NSSO has two datasets (2002-03, and 2012-13) that capture some data
on estimates and income sources, at a nation-wide level, the definitions of farming households used in
both datasets are different, hence affecting the comparability. For most part, this report relies on data
and estimates from the 2012-13 dataset, and literature or analyses that have been done using this data.
In 2012-13, the average annual income of a farming household was ₹ 77,112 – 60 percent of this amount
being contributed by farm sources (cultivation, and farming of animals), and 40 percent from non-farm
sources (wages, salary etc.). This amount works out to an average monthly income of ₹ 6,426. The average
8 NITI Aayog Policy Paper
24
monthly household expenses of an agricultural household add up to around ₹ 6,223, as per the same
dataset. This translates into a meager saving of ₹ 223 per month, or a little more than ₹ 2600 per year. In
Tamil Nadu, the data paints a marginally better picture – the average monthly income of a farming
household is ₹ 6,980, while the average household expenses add up to ₹ 5,803 – a monthly saving ₹ 1,177.
Two years have passed since the goal of doubling farmer’s incomes was announced; the time is indeed
ripe to assess the progress that has been made thus far. There is a need for a careful estimation of the
current income level of farmers, and the composition (in various agro-climatic zones, holding size-wise,
social class wise, etc.). It is only through such an exercise that the extent of progress, and the success of
the various schemes initiated by the State and Central governments can be reviewed, and modified as
necessary in order to ensure maximum benefit to the farmers. This is indeed the primary objective of this
study. Additionally, the study aims to understand the constraints faced by the farming community
(including the distress situations, their frequency) that are limiting opportunities to income enhancement
of the farmers. The overall objective is to be able to identify the kind of support, facilities, and policy level
changes that are required that in order to substantially improve farmer’s incomes by 2022. To this end,
this study relies on data from sample survey focusing on 4 districts, from different agro-ecological zones
of Tamil Nadu. Additionally, this study also gathers a number of opinions, insights and perspectives from
key stakeholders in the agricultural space in Tamil Nadu. These further inform the objectives of the study,
and provide direction to its findings.
2.2 Methodology, and Sample Selection
The research methodology followed has been the mixed methods approach, which entails both
quantitative and qualitative data collection through well-designed survey instruments and focus groups,
stakeholder discussions etc. During the period July 2017-December 2017, quantitative data (in the form
of household surveys), and qualitative data (in the form of focus group discussions and key stakeholder
interactions) was collected.
The sample comprised of 854 households across four districts in 4 agro-climatic zones of Tamil Nadu. The
respective blocks and districts for the study were selected based on relevant indicators such as ground
water potential and irrigation intensity, per capita income indicators and contribution of agriculture
towards the District Domestic Product. 9
9 Refer table on groundwater depletion levels between 2012 and 2013.
25
Table 4. Sampled Districts - Key details
District Irrigation Intensity PCI (2010-11) Agro-Climatic Zone
Dharmapuri 1.31 46828 North Western Zone
Nagapattinam 1.13 34640 Cauvery Delta Zone
Villupuram 1.07 30181 North Eastern Zone
Ramanathapuram 1.00 37707 Southern Zone
1. Household Surveys: The quantitative data collection comprised of around 800 Household Surveys
across four districts, 200 surveys in each district. Three blocks were selected within a district based
on ground water potential data (refer10), one each from the respective zones ie, Over exploited
(greater than 100 percent water consumption), Critical/Dark ( between 90-100 percent) and Semi-
critical/ Grey (70-90 percent). The following blocks were selected within each district based on the
above indicators.
Villupuram: Kallakurichi, Chinnasalem, Gingee
Dharmapuri: Pennnagaram, Hosur, Dharmapuri
Nagapattinam11: Kolidam, Mayiladuthurai and Thirumarugal
Ramnathapuram: Thirupullani, Tiruvadanai and Ramnathapuram
Two villages with reasonable area of land under cultivation were selected within a block, each
from the north and south of the block. Within a particular village, based on consultations with the
local agricultural officers at the village or panchayat level and the land owning criteria, 35
households were randomly selected for the detailed household survey.
More than 5 acres: 5 farmers (14 percent)
2.5-5 acres: 10 farmers (29 percent)
Less than 2.5 acres: 20 farmers (57 percent)
2. Focus Groups: While the household survey provided data on land area under cultivation and allied
farm activities, credit and risk mitigation strategies of household, farm input usage, expenditures and
incomes from all possible sources of agricultural households, farm productivity estimates and
irrigation statistics, penetration of marketing, MSP awareness indicators , insurance take up etc. the
qualitative methods such as focus group discussions facilitated understanding the reasons for
cropping choices, preferences in farm decisions and income-earning activities etc.
10 http://www.nicra-icar.in/nicrarevised/images/publications/Tbu_NRM_Guidelines%20For%20Augmentation%20Of%20Groundwater%20Resources.pdf ) 11 Declared as distressed in 2016-17
26
Sample selection for Focus Groups: Around 10 to 12 farmers were selected within a village
community based on consultations with the local agricultural officer at the village/panchayat
level, and in adherence to the land criteria mentioned above for farmers. The focus groups
ensured participation of at least 2 women farmers, as it facilitated understanding preferences,
decision-making and risk-management choices related to agriculture and associated activities
from a gender perspective.
3. Stakeholder Interviews: Detailed interviews with relevant stakeholders, both private and government,
comprised an integral part of this project owing to the immediate policy implications of the study,
both at the national and state level.
Sample selection: A stakeholder mapping exercise was performed to identify and map the
relevant stakeholders within the agricultural sector. 12After multiple discussions within the
research team, we finalized on a set of stakeholders to be interviewed for the study, based on the
focus areas and discussion themes of the study, wherein secondary and primary data had to be
substantiated with policy perspectives and implementation aspects from the field.
12 Please refer to the stakeholder mapping section for further details.
27
2.3 Key Stakeholders - Agriculture in Tamil Nadu
The primary stakeholders - who are the main focus of this study – are the farmers and cultivators
(including those pursuing husbandry and fishing activities). These stakeholders are directly affected by
policy decisions on agriculture and allied activities. Key stakeholders include all individuals/ entities
influencing the design, implementation, and ultimately the success of the various policies and schemes
whose aim is to increase farmers’ incomes, and improve their wellbeing and welfare. These could be the
government departments involved in deciding the budgetary allocations towards agriculture and allied
activities, departments engaged in deciding, streamlining the schemes and activities for agriculture for
the respective financial year and implementing them on ground. These stakeholders have the influence
to determine/ shape the policies with regards to doubling or improving farmers’ incomes. Secondary
stakeholders function as intermediaries between farmers (primary stakeholders) and respective
government departments (key stakeholders shaping the policy landscape for increasing farmers’ incomes)
and affect the system in roles wherein they do not directly influence the farmers’ income policies (in
capacities related to monitoring and implementation, advisory roles) however are essential to this
framework. External stakeholders are those who are not directly involved in enhancing farmer incomes,
but are involved in the process, means and outcomes of policies with regards to increasing farmer
incomes. The following chart illustrates the relationship and flow of stakeholder interactions within this
framework, and following table would describe the major findings from stakeholder discussions. During
the course of this study, key stakeholders representing various facets of the landscape mapped out below
were interviewed in detail. Their inputs and suggestions have been incorporated throughout the study.
28
Table 5. Stakeholders in Agriculture- Tamil Nadu D
epa
rtm
enrt
of
Ag
ricu
ltu
re(T
N S
tate
)/
Co
mm
issi
on
ara
te
Agricultural Engineering
Agricultural Marketing and Agri-Businees Directorate
Agriculture Department
Layers of Organisation (Secretary, Director at the State level, JD at district, AD at block levels etc.)
Village level: Agricultural OfficerSeed Certification Dept.
Organic Certification Dept.
Horticulture and Plantation Crops Department
Department of Sugar
Other Undertakings / Boards
Tamil Nadu Agriculture Marketing Board /APMC
Tamil Nadu Agricultural UniversityDirectorate of Extension
EducationATMA
Agricultural Colleges in Tamil Nadu
TN Watershed Development Agency (TAWDEVA )
TN Horticulture Development Agency (TANHODA)
TN Horticultural Producers Co-operative Enterprises
TN State Agricultural Marketing Board
Pri
vate
Sta
keh
old
ers
Research Institutes
NGOs (working in agri space)
Input Suppliers Farmers
Intermediaries (brokers)
WholesalersProcessor/ Exporter
Manufacturer/ retailer
Govt Markets
Consumers
Formal chains (retail stores etc. )
Farmer groups
Cre
dit
Lin
kag
es Public sector banks
NABARD
Cooperatives/RRBPrivate/
commercial banks
29
3. Data Analysis, and Key Observations
All survey data was collected digitally, and quality checked. Qualitative data was transcribed, and
incorporated along-with insights from the data. The key points of note from the collected data that are of
relevance to the study, and the broader recommendations proposed are presented below.
3.1 Definitions, and Reference Period
In designing the survey instrument and detailing the concerned sections, the National Sample Survey
Office (NSSO) reports for the 59th and the 70th round of surveys were used as reference. The Situation
Assessment Survey of Farmers in NSS 59th round defines farmer as a person operating on some land
(owned or leased or otherwise) and engaged in agricultural activities such as cultivation of field crops,
horticultural and plantation crops, animal husbandry, poultry, fishery, etc. on that land during last 365
days before the survey. In our survey we extended the definition of farmers to include those farming over
the past three years, as this helps understand whether farmers had stopped cultivating any crops in the
past three years due to various constraints.
The possession of land was also an essential condition in the survey, similar to the 59th round of NSS, and
unlike the 70th round which included households which may or may not possess land. Data was collected
for the last farmed season of the farmer which included farm expenditures as well as incomes from
harvest, over the past three years (2014-15, 2015-16, 2016-17). A failed farmed season in terms of crop
damage due to delayed monsoons or flooding was not accounted as a farmed season, due to lack of
income data from agricultural produce across households for such seasons. Expenditures incurred and
incomes earned from cultivation were estimated at the household level across agricultural households for
the last farmed season; incomes and expenses for livestock, aquafarming and poultry activities were
collected for the last 30 days; non-farm incomes and expenditures were collected for the last 12 months
(as disaggregating non-farm expenditures for business or others were difficult on a monthly basis),
household consumption expenditures on education, health , medical and other purposes were estimated
for the past 30 days.
3.2 Key Observations
This chapter presents some of the key observations with regards to household economics. Estimates of
the current farmer income levels and the composition of the income basket of the household, across
varying holding sizes and social classes are presented. Details on the credit situation of agricultural
30
households, agricultural indebtedness of households etc., findings with regards to information/training
levels, and skilling facilities for agricultural households are also included in the report. Focus groups with
farmers and interactions with relevant stakeholders facilitated the identification of constraints and
distress situations faced by the farming community such as droughts, floods and the potential for
diversification of the income basket of households, through allied, off-farm and non-farm activities.
The below paragraphs brief the key observations from the survey, focus groups and stakeholder
interviews substantiated with relevant secondary data from the NSSO surveys as well as literature
evidence from previous studies elsewhere.
1. Estimated number of agricultural households in Tamil Nadu and Survey Sample:
The Situational Assessment Survey of Agricultural Households estimated that during the agricultural year
July,2012- June 2013 rural India had around 90.2 million agricultural households, constituting about 57.8
percent of the rural households within the country. Out of 93,607 rural households in Tamil Nadu, around
32,443 households were agricultural (i.e. around 34.7 percent of the rural households). 13. Tamil Nadu has
a total cultivated area of 5,994,501 hectares as of 2014-15, the net area sown is around 4,819, 018
hectares and the area sown more than once is 1,175,483 hectares14.
The data collection for the study was done between September to November 2017 across four districts in
Tamil Nadu. The overall sample size was 854 households, and the distribution of households across the
districts are detailed in provided in Table 6. Some other important characteristics of farming households
surveyed include household size which on average was around 4.72 (SD is 1.95). 18.7 percent of those
surveyed included women farmers as well (159/854 respondents).
Table 6. Sample Composition
District No. of HHs Percentage
Villupuram 215 25.18
Ramanathapuram 214 25.06
Dharmapuri 214 25.06
Nagapattinam 211 24.71
Total 854 100
13 Key Indicators of Situation of Agricultural Households in India, NSS 70th Round, MOSPI December 2014 14 Tamil Nadu at a Glance 2016, Socio Economic Indicators of Tamil Nadu and India, Department of Economics and Statistics Tamil Nadu
31
2. Distribution of Agricultural Households by Social Groups
Figure 6: Agricultural Households by Social Group
7 percent of the farming households were from the forward caste (Fig. 6), while the rest belonged to
socio-economic backward castes. 36 percent of the sample were from the Most Backward Castes, 25
percent belonged to the Backward caste and 28 percent fell under the Scheduled Caste category.
Figure 7. Sample Composition - Social Groups
1%
28%
3%
7%36%
25%
Scheduled Tribe
Scheduled Caste
Other Backward Caste
Forward caste
Most Backward Caste
Backward caste
32
From Fig. 7, it is observed that the small and marginal farmers are mainly from the Most Backward Castes
as well as the SC and BC caste categories. Among medium-large farmers, around 20 percent belong to
forward castes – a higher representation compared to other land categories. The NSSO reports15 show
that are significant caste based differences in the economic status of agricultural households, and
scheduled caste farm households followed by OBC households have the highest deficits (average monthly
income lesser than sum of average monthly consumption and net investment in productive assets).
Forward castes report larger landholding sizes (20 percent of large farmers in our data belonged to the
forward caste), increased share of household earnings from cultivation and non-farm activities. Socio-
economically challenged castes such as the SCs report their highest share of income from wage
employment and agricultural labour, making them more vulnerable to unemployment. 16
3. Agricultural households by Respondent(Farmer) Age:
53 percent of farmers surveyed were in the age group 40 to 60 years, only 6.7 percent of them were
young farmers under thirty (between the age group of 20 to 30 years) who could have started farming
activities in the recent past, and 20 percent of them were in the age group 30 to 40 years. This reinforces
the general observations on agriculture wherein the younger demographic in the state (and across the
country) are no longer willing to adopt agricultural activities as an occupation, and are shifting out of
agriculture due to uncertainties and lower returns towards other non-farm opportunities.
Focus groups and individual discussions with these households revealed that young farmers or younger
generations within agricultural households were willing to enter into or take up dairying and husbandry
compared to cultivation activities. Dairying and husbandry offered profitable and sustainable returns as
well as better sources for institutional credit. The youth in the surveyed districts were interested in
dairying, husbandry etc. as these offered sustainable alternatives to cultivation, provided a daily income
source unlike seasonal earnings from agriculture and investments in dairying and husbandry activities
were lower compared to cultivation. Also institutional credit was available to farmers interested in rearing
cattle or other husbandry activities, and this provided the necessary support to enter into as well as
sustain their livelihoods through these ventures. Other observations from the field included the increasing
15 NSSO Situational Assessment Survey 16 http://www.livemint.com/Opinion/myrJLTnIfiNVSaJF8ovdRJ/Locating-caste-in-Indias-farm-economy.html
33
qualifications of the youth in villages with few graduating with professional degrees like engineering etc.,
and hence being lesser inclined towards agricultural activities.
Directed efforts in terms of institutional credit, extension and training activities through local agricultural
officers and KVK functionaries in motivating the youth towards such allied activities and improving their
operational efficiencies by staying informed, adopting modern practices in these regards and organizing
farmers involved in dairying or husbandry into at least local collectives could facilitate their participation
in such allied activities. A recent scheme aimed at skilling youth in agriculture, Attracting Rural Youth in
Agriculture (ARYA) along with the Agriculture Technology Management and Training (ATMA) scheme
extends extension services to rural youth. These schemes could be linked with activities such as
identification of barren lands with the support of the Agriculture-Science Centre, promoting suitable crops
according to climate-soil contexts, encouraging varied crop cultivation after harvesting paddy,
encouraging farmers to use fertilisers as per Soil Health Card, registering farmers onto a portal, improved
access to new technologies and connecting them through farmer groups (Dr. K. Ramasamy, VC TNAU,
2017)17. NSSO 2003 findings revealed that 27 percent farmers considered farming was not profitable
enough, and given options 40 percent of them wanted to shift out of agriculture (GOI, 2005).
Figure 8. Respondent Age
17 Source: https://thewire.in/111075/farmers-notebook-young-india-can-save-the-future-of-agriculture/
34
4. Migration Patterns:
22 percent of the households surveyed had a family member who had migrated for work or education in
the past 3 years. Seasonal migration has been on the increase due to declining agricultural employment
opportunities and has become an “irreversible trend” for such farming households (Mosse 2005 and
Breman, 1996). Haberfeld et al (1999) argue that seasonal migration functions as an effective coping and
risk management strategy for rural poor due to lack of employment, especially during droughts. Such
migrant households are usually characterized by lower educational levels and agricultural incomes.
Households with migrant labourers were found to have higher income levels compared to other
households (incomes from migrant labour accounts for 60 percent of the total annual household income).
Basu and Kashyap (1992) discusses that majority of such migrants constitute of off-season employment
for agricultural labourers and small/marginal farmers. Such “distress diversification” trends are observed
amongst agricultural labourers and landless alternating across agricultural and non-agricultural jobs
between crop seasons and during off/lean seasons to support their household incomes (S. Chandrasekhar,
Mousami Das and Ajay Sharma, March 2014, IGIDR Mumbai). 18
With increasing education levels and employment opportunities, men are more likely to move out of
agriculture. With such migration of men towards cities, there could be an increased role for women as
operators and decision makers with regards to farming. On an average, a woman spends around 3300
hours in the field during a crop season while a man spends around 1860 hours, the paradox being that
only 12.69 percent women have operational land ownership. While their role is crucial towards ensuring
food security, they remain unrecognized as farmers as the legal recognition is tied to land ownership.19 As
mentioned earlier, our survey had around 18 percent female farmers operating their landholdings, but
the legal ownership aspect has not been studied. This situation calls for a shift in policy focus in creating
a favourable ecosystem for women farmers, increasing engagement and extension activities with women
farmers and improving their accessibility to physical and financial resources (Prof. Hema Swaminathan,
Centre for Public Policy IIM Bangalore)20.
5. Education Status:
Education and skills of farmers are integral for improving farming practices, investments and productivity.
Lower educational levels of farmers could act as significant barriers in the public dissemination of
18 http://www.igidr.ac.in/pdf/publication/WP-2014-009.pdf 19 https://thewire.in/135617/women-farmer-suicide-crop-tamil-nadu-drought/ 20 http://www.thehindubusinessline.com/opinion/india-farming-women-policy-issues-migration/article9968781.ece
35
knowledge as well as diversification into allied farm or off-farm activities. The NSSO survey reports that
awareness about bio-fertilizers, minimum support prices and WTO is associated with educational levels,
lower among marginal and small farmers. 2160 percent of the farmers surveyed had not studied beyond
class 8, and only 31 percent farmers had completed high school or senior secondary school (between
classes 9 to 12).
Figure 9. Education Status
Literacy and mean years of education are lower for marginal and small farmers compared to the medium
and large ones. A National Commission for Enterprises in the Unorganized Sector Report shows that
literacy rates for small and marginal farmers were 55 percent and 48 percent respectively, lower than the
national average literacy rate of 72.98 percent, i.e. 67.6 percent in rural areas and 84.1 percent in urban
areas. Educational levels of farmers impact their uptake of government schemes, digital initiatives in the
agricultural space including the e-NAM and updating themselves with modern farming techniques22
( Mahendra Dev, 2012-14).
Education being one of the key variables influencing rural diversification, efficiencies of the rural
workforce can be tapped into only through generating awareness among the rural populations on the
importance of education and skilling and increasing the public expenditure on education. Farmers’
education, especially women farmers, has been shown to significantly increase the net household farm
income per acre of cultivated land(Sitakanda Panda,2015)23. Other studies also find a positive, significant
21 http://www.igidr.ac.in/pdf/publication/WP-2012-014.pdf 22 http://cf.orfonline.org/wp-content/uploads/2016/12/ORF_Issue_Brief_167_Small_Farmers.pdf 23 http://www.emeraldinsight.com/doi/pdfplus/10.1108/IJSE-12-2013-0278
36
relationship between level of farmers’ education and productivity. Also agricultural productivity increases
with educational levels across caste categories. Government and NGOs should work towards higher
investments in farmer education and awareness for increasing agricultural productivity and incomes (Atal
Bihari Das, Dukhabandhu Sahoo, 2013). 24
6. Farming/ Cultivation Experience
68.5 percent of the households surveyed had been engaged in cultivation for more than 20 years, 22
percent had been involved in cultivation for the last 10-20 years, 6 percent had taken up cultivation in the
past 5 to 10 years. Only 1 percent of those surveyed had started farming activities in the last 1 to 3 years.
Table 7. Cultivation Experience
Goran Djufeldt and Srilata Sircar in their book “Structural Transformation and Agrarian Change in India”
(2016) elaborate on such trends, wherein family farmers have stronger tendencies to opt out of
agriculture than large landowners.25 Stronger odds for entry into farming or allied activities exist for
marginal and landless labour households as well as non-agrarian ones due to lesser saving capacities and
inabilities in purchasing land and the existing lease structures.
7. Ration Card Status
As per the survey data, a majority of the households have Priority Household (PHH) Ration cards (as
mandated under the National Food Security Act, 2013) that allows for ration purchases of all essentials
including rice, sugar, oil, pulses etc.
24 http:///www.inderscience.com/offer.php?id=52312 25 A family farm is essentially a family operated farm, with its ownership transferred from generation to generation (Djurfeldt,
1996).
Experience (Years) No of HHs Percent
1-3 years 9 1.06
3-5 years 17 2.00
5-10 years 53 6.23
10-20 years 189 22.21
More than 20 years 583 68.51
Total 851 100
37
Figure 10. Ration Card Type
According to the recent modifications in ration cards, Priority Households are those earmarked with the
urgent need of being alleviated from poverty. The PHH tagging ensures that such households in most need
of supplies benefit from other targeted schemes such as the Annapurna Yojana. The larger proportion of
households across our sample falling into this Priority Household category shows the relevance and urgent
need for increasing the scope of livelihood and income-earning opportunities for such households.
8. Animal Husbandry/ Livestock Rearing
Table 8. Animal Husbandry/ Livestock Rearing
No. of HHs Percentage
Villupuram
Yes 135 62.8
No 80 37.2
Total 215 100.0
Ramanathapuram
Yes 125 58.4
No 89 41.6
Total 214 100.0
Dharmapuri
Yes 154 72.0
No 60 28.0
Total 214 100.0
Nagapattinam
Yes 126 59.7
No 85 40.3
38
Total 211 100.0
Total (All districts)
Yes 540 63.2
No 314 36.8
Total 854 100.0
63.2 percent of the households surveyed were engaged in animal husbandry including livestock, and
poultry activities - contributing to their household income or food consumption. 4.6 percent of the
households had entered animal husbandry in the past 1-3 years while another 7.2 percent in the last 3-5
years. Animal husbandry seems to be an attractive option for rural agricultural households as compared
to cultivation, at least 11.8 percent households had initiated some husbandry activities in the last 5 years
while only 3 percent households had taken up farming. Livestock can be reared within smaller
landholdings and yield favourable returns (labour demands vary as cattle are high maintenance and
provide higher earnings, while goats are low maintenance with negligible earnings) as compared to
cultivation wherein the odds of entry as well as remaining in the same are high, especially for small and
marginal farmers. Weather fluctuations and distress situations impacts cultivation more than animal
husbandry, the challenges here too are addressing issues of water and fodder scarcity during droughts,
labour availability within households or elsewhere and accessibility to risk management strategies
through insurance as well as timely credit. The cattle insurance penetration is extremely low in Tami Nadu,
the penetration across our survey districts was around 2 percent.
Table 9. Experience in Animal Husbandry/ Livestock Rearing
Experience (Years) No. of HHs Percent
Less than 1 year 2 0.37
1-3 years 25 4.62
3-5 years 39 7.21
5-10 years 111 20.52
10-20 years 121 22.37
More than 20 years 243 44.92
Total 541 100
We find zero report of aquafarming in our study sample. We had sampled farmers for the survey based
on land ownership criteria and hence fishermen engaged only in fishing activities in the sea without any
cultivable land could not be taken into consideration. This definition has been adopted in lines of the
agricultural census 2013 that defines farmers based on land holding criteria. A major reason for fishermen
39
with cultivable land not engaging in aqua activities included dried up farm ponds and water reservoirs due
to drought conditions and unpredictable, scanty rains that usually recharge such surface water sources.
This was quite surprising for the research team that even in coastal districts like Ramanathapuram and
Nagapattinam, the sample showed no mention of aquafarming or inland fishing activities. We had
followed up on this with surveyed farmers as well as through our focus groups and learned that seasonal
variations had to be accounted for as inland aquafarming activities were extremely dependent on water
availability in farm ponds, surface water sources etc. (past two years of 2016-17 witnessed severe drought
conditions, the worst in 140 years). Farmers engaged in aquafarming activities in the past mentioned that
their farm ponds have been dried up in the recent seasons due to scanty rainfalls (also verified first hand
through our surveyors) and in surveyed areas, freshwater sources were becoming increasingly saline due
to sea water intrusion making them unfit for such aquafarming activities, except prawn culture. On
average, households seem to own 1-2 milk cows, and an even smaller number of milk buffaloes. We find
a very low number of male buffaloes or bullocks reported across the surveyed households. The average
poultry ownership is around 8 heads per household.
Table 10. Livestock/ Poultry Ownership
(Type) Mean SD Min Max
Milk cows 1.3 1.8 0 15
Milk buffaloes 0.1 0.4 0 4
Male buffaloes 0.0 0.1 0 1
Bullocks 0.1 0.5 0 10
Goats 1.5 5.0 0 70
Sheep 0.4 5.4 0 110
Poultry 8.0 174.4 0 5000
Aquafarming 0.0 0.0 0 0
Table 11 shows the average total value of livestock across different categories with those households reporting ownership.
Table 11. Value of Livestock/ Poultry Owner per HH
(Type) No. of HHs Mean SD Min Max
Milk cows 426 55412.0 51613.3 1000 450000
Bullocks 27 39518.5 94160.4 0 500000
Milk buffaloes 34 41911.8 24562.1 5000 100000
Male buffaloes 5 27400.0 12401.6 12000 45000
Sheep 11 209818.2 271306.8 4000 880000
Goats 219 21150.7 38878.3 1000 420000
Poultry birds 136 4073.5 22899.8 100 250000
40
9. Land Ownership:
The average size of land holdings across surveyed households was 1.2 hectares (average landholding size
across India as per the 2010-11 census was 1.16 hectares).26 However, this was larger than the state
average of 0.8 hectares, as per the last available data. According to the Agricultural Census 2010-11,
marginal and small holdings constituted for 92 percent of total holdings in the state, and 61 percent of
total operated area. Tamil Nadu accounts for only 4 % of the total area operated in all-India at 159.2
million hectares. The total number of operational land holdings in Tamil Nadu declined from 81.93 lakh
(2005-06) to 81.18 lakh (2010-11), a decline by 0.9 %. Tamil Nadu has a share of 5.9 percent in the total
all-India operational holdings at 137. 8 million. The total area operated also declined from 68.24 lakh
hectares in 2005-06 to 64.88 lakh hectares in 2010-11 (4.9 % decline).
This decline could be attributed to farmers having given up on cultivation due to lucrative land prices
offered, also noted in our focus group interactions with farmers and especially prevalent in villages closer
to urban areas. Small landholdings limit the utilization of technology and machinery for improving
production and productivity, and has resulted in the marginalization of small and marginal farmers and
the casualization of agricultural labour. Thus farmers would have to engage themselves in farmer groups,
thereby encouraging sharing and judicious use of scarce resources as well as better accessibility to
technical inputs. Fig.11. shows the average size of holdings by land category acoss the surveyed
households. This data compares favourably with the state averages for operational landholdings across
land categories as given in Table 12.
Figure 11. Average Size of Landholdings
26 Source: Government of India, 2012.
41
Figure 12. Sample Composition - by Landholding Class
Table 12:Distribution of Number of Holdings and Area Operated (Tamil Nadu)
Category Number of holdings (lakhs) Area operated (lakh ha) Average size of holdings (ha)
2005-06 2010-11 2005-06 2010-11 2005-06 2010-11
Marginal (< 1 hectare) 62.28 62.66 22.86 22.92 0.37 0.37
Small (1 to 2 hectare) 12.34 11.82 17.21 16.44 1.39 1.39
Medium ( 2 to 10 hectare) 7.12 6.53 24.26 22.03 3.41 3.37
Large (> 10 hectare) 0.19 0.17 3.91 3.50 20.58 20.59
Total 81.93 81.18 68.24 64.88 0.83 0.80
Source: Department of Economics and Statistics, Chennai – 6.
From Fig. 12, it is observed that across the surveyed households, 53 % constituted of marginal farmers
(less than 2.5 acres of land), 27% are small farmers (between 2.5 to 5 acres of land), 16% are semi-medium
farmers (owning between 5 to 10 acres ) and 4 % are medium-large farmers (more than 10 acres of land).
Table 13:Owned, and Irrigated Land
Mean Sd Median
Marginal Farmer
Owned(acre) 1.40 0.54 1.50
Owned(hectare) 0.56 0.21 0.60
Irrigated(acre) 1.40 0.52 1.50
Small Farmer
Owned(acre) 3.21 0.60 3.00
Owned(hectare) 1.28 0.24 1.20
Irrigated(acre) 3.05 0.76 3.00
Semi-Medium Farmer
Owned(acre) 5.97 1.19 5.50
Owned(hectare) 2.39 0.48 2.20
Irrigated(acre) 5.46 1.63 5.25
42
Medium-large Farmer
Owned(acre) 13.26 5.26 11.50
Owned(hectare) 5.31 2.10 4.60
Irrigated(acre) 12.45 5.95 10.50
Total
Owned(acre)* 3.10 2.90 2.00
Owned(hectare)* 1.24 1.16 0.80
Irrigated(acre)* 2.94 2.82 2.00
10. Primary Income Sources of Farming Households Across Land Categories
Respondents were asked about their three main income-earning activities, and cultivation of crops was
the primary source of income for these households in our sample. 47.5 % of marginal farmers and 35.2 %
of small farmers report agricultural labour as the second most important source of income for their
households, and the proportion of households engaged in agricultural labour decline with the increasing
size of landholdings. 20.8 percent of households of marginal farmers reporting wage labour as another
important income earning activity, while this reduced to 15% and 8.8% respectively among the semi-
medium and medium-large farmers. The proportion of agricultural households reporting cultivation as a
significant income earning activity increases across the land categories, 95.3 percent among the semi-
medium farmers and 100 percent among the medium-large farmers. The dependency on agricultural
labour, wage labour and NREGA for household incomes is significantly higher amongst those with smaller
landholdings, as observed in the case of marginal and small farmers.
Figure 13. Main Income Earning Activities
89
.7%
93
.6%
95
.3%
10
0.0
%
47
.5%
35
.2%
14
.2%
23
.5%
25
.4%
25
.0%
24
.4%
23
.5%
20
.8%
15
.7%
15
.0%
8.8
%
15
.3%
15
.7%
9.4
%
11
.8%
11
.6%
4.7
%
11
.0%
14
.7%
7.2
%
5.5
%
7.9
%
5.9
%
M A R G I N A L S M A L L S E M I - M E D I U M M E D I U M - L A R G E
PER
CEN
TAG
E O
F H
OU
SEH
OLD
S
Cultivation Agri- Labourer Husbandry Wage labourer NREGA Business Salaried
43
Marginal and small farmers show a higher dependency on family labour for agricultural operations, and
also work as agricultural labourers on a contract basis or for large farmers, as earnings from their small
landholdings would not alone sustain their household incomes.
The major determinants identified as drivers of rural non-farm diversification from previous studies
include agricultural growth, commercialization of agriculture, unemployment, urbanisation, real wages
and public expenditure. Different studies have attributed this diversification to both push and pull factors.
Vaidyathan (1986) discusses the ‘residual sector’ hypothesis, showing a significant relationship between
push factors such as unemployment rates and rural non-agricultural sector across states in India. He
refuted this argument in 1994, as real wages in rural areas were on the rise in the 1980s and gradually the
‘residual sector’ case was weakened as on average non-agricultural workers were better-off than
agricultural workers.27
To understand the rural non-farm diversification determinants, it would be essential to analyse trends in
this regard. Stagnation in rural non-farm employment between 1987-88 to 1993-94 was attributed to the
economic liberalization. Sen (1998) argues that public expenditure in rural areas was a significant driver
in raising rural non-farm employment till 1987-88, and the stagnation in non-farm employment
afterwards could be attributed to declining public expenditure, due to stabilization and structural
adjustment.
It can be observed that between 1977-78 to 1999-00, the share of male self-employed and regular workers
had declined in agriculture and increased for non-agriculture. Diversification from agriculture to non-
agriculture has increased over the years, and during the period 1977-78 to 1999-2000, rural non-farm
employment increased by 9.4 percentage points among men and 2.8 percentage points among women.
Casualisation of labour (shift from regular and self-employment towards casual labour in agriculture and
non-agriculture) has been on the rise as a survival mechanism for the bottom 40 percent of the workers.
While diversification has increased over the years, it has been a gradual process for women in rural areas.
With regards to non-farm work in rural areas, cultivator households and agricultural worker households
have lower odds of rural non-farm work, SC households have higher odds of RNF, marriage and higher
agricultural employment growth decreases the odds of RNF work, and higher schooling and higher
household incomes increases the odds of RNF work.28
27 (Sen, 1998; Papola, 1991). (Vaidyanathan (1986), Visaria and Basant (1993) Mahendra Dev (1993), Chandrasekhar (1993),
Chaddha (1999), Unni (1996), Sen (1998), Lanjouw and Shariff (2000) 28 https://globalpoverty.stanford.edu/sites/default/files/publications/187wp.pdf
44
Agricultural technology is integral in improving agricultural growth, and along with improvements in the
rural non-farm sector can create productive employment, and thereby reduce rural poverty.
Improving rural incomes entails policies for higher growth in agriculture through raising public investment
in agriculture, elimination of both domestic and external controls on agriculture, liberalizing the leasing
of land, development of non-cereal crops and expansion of the rural non-farm sector (Mahendra Dev and
Robert Evenson, Stanford University, October 2003)29.
11. Crops Farmed in Last Season
Seasonal Crops: The “last farmed season” for the purpose of this survey is defined as the most recent
complete farming season for the farmer, which accounts for both expenses as well as incomes for that
season. In few cases farmers report that due to monsoon failure or flooding crops had been damaged,
and hence there were no incomes earned for that particular season. For this reason, we take into account
their last farmed season with expected yields and incomes earned, as this would be comparable with the
expenses over the farmed season. The major crops cultivated across these surveyed households are
shown in the chart below. 60 percent of the surveyed households cultivated Paddy, followed by Sugarcane
(9.6 %), Millets (8.7 %), Cotton (7.3%), Horticulture crops (5.4 %), Turmeric (4.8 %) Groundnut (4.7%) etc.
Figure 14. Crops Cultivated - Last Complete Farming Season
Perennial Crops: 20 percent of the total agricultural households surveyed were engaged in some perennial
crop cultivation. 34 percent and 27 percent of the surveyed households in Dharmapuri and Villupuram
cultivated perennial crops respectively.
29 Working Paper on Rural Development in India: Agriculture, Non-farm and Migration
60.7
9.6% 8.7% 7.3% 5.4% 4.8% 4.7% 3.7% 3.2% 2.7% 0.6%0%
10%
20%
30%
40%
50%
60%
70%
Cultivation Percentage
45
Table 14: Perennial Crop Cultivation
District No of HHs Percent (%)
Villupuram
Yes 58 27.0
No 157 73.0
Ramnathapuram
Yes 12 5.6
No 202 94.4
Dharmapuri
Yes 73 34.3
No 140 65.7
Nagapattinam
Yes 29 13.7
No 182 86.3
Total (Across all districts)
Yes 172 20.2
No 681 79.8
Total 853 100
The perennial crop mix included coconuts, mangoes, fruit trees and tamarind. Among those households
cultivating perennial crops, 94.7 percent cultivated coconuts among the perennials. 41.7 percent of the
households cultivating coconuts were in Dharmapuri and 33.7 percent were in Villupuram respectively.
12. Indebtedness of Agricultural Households
According to our survey data, 71.3 percent of households surveyed were indebted (609 households out
of 854 HHs had outstanding loans) and across land categories 65 % of marginal farmers, 76 % of small
farmers, 65 % of medium farmers and 91 % of large farmers were indebted. Around 82.5 percent of
agricultural households in Tamil Nadu were indebted, while Andhra Pradesh had the highest share or
indebted households (92.9 percent) followed by Telangana (89.1 percent), while the national
indebtedness was at 52 percent.30 This was one of the primary reasons for 55 percent of the farmer
suicides in 2015, and more than 300,000 farmers have committed suicide since 1995. 31
Outstanding Loans: On average, a household in our sample reported around 2.35 outstanding loans,
irrespective of the land categories. The average outstanding amount for the largest loan was around ₹
134,944 (SD: 116,098) ranging between 15,000 and 459,856 ₹, with 6 percent of them being interest free.
The average principal of the largest outstanding loan was around ₹ 125, 630 (SD: 110,868).
30 Situation of Agricultural Households, NSSO 31 IndiaSpend Report dated January 2, 2017
46
As per the Situation of Agricultural Households estimates, the total amount of outstanding loan per
agricultural household was around ₹ 115,900 for Tamil Nadu, while this was the highest for Kerala at ₹
213,600 followed by Andhra Pradesh at ₹ 123,400 ₹ and Punjab at ₹ 119,500.
Table 15: Household Indebtedness
No of HHs Mean* SD Min Max
Marginal farmers
No of Outstanding Loans 315 2.3 1.6 1 10
Principal Amount of Largest Outstanding Loan 315 98139.7 85886.2 18000 450000
Outstanding Amount on Largest Outstanding Loan 315 104181.0 91733.5 15000 459856
Small farmers
No of Outstanding Loans 180 2.4 1.4 1 7
Principal Amount of Largest Outstanding Loan 180 109638.9 87608.4 18000 450000
Outstanding Amount on Largest Outstanding Loan 180 122284.3 98232.7 15000 459856
Semi-medium farmers
No of Outstanding Loans 83 2.3 1.4 1 8
Principal Amount of Largest Outstanding Loan 83 194192.8 156275.4 18000 450000
Outstanding Amount on Largest Outstanding Loan 83 201117.8 157068.4 15000 459856
Large farmers
No of Outstanding Loans 31 2.3 1.3 1 5
Principal Amount of Largest Outstanding Loan 31 223387.1 165652.2 35000 450000
Outstanding Amount on Largest Outstanding Loan 31 238238.5 163199.0 40000 459856
Total (Across all districts)
No of Outstanding Loans 609 2.36 1.5 1 10
Principal Amount of Largest Outstanding Loan 609 125630.6 110868.0 18000 450000
Outstanding Amount on Largest Outstanding Loan 609 134944.5 116098.7 15000 459856
47
13. Loan Sources
This section details the loan sources from which agricultural households borrow, across land categories.
From the Fig 15., it can be observed that as the size of land holdings increases, the accessibility to formal
banking institutions also increases, implying the higher dependence of marginal and small farmers on
informal sources of lending. In this fig, the y-axis indicates a proportion ie, total number of outstanding
loans (across formal and informal sources) over the total number of HHs with outstanding loans across
each land category. The proportion exceeds one as a household can have more than one outstanding loan,
and hence the total number of outstanding loans exceeds the total number of households in each land
category. From the fig, it is clearly shown that accessibility to institutional increases with landholding
sizes, and the dependency on informal sources increases with the decline in landholding sizes.
Figure 15. Loan Sources across Land Categories
Accessibility to formal credit positively impacts the net farm returns as well as the per capita monthly
household expenditure of agricultural households (Anjani Kumar et. al)32. The emphasis has to be on
eliminating barriers in accessing institutional credit for marginal and small farmers, reduce dependency
on informal sources as well as restructuring agricultural credit so as to cater to farmers’ credit
requirements effectively. Figure 16 describes the sources from which an agricultural household borrows,
government banks were the most preferred option and 40 percent of the households had borrowed from
government banks. 23.5 percent borrowed from co-operatives and another 22 percent from private
32 https://www.sciencedirect.com/science/article/pii/S093936251730050X
0.9
1.1
1.21.3
0.80.7
0.6
0.5
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Marginal Small Semi-medium Medium-large
Pro
po
rtio
n o
f lo
ans
take
n o
ver
HH
s w
ith
o
uts
tan
din
g lo
ans
Land Categories
Formal Sources Informal Sources
48
banks. 70 percent of the households borrowed from informal sources including moneylenders (34
percent), friend and relatives (15.9 percent), Pawnbrokers (13.8 percent) and others.
Figure 16. Loan Sources
Fig 17 illustrates the loan sources for agricultural households surveyed by land categories. Semi-medium
and large farmers borrow mainly from formal lenders, both private and nationalised banks (47 percent
and 58 percent of medium and large farmers respectively) , while marginal and small farmers depend
mainly on moneylenders (40 percent of marginal and small farmers respectively) and other informal
sources. Only 23 percent and 16 percent of medium and large farmers respectively across the survey
sample reported having outstanding loans from moneylenders, and the same applied to other informal
sources as well.
Figure 17: Loan Sources across Land Categories
39.6%
34.0%
23.5%22.3%
15.9%13.8%
9.0%
4.9%2.5% 2.3% 1.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
Loan Sources
Pe
rce
nta
ge
Govt. Bank
Moneylender
Co-operatives
Private Bank
Friends/ Relatives
Pawnbroker
NGO/MFI
SHG
Chitfunds/NBFC
Financiers
35
%
22
%
17
%
19
%
40
%
13
%
24
%
42
%
18
%
29
%
16
%
40
%
15
%
15
%
47
%
33
%
29
%
11
%
23
%
13
% 22
%
58
%
26
%
39
%
6%
16
%
16
%
13
%
Marginal Small Semi-medium Medium-large
49
As far as the largest outstanding loan amount per agricultural household was concerned, 28.9 percent of
the farmers surveyed reported borrowing from government banks followed by moneylenders (19.1
percent), private banks (15.5 percent), co-operative societies (14.5 percent), MFIs/ SHGs (9.7 percent),
informal sources such as relatives and friends (6.9 percent) as well as pawnbrokers (4.1 percent).
Figure 18. Largest Outstanding Loan - Source
14. Primary Purpose of Loans
Figure 19. Primary Purpose - Largest Outstanding Loan
Fig 19. discusses the primary purpose of the largest outstanding loan amount borrowed. 64.4 percent of
the households reported the purchase of farm inputs as the primary purpose of this loan, 9.6 percent
households reported house repairs, 7.7 percent indicated meeting educational expenses as their major
50
loan purpose, 6.9 percent reported weddings, functions etc. and 5.9 percent reported the purchase of
farm and business equipment.
The All India Debt and Investment Survey 2013 data shows that loans for farm businesses across India
have fallen by half over a decade from 58 % in 2002 to 29 % in 2012. Health has emerged as a significant
reason for household borrowings, and our data shows that at least 2.6 percent of households surveyed
indicated this as the major purpose of largest outstanding loan. With negligible savings and low quality
government health services, farmers ended up borrowing money to visit expensive private hospitals,
escalating their debts for health expenditures. NSSO data shows that more than half of India’s rural
population uses private healthcare, four times costlier as public healthcare, and such expenditures
account to at least 20 percent more than 15 times their usual monthly expenses for the poor33. The
Household Indebtedness in India survey as part of the NSS 70th Round, January to December 2013 showed
that “households of the bottom decile class incurred a relatively small part of their debts for productive
purposes” and among the rural populations, the percentage share of debts for productive purposes was
seen to vary between 11 % to 56 % among the decile classes. Findings from our sample show that at least
6.9 percent of the sample had their highest debts on unproductive expenditures such as weddings or
social functions. This still throws light upon the huge expenditures towards unproductive activities, and a
reasonable share of households (6.9 %) reporting such functions as the primary purpose for single largest
outstanding loan.
15. Last Farmed Season:
Paddy, Sugarcane, Cotton, Groundnut, Black gram, Maize, Turmeric were the major crops cultivated
over the last farmed season across the surveyed households. Last farmed season is defined as the
most recent season for that particular household with both expenditures incurred on cultivation as
well as incomes from the same. The most recent season with expenditures on farming but negligible
or zero incomes from the same due to distress situations like droughts or flooding would not be
considered, and the previous season complete with both expenditures and incomes would be
accounted for.
Moving out of cultivation: 15.2 percent farmers stopped cultivating some crop in the last 2 years due
to water scarcity issues intensified through delayed and inadequate rains. Addressing the water
scarcity issue through irrigation, dryland farming etc.
33 Source: Indiaspend article http://www.indiaspend.com/cover-story/dodgy-data-farm-suicides-drop-67-in-6-years-54551
51
Agricultural Inputs: 90 percent of farmers among those surveyed (777 HHs) purchased fertilisers from
private dealers, 8 percent from co-operative societies, and from other sources.
91 percent farmers (701 HHs) purchased seeds from private dealers, 6 percent from co-operative
societies, and less than 2 percent from friends/ neighbors etc.
16. Yield and Revenue per hectare for Last Farmed Season
Increasing agricultural production and productivity are crucial towards achieving improved farm incomes
as well as ensuring food security within the state. Table 16 reports the performance of principal crops in
Tamil Nadu through the area under cultivation (in lakh hectares), production (kgs per hectare) and yield
(in lakh tones) estimates for the respective years 2011-12, 2012-13, and 2013-14, and the figures for 2013-
14 are forecast estimates.
Table 16: Performance of Principal Crops in Tamil Nadu
Crops 2011-12 2012-13 2013-14#
A Y P A Y P A Y P
Paddy 19.04 3918 74.59 14.93 2712 40.50 18.49 3097 57.26
Millets 6.38 3643 23.24 6.42 2092 13.42 9.10 2747 25.00
Pulses 6.67 554 3.69 5.11 415 2.13 7.73 414 3.20
Foodgrains 32.09 3164 101.52 26.46 2118 56.05 35.32 2420 85.46
Sugarcane@ 3.46 113 389.75 3.48 98 340.14 3.58 105 375.46
Cotton* 1.36 481 3.82 1.33 326 2.55 1.50 361 3.18
Oilseeds 4.49 2481 11.14 3.90 2092 8.16 4.61 2245 10.35
Note: A – Area in lakh hectares; Y – Yield in kgs per hectare; P -Production in lakh tonnes * in terms of lint;
@ - in terms of cane # - Forecast estimates. Source: Department of Economics and Statistics, Chennai – 6
Table 17 illustrates the yield gaps for some major crops, comparing the average yield data for 2011-12
with potential yield, as per estimates from the Agriculture Development Strategy for Tamil Nadu – 2004,
State Planning Commission.
Table 17: Yield Gap in Select Crops34
34 Source: Agriculture Development Strategy for Tamil Nadu – 2004, State Planning Commission
Crop Potential Yield (kg/ha) Average Yield (2011-12) (Kg/ha) Yield Gap (Kgs/ha.)
Paddy 6000 3918 2082
Red Gram 1500 870 630
Black Gram 1270 580 690
Sugarcane 146000 113000 33000
52
We compare the yield data, and the yield gaps existing for principal crops with the yield estimates from
our sample provided in Table 18. While the average yield for paddy across our sample is around 3704 kgs
per hectare (comparable to the average yield for 2011-12 at 3918 kgs per hectare), there exists a yield gap
of around 2296 kgs per hectare from the potential yield. Likewise, the average yield for sugarcane from
the survey is around 79682 kgs/hectare which is lower compared to 113,000 kgs/hectare, indicating a
larger yield gap of around 66,318 kgs/hectare on the ground. As per our field findings, the average yield
for black gram from our data is at 490 .8 kgs/ hectare, much lower than the state average for 2011-12 i.e.
around 580 kgs/hectare and the yield gap is around 780 kgs/hectare. 35
Table 18: Yield and Revenue per Hectare
Yield and Revenue per Hectare (Yield in kgs per hectare)
HHs(No.) Mean * SD Median Min Max
Total (Across all districts)
Owned(acre) 854 2.9 2.0 2.0 0.8 8.0
Owned(hectare) 854 1.2 0.8 0.8 0.3 3.2
Irrigated(acre) 848 2.8 1.9 2.0 0.8 8.0
Total farmed (acre) 854 2.4 1.6 2.0 0.5 6.5
Total farmed (hectare) 854 1.0 0.7 0.8 0.2 2.6
Rice yield(per hectare) 518 3704.0 1440.0 3700.6 1395.0 6510.0
Rice revenue 518 47874.5 27129.0 47958.3 0.0 97500.0
Sugarcane yield (per hectare) 81 79682.3 31295.4 75000.0 29166.7 133333.3
Sugar revenue 81 196639.8 93808.9 183593.8 62500.0 372500.0
Cotton yield (per hectare) 63 1478.3 950.7 1333.3 416.7 3750.0
Cotton revenue 63 68388.0 39337.5 60000.0 22500.0 150000.0
Black gram yield (per hectare) 32 490.8 298.9 500.0 31.3 1000.0
Black gram revenue 32 28112.6 20821.6 28750.0 0.0 67500.0
Groundnut yield(per hectare) 40 1290.7 781.2 1110.0 331.8 3050.0
Groundnut revenue 40 35585.6 38177.8 35000.0 0.0 122250.0
Maize yield(per hectare) 23 2595.2 2323.3 1666.7 333.3 7500.0
Maize revenue 24 36217.7 35753.4 18750.0 0.0 112500.0
Turmeric yield (per hectare) 39 2373.1 2515.2 1750.0 250.0 15000.0
Turmeric revenue 39 127405.8 88589.6 105000.0 0.0 270000.0
Table 19: Comparison between Prices Data from Survey and MSP
Principal Crops Price from survey data
(per quintal)
MSP
(2015-16)
MSP
(2016-17)
MSP
(2017-18)36
Price37
(per kg)
Paddy 1292 1410 1470 1550 13
Sugarcane 247 230 255 255 2
Cotton 4626 4100 4160 4320 46
Black gram 5728 3425 4000 4400 57
35 Average yield for principal crops at an all-India level. (http://agritech.tnau.ac.in/agriculture/agri_cropscenario_india.pdf) 36 http://cacp.dacnet.nic.in/ViewContents.aspx?Input=1&PageId=36&KeyId=0 37 Based on survey data
53
Groundnut 2757 4030 4220 4450 28
Maize 1396 1325 1365 1425 14
Turmeric 5369 54
Cotton
(medium staple) 3800 3800 3860 4020
Table 19 compares the average price per quintal for principal crops across the surveyed households with
their MSP over the years. The actual price realization for paddy per quintal currently seems to be much
lower than the MSP, and is drastically lower for groundnut, the difference between the MSP 2016-17 and
the market prices for groundnut is around Rs 1463 per quintal. One major reason– particularly for paddy
- is likely to be spot purchase of paddy by various private entities, and the sale of paddy soon after harvest
(within a day or two) so as to address their liquidity constraints as understood from interactions with
farmer groups. The price realization for farmers growing sugarcane and maize is much closer to the MSP
as observed from the table. For cotton and black gram, farmers seem to be better remunerated compared
to the MSP.
17. Post-harvest
In this section, we address the postharvest processes, storage of grains and the quality of storage
structures involved as well as actual constraints in utilizing storage options.
All 854 households surveyed across four districts had stored their crop produce in household facilities,
such as separate rooms in their house or in bags stored in a barn etc. Only 42 percent of households
surveyed i.e. 359 HHs reported storing their produce over the past three years (in rooms at home, except
one or two cases wherein the final produce was stored in a village godown or a godown outside of the
village). Transportation or access costs involved in reaching the nearest government godown or
warehouses due to poor proximity of such storage facilities, delays in sale of produce at the regulated
market godowns and deterioration of produce quality through the transit process and the long wait for
produce to be sold at godowns (waiting period for sale of produce at the regulated market could go upto
even 2-3 days), delayed payments or higher chances of payment issues (payments took around 10 days
to be processed) affecting the repayment of loans especially towards moneylenders (as loans are linked
to the harvest timing, and such delays could cause liquidity constraints in repaying loans), loss of working
days for farmers in the waiting process and the long queues at such procurement centres and regulated
markets deter farmers from selling at these centres or utilizing the storage facilities offered in these
godowns. Farmers hence preferred selling their produce to traders who collected the same from their
fields or homes, even if the prices offered per quintal were lower than the MSP. In some areas, farmers
54
claimed that selling through traders fetched higher returns, as no stringent measures for quality testing
on criteria such as moisture content of grains or pulses were needed as in case of regulated markets. At
the regulated markets, prices per quintal of grains varied based on the quality and moisture content. The
regulated markets procured only grains such as rice and wheat (mainly rice in Tamil Nadu) at the MSP,
and hence this was not beneficial to farmers growing other crops.
Table 20. Post-Harvest Storage (On-farm) in the last Three Years
Storage (Yes/No) No. of HHs Percentage Cumulative Percentage
Marginal farmers
Yes 186 21.8 40.7
No 271 31.7 59.3
Total 457 53.5 100.0
Small farmers
Yes 103 12.1 43.6
No 133 15.6 56.4
Total 236 27.6 100.0
Semi-medium farmers
Yes 51 6.0 40.2
No 76 8.9 59.8
Total 127 14.9 100.0
Medium-large farmers
Yes 19 2.2 55.9
No 15 1.8 44.1
Total 34 4.0 100.0
Total (across all districts)
Yes 359 42.0 42.0
No 495 58.0 58.0
Total 854 100.0 100.0
From Table 20, it can be observed over the last three years, higher proportion of medium and large
farmers had stored their produce (56 percent) compared to marginal and small farmers (only 40 percent
and 44 percent reported storage respectively). Marginal-small farmers were highly dependent on
moneylenders, and required immediate liquidity to repay their loans soon after harvest (as loans were
tied to harvest timings, and were short term loans of average three months) without defaulting along with
the added burdens of escalated interest rates. Such liquidity constraints dissuaded marginal-small
farmers from storing their produce for better returns at a later period, probably two to three months
after harvest of the crop.
55
Though all households surveyed stored their produce within home facilities, the type of storage facilities
utilized for the purpose varied based on the structure of their house. Table 21 shows the kind of storage
facilities utilized by the 359 households that reported storing some produce over the past three years,
which in turn affected the quality of the produce stored. More than 40 percent of the households stored
their produce in some kutcha or semi-pucca household facility, and such poor storage conditions could
have deteriorated the quality of produce and resulted in reduced returns.
Table 21. Type of Storage Facility
Storage facility (type) No. of HHs Percentage
Kutcha 78 21.7
Semi-Pucca 72 20.1
Pucca 209 58.2
The table shows the average total storage capacity in kilogrammes within households across different
land categories, and as expected the storage capacity of medium-larger farmers is much higher than those
of marginal and small farmers. With increased production and returns from larger landholdings, medium-
large farmers have the need for and resources to support larger storage capacities. The pest control
measures for their stored produce included sun drying (98.6 percent households) and removal of infested
grains (13 percent households).
Table 22. Total Storage Capacity
No.of HHs Mean (Total storage capacity kgs) SD Min Max
Marginal farmers 181 1852.4 2032.3 5 20000
Small farmers 92 2316.0 1905.4 410 10000
Semi-medium farmers 46 2893.3 2305.4 200 10000
Medium-large farmers 18 6222.2 5717.9 630 24000
Total 337 2315.48 2557.2 5 240
18. Post-Harvest Losses:
33.65 percent of the households surveyed (287 households) reported some post-harvest loss in the last
three years, and this could have been translated into a significant share of an agricultural household’s
income. Another observation to be noted is that a good proportion of farmers were not even aware or
could not account for post-harvest losses, given their priority was to sell off the harvest from the field
directly if possible within a day or two.
56
Table 23 details the post-harvest loss on average per farmed season for the principal crops cultivated
across the surveyed districts and the state. The average loss percentage for any crop in a farmed season
is around 7 percent of the total produce as per our study sample. The quantity lost in kgs per farmed
season for a particular crop is also shown in terms of the total equivalent value loss or price loss.
The post-harvest losses have been estimated only for those farming households who reported having
losses in their harvest due to multiple reasons, but a considerable number of farmers were genuinely
unaware of post-harvest losses as the produce was sold off to traders within a day or two and hence could
not comment on the same.
Tapioca, a horticultural crop seems to show extremely high losses ranging between 8650 to 34,450 Rs
over a farmed season, while the value loss for paddy is around Rs 2769 on the harvested produce, Rs
14762 for sugarcane, Rs. 6477 for cotton, Rs. 2253 for groundnut, Rs 1700 to 1800 for the pulses, Rs 1500
to Rs 2000 for millet varieties. Gingelly, coconut, maize and jowar seem to have lower post-harvest
losses. This affirms the high value-high returns and high losses scenario associated with horticultural
crops such as vegetables (seen in case of tapioca) and fruits, and hence making a case of increased and
quality investments in post-harvest processes for horticultural sector in improving market accessibility
and linkages, cold storage connectivity etc.
Table 23. Post-Harvest Losses per Farmed Season
Primary Crop Mean SD Count Median
Paddy
Quantity lost(kgs) 214 267 234 124
Quantity lost(percentage of total harvest) 6 4 233 5
Price loss over a season(Rs) 2769
Cholam(Jowar)
Quantity lost(kgs) 93 12 3 100
Quantity lost(percentage of total harvest) 2 2 3 1.5
Price loss over a season(Rs) 1567
Maize
Quantity lost(kgs) 67 29 3 50
Quantity lost(percentage of total harvest) 6 2 3 6.25
Price loss over a season(Rs) 931
Samai
Quantity lost(kgs) 30 28 2 30
Quantity lost(percentage of total harvest) 12 0 2 12.25
Price loss over a season(Rs) 1950
57
Green gram
Quantity lost(kgs) 41 55 2 41
Quantity lost(percentage of total harvest) 11 12 2 11.3
Price loss(Rs) 1845
Black gram
Quantity lost(kgs) 31 20 7 25
Quantity lost(percentage of total harvest) 15 16 7 12.5
Price loss(Rs) 1799
Sugarcane
Quantity lost(kgs) 5982 13988 12 2000
Quantity lost(percentage of total harvest) 7 11 12 4.1
Price loss over a season(Rs) 14762
Tapioca
Quantity lost(kgs) 3445 5717 4 865
Quantity lost(percentage of total harvest) 17 23 4 8.33165
Price loss over a season(Rs) 8650-34450
Cotton
Quantity lost(kgs) 140 85 2 140
Quantity lost(percentage of total harvest) 10 9 2 10
Price loss over a season(Rs) 6477
Groundnut
Quantity lost(kgs) 82 56 7 82
Quantity lost(percentage of total harvest) 13 5 7 12.5
Price loss over a season(Rs) 2253
Gingelly
Quantity lost(kgs) 6 . 1 6
Quantity lost(percentage of total harvest) 4 . 1 4
Price loss(Rs) 300
Coconut
Quantity lost(percentage of total harvest) 6 8 2 6.25
Average yield (nuts per palm per year) 100
Quantity lost annually (nuts per palm) 6
Price loss annually per palm( Rs) 72
Price loss per household(Rs) 144
Total
Quantity lost(percentage of total harvest) 7.0 6.2 279 5
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19. Training and Information for Farmers
16 percent of farmers (spread across 144 households) in the sample have undergone some formal
training. 84.5 percent of farmers reported they are not members of any farmer associations or groups,
while only 5.6 percent indicated they are members in some local or panchayat farmer’s association, 3.5
percent reported they are members in some women’ group or association and another 3.16 percent
report membership in some co-operatives or producers’ groups. A majority of the farmers (91.8 percent)
report having access to farming related information from various sources including other extension
officers,other farmers and friends, agriculture related programmemes on TV and radio etc.
Table 24. Training and Information
Information (yes/No) No. of farmers Percentage
Marginal farmers
Yes 404 90.4
No 43 9.6
Total 447 100.0
Small farmers
Yes 215 93.5
No 15 6.5
Total 230 100.0
Semi-medium farmers
Yes 118 92.9
No 9 7.1
Total 127 100.0
Medium-large farmers
Yes 32 94.1
No 2 5.9
Total 34 100.0
Overall Sample
Yes 769 91.8
No 69 8.2
Total 838 100.0
Feder, Lau and Slade (1987) showed that investing in training farmers is worth the effort, and the Training
and Visit system of agricultural extension in India resulted in a “high probability of at-least an acceptable
rate of return to intensified extension”. As a result of these extension activities, significant improvements
were recorded in farm management and not necessarily in the adoption of new inputs. Extension activities
with a bottoms-up approach wherein a regionally specific curriculum is followed, farmers understand the
benefit of agricultural reforms and participate in planning the same, and their indigenous knowledge and
traditional practices are integrated into the training or extension modules would facilitate favourable
59
outcomes (Examples to be drawn from the Orissa Social Forestry Project launched in 1983, Glendinning,
Mahapatra and Mitchell, 2001).
The chart below illustrates the information sources for farmers across the study districts, and it can be
observed that majority of the farming households had access to farming related technical information or
advice primarily through fellow farmers, followed by friends/ family and agricultural programmemes on
Doordarshan, TV, Radio etc. Extension officers were also a relevant source of technical information for
farming households and this highlights the relevance of effective extension activities for illiterate farmers
with little exposure on modern farming practices, strategies for optimising post-harvest losses and
effective price realisation for crops cultivated, secondary income sources for the household etc.
Figure 20. Main Information Sources for Farmers
20. Farm Mechanisation
The table below illustrates the extent of mechanization within the survey sample, 94 percent of the
households utilised a tractor for farming purposes, 79 percent used a sprayer, and other equipments used
included a rotovator (43.4 percent) and harvester (49.3 percent). Majority of these equipments were
leased and not owned, and a recommendation to this regard could be increasing farmers access to such
equipments’ on a lease, rental basis at affordable prices. This could reduce cultivation costs to a greater
extent, and thereby encourage farmers to depend on leased machinery for various steps involved within
cultivation and harvesting. This could make for an argument for leasing or renting farm machinery within
farmer collectives, wherein such groups purchase their own farm equipments’ and lease them to
members of the farmer group at affordable prices.
60
Table 25. Mechanization.
Land category Tractor Sprayer Harvester Rotovator Thresher
Own Lease Own Lease Own Lease Own Lease Own Lease
Marginal 4 424 23 337 0 226 2 176 0 22
Small 11 211 23 161 0 106 9 109 2 14
Semi-medium 16 103 21 82 1 67 8 49 0 9
Medium-large 13 21 13 15 0 21 5 13 0 6
Total 44 759 80 595 1 420 24 347 2 51
Total No. of HHs using each equipment 803 675 421 371 53
Total % households using each equipment 94.03% 79.04% 49.30% 43.44% 6.21%
21. Insurance Penetration
Given the extreme drought conditions and reduction of premium rates, around 15.2 lakh farmers in Tamil
Nadu bought crop insurance under the new PMFBY38 scheme in Samba/ Rabi 2016-17 (the main crop in
Tamil Nadu), almost double the number of farmers who purchased crop insurance the previous year (8.6
lakh farmers). The state government aims to cover around 30 lakh hectares in 2017-18 (from 12.6 lakh
hectares in 2016-17) and around 23.9 lakh farmers (spread over 15.1 lakh farmers in samba/rabi and 8.8
lakh farmers in kuruvai/kharif seasons).
Along with this peril-based insurance (coverage) approach for delayed sowing or pre-plating risk due to
rainfall and weather fluctuations, a total crop insurance package that covers seed insurance, complete
crop cycle insurance, prepaid insurance card for weather insurance and options for rainfall insurance can
be designed as coping mechanisms for yield loss, and expected income loss for smallholder farmers
(Ferroni, 2016 and Dey and Maitra, 2017). Though PMFBY lowered premium rates and promoted the use
of technology, improved penetration rates amongst non-loanee farmers and efficiencies can be achieved
only through addressing lower awareness levels and conflicting interests of multiple parties in insurance
product design, pricing and distribution.
The PMFBY scheme allows for claims settlement frequency and indemnity level at 70 percent, 80 percent
and 90 percent for agricultural major crops and 100 percent for cotton, horticultural crops on the basis of
38 http://tnagrisnet.tn.gov.in/fcms_old/documents/go/25-GOMs123.pdf and http://agritech.tnau.ac.in/pdf/pmfby.pdf
61
the risk profile of clusters. The post-harvest losses data showed that the average post-harvest loss was
higher for horticultural crops like tapioca, as well as cotton.
The state government has disbursed around Rs 404 crores to around 2.96 lakh insured farmers for
damages of samba crop in 2015-16 (through NAIS scheme). Districts that received almost 90 percent of
compensation amounts include Nagapattinam (Rs 205 crore), Tiruvarur (Rs. 101.7 crore) and Cuddalore
(Rs. 45.15 crore). 39 Two of the surveyed districts Ramanathapuram and Nagapattinam fall under the high
risk profile districts in the state.
From the survey data, around 28 percent households (239 HHs) had their crops insured. The average
annual premiums paid per hectare as well as the claim amounts received per hectare are detailed in Table
26. Of those 239 households with crops insured, 45.6 percent (109 households) had raised claims request
in the last 12 months, and 74 percent (81 households) had their claims processed.
Cattle Insurance Penetration: Only 2.7 percent of the surveyed households (23 households) have their
cattle insured, and only one farmer out of the insured had raised a claims request in the past 12 months
and he had also received his claim payments worth Rs 30,000 for his cattle. The mean sum insured was
23,422 Rs (median is 10,000 Rs) and the mean annual premium was around 1,086 Rs (median is 500 Rs).
Table 26. Crop Insurance
Land Category Mean sd Median Count Min Max
Marginal
Annual Premium (per hectare) 1270.3 1348.8 875.0 115 0 9000
Claims received (per hectare) 34199.7 20961.8 30000.0 45 5000 100000
Owned land (hectare) 0.6 0.2 0.6 457 0 0.988
Small
Annual Premium (per hectare) 767.9 419.9 785.7 63 0 2628.572
Claims received (per hectare) 27790.4 16926.3 25000.0 23 2857.143 71428.57
Owned land (hectare) 1.3 0.2 1.2 236 1 1.94
Semi-medium
Annual Premium (per hectare) 832.2 477.1 761.4 48 145.8333 2500
Claims received (per hectare) 27480.8 17030.1 22714.3 16 6250 71428.57
Owned land (hectare) 2.4 0.5 2.2 127 2 3.6
Medium-large
Annual Premium (per hectare) 581.8 496.5 425.0 12 107.1429 1687.5
Claims received (per hectare) 16488.1 10169.0 17500.0 5 2857.143 27083.33
Owned land (hectare) 5.3 2.1 4.6 34 4 14
39 Source: http://www.thehindu.com/news/national/tamil-nadu/govt-plans-to-expand-crop-insurance-scheme/article18579154.ece
62
Total
Annual Premium (per hectare) 1014.2 1020.7 825.0 238.0 0 9000
Claims received (per hectare) 30340.5 19161.6 26666.7 89.0 2857.143 100000
Owned land (hectare) 1.2 1.2 0.8 854.0 0 14
22. Farmer Distress
Over 58 percent of rural households depend on agriculture for their livelihoods, and the share of
agriculture and allied sectors (including agriculture, livestock, forestry and fishery) is 17.3 percent of the
Gross Value Added (GVA) during 2016-17 at 2011-12 prices. 40 Increasing farmer agitations across the
country especially Tamil Nadu, Maharashtra and MP and the alarming number of suicides draws attention
towards some of these challenges of farming households.
Some of the these include land fragmentation, liquidity constraints faced by small landholders for
investments in land, infrastructure and other farm inputs, weather conditions such as delayed monsoons
and declining soil fertility, increased fluctuations in inputs prices and highly distorted product market,
price realisation below MSP and exploitation by traders/middlemen, APMC markets controlled by cartels
of licensed traders, casualization of agricultural labour and unwillingness on the part of young people to
take up or stay in farming due to falling returns. The graph shows the declining average size of
landholdings across India from 2.2 hectares in 1970-71 to 1.15 hectares in 2010-11(Agricultural Census
from 1970-71 to 2010-11)41.
Figure 21: Average size of Landholdings
40 2nd advised estimates by the Central Statistics Office 41 http://agcensus.nic.in/document/agcensus2010/agcen2010rep.htm
63
Agricultural production in the state depends on a good monsoon, and frequent failures, uncertainties and
skewed distribution of this significantly affects yields; fragmented and smaller plot sizes resulting in higher
input costs (92 percent of all agricultural holdings in Tamil Nadu are small and medium, lesser than five
acres each), poor economic conditions and low literacy levels of farmers and agricultural households
slowing down the adoption of scientific techniques, dilapidated irrigation systems due to insufficient
funds affecting crops, livestock and human livelihoods.
Failing monsoons, Growing Water Scarcity: Much of the Kuruvai (summer crop) in 2016 was lost due to
water sharing disputes over Cauvery river between Tamil Nadu and Karnataka and samba (winter) crops
failed due to the weak North east monsoon (between October to December 2016), during which the state
usually gets most of its rainfall. In 2016, the North east monsoon recorded a deficit of 62 percent and
usually districts receiving less than 20 percent normal rainfall are declared drought affected, making this
one of the worst droughts over a century42. A Supreme-court appointed technical committee reported
that the Kuruvai crop has been a ‘lost cause’ in Tamil Nadu with two farming seasons been reduced to one
and farmers now being entirely dependent on the October-January samba season.
Lower Productivity: The Economic Appraisal in 2014 shows that paddy yield is 2.08 tonnes lower than
potential yield per hectare across the state, also shown in the yield gaps analysis (Table 17). Small
landholdings and financial constraints have been major reasons for the low yield rates, making new
scientific techniques difficult to implement. 43
Diminishing agricultural labour returns: The agrarian crisis has affected the landless farm labourers,
constituting at least 40 percent of Cauvery delta population. The diminishing farming season has
compelled them to fully depend on NREGA for earnings, reducing their daily earnings from Rs. 500 to Rs.
600 per acre for harvesting and crop planting respectively to Rs 100 to Rs. 200 a day.
As regards to constraints to farming for these households over the recent years, 90.5 percent of the
households (773 HHs) reported water scarcity as the major challenge, incidence of pests and diseases (32
percent), challenges due to weather fluctuations (24.8 percent), increasing input costs (8.1 percent) and
lower price realisation for their produce (6.8 percent) as significant risks posed to their households.
Major shocks faced by these households in the past 12 months include medical emergencies such as
illness, injury etc (57 percent ie 487 HHs), harvest or livestock loss due to weather conditions (53.2
42 K Sivasubrahmaniyan, Associate Professor at the Madras Institute of Development Studies 43 https://scroll.in/article/819424/cauvery-dispute-in-tamil-nadu-parched-lands-push-farmers-into-distress
64
percent ie. 455 HHs) and loss of wage labour, including both agricultural and non-agricultural (13.7
percent ie. 115 HHs).
Surveyed households reported their agricultural activities to have been significantly affected in the
past three years due to following events: Weather related events (83.4 percent ie. 712 households),
Health related issues in household (48 percent ie. 410 households), Pests and diseases (43.4 percent
ie. 371 households), Unexpected price fluctuations in market (9.7 percent ie. 83 households) and
Unexpected price fluctuations of inputs (8.2 percent ie. 70 households).
Irrigation: 86.4 percent households reported they had intermittent water supply affecting their
agricultural activities, 6.2 percent reported they had enough water for their current cultivation but
could expand their agricultural activities with more water made available, and only 8 percent reported
they had sufficient water available for their agricultural needs.
The major coping mechanisms included further borrowing (70 percent ie. 582 HHs), taking up other
temporary jobs (14.2 percent ie. 119 households), sale of livestock assets (1.5 percent, 13 households),
sale of other assets (0.8 percent, 7 households), utilizing their savings (6.4 percent, 54 households) and
few households did not do anything about this situation (14.04 percent, 117 households).
23. Other Household Characteristics
The Fig.22 shows the durables owned by the surveyed households, and it can be observed that majority of
these households own a mobile phone (841 out of 854 total households), and television (829 HHs) and
these technologies could be tapped into for imparting awareness on agriculture and allied activities related
information. Agricultural programmemes on television and Doordarshan were mentioned as an important
source of farming associated information for these farmers (as seen in the above chart).
Figure 22: Durables owned by household
65
Farmers’ Income in Tamil Nadu – Current Status
The sample survey captures income data for the period October 2016- October 201744. For the purpose
of income estimation, we consider the following categories under which data was collected and
aggregated:
1. Net Receipts from cultivation: Collected for two periods ranging from October 2016-March 2017,
and March 2017-October 2017.
2. Net Receipts from livestock: a 30-day period
3. Income from wages and salaries: 30-day period
4. Net receipts from non-farm business/ other non-farm income: 30-day period
For the purpose of estimating annual income, we use the method wherein the net receipts from both
cultivation periods are added together to obtain an annual estimate of income from cultivation. Data from
all other categories are multiplied by 12 in order to obtain annual estimates for each of those categories.
It must be mentioned upfront that the timing of the study presents a challenge to obtaining precise
income estimates; estimating the returns from the cultivation in the 2017 Kuruvai seasons in particular is
challenging.
Mean Annual Income
Table 27. Mean Annual Income - Various Sources
Survey Cultivation Livestock Non-farm Business
Wages and Salaries
Average Total Income (Current Price)
Average Total Income (2011-12 Price)
NSSO 70th Round 36950 10016 6209 24801 77976 70118
IHDS 36954 6018 9044 45783 97799 87943
As per the NSSO 70th Round data, the average income of an agricultural household in Tamil Nadu is ₹
85,031 (current prices, 2012-13), or ₹ 76,461 (constant prices, base=2011-12). At current prices, the
average annual income in Tamil Nadu is about 9% higher than the all India average. The DFI Committee
also provides estimates for average annual incomes from the India Human Development Survey (IHDS) –
this amount is considerably higher than the NSSO estimates. The DFI committee ultimately uses NSSO
data to benchmark the income, and make further estimations with regards to the strategies to accelerate
44 The aim is to be able to cover as much of the Samba / Thaladi / Pishanam 2016-17, and the Kar/ Kuruvai /Sornavari 2017 season in the study
districts as possible. The timing of the study effectively means that most of the Kar/ Kuruvai /Sornavari 2017 harvest for Dharmapuri and Ramanathapuram will not be captured in the data. For the other areas, in many cases, the study has collected expenditure data on cultivation in Kuruvai 2017, but only has predicted yields/ no yield data in 2017. We try to overcome this shortcoming by conducting a rapid phone based follow-up to capture as much data as possible. (Ref. http://www.tn.gov.in/crop/Part9.htm)
66
income growth. Thus for all our comparisons, we will rely on the benchmark created at 2015-16 prices by
the DFI committee, based on the 70th round NSSO estimates.
Our survey data suggests that the average annual income from the four districts, for the period in question
is around ₹ 1,31,490 at current prices45. In terms of reference, data published by the DFI committee shows
that the average annual income for Tamil Nadu at around ₹ 1,33,568 in 2015-16. At constant prices (2015-
16), the real income in the 2016-17 period would then be around ₹ 1,25,228. The decline in incomes can
be attributed to the poor outputs from cultivation, due to the drought and poor rainfall that impacted
agriculture in period 1. The output from period 2 is considerably larger.
Around 34% of annual income is generated from cultivation, while 54% of the amount is realized from
wages and salaries. On average, total farm sources (livestock + cultivation) contribute to 41.5% of annual
income, while total non-farm sources contribute the remainder. This compares with the NSSO data46 for
Tamil Nadu, wherein cultivation and livestock activities together occupied a share of 43.2 percent of the
average monthly income per agricultural household. While the share of agriculture (including cultivation
and livestock activities) of the total average monthly income per agricultural household for rural India was
around 60 percent, this was as low as 30.3 percent in West Bengal, 34.5 percent for Kerala and 43.2
percent for Tamil Nadu. Also the share from agricultural activities towards the average monthly income
per agricultural household was the highest for states such as Madhya Pradesh (76.5 percent), followed by
Assam (74.8 percent) and Telangana (72.9 percent). The data also showed that for the agricultural year
July 2012-June 2013 (taken into account being the recent estimate) agricultural activities accounted for
more than half of the average monthly income per agricultural household except in all major states,
except West Bengal, Kerala and Tamil Nadu.
It is equally surprising that the actual contribution from non-farm business etc., and livestock incomes are
relatively low. With regards to livestock, this is surprisingly low, given that around 63% of the sample
report owning livestock. At the same time, the low share of the non-farm business etc. in the income
basket highlights that diversification towards non-farm activities is likely to be very challenging, and
investments towards this segment have to be carefully considered. There is indeed a lot that remains to
be done if the income composition should reach the level of 70% from farm based sources, as
recommended by the DFI committee.
45 INR 95,977.92 at 2011-12 prices, deflated using the Rural CPI Index average data for 2017 for Tamil Nadu. 46 Income, Expenditure, Productive Assets and Indebtedness of Agricultural Households, Jan-Dec 2013.
67
While the share of wage or salary accounted for 32.2 percent of the average monthly income per
agricultural household at the all India level, the share of wage or salary in the average monthly income
per farming household was the highest for West Bengal (53.4 percent), followed by Kerala (44.2 percent)
and Tamil Nadu (41.6 percent). Our survey showed that 53 percent of the average annual income per
farming household was from wages and salaries.
Table 28. Components of Income - Survey Data
Wages and
Salaries
Livestock Non-
farm
Cultivation
71414.45 9231.14 5545.71 45298.45
Figure 23. Share of Income Categories
Further analysis reveals that there is considerably large variation in the income composition, across the
land categories. While the contribution of wages and salaries is over 60% in the marginal farmers’
category, it drops to under 30% in the medium-large farmers’ category. At the same time, the contribution
from cultivation is the largest for the medium-large farmers – accounting for a little over 50% of the total
annual average income. Notably, the share from non-farm business is also that largest for the medium-
large farmers. The total average annual income for a marginal farmer in the study sample is around ₹
1,14,540, and this amount increases to ₹ 2,25,190 for a medium-large farmer. In brief, this considerable
amount of variation highlights the need for varying the strategies to boost income across different
categories of farmers in Tamil Nadu.
53%
7%
4%
36%
Wages and Salaries Livestock
Non-farm Cultivation
68
Figure 24. Income Composition - by Land-holding Categories
Table 29. Income Composition - by Land-holding Categories (₹ Values)
Category Wages and Salaries Livestock Nonfarm Cultivation
Marginal 75251.23 7369.545 2045.455 29873.85
Small 65333.16 9919.111 6328.889 42726.37
Semi-medium 72712.48 12560.96 7710.843 82650.11
Medium-large 55642.11 15663.16 39157.89 114726.8
Given the drought situation, along-with poor rainfall through the 2016-17 period, stagnation in incomes
was indeed expected. It must be noted that due to the selection of districts in the study sample, these
effects are unlikely to be captured in full. The most affected district out of the four in the sample was
Nagapattinam district, and some evidence to this fact may be seen in the net receipts from cultivation,
for the period 1 (October 2016- March 2016). The average income for this period is considerably lower in
Nagapattinam, than Dharmapuri and Villupuram.
Table 30. Net Receipts from Cultivation
District Net Receipts from Cultivation (Period 1)
Dharmapuri 24937.09
Nagapattinam 19225.4
Ramanathapuram 4513.462
Villupuram 33512.23
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Marginal Small Semi-medium Medium-large
Wages and Salaries Livestock Nonfarm Cultivation
69
Keeping the 2015-16 annual average income for Tamil Nadu (₹ 1,33,568) in mind, the target for 2022-23
would be to improve the annual average income to at least ₹ 2,67,136 (constant prices, 2015-16), or ₹
3,52,418 at current prices. Given the current income level from the 2016-17 period, this would require a
13.5 per-cent real annual growth rate in income. Given the current trends, this level of growth seems
extremely challenging to achieve and sustain in Tamil Nadu. The DFI committee itself has broadly pointed
out that most states/UTs will be unable to double income in real terms in seven years if past/ current
trends are to be continued. If a doubling of the average farmers’ income is indeed to be realized, then it
requires a concerted set of policies that are complementary in nature, focusing on accelerating growth in
both farm and non-farm spheres. The challenges here are manifold – as seen in the analysis above,
accelerating the incomes of small and marginal farmers will prove the toughest task, given the several
constraints involved.
Figure 25 Increasing Farmer's Incomes - Targets.
The committee sets a more realistic target of ₹ 2,32,505 (2015-16 prices) to achieve – the assumption
being a doubling of farm income (livestock and cultivation), and 40 per cent increase in the non-farm
income. This target can be achieved with an annual real growth rate of 10.87%. For a state like Tamil Nadu
with a relatively large service and manufacturing sector, these targets have a significant implication in
planning and allocation of resources. For instance, there is an immediate need to evaluate and identify
potential areas for investment and development as far as non-farm income is concerned - this will be
crucial to adding to the income base of farming households. Concerted efforts will also have to be made
to ensure that the districts currently faring poorly will have to sufficiently catch up with the other districts,
0
50,000
1,00,000
1,50,000
2,00,000
2,50,000
3,00,000
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
DFIT Committee Target Doubling Farmers Income
70
in order to ensure that the projected growth is indeed equitable. Effectively it can be said that the doubling
of real income in this relatively short time-period in Tamil Nadu will require a large number of changes in
agrarian policy at both state and central level, accompanied by significant increases in investment.
Thus far, Tamil Nadu has remained well below the national average when it comes to public and private
investments, in and for agriculture. It is estimated that Tamil Nadu will require a total private and public
investment of at least ₹ 1,19,973 crores during the period 2015-16 to 2022-23. The annual growth rate
for private investment will have to be roughly 25% during this period, while the annual growth rate for
public investment is estimated to be around 15%. These are highly substantial growth rates, and require
concerted efforts from all parties involved in order to ensure full implementation. It is highlighted earlier
that the governments’ plan to invest around ₹ 40,000 crore, in order to achieve the TN Vision 2023
strategy needs to be re-looked, given the considerations below.
Table 31. Estimated Amount of Investment
State Total Private Investment Total Public Investment
Agriculture and Allied Activities 18,230.00 26,884.00
Irrigation 19,440.00
Rural Energy 17,899.00
Rural Road -Transport 37,520.00
Total 18,230.00 1,01,743.00
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4. Increasing Farmer’s Incomes – A Review of Strategies and Approaches Across
India
4.1 Doubling Farmers’ Incomes - Is There a Precedent?
To assess the feasibility of this goal, it is imperative to understand if there has been a precedent in
doubling of farmer’s income. The most recent estimates of farm income for the period 1983-1984 to 2011-
2012 and extrapolated to 2015-2016 result suggest that the total farm income per cultivator has just about
doubled in the 22-year time period with an annual growth of 3.30 per cent in real terms (Chand et al.
2015). However, the Government of India’s initiative to double farmers’ income does not allow for 22
years, and a closer look at a shorter time period (similar to 2015-2016 to 2022-2023) is required. Using
2015-2016 as the base year, an annual growth of 10.41% is required in farmer’s income to reach the goal
by 2022-2023. Thus, to assess feasibility, other authors take a more granulated look at the shorter time
frame from 2003-2013.
There were a number of policies aimed at targeting various factors to increase farmer’s income in the
period of 2003 to 2013:
The Rashtriya Krishi Vikas Yojana successfully contributed to agricultural growth by focusing on State and
district level incentivization for agricultural planning and investment and a decentralized approach to flow
of funds, however, net investments in productive assets remained low.
During 2004-2007, the Government of India successfully doubled the flow of agricultural credit at the
aggregate level, however, this did not have a significant impact on net investments at the household level.
To increase income, the minimum support price for paddy and wheat was increased and Farmer Producer
Organizations were formed with the aim of ensuring remunerative prices. Various States implemented
de-centralised procurement of food and grains and invested in irrigation with funding from the Rural
Infrastructure Development Fund (RIDF).
Using data from the NSSO’s Situation Assessment Survey of Farmers conducted in 2003 and the Situation
Assessment Survey of Agricultural Households in 2013, Chandrashekhar and Mehrotra (2016) estimate
growth in farmers’ total income in real terms against the backdrop of these policy pushes. The 2013
dataset presents the principal source of income for agricultural households: for 63.5% the principal source
of income is from cultivation, for 3.7% from livestock, for 1% from other agricultural activity, for 4.7%
from non-agricultural enterprises, for 22% from salaried employment, for 1.1% from pension, for 3.3%
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from remittances and others at 0.7%. There is considerable state-wise variation and variation by land
ownership. More importantly, a large number of households are engaged in multiple income-generating
activities. Essentially, in addition to income from cultivation, there are other income sources that facilitate
increase in farmer’s income.
When accounting for income from wages, net income from cultivation, net income from farming of
animals and net income from non-farm business, there is no evidence of doubling of total income (in real
terms) across India. The average monthly income, in real terms, increased by a factor of 1.34; Odisha
crossed the threshold of 2, with Haryana at 1.93. In Tamil Nadu, farmer’s income increased by a factor of
1.48 between 2003 and 2013. The picture is grimmer for other states; Bihar and West Bengal experienced
a decline in farmer’s income over the time period. Net income from cultivation increased by a factor of
1.32 across India, with Chhattisgarh experiencing growth of 2.05 and Tamil Nadu, by a factor of 1.16. For
Bihar, Jharkhand and West Bengal, there was a decline in income from cultivation. In contrast, many states
experienced a decline in income from non-farm business and a doubling of income from farming of
animals; all-India average is at 1.00 and 3.21 respectively (Chandrashekhar & Mehrotra, 2016).
4.2 Consideration of Other Determinants
It is clear that despite the measures taken by the central and state governments, the real total income of
agricultural households did not increase over the 2003 to 2013 time-period. Thus, focusing policy
measures on increasing income from cultivation might not be sufficient; other factors need to be
considered whilst devising a comprehensive strategy to double farmer’s income. Based on the above
analysis, policy measures that take into consideration increasing net income from animal farming could
form the key driver of doubling farmers’ income in the future.
Size of land ownership plays a large role in income growth; households with over 10 hectares of land did
experience a doubling of their income in real terms and any household with at least one hectare of land
experienced an increase of at least 1.5 times for income from cultivation and total income. The table
presented below highlights the importance of size of land ownership in determining livelihoods. Thus, it
is essential to also consider the role played by legalizing and liberalizing land titling and land leasing
through “agricultural efficiency, equity, occupational diversification and rapid rural transformation” in
enabling income growth for farmers (Chandrashekhar & Mehrotra, 2016). Niti Aayog, in an occasional
paper, highlights land leasing and land titles as one of the five main issues that need addressing to ensure
improvement in farmer livelihoods.
73
Table 32. Composition of Farmers' Income
2003 2013
Size-Class of Land Possessed
Income from Wages
Net Receipt from Cultivation
Net Receipt from Farming of Animals
Net Receipt from Non-farm Business
Income from Wages
Net Receipt from Cultivation
Net Receipt from Farming of Animals
Net Receipt from Non-farm Business
<0.01 71 2 9 18 64 1 26 10
0.01-0.40 60 16 6 18 58 16 15 11
0.41-1.00 42 40 6 11 39 412 12 9
1.01-2.00 29 58 5 8 24 57 11 8
2.01-4.00 19 71 3 7 15 69 11 5
4.01-10.00 11 82 2 6 10 78 8 4
>10.00 5 85 4 7 3 86 6 4
All classes 36 49 5 11 32 48 12 11
Calculated from unit level data NSSO, 2003, and 2013
4.3 Building a Comprehensive Roadmap to Double Farmers’ Incomes – Current
Strategies
To build a comprehensive strategy for growth and assess the feasibility of reaching an annual growth of
10.41% in the next decade, it is essential to consider the various sources of growth that need addressing.
The current literature, research and conversations with various stakeholders highlight three main pillars
to doubling farmers’ income: enhancing gross income, reducing costs and stabilizing income. The number
of sources that can contribute to each pillar are highlighted below.
i. Agricultural productivity
Due to the diversion of agricultural land area to non-agricultural uses, increasing agricultural output needs
to focus on increasing agricultural productivity per unit of land. Except for wheat, productivity for most
crops is below the world average with significant state-wise variation. The crop sector constitutes
approximately 70% of the income from agriculture and 30% from livestock. Chand (2017) estimates that
if the current growth rate of crop productivity and livestock production is maintained, total farm income
will increase by 16.7% and 10.8%, totaling 27.5% in seven years. Some of the variation in crop productivity
can be attributed to access to irrigation; however, even districts with the same levels of irrigation access
have differing yield outcomes. Productivity in India can be enhanced by focus on two key areas: access to
irrigation, and adoption of technology.
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Current yield gaps for crops covering cereals, pulses, oilseeds, vegetables and fibre are large; some crops
such as cotton exhibit a 495% yield gap. In the short-term and long-term, strategies to increase yield could
include integrated pest management and conventional breeding or biotechnology respectively. These
gaps can be reduced by agronomic measures such as intercropping, crop rotation, line sowing, weed
control, and increase of micronutrients (Satyasai & Mehrotra, 2016). As the chart below shows, there is
already a substantial gap between the experimental and realizable yields. However, examining the gaps
between the farmers’ actual, and realizable yields reveals a vast difference – it is estimated that bridging
the gap by 50% can increase gross farm income by at least ₹ 10,000 and net income by ₹ 5600 (per 1.02
hectare of farm land).
Figure 26. Yield gaps (Satyasai & Mehrotra, 2016)
ii. Total Factor Productivity
Total factor productivity accounts for efficiency gains due to technological changes, skill development,
better utilization of inputs and infrastructural enablers; it is part of the output that is not directly
measured by inputs. Between 2004-2012, the Indian agricultural sector experienced a 2.62% annual
increase in total factor productivity (Fuglie & Rada, 2015). Assuming the corresponding increase in
farmers’ income – if the same rate of growth is maintained, farmers’ income will increase by 26.3% by
2022-2023.
0 500 1000 1500 2000 2500
Finger Millet
Maize
Pigeon Pea
Horse Gram
Cowpea
Ground Nut
Sun Flower
Gap: Realisable <-> Farmers' Yield Gap: Experimental <-> Realisable yield
75
iii. Role of Water and Irrigation
In terms of water stress, 54% in India experience extremely high water stress with groundwater declining
at the same rate. As farming is water intensive, managing water resources adequately is imperative for
agricultural productivity. Currently, less than 10% of area feasible for micro-irrigation is covered;
additional coverage can increase output through area, productivity and cropping pattern effects, thereby
positively influencing income. Currently, the Prime Minister’s Krishi Sinchayi Yojana (PMKSY) focuses on
source of water, distribution and end-use. In terms of contribution to farmer’s income, Jin et al (2012)
suggest that as per plot-wise data from NCAER’s REDS survey, average net return from a hectare of land
under irrigation is Rs. 32,980 as compared to a net return of Rs. 25, 276 from a hectare of land that is
rainfed, giving an additional income of Rs. 7,704 per annum per hectare subject to further increase with
cropping pattern effects.
Table 33. Impact of Irrigation on Income (₹) (Jin et al. 2012)
Irrigated Rainfed
Gross Returns 54243 38090
Net Returns 32980 25276
Additional income per hectare 7704
iv. Cropping intensity
Focused irrigation initiatives can increase the cropping intensity by enabling farmers to grow a secondary
short duration crop in the period between kharif and rabi. As per recent land use statistics, the second
crop is grown only on 38.9% of the net sown area and crop intensity is increasing by 0.7p.p. annually. This
growth rate will lead to an approximate increase in farmer’s income by 3.4% by 2022-2023, however, with
more focus on irrigation, crop intensity should increase further.
Rajasthan and Micro-Irrigation
In Rajasthan, currently around 35-40% of agricultural land is irrigated, however, less than 10% of
cultivatable land is covered by micro-irrigation. The state plans to bring its entire irrigated area under
micro-irrigation by 2022-23. To promote this, the Government of Rajasthan has an added focus on
micro-irrigation and provides an additional 5% top-up subsidy over the Government of India’s subsidy
on sprinklers and drips for all farmers. To further increase efficiency in resource usage, there is an
ongoing initiative to reduce the dependence on electricity through the introduction of subsidies on
solar energy based pumps.
\
76
v. Diversification toward high value crops and non-farm activities
Using CSO and DES data from 2013-2014, Satyasai & Mehrotra (2016) estimate that staple crops that
occupy up to 77% of the gross cropped area, only contribute around 41% of total output by the crop
sector. On the other hand, high value crops that occupy only up to 19% of gross cropped area, contribute
41% of the total output as well. In terms of productivity, authors estimate the average productivity of high
value crops at Rs. 1,41,777 per hectare, as compared to an average productivity of staple crops at Rs. 41,
169 per hectare. Thus, a one-hectare shift from staple crops to high value crops can increase gross returns
by over Rs. 1 lakh per hectare. Additionally, in terms of productivity, a 1% increase in land area under high
value crops would lead to an 0.319% increase the total output of the crop sector. If past trends in
diversification continue, diversification has the potential to increase farmer’s income by 5% by 2022-2023.
Secondly, there is also scope to increase income realizations through diversification toward other allied
enterprises such as forestry.
Lastly, diversification is not limited to cropping choice; diversification toward livestock, poultry and non-
farm activities can also bring in additional streams of income for small land-owners. NSSO data between
2004-05 and 2011-12, highlights a decline of 2.04% annually in the agricultural workforce in terms of
agricultural labour as well as cultivators. However, employment diversification is still gradual mainly due
to high requirement of skill and education for various non-farm sector employments (Chand & Srivastava,
2014).
Need for Training: The need to diversify in crop and employment choice also calls for a need for training
of farmers in technical, risk-management, managerial and financial skills to meet the growing
sophistication of the agricultural value chain and skill requirements in other sectors. Karnataka and
Rajasthan and Crop Diversification
To promote crop diversification, the Government of Rajasthan is focusing on micro-irrigation as
well as water efficient cropping pairs such as soya bean-coriander. The state has also established
crop specific Centers of Excellence that aim at building awareness on best practices for
horticultural farmers under crops such as mandarin, date, guava, citrus, mango and spices.
Additionally, the state has set up an International Horticulture Innovation and Training Centre for
capacity building on hi-tech horticulture. Given these measures, the state witnessed a significant
increase in cultivation of a number of horticultural crops post 2014. Lastly, the Government is
promoting agro-forestry to grow fodder/fruit trees/timber on a portion of the farmland to ensure
long-term income security.
77
Manipur provide some examples in terms of the various kinds of initiatives that can be taken, in order to
improve the capacity and skill levels of the famers in respective states.
vi. Bringing down Costs of production
a. Soil Nutrient Management: The soil health card programme was introduced to ensure a soil test based
application of fertilizers to increase productivity in an otherwise micronutrient deficient Indian soil.
Though study estimates in Gujarat highlight an increase in yields for farmers with soil health cards, the
main challenge of the programme lies in the fact that only about 11% of farmers display a favourable
attitude toward the programme (Patel & Chauhan, 2012). Building awareness among farmers of the
importance of soil health and adequate micronutrient application.
b. Organic Farming: Organic farming, precision farming, and low external input sustainable agriculture are
being promoted to reduce farmers’ excessive use of costly inputs such as fertilizers and pesticides. In the
last one decade, cultivated area under organic farming has grown from 42,000 hectare in 2003-04 to 7.23
lakh hectare in 2013-14. States such as Karnataka, Gujarat, Rajasthan, Uttaranchal, Maharashtra, Madhya
Pradesh, Tamil Nadu, Kerala, Mizoram, Nagaland, and Sikkim have been promoting organic farming over
the recent years.
c. Farming Systems Approach: More efficient management of by-products can help reduce costs of
purchased inputs. Integrated Farming System (IFS) can help increase efficiency in land use and animal
Karnataka and Training
As a skill-building initiative under shifting to horticultural plantations, the state has set up a Center
of Excellence on precision farming to demonstrate hi-tech horticulture and distribute quality
planting material to increase the productivity per water drop.
Manipur and the Phased Skill Building Plan
The Government of Manipur has a comprehensive initiative to enhance farmer’s income that is
divided into the short-term, medium-term and long-term. Under skill building, in the short-term
segment, farmers will be on-boarded onto basic best practices and farming techniques, and select
high capability farmers will be identified for specialized training such as integrated farming and hi-
tech farming methods. The state will ensure these capable farmers are also introduced to
institutions that can provide credit facilities to enhance investment in specialized farming
techniques. In the medium-term and long-term, specialized training will be provided to farmers on
adoption of IFS and ancillary services.
78
management techniques thereby increasing sources of farmer income. For example, if coupled with dairy
(1 animal) and 8-10 sheep, net income from groundnut farming system would be approximately Rs. 22,000
per hectare as compared to Rs. 5059 per hectare if groundnut is grown singularly.
Taking a number of these growth sources together, at current trend rates, farmer’s income might have
potential to double in a 10-year time span as highlighted in the table below. Doubling of income by 2022-
2023 would require an additional 33% growth over current growth rates. Some strategies to achieve this
can be seen in measures adopted by various states.
Table 34. Prospects of growth in farm income (Satyasai & Mehrotra, 2016)
Source Scope Contribution
Remarks 7 10
Crop Productivity 70% seg 3.1 16.7 25 Same as in 2001-13. For crop sector
(70%) ag.
Livestock value added 30% seg 4.5 10.8 16.6 Same as in 2004 to 2014
Improvement in resource use efficiency
2.26 16.7 25 Same as in 2005 to 12
Crop Intensity (70% seg) 1 pp. 3.4 4.9 Same as during 2001-12
Rajasthan and Soil Health
Fertilizer quality control units have been set up in 6 regions in Rajasthan along with an extensive
network of 101 soil-testing laboratories. The state plans to expand this network to distribute soil
health cards over the coming few years and is planning for digital soil mapping and the use of
technology such as drones to ensure optimized resource usage.
Karnataka and Integrated Farming Systems Pilot
The Karnataka Agriculture Price Commission (KAPC) selected eight villages in 2016 for a pilot
programme to implement integrated farming systems in an effort to enhance farmers’ income.
Under this pilot programme, the Institute for Social and Economic Change (ISEC) will conduct a
baseline socio-economic survey, post which Krishi Vigyan Kendras (KVKs) in each village will
prepare an integrated farming system and undertake implementation of the programme. For
example, in one of the villages, Chitradurga, the focus is on a millet-based integrated farming
approach, whereas, in Kalaburagi the focus is on a pulses-based farming system. The KVKs are also
undertaking measures to raise awareness on the programmes and facilities available to farmers
under Center and State initiatives to enhance income. Additionally, KVKs will implement soil quality
testing farmers’ health check-ups in the selected villages. The Government plans to use the results
from these pilot villages to develop district-level blue prints and work toward enhancing the
farmers’ income.
79
Crop Diversification (70% seg) Area increase - 3.13 per
cent, elasticity 0.319 5 7.3
Better Price Realization 13% 9.1 9.1 Implemented in 7 or 10 years
Shift to non-farm occupation 1.81% 13.4 19.6 Same as in 2005 to 12
Total 75.1 107.5
vii. Price Realization by Farmers: The Government of India recently introduced the e-NAM to focus on
improving benefits accruing to the farmer, by giving them direct access to the market. Successful
implementation of market reforms and a unified agricultural market at a national level can be an effective
strategy in increasing farmers’ income by 2022-23. Karnataka has had a successful experience in this
regard. Estimates indicate that after the creation of the online trading platform, prices in mandis in
Karnataka displayed a much higher increase as compared to wholesale prices of the same commodity in
the rest of the country; the average increase in prices received by farmers in a short span of time was
13.4% in real terms which translates to a 9.1% increase in farmers’ income. This initiative highlights that
the application of small reform to the system of marketing can increase price realization for farmers.
Karnataka and Unified Markets Platform: Under ReMS, a joint initiative of the Government of
Karnataka and NCDEX Spot Exchange Limited, an online marketing platform, Unified Market Platform
(UMP), was created in 2014 and operational soon after. This platform allowed auctioning of farm
produce on an electronic platform.
Manipur and Agricultural Markets: In the medium-term, the Government of Manipur plans to focus
on developing agricultural markets to ensure farmers’ can access adequate marketing facilities and
remunerative prices for their produce. This will be facilitated by support of credit facilities and is being
supported by legislation on “The Manipur Agricultural Produce and Livestock Marketing (Promotion
and Facilitation) Bill, 2017”.
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5. Doubling Farmers’ Incomes in Tamil Nadu – The Way Forward?
Our findings from the sample survey reinforce the point that the agriculture sector in Tamil Nadu is fast
reaching a critical point. Faced with continuous weather uncertainty, the few preceding years have been
exceedingly difficult for Tamil Nadu’s farmers, having suffered from floods, drought, and cyclones at
different points in time. In addition, the agrarian sector in general in India has faced a severe set of
pressures that continue to be exacerbated – the number of cultivators is on the decline47, while the
population is on the rise; available resources for production are dwindling, and input costs have risen
tremendously - while returns from agriculture have not increased in commensurate terms.
Notwithstanding these issues other serious challenges include the scarcity of labour, and a highly volatile
price market for agricultural produce that has severely damaged farmer’s interests48. At the same time
the pressure to improve land productivity, and increase agricultural output is higher than ever. This is
indeed the primary contradiction of the agrarian sector today – it is more resource constrained and carries
more risk, than ever before – and yet, output is expected to stay constant at the very least, if not to
improve significantly as each year passes by.
Being a lower riparian state, Tamil Nadu’s dependence on rain-fed agriculture is unlikely to reduce in the
near future. The dependence on the North-East monsoons makes it improbable to expect all farmers to
be able to cultivate 2 or more full crops in year, with sufficient output for commercial sale to supplement
the household income. With regard to increasing farmer incomes under these constraints, the need for
diversification has been put forth as a strategy for the future, the aim being to ensure that farmers are
able to leverage income from various farm and non-farm sources. The advantages of such a strategy are
obvious – most importantly, the increasing risks faced by farmers can be hedged by investments in
multiple areas, thus ensuring that in the event of weather related uncertainty, income remains
unaffected. However, the disadvantages of this strategy also need to be considered – for a small and
marginal farmer, having to focus on multiple activities to obtain income is almost certain to lead to
increased pressure on available resources – consider the shortages of land, technological know-how/
access to technology, and the credit and monetary constraints that prevent adequate investment in
various income generating activities. In the short term, relying on diversified income streams certainly
appears to be a useful strategy to mitigate risks, and ensure sufficient income generation. However, in
47 Insert reference from TN Policy Note, and also from the CoI data. 48 The recent case of tomato prices falling to under a rupee per kilo (See: the Hindu – 26th December 2017), or the well documented issues with the market prices of pulses in India are prime examples of the price risks faced by famers today (See: RBI Annual Report (August 2017), or Livemint – June 2017.)
81
the longer term, it merely seems inefficient to suggest that farmers should be focusing on a variety of
activities, instead of ensuring maximum productivity, and full price realization in the areas where they
have competitive advantage – cultivation, and farm related activities. An analysis of the income data from
this survey provides an overview of where the maximum gains can be expected.
Both Chand (2017) (see Section 4) and the DFIT committee suggest that the components of income from
farm sources maybe thought of as comprising the following parts:
- Improvement in crop productivity
- Improvement in livestock productivity
- Increased cost-efficiency in production
- Increase in cropping intensity
- Diversification towards high value crops
- Better price realization
- Shift to Non-Farm opportunities
For each of these categories, the DFIT committee estimates parameters of income growth potential, based
on trends from past data (2003-2012) (Table 35). The estimated contributions from each of these
categories to income growth is also presented below (Table 36)
Based on the 2015-16 income of ₹ 133,568, the growth in farm incomes based on parametric trends is
only likely to be around 81.5%. The DFIT Committee’s accelerated targets provide a good overview of the
role of these individual factors in income growth, in doubling, or even a substantial increase in farmer’s
incomes is likely to be achieved. It must be noted that these estimates are focused on doubling farm based
incomes, the overall assumption being that in 2015-16, farm income contributes to around 43% of the
total annual income of the farmer. The aim of the accelerated growth parameters is to boost the share of
farm income to around 54% by 2022-23.
However, as data from this survey shows (Section 3), there has been a decrease in farmers’ real income
in Tamil Nadu in 2016-17, mainly due to the multiple weather shocks, and related issues. The annual
income for farmers in the 4 districts is estimated to be ₹ 125,228 (2015-16 prices). Thus, if the DFIT
Committee’s target of ₹ 232,505 is seen the benchmark that has to be achieved in the next 5 years (by
2022-23), the implication is that farm based incomes have to increase by 134% from the current level,
assuming that the share of farm income in the total income basket is around 55%. At the same time, this
also places the demand of an annual 7% growth in non-farm incomes during the period 2017-18, which is
slightly higher than the DFI committee’s estimate of 5% for the longer 7-year duration.
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Table 35. Parameters Affecting Farm Income
Crop
Productivity Livestock
Productivity Resource use
efficiency Crop
Intensity Crop
Diversification Price
realization Shift to
NFS
Parameters as per 2003-2012 data
0.63 9.87 1.92 1.06 3.93 6.5 1.71
Adjusted targets (accelerated)
3.5 11.84 2.26 1.33 4.92 13 2
Source: DFI Committee Estimates
Table 36. Contributions to Growth in Farm Income
Crop
Productivity Livestock
Productivity Resource use
efficiency Crop
Intensity Crop
Diversification Price
realization Shift to
NFS Total
Estimated from data 2.6% 39.2% 14.2% 4.4% 4.7% 3.8% 12.6% 81.5
%
Adjusted targets (accelerated)
15.8% 49.9% 16.9% 5.6% 7.4% 7.5% 14.9% 118.1
% Source: DFI Committee Estimates
Table 37. Revised Projections - 5 year Contributions to Growth in Farm Income
Crop
Productivity Livestock
Productivity Resource use
efficiency Crop
Intensity Crop
Diversification Price
realization Shift to
NFS Total
TN-Growth Revised
16.0% 42.5% 24.0% 5.1% 14.1% 15.7% 16.5% 134.0
% Source: Authors Calculations
83
Therefore, this has resulted in a need to re-assess, and recalibrate the growth targets for the remaining 5
years, in order to highlight the areas for significant intervention and action. The share of farm income in
the 2016-17 income estimates from this survey (₹ 125,228) is around 41% - quite similar to the 2015-16
estimates. However, the real challenge is presented by reduction in farm income in real terms – thus
suggesting that higher growth targets are to be met for the remaining 5 years in order to achieve the 134%
(Table 37) increase from the current income level. Projections suggest that in order to achieve this level
of growth in farm incomes in the next 5 years, the focus needs to be devoted to components of income
that can be increased with investment and short-term effort. However, it is crucial to remember then,
that the aim of reaching a peak income by 2022-23 is not the goal – instead, it is to ensure that incomes
substantially increase by that year, and continue to increase, or remain stable at the very least.
Thus in the immediate 5 years to come, the highest priority should be given to actions focused on:
- Improving resource use efficiency (Aim to achieve at least a 25% improvement in resource use
efficiency)
- Focusing on diversifying to high-value crops (Aim for 14-15% contribution of diversification to high-
value crops in increasing farm incomes)
- Significantly improving price realization by farmers (Developing strategies to improve price
realization; 15% contribution to income growth to be the aim)
- Boosting livestock sector productivity
These are areas of high short-term gains, and significant advances can be achieved in a limited period of
time with concerted effort from policy makers and practitioners. The following recommendations are
therefore in tune with these analyses.
Organizing Farmers – the Missing Ingredient?
For any intervention to succeed in improving profits across the agrarian sector, scale and scope are huge
factors in lowering costs, improving access to resources and bargaining power, and ensuring that
maximum benefits reach all farmers (see Bernard and Spielman, 2009; Biénabe and Sautier, 2005; Datta,
2004). There is indeed a belief that in the absence of effective organization, Indian farmers are suffering
from poverty and exploitation, and even isolation from economically viable agricultural activities
(Croucher, 2010). From this perspective a collective approach to farming is a vital ingredient then, in the
pursuit of increasing farmer’s incomes.
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The concept of an organized, or collective approach to farming is not new to India – the cooperative model
has long existed in India – in a range of sectors. However, the benefits for the farmer have reduced over
the years, until confidence in the cooperative model of organizing farmers was completely lost, despite
the successes realized in the 70s and the 80s (Trebbin and Hassler, 2012). It was with the aim of addressing
this situation that the concept of producer companies (FPC/FPO) came into being, in 2002. By taking the
elements of the cooperative model, and by making the farmers the shareholders of a company, it was
hoped that they would be better placed to commonly and sustainably manage and develop community
resources such as land and water. The concept got a further boost, when Farmer Producer Organizations
(FPO) were given policy support (credit guarantee scheme, and equity guarantee scheme) under the XII
Five Year Plan.
However, the concept has met with limited success in Tamil Nadu thus far. In 2014 – dubbed the year of
FPOs by the Department of Agriculture and Cooperation (DAC), Ministry of Agriculture, Tamil Nadu had
only 1000 farmers enrolled in 50 Farmer Interest Groups (FIGs), and only 1 registered FPO49. This later
increased to a total of 11 registered FPOs, as per available data50. Data from the sample survey also shows
that around 80% of the farmers report having no association to any local agricultural groups or
cooperatives51. In 2017, the government of Tamil Nadu launched a programmeme to promote organized/
group-based farming, the target being to promote 2000 Farmer Producer Groups52 (FPGs) covering around
2 lakh farmers. The objective of the programmeme is to leverage collective farming, for “credit
49 http://agritech.tnau.ac.in/farm_association/pdf/Year-of-FPO2014.pdf 50 http://sfacindia.com/PDFs/List-of-FPO%20identified-by-SFAC/List%20of%20FPOs%20in%20the%20State%20of%20Tamil%20Nadu.pdf 51 We suspect some under reporting of any associations with group-based lending activities. 52 Around 10 FPGs would together form an FPO, in a contiguous area – thus the overall target would be to form 200 FPOs.
Organizing farmers in Tamil Nadu – progress in 2017
- 975 Farmer Producer Groups have been formed, and handed over the Agri-Marketing Department - Objective of the FPGs: Channel to educate farmers about growing high-yielding varieties (HYV), seed treatments, training in new technology, sensitization on the scope of value-addition, and processing. - Successful business plans worth up-to INR 7 lakhs for the FPGs to be approved by the government, with INR 5 lakhs subsidy per business plan to be contributed by the government.
- Number of FPOs (registered) in Tamil Nadu has increased to 167 (NABARD).
-
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mobilization, better adoption of technology and to facilitate effective forward and backward linkages”53.
A total amount of ₹ 100 crore was earmarked, to provide a corpus fund for each of the FPGs (₹ 5 lakh per
FPG). In parallel, many private initiatives – launched by various NGOs, or agri-business firms are
attempting to mobilize the farmers of Tamil Nadu into collectives, the end objectives being the same as
described above. The challenges are many – including the various socio-economic differences that have
prevented a truly successful and meaningful organization of farmer groups in the past, notwithstanding
various political pressures.
Ultimately - whether through private means or through government aided ones, the successful
implementation of farmer collectives and groups is an absolutely necessity. It is the need of the hour, and
ensuring the successful collectivization of Tamil Nadu’s farmers must be given the highest priority –
without this crucial building block in place, the aim of doubling farmer’s incomes may well remain a distant
dream.
Given this context, the report identifies three broad guiding principles, that provide the overall framework
for a comprehensive strategy, while going forward. Accordingly, presents a set of short term
recommendations, whose implementation is to be considered immediately (within 1-3 years), and a set
of a medium-to-longer term recommendations (timeframe to be considered for this set would be in the
range of 5 to 10 years) are provided.
1) Promoting the value chain approach: All farmers – small and marginal farmers in particular, need
to be integrated into a well-developed agricultural value chain, that focuses on value addition to
the produce at each and every stage. This integration will ensure that the farmers too are able to
benefit from market access. Strong linkages to the market are vital in ensuring the timely
availability of good quality inputs, and capital - at affordable prices. Farmers also benefit from
these linkages, by being able to realize the best price for their produce - thus gaining maximum
profits. It must be noted however, that farmers also need to be adequately protected against
price fluctuations and other such issues, which greatly influence the income generated by the sale
of farmer’s produce. The long term aim should be to transition farmers in India from having to
rely on price support, to improving productivity and profitability by utilizing the various links and
networks inherent to the supply chain. In the short term:
53 http://cms.tn.gov.in/sites/default/files/go/agri_e_ms_164_ap4_2017.pdf
86
- The need is to carefully consider and identify appropriate value chains that can benefit
farmers – accounting for variation in resource availability and other conditions across
various agro-climatic zones, and allocate funds to ensure maximum profitability from these
value chains.
- Several high return value chains exist – bamboo, mushrooms etc. that are suitable for the
Tamil Nadu context. – the need of the hour is to carefully assess these options and their
suitability in different districts/ agro-ecological zones, and allocate investment in order to
both ensure appropriate market linkages, and also to incentivize farmers to shift towards
these value chains. The table below highlights some high potential value chains that may
be pursued for immediate development in the various agro-climatic zones in Tamil Nadu.
North Eastern Zone Drought tolerant fruits, horticulture, floriculture, pulses, oilseeds , coconut
North Western Zone Mango value chain - mango pulp, and processed mango, sugarcane, tapioca, tamarind, chilly, samai
Western Zone Pulses, Coconut, Maize, Tomato, Drumstick, Castor
Cauvery Delta Zone Alternatives to Kuruvai paddy - Cotton, Hybrid Maize, Horticulture, Coconut etc.
Southern Zone Pulses, Oilseeds, Coir based industries, Crops like chillies in drier areas of Ramanathapuram
High Rainfall Zone Lack of development in agro-industries, high potential for a wide range of crops including paddy, pulses, oilseeds, fruit crops, vegetables, flower crops, spices and plantation crops. Focus should thus be on infrastructure development, and ensuring value addition to all produce
Hilly Zone Hill vegetables/ off-season vegetables, hill spices, floriculture, fruits
Successful examples for development of the value chain exist for each of the cases discussed above, in
various states across the country:
- In Gulbarga, implementation of a value chain approach for chilli cultivation has been
successfully undertaken. The intervention, which included training on integrated pest
management resulted in manifold increases in yield, while farmers have reported significant
gains and improvements in terms of crop quality and profit realization. This is a useful
example, as there are many areas in Tamil Nadu where similar climatic conditions persist, and
similar interventions could be relevant.
- In Tamil Nadu, some research aimed at improving the output, and drought resistance for
paddy has been undertaken by reseachers from TNAU, and Rutger’s University. The study
finds a widespread need for the adoption of drought tolerant rice varieties, given the higher
87
returns. However, there needs to be an enabling ecosystem in place – including improved
seed supply, market linkages, and extension/ advisory in order to improve cultivation
practices.
- In Maharahtra, Jaljeevika demonstrates a means of implementing and sustaining inland
fisheries in a manner beneficial to many landless farmers. Jaljeevika’s interventions include
promoting aquatic livelihoods, building necessary institutions in order to promote inland
fisheries, and ensuring that the necessary development along the value chain is undertaken,
in order to fully support inland fisheries.
2) Building farmer’s capacity in strategies for risk management, loss minimization, and climate
change adaptability: In the face of increasingly uncertain weather patterns, and highly
unpredictable rainfall, farmers need to be able to adapt, and mitigate various kinds of risk.
Developing this capacity among farmers – by leveraging technological solutions (during pre-
cultivation, cultivation, and post-harvest phases), influencing crop choices and cultivation
patterns, and ensuring the insurance of the various production risks - is crucial in ensuring the
continued success of the agrarian sector in Tamil Nadu. However, there is a lack of a well-rounded
strategy to achieve this goal. The landscape of risk management solutions remains highly
fragmented – private players tend to mainly be in the insurance space, while the government has
a numerous set of schemes focused on various aspects ranging from irrigation, to warehousing
etc. However, the state needs to adopt a consistent and well-round strategy that seeks to leverage
the strengths of all key stakeholders, in order to ensure the the necessary capacity to manage and
mitigate risks is built in each and every farmer.
3) Addressing soil health, reducing yield gaps, and related Issues: Like many other states in India,
the overall productivity of the land continues to remain low in Tamil Nadu; additionally, soil health
is an increasing concern, especially given that the overuse of urea and the gap between the
recommended NP ratio vis-à-vis the current situation on ground. Thus the strategy ahead should
aim to extract maximum realizable yield from available land (even during the dryer summer
season), while maintaining the health of the soil, and that of the surrounding ecosystem.
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5.1 Short term recommendations:
5.1.1 Improving cultivation strategy in the dry season:
While programmemes aimed at improving the cultivation of horticultural and dryland crops are underway
in Tamil Nadu, careful thought and planning needs to be undertaken in order to ensure that the land is
used efficiently, and maximum output is obtained. In various other parts of the country, inter-cropping of
high value vegetable crops, with pulses or oilseeds has been undertaken – at great returns to the farmer.
One example is the “machan” model of cultivation that has been seen, especially in Uttar Pradesh. The
machan or the multi-tier system involves the use of vertical space on a small portion of land, thus allowing
the farmer to grow multiple high value crops at the same time. It has been seen that building a “machan”,
on 0.08 acres of land allows two vegetable crops to be grown simultaneously, at minimal cost (the system
is highly resource efficient), and with high returns54. The machan can be maintained throughout the year,
which means at least two harvests can be made, by growing crops such as bittergourd, turmeric etc. This
speaks to a broader point about identifying an appropriate set of high-value options, for a given area –
based upon market assessments (demand analysis) etc. Every farmer should thus be able to grow a regular
crop in the rainfed season, and reinforce his or her options with a mix of high-value crops in the dry season.
Thus the following steps need to be immediately undertaken, to improve cultivation in the dry season:
- 5 to 10 percent of a small/ marginal farmers’ land (a minimum of 100 square feet) must be
devoted to cultivating high value crops – vegetables, herbs etc. - that consume minimal resources,
and yet prove highly profitable, particularly in the off-season. Up-to 5 crops can be grown in a
year, and the margins for a single crop range upwards of ₹ 5000.
- It is estimated that the contribution from horticulture crops has to be significantly increased
where possible. The DFI committee presents two strategies towards this: a) shifting of area into
horticulture at 4 per cent per annum for seven years, or a more pragmatic approach b) shifting of
area in favour of horticulture by replacing staple crops at 2 per cent per annum for the first three
years and thereafter shifting at the rate of 4 per cent per annum for the next four years.
o Tamil Nadu is already the second largest cultivator of horticultural crops in the country,
accounting for 7% of the production, and 6% of the area under cultivation. Increasing area
54 Net returns were around INR 7000, as per one case study (http://www.tatatrusts.org/article/inside/Multi-crop-to-multi-income)
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under cultivation to the extent suggested by the DFI committee needs to be carefully
examined, to assess feasibility.
o While the government has indeed programmemed to increase the area under
horticulture crop cultivation from 34 lakh hectares in 2016-17 to 39 lakh hectares in 2017-
18, it is equally important to ensure maximum value addition to the output, and minimize
wastage. Currently, the wastage is estimated to be at around 30-35%.
- For larger farmers, with more land area, shifting a portion to longer term tree crops can be
considered.
5.1.2 Improving Farming Practices Through Nutrient Management
Tamil Nadu has a fast deteriorating soil quality – the deviation from the optimal N:P ratio is assessed at a
little over 40%55 - a definite warning sign. The poor soil health could have serious implications for
productivity, and thus for income generation in the near future. A major reason for the poor health of the
soil is the overuse of urea, given the very high rate of subsidy it attracts. A very small portion of study
sample (around 7%) reported using soil tests – a clear warning that much needs to be done in order to
ensure farmers pay more attention to soil health, and soil fertility. The soil health card will play an
invaluable role in ensuring that farmers are maintaining the health of their lands. A study conducted by
National Productivity Council (NPC) in 2016 has shown that 84% of farmers have expressed that they have
applied the nutrients recommendations suggested in soil health card that have proven to be beneficial to
them in reducing the cost of cultivation and improving productivity of crops. It is estimated that as a usage
55 Ministry of Agriculture, 2014
Dryland Agriculture Scheme
Across TN, 2 lakh hectares have been identified for dryland clusters (Kharif crops cover around
1,17,000 hectares) across 25 districts. The criteria considered comprises of a village having dryland
in a continuous manner, not under the ambit of any irrigation source and not growing any
horticultural crops. Cluster Development Teams have been formed for its implementation. The
scheme has formed 200 clusters across 2 lakh hectares in 25 districts, covering 2,30,000 farmers.
The aim is to form 1000 clusters, over a four-year time-period.
INR 80 lakhs is allotted to every cluster. The coverage includes subsidies for ploughing, contour/
compartmental bunding, 50 percent subsidies for seeds, and fertilizers (only organic). Value
additive machinery such dal mills, oil extracting equipment worth INR 10 lakhs are to be provided
per cluster. 80 percent subsidies to be given on tractors and animal husbandry activities will also be
provided.
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of the soil health cards, an overall reduction of 8% to 10%, in the usage of chemical fertilizers was seen in
2016-17 as compared to the previous year56. Additional information released by the Ministry of
Agriculture suggests that the costs of paddy farming have decreased by 16 to 25%, while the cost of
production for pulses and oilseeds have decreased by around 10 to 15%57. These findings have significant
implications for Tamil Nadu, as all three crops are important to the farmers.
A variety of immediate steps could be taken to ensure that the soil health card is fully utilized as a tool for
monitoring and maintaining soil health:
- Soil health cards to all: All agricultural landholdings should be provided with soil health cards, and soil
tests should be encouraged before the start of each cropping season. It must be noted that each soil
sample uses around 5 SHCs – thus provisions must be made to provide a minimum of at least 10 SHCs
per agricultural holding (assuming 1 plot, 2 cropping seasons, and 1 sample per cropping season).
Under the SHC scheme, the current cycle per farmer is a 3 year one. This could be changed – ideally
to a bi-annual cycle/coinciding with the farming seasons.
- Our phone follow-ups with a random sample of farmers across four districts surveyed showed there
were serious implementation gaps in the soil health card scheme in Tamil Nadu, wherein test samples
were either not taken with the soil health cards or though the samples were taken results were not
made available to farmers. In few cases, farmers were unaware of how soil test results could be
interpreted or utilized. This hence pushes towards the better implementation of the soil health card
scheme in Tamil Nadu, wherein our survey as well as other surveys show a higher penetration of SHCs
compared to other states in India.
- Studies (an A/B testing in Bihar) by Shawn Cole (Harvard Business School) and Garima Sharma(MIT)
have demonstrated that fertilizer usage has substantially increased over the years, from 10 kgs per
hectare in 1970 to 128 kgs per hectare in 2011 and site-specific nutrient management strategies could
reduce fertilizer expenses as well as improve yields. Farmers lack awareness about the timely
application and right quantities of soil nutrients, and hence this scheme could be extremely beneficial
if executed efficiently. The study shows that Tamil Nadu has achieved 97 % coverage of the
distribution target of 7,000,000 SHCs as of July 2017, and other states to have surpassed TN with 100%
of the distribution targets achieved are Madhya Pradesh and Himachal Pradesh.
- SHC scheme has the potential to improve agricultural productivity (higher per unit yield) and increase
agricultural incomes within the state, given that TN is among the four states with better penetration
56 http://pib.nic.in/newsite/PrintRelease.aspx?relid=169150 57 http://pib.nic.in/newsite/PrintRelease.aspx?relid=163342
91
of SHCs (79.1%), the others being Gujarat, Andhra Pradesh and Goa. Initiatives in this direction could
be further distribution of SHCs and strengthening the testing infrastructure within the state.58
- Implementation gaps such as delays in test results made available to farmers, poor quality of soil test
results and farmers’ lack of awareness in interpreting these results are to be addressed on a priority
basis. Farmers should be trained in inferring soil test results, and be able to trust and act on the SHC
recommendations, and extension networks such as local agricultural officers have the potential to fill
the existing gaps in this system. 59
- Limiting nitrogen based fertilizer purchase, based on soil health: Farmers may be asked to submit
the soil health cards at the time of fertilizer procurement, and limits on urea purchase may be
imposed, based upon the soil health report.
- Incentivizing soil health: The soil health card may also be used as a means to provide incentives to
farmers, that are tied to the maintenance of an optimal N:P:K ratio in any given farmer’s land; these
incentives could be in the form of input cost discounts, or direct transfers to the farmer.
- Soil health, JAM, and digitization: As the sector moves towards direct transfer of the fertilizer subsidy
to the farmers, the transfer of subsidy itself may be made conditional upon the submission of periodic
soil tests. The soil health card may be linked to the farmer’s Aadhar, and his digitized land record, thus
allowing the creation of a soil health database for each individual plot. This database may also be used
to then provide optimal fertilizer recommendations, while ensuring that the farmer is periodically
checking on the quality of the land. In the longer run, other options such as linking the SHC to avail
credit/ working capital, or other products must be considered.
However, in order to ensure the feasibility of these steps, soil health testing facilities need to be made
commonly available, and easily accessible for all farmers. Ideally, farmers should be able to have a soil
test facility within an hour’s travel60 by public transport at the very least, in order to ensure efficient usage.
5.1.3 Providing a strong crop insurance product to the farmers
The PMFBY scheme has been implemented in Tamil Nadu since the Kharif season of 2016. Around 16 lakh
farmers were covered (Khari + Rabi, 2016-17) – a little over a third of the estimated total number of famers
in the state. The state had the highest number of non-loanee farmers enrolled across the country as well.
However, data from the sample survey shows that only 28% of the households had taken crop insurance
in the crop year 2016—17. Major issues were particularly experienced on the side of the payouts. Across
58 https://darpg.gov.in/sites/default/files/Soil%20Health%20Card.pdf 59 http://www.ncaer.org/Events/IPF-2017/IPF-2017-Presentation-Cole-Sharma-Conf-vesion.pdf 60 A current complaint from farmers is that the labs are too far off to access – travel times of over three hours have been observed
92
Tamil Nadu, 55% of the farmers who suffered crop losses in the crop year 2016—17 were yet to receive
their payouts. The role of crop insurance in protecting small and marginal farmers in Tamil Nadu cannot
be emphasized enough, in ensuring adequate protection against various risks.
As per our survey sample, only around 28 percent households (239 HHs) had their crops insured in 2016-
17. Of these 28 percent households in the sample, 45.6 percent (109 households) had raised claims
request in the last 12 months, and 74 percent (81 households) had their claims processed. The data points
towards the existing poor penetration rates of the crop insurance scheme in the state as a whole, even
while TN was going through tough seasons of droughts and irregular rains. Of the 28 percent penetration,
at least half of the households had requested claims owing to the climatic conditions. This demonstrates
the importance of the crop insurance scheme in mitigating the effect on household incomes and
livelihoods, and the existing loopholes such as irregular or delayed payments of claims, denial of genuine
claims need to be tackled efficiently.
Table 38: Crop Insurance
Land Category Mean (Rs) Sd (Rs) No. of HHs
Marginal
Annual Premium (per hectare) 1270.3 1348.8 115
Claims received (per hectare) 34199.7 20961.8 45
Owned land (hectare) 0.6 0.2 457
Small
Annual Premium (per hectare) 767.9 419.9 63
Claims received (per hectare) 27790.4 16926.3 23
Owned land (hectare) 1.3 0.2 236
Semi-medium
Annual Premium (per hectare) 832.2 477.1 48
Claims received (per hectare) 27480.8 17030.1 16
Owned land (hectare) 2.4 0.5 127
Medium-large
Annual Premium (per hectare) 581.8 496.5 12
Claims received (per hectare) 16488.1 10169.0 5
Owned land (hectare) 5.3 2.1 34
Total
Annual Premium (per hectare) 1014.2 1020.7 238
Claims received (per hectare) 30340.5 19161.6 89
Owned land (hectare) 1.2 1.2 854
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Addressing the implementation related issues with the PMFBY is crucial to ensuring that the take-up of
insurance is further enhanced. Further steps that might be considered include:
- Improving accountability for faster claims processing: Currently, in the absence of strong monitoring
and performance indicators for insurers, there is a lack of sufficient pressure on insurers to stick to
timelines. At the same state governments also are not held sufficiently accountable, for delays in
payouts to the insurers. Strong accountability frameworks, with clear penalties (and incentives in the
event of compliance) must be laid down, in order to ensure smooth functioning of the scheme.
- Sharing the benefits of profits: As the design of the PMFBY scheme, there is a clear mechanism to
ensure that insurers are protected, in the event of premium to claims ratio exceeding 1:3.5, or in the
event of claims to sum-insured ratio exceeding 35%. In Kharif 2016, the example of Tamil Nadu
provides a clear example as to why there is also a need to devise a mechanism to share the profits.
The PMFBY covered 16,000 farmers in Tamil Nadu in Kharif 2016, while the total premium collected
was around ₹ 10.2 crore. As per data from the ministry of agriculture, the Kharif 2016 season saw zero
reported claims from the farmers in Tamil Nadu. The entire premium collected essentially translated
into profits for the insurers.
Considering mechanisms to share some portion of the profit with the famers, or to provide some
discounts in lieu of the profits for the succeeding season’s premium amounts, are some options that
can be considered. Such initiatives will not only improve the trust in the insurers, while also ensuring
that renewal rates (an often overlooked area in the insurance sector) are influenced.
- Making the insurance market more competitive: the crop insurance market in India currently
revolves around the highly subsidized PMFBY scheme, the level of subsidy making it currently unviable
for private insurers to offer any alternative product offerings. However, market competition is vital
providing alternatives and options to the farmer, allowing them to choose the most suitable and best
performing product. Specifically, the need of the hour is to expand coverage, and include high-risk
high return crops like mushrooms.
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5.1.4 Improving the usage of warehousing infrastructure
Tamil Nadu has an extensive warehousing infrastructure – the Tamil Nadu Warehousing Corporation alone
operates instalments with a total capacity of 648,000 MT, at an average occupancy position of 88%61.
However, the majority of the occupancy is taken up by the FCI, private companies, and other entities
including TASMAC. A very small percentage of the actual available capacity is used by individual farmers62.
Sample survey data shows that there are only one or two farmers, in the total sample 854, who actually
use go-downs or warehouses to store their harvested produce. However, over 42% of the sample reports
storage within the premises of the house. A significant number of sample households also report post-
harvest losses.
Table 39 shows the potential for storage at a larger scale through warehousing options, demonstrating
the quantities of major crops produced and sold over the last farmed season (in kgs), and the revenues
earned from the sale of the same. The difference between the quantities produced and sold for each crop
would be that utilized for household consumption, as in the case of rice, turmeric, black gram and
groundnuts. Also the table shows that in certain crops like sugarcane, maize and cotton the quantities
sold over the last farmed season are slightly higher than the quantities produced indicating that few
households might have stored some produce from the previous farmed season. Our data also indicates
that farmers agreed to storing at least part of their produce within household facilities and hence this
assumption should hold reasonable. Thus if farmers could divert some of the produce sold into proper
storage options through warehouses and godowns, this could substantially increase their household
incomes.
Table 39: Crop quantity produced and sold (in kgs), and revenue earned over last farmed season
Crop quantities (in kg) and revenue over last farmed season
Count Mean (kgs) Sd Min (kgs) Max (kgs)
Villupuram
Rice produced (kgs) 95 4,617 6,231 20 53,940
Rice sold(kgs) 93 4,491 6,310 0 53,940
Rice revenue earned (Rs) 95 ₹ 59,781 ₹ 62,910 ₹ 0 ₹ 3,92,000
Sugarcane produce(kgs) 53 87,481 55,569 13,000 2,50,000
Sugarcane sold (kgs) 52 88,375 55,725 13,000 2,50,000
Sugar revenue earned (Rs) 53 ₹ 2,33,621 ₹ 1,84,903 ₹ 28,000 ₹ 9,12,000
Cotton produced(kgs) 7 13,471 33,747 300 90,000
Cotton sold(kgs) 7 13,471 33,747 300 90,000
Cotton revenue earned (Rs) 7 ₹ 37,985 ₹ 23,536 ₹ 11,550 ₹ 85,500
61 https://tnwc.in/vacant-storage-space/ 62 Under 5 percent, as per stakeholder interviews.
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Maize produced (kgs) 12 2,129 1,813 300 5,000
Maize sold (kgs) 12 2,129 1,813 300 5,000
Maize revenue earned (Rs) 13 ₹ 25,361 ₹ 25,444 ₹ 666 ₹ 78,000
Turmeric produced (kgs) 11 1,136 1,703 100 6,000
Turmeric sold (kgs) 11 1,118 1,716 0 6,000
Turmeric revenue earned (Rs) 11 ₹ 48,467 ₹ 48,245 ₹ 0 ₹ 1,54,800
Groundnut produced(kgs) 23 553 353 80 1,400
Groundnut sold(kgs) 19 452 386 0 1,400
Groundnut revenue earned(Rs) 23 ₹ 18,187 ₹ 21,304 ₹ 0 ₹ 87,500
Blackgram produced (kgs) 3 22 9 12 30
Blackgram sold (kgs) 1 0 . 0 0
Blackgram revenue earned (Rs) 3 0 0 0 0
Ramnathapuram
Rice produced (kgs) 206 3,463 3,187 305 19,840
Rice sold(kgs) 196 3,114 3,042 0 18,600
Rice revenue earned (Rs) 206 ₹ 47,763 ₹ 54,036 ₹ 0 ₹ 3,15,000
Cotton produced(kgs) 3 3,000 2,598 1,500 6,000
Cotton sold(kgs) 3 3,000 2,598 1,500 6,000
Cotton revenue earned (Rs) 3 ₹ 75,000 ₹ 39,686 ₹ 45,000 ₹ 1,20,000
Dharmapuri
Rice produced (kgs) 46 2,028 1,450 350 6,000
Rice sold(kgs) 27 1,814 1,489 0 6,000
Rice revenue earned (Rs) 46 ₹ 15,689 ₹ 21,036 ₹ 0 ₹ 96,000
Sugarcane produce(kgs) 28 78,000 59,046 10,000 2,45,000
Sugarcane sold (kgs) 28 78,000 59,046 10,000 2,45,000
Sugar revenue earned (Rs) 28 ₹ 2,09,065 ₹ 1,67,952 ₹ 21,000 ₹ 7,35,000
Cotton produced(kgs) 45 711 463 150 2,000
Cotton sold(kgs) 45 711 463 150 2,000
Cotton revenue earned (Rs) 45 ₹ 39,934 ₹ 27,115 ₹ 8,750 ₹ 1,20,000
Maize produced (kgs) 11 1,048 1,116 100 4,000
Maize sold (kgs) 9 1,134 1,235 0 4,000
Maize revenue earned (Rs) 11 ₹ 17,623 ₹ 19,296 ₹ 0 ₹ 60,000
Turmeric produced (kgs) 28 792 635 130 2,500
Turmeric sold (kgs) 27 754 592 130 2,100
Turmeric revenue earned (Rs) 28 ₹ 47,005 ₹ 44,232 ₹ 0 ₹ 1,72,200
Groundnut produced(kgs) 16 718 1,177 84 4,960
Groundnut sold(kgs) 10 999 1,436 120 4,960
Groundnut revenue earned(Rs) 16 ₹ 15,029 ₹ 19,519 ₹ 0 ₹ 64,000
Blackgram produced (kgs) 1 250 . 250 250
Blackgram sold (kgs) 1 250 . 250 250
Blackgram revenue earned (Rs) 1 15000 . 15000 15000
Nagapattinam
Rice produced (kgs) 171 4,677 5,701 420 46,500
Rice sold(kgs) 169 4,478 5,590 420 43,400
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Rice revenue earned (Rs) 171 ₹ 70,767 ₹ 90,823 ₹ 0 ₹ 7,00,000
Cotton produced(kgs) 8 1,600 1,963 200 6,000
Cotton sold(kgs) 8 2,763 3,503 200 10,000
Cotton revenue earned (Rs) 8 ₹ 60,813 ₹ 67,502 ₹ 9,000 ₹ 2,10,000
Groundnut produced(kgs) 1 2,310 . 2,310 2,310
Groundnut sold(kgs) 1 2,100 . 2,100 2,100
Groundnut revenue earned(Rs) 1 ₹ 1,07,500 . ₹
1,07,500 ₹ 1,07,500
Blackgram produced (kgs) 28 518 669 3 3,500
Blackgram sold (kgs) 26 505 642 25 3,300
Blackgram revenue earned (Rs) 28 32354 50135 0 264000
Total
Rice produced (kgs) 518 3,948 4,758 20 53,940
Rice sold(kgs) 485 3,781 4,788 0 53,940
Rice revenue earned (Rs) 518 ₹ 54,713 ₹ 69,807 ₹ 0 ₹ 7,00,000
Sugarcane produce(kgs) 81 84,204 56,608 10,000 2,50,000
Sugarcane sold (kgs) 80 84,744 56,754 10,000 2,50,000
Sugar revenue earned (Rs) 81 ₹ 2,25,133 ₹ 1,78,553 ₹ 21,000 ₹ 9,12,000
Cotton produced(kgs) 63 2,351 11,270 150 90,000
Cotton sold(kgs) 63 2,498 11,309 150 90,000
Cotton revenue earned (Rs) 63 ₹ 44,039 ₹ 35,209 ₹ 8,750 ₹ 2,10,000
Maize produced (kgs) 23 1,612 1,585 100 5,000
Maize sold (kgs) 21 1,703 1,635 0 5,000
Maize revenue earned (Rs) 24 ₹ 21,814 ₹ 22,698 ₹ 0 ₹ 78,000
Turmeric produced (kgs) 39 889 1,037 100 6,000
Turmeric sold (kgs) 38 860 1,034 0 6,000
Turmeric revenue earned (Rs) 39 ₹ 47,418 ₹ 44,756 ₹ 0 ₹ 1,72,200
Groundnut produced(kgs) 30 689 933 0 4,960
Groundnut sold(kgs) 40 663 825 80 4,960
Groundnut revenue earned(Rs) 40 ₹ 19,157 ₹ 24,702 ₹ 0 ₹ 1,07,500
Blackgram produced (kgs) 32 463 642 3 3,500
Blackgram sold (kgs) 28 478 626 0 3,300
Blackgram revenue earned (Rs) 32 ₹ 28,778 ₹ 47,823 ₹ 0 ₹ 2,64,000
This suggests that there is indeed a requirement for good quality storage facilities. Thus more needs to be
done, in order to ensure that farmers are using available public infrastructure. To this end, the following
steps could be considered:
- The ease of access to go-downs, and warehousing, and other public storage facilities needs to be
reviewed – one major barrier in moving the harvest from the farm to the facility revolves around the
lack of availability of transport facilities, or the cost of the same. Two potential interventions may be
of relevance here:
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o Procurement infrastructure for the warehouses: Providing the warehouses with a few
vehicles – trucks, and tractors, which might be accessible at minimal rates to the farmer might
be an important step in improving the linkages between farmers and storage facilities.
o Improving awareness regarding warehouse receipts, and other storage related incentives: In
the credit constrained markets of rural India, warehouse based receipts are likely to be crucial,
in the coming years, in ensuring that farmers have access to working capital. Thus rekindling
interest on this front for both warehouse operators, and also for farmers – particularly the
small and marginal ones remains crucial. There is a clear lack of awareness regarding the
availability of these facilities – this must be fixed immediately.
- There is a clear mismatch between Tamil Nadu state’s agrarian strategy, and the existing
infrastructure. For example, one of the strategies that the current government has undertaken, and
invested resources in aims to bring about a substantial increase in the cultivation of horticulture crops.
However, the existing network of cold storage facilities in Tamil Nadu is absolutely inadequate to
support the potential growth in this regard, and has been cited several times as a disincentive to grow
such crops. Given the high levels of wastage in the fruit and vegetables sub-sector, adequate
infrastructure in cold storage, along with the development of sufficient linkages in the supply chain
can be considered as a strategy to minimize losses. Other factors too need to be considered, such as
the high maintenance costs, and also adequate supply of electricity etc.
- Given that most storage facilities have an abundance of space, developing them to allow for basic
processing (grading, sorting etc. are simple activities, with a huge value addition potential) on-site,
thus improving their value proposition. Recent proposals have also suggested that warehouses can
themselves be converted into markets, in order to improve access for the smallest farmers. Indeed,
the government’s move to convert accredited warehouses63 into mandis is a step in this direction.
One way of thinking about this could then be to develop warehouse sites into a single window
opportunity for farmers to avail a number of services – making them more attractive and cost-
effective from the farmer’s perspective, while also considerably improving the profitability of these
warehouses.
- There have been several cases of innovative solutions implemented in other states that may be
considered for adoption in Tamil Nadu as a means to overhaul the extension system. Some of these
63 https://www.financialexpress.com/industry/farmer-friendly-now-warehouses-part-of-e-nam/1278059/
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include smart farming solutions (Karnataka), and app-based warehousing services (Bihar) that have
been successful, and demonstrate the role of technology in improving the available landscape of
warehousing solutions available to farmers.
- In sum, the need of the hour is to translate access into usage. A lesson from many other sectors –
including India’s attempts at improving the financial inclusion of its people – highlights that providing
facilities alone does not ultimately translate into proper usage. There are serious knowledge/
awareness gaps, and other socio-economic issues which influence the usage of storage facilities by
farmers. This can be addressed by concerted campaigns that detail the benefits of storage, and also
provide adequate price information for farmers to realize better prices. At the same time an incentive
must be created for warehousing authorities to engage with farmers – the collectivization agenda
provides the ideal platform for this.
5.1.5 Revamping the agricultural extension system
In spite of increased mobile penetration and internet access, farmers are extremely reliant on trust
networks within their communities for farming and other important household decisions. Only 16% of the
farmers in the sample survey reported having received training from external sources. Many farmers are
also dependent upon private input dealers and traders purchasing their produce for advice relating to
farming decisions in the absence of efficient and up-to date extension systems. Effectively implemented
extension activities through local agricultural officers can plug information gaps, and familiarize farmers
to improved technologies, mitigation strategies, efficient farming practices with regards to fertilizer
Realizing Better Prices – Simple Solutions?
Exclusion from the public procurement, due to poor quality of crop common problem faced by farmers –
particularly small and marginal farmers. As a result, a large number of farmers are selling their produce for
below MSP rates. There are various simple and cost-effective solutions which can address these issues.
For example, maize (a 90-day crop) prices are dependent on the moisture content of the crop, and also the
presence of aflatoxin. In many cases, farmers who try to sell their maize crop immediately are at a
disadvantage because of higher moisture content, or aflatoxin levels, thus reducing the price realized. Drying
the harvest in a room for just three days - under halogen lights - has been shown to reduce the moisture
content significantly, and also prevent increased levels of aflatoxin. This can be done at the farmer’s home,
or any space that can be availed that is dry and sprayed down to prevent pest attacks. The need of the hour
is investment in such solutions.
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application and right sowing time, improving crop returns through minor processing activities and access
to better markets etc.
Currently, the major gap this study perceives in the extension system is a significant gap in the ability of
extension workers to provide highly localized, and up-to-date information and advisory on crop choices
that are sensitive to real time weather conditions, input usage advisory that is sensitive to the prevailing
soil health, etc. These are major gaps to be plugged immediately. This requires constant upgradation of
skills of the extension officers in reaching out to farmers in the context of market prices and technological
innovations etc. (acreage information etc.), and needs to be addressed with priority by the state/ central
governments. Thus it is crucial to invest resources in the training, and knowledge-building of the extension
officers themselves. At the same time, leveraging newly available forms of technology to make
information easily accessible by all farmers is equally important.
5.1.6 Rethinking agricultural credit
The debt burden of farming households has increased to unprecedented in recent times. The survey data
shows that on average, households in the study sample have an outstanding debt of around ₹ 1,29,567
(median = ₹ 1,00,000). While loan waivers have been very much at the heart of recent debates, it must
be stated categorically that loan waivers are inefficient, and place a huge fiscal burden on the states. At
the same time, the frequent mention of loan waivers by politicians and policymakers create an
expectation on the part of the farmers. In 2017, ₹ 7,760 crore worth of loans were waived in Tamil Nadu,
benefitting almost 20 lakh farmers - working out to an average loan waiver benefit of ₹ 40,000 per farmer.
This unprecedented scale of waiver placed a large strain on the state finances – effectively reducing the
amount of money available for investments in capital infrastructure, or other such productive
investments.
As per current lending norms, formal institutions will not offer credit to farmers in the next season, unless
and until the current seasons dues are paid off. As a result, several small and marginal farmers tend to
turn towards informal credit for their various purposes, thus accessing credit at a much higher cost –
adding to their indebtedness. It is in this context that loan waivers are increasingly being demanded. The
issues associated with the benefits of a loan waiver are well documented, especially the fact that waivers
cover only a tiny fraction of the farmer population64, and tend to leave out all those having outstanding
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loans from informal lenders, and NBFC-MFIs. Indeed, the 20 lakh farmers benefitting from the loan
waivers represent only about 25% of the total number of operational landholders in Tamil Nadu (81.8
lakh)65.
It is important to think about sustainable alternatives for these loan waivers – in the long run, increasing
farmers’ incomes, and ensuring the provision of well-functioning insurance products can prevent the debt
burden from spiraling out of control. In the short term however, it might be prudent to consider simples
alternative – in the form of debt relief – wherein various concessions in the form of loan holidays, or
flexible repayment schedules are made available to the farmer, with the government providing a credit
guarantee to the credit providers for the outstanding debt.
The situation reaffirms the need for revising the agricultural credit structure, and rethinking the way credit
is disbursed to agrarian households. Moving forward, the aim should be to ensure that borrowing for
agricultural purposes is limited to formal sources as much as possible, in order to prevent further
exploitation of particularly the small and marginal farmers.
- Syncing the design of credit contracts with the cropping cycle: It is no secret that the joint liability
model operated by MFI-NBFCs, or the standard bullet loan product that is often made available by
other financial institutions is ill-suited to the needs of farmers. There is a concerted need to mandate
that agricultural credit has to be disbursed in two or three tranches, in sync with the various key events
in the cropping cycle – thus allowing the farmer access to credit when he actually needs it. This
controlled disbursement also ensures that the farmer is not relying on credit originally borrowed for
agricultural purposes to mitigate health shocks, or other such issues.
- Annual term for crop loans: A major issue currently pertains to the fact that in the event of loan
default by the farmer – as a result of a bad season, his or her access to formal finance is locked off for
the next season. Breaking the debt trap becomes extremely difficult in such circumstances. A potential
option would to be increase the term of every crop loan to a year-long basis, and allowing farmers to
avail at a loan for each farming season in each year. The repayment may then be made co-terminus
as well. Initiatives like this could ensure that farmers are not blocked off from access to formal credit,
at all times.
65 http://cms.tn.gov.in/sites/default/files/documents/agri_e_pn_2017_18.pdf
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- Value-chain finance: the way ahead? The agricultural credit structure needs to shift from being based
on the financial health of the individual borrower, to being based on the health of the larger value
chain that borrower is situated in. The advantages of this shift will be manifold – the various linkages
in a value chain can be used to leverage many financial arrangements that are not possible in the
individual lending model. Some examples of these types of arrangements include third party
guarantees, working capital loans, asset finance, and also warehouse receipts.
- Responsible Lending: Farmers in Tamil Nadu rank among the most heavily indebted in the country.
The situation needs to be addressed immediately, and aggressively. The various lending agencies have
a moral responsibility to ensure that farmers are provided easy access to credit – however, they must
also ensure farmers are provided only the appropriate amounts of agricultural credit, at the correct
times, in order to prevent funds being spent on other expenses. Formal lenders have to particularly
ensure that small and marginal farmers are not turned away, forcing them to access informal credit
at much higher costs.
Among the various listed objectives and functions of the TN Warehousing Corporation, it is also tasked
with “Creation of Negotiable Instrument (Warehouse Receipt) for the expansion of credit through
Commercial Banks for the benefit of all producers, dealers and others who might be connected with rural
economy. However, due to poor demand and utilization of the warehouses by individual producers, the
use of this facility has been limited. In 2016-17, a mere 2642 NWRs were issued. A concerted effort should
be made to leverage such linkages in the different agri-value chains, in order to ensure that mutually
beneficial financial arrangements are made available to all actors. To this end, an immediate step that can
be taken is to link the 2000 FPGs that are being formed to the relevant warehouse facilities, and ensure
that the farmers are able to access, and use the storage facilities – thus realizing better prices, and also
improving access to credit.
5.1.7 E-NAM
Currently, there are 278 regulated markets across Tamil Nadu. 15 markets are on the e-NAM in TN as of
November 2017, out of which 12 markets have the e-bidding and e-trading facilities. The benefits of
having joined the E-NAM are many - they include:
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- Standardization of quality and grading/sorting/assaying through assaying labs established in proximity
to these markets (scope for private labs, currently through the support of Agmark labs).
- A single database of farmers, traders etc.
- As per the Act, amounts are credited to farmers' accounts directly on the same day or within a day.
- E-trading/online-trading ensures that buyers can bid and buy from anywhere in India – in other words,
providing for the first time free/fair bidding, while reducing leakages and waiting time for farmers to
receive payments.
It is far too early too early to evaluate the impacts on farmer incomes in Tamil Nadu. Many hurdles exist
in this platform, slow servers and these need to be addressed. If the experience of Karnataka is anything
to go by, an improvement in prices realized by farmers by at least 10% can be expected in the shorter
term, with the potential for larger increases depending on the sustained success of the initiative.
Therefore, it is extremely important to ensure that the remaining markets under the APMC act are
brought on to the e-NAM as quickly as is possible.
5.1.8 Food processing – the untapped potential
In India, around 2% of all agricultural and food produce is processed. The largest share is from the dairy
and livestock sub-sector, where 37% of the output is processed66. For fruits and vegetables, only 2-3% of
the total output is processed. In comparison, countries like Thailand and Malaysia have managed to create
value chains wherein up-to 70% of the output is processed, and ties into the retail industry. The value
addition from food processing has the genuine potential to increase the earnings for all of the
stakeholders across various value chains in Tamil Nadu. For example – paddy is procured at ₹ 13-20 per
kg; after processing into ‘aval’ (beaten rice), it retails at around ₹ 70 per kg. This implies that after
procurement from the farmer, processing/ packaging and other such activities effectively triple the value
of the produce; however, the ₹ 53 that is generated is all distributed among the various intermediaries.
There are many districts/ zone in Tamil Nadu that stand to benefit from this. For example, Dharmapuri –
a sample district – has high potential for processing of mango pulp, tamarind, and tapioca. Examples of
value chains where there is high potential for such development have been highlighted earlier. Similarly,
Tamil Nadu is one of the largest producers of gherkins, and this is again a high value chain where
substantial processing opportunities can be harnessed to add value to the produce. Across the country,
private players in the warehousing sector have been promoted by subsidies, incentives, loans on low
66 http://www.investingintamilnadu.com/tamilnadu/opportunities/agro_foodprocessing.php
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interest rates and other ways. The Tamil Nadu government’s steps to establishing food parks is in the right
direction. However, concurrently, other steps need to be taken including an assessment of cold storage
and other storage facilities, the aim being to enhance the storage of perishables through processing.
Minimizing the wastage of agricultural outputs, between the flow from farmer to retailer must be the
immediate priority. This can be achieved through concerted and coordinated supply chain management,
involving all actors in the chain.
5.1.9 Accelerating Income from Livestock, and Integrated Farming Systems
Currently, farmers in Tamil Nadu earn under 10% of their income from the livestock sub-sector.
Particularly for small and marginal farmers, focusing on doubling the contribution of this sector, at the
very least, is crucial to the aims of enhancing farmers’ incomes. Ensuring that each small and marginal
farmer has at least milch producing animals, with sufficient productivity for daily sale, results in a constant
income stream. Enhancing and improving the functioning of the dairy cooperative system is vital in this
regard. There are two key areas for intervention here: i) promoting integrated farming systems, and ii)
providing a strong livestock insurance product
The integrated farming approach specifically refers to the following: after farmers grow and harvest crops,
they feed livestock the leftover crop residue from the fields. This in turn provides nutrient-rich manure
that serves as an organic fertilizer for growing new crops. Over time, this maintains soil health, and also
serves as a a source of feed for livestock. Encouraging and incentivizing the integration of cultivation with
livestock rearing, or fishery has a huge potential to improve the overall agrarian economy. Overall,
Supply Chain Management
New initiative, to be pursued across 10 districts – by leveraging the FPOs that are being
registered. It is estimated that effective channeling of fruits and vegetables, and managing the
supply chain at all points can increase prices realized for farmers by at least 15%. This can be
achieved through adequate investments in infrastructure to minimize wastage, and improve
post-processing, while increasing the linkages to markets.
Back-end activities: grouping farmers into Primary Processing Centres (3 PPCs per district)
wherein washing, grading, sorting, packing and pulping etc. will be undertaken.
Front end activities: direct connection of the PPCs to major retailers, elimination of
intermediaries
Allocations: INR 400 crores
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integrating multiple agricultural enterprises results in the creation of interrelated, and sustainable
linkages between the soil, water, plants, and animals. Their interaction results in a farming system more
viable and profitable over the traditional monocrop/arable farming system. The presence of livestock on
a farm provides a steady supply of manure, milk for the household, and an income stream from
commercial sale where possible. This also means crop residue can be used as animal feed, and for other
purposes. A recent study in Tamil Nadu has found that integrated farming approaches have resulted in
“an increase in organic carbon content in the soil, which gives it structure and makes it healthier and
better for growing crops. Livestock reproductive performance has also gone up, including a 15% increase
in the cattle’s milk production as well as significant increases in the size of the goats.” Other experiments
across the country have shown that the added value from integrated farming systems can range from Rs
15,000 to Rs 1,50,000/ha/annum (Hanumantha et al. 2014). Evidence from Tamil Nadu shows that
margins of ₹ 1,30,000 was easily achievable, through a combination of cropping, poultry, piegon, goat and
fishery (Jayanthi et al, 2001).
The specific interventions to be followed here are:
- Providing training, and disseminating information to households, in both cattle/ livestock
management, and also on relevant techniques for integrated farming.
- There is a need for financial assistance – at least initially, in order to ensure that the integration
between livestock and crop cultivation is achieved in a sustainable manner
- Lastly, assistance can also be provided in terms of schemes to build the necessary infrastructure –
compost pits, cattle sheds etc, that can encourage the farmer to adopt these methods more quickly.
Cattle Insurance Penetration: Only 2.7 percent of the households surveyed (23 HHs) had their cattle
insured, and only one farmer among the insured had raised a claims request in the past 12 months and
had also received his claim payments worth Rs 30,000 for his cattle. The mean sum insured was 23,422
Rs (median is 10,000 Rs) and the mean annual premium was around 1,086 Rs (median is 500 Rs). It would
be interesting to understand if increased penetration of cattle insurance within Tamil Nadu, could improve
the livestock productivity within the state. While our survey shows around 63 percent HHs owning cattle,
the contribution of livestock income to the average annual income basket of a household was only 7
percent (mainly income from cattle, and this shows that cattle contributed mainly towards household
consumption needs). Thus improving the share of the livestock sector within household income could be
associated with increased penetration of cattle insurance schemes, thereby encouraging farmers to invest
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in more number of cattle per household, the average number of cattle owned per household was around
1.2 to 1.5.
5.1.10 Digitizing the agricultural value chain
As technology rapidly changes the manner in which various supply chains function, there is no reason that
it cannot be leverage to improve value realization in the agricultural sector. As collective/ group-based
approaches are increasingly being highlighted as the means to reduce input costs, and improve profit
margin for farmers, the role of digital services in improving these outcomes even more must be
considered. Various examples exist of digital platforms, that provide end to end services to FPOs,
including:
- Aggregating member orders, facilitating collective purchases
- Real time information on harvest times – allows to schedule the procurement/ delivery to the bulk
customers
Evidence from such digital platforms that have been implemented across parts of India suggest that
digitization is likely to bring huge benefits to FPOs and the farmers involved – by not only streamlining
and simplifying various processes, but also by significantly reducing transaction costs. An example from
Karnataka67shows that FPOs (of 1000 farmers) can retain upto ₹ 20-28 lakhs, by leveraging the advantages
of group buying/ selling through a digital aggregation platform. As the TN government has steps up the
focus on producing FPOs for small and marginal farmers, it is imperative that digital/ technology based
solutions, which facilitate easy aggregation, and significantly improve margins across the board are
piloted, tested, and widely encouraged. This is likely to be a crucial step in improving farmers’ incomes,
especially in the longer run. The idea is not new – various portals have been launched in the recent years,
ranging from e-Kisan (by the SFAC), to e-RAKAM (a portal that enables farmers to sell their food produce
to bigger markets), and most recently, the e-NAM that links the various mandis. The objective must to be
to centralize these disparate approaches into one common portal, that can be administered at the level
of the state governments.
5.2 Longer Term Recommendations
The DFI committee set up by the Government of India has broadly recommended that there is a need to
move towards providing farmers with income support, as opposed to providing them with price support.
67 https://easykrishi.com/
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In this vein, the committee has also pointed out that an increase in MSP – as is being demanded by many
stakeholders, might not be the best way forward. While increases in prices are indeed necessary, it is
going to be unlikely that this alone will solve the agrarian distress many farmers are facing currently.
Over the longer term, it is thus important to ensure that adequate income protection is provided for the
farmers, in order to ensure that farmers are able to withstand, and maintain a decent quality of living in
the event of adverse shocks, such as “life accidents”68 such as droughts and erratic weather conditions,
increasing cultivation costs and decreasing farm returns, declining opportunities in agriculture and
migration of youth from agriculture related activities. To this end, the following steps could be considered.
5.2.1 Skill Development and Off-Farm Income Opportunities
As the survey data shows, only 31 percent of the farmers in our sample had studied up-to the higher
secondary level, or beyond. Thus it is not wrong to suggest that already resource-poor farmers have few
options outside agriculture other than casual work, which is often far more deleterious in terms of impacts
on wellbeing. This sample data reflects a much larger concern for the state. During the e period 2017-
2022, it is estimated that there will be a skill gap of over 8 million persons – i.e, over 8 million persons in
the state of Tamil Nadu69 will require some form of skill building or training, across various sectors. The
National Skill Development Authority (NSDA) has identified five priority sectors for focus initially; these
include i. Auto, Auto Components and Machine tools, ii. Tourism & Hospitality services, iii. Health & Health
care services, iv. Transportation & Logistics, v. Engineering & MS&ME, with the aim of creating jobs in the
private sector, and driving growth.
Given the situation described above, the efficacy of off-farm strategies to accelerate income growth for
farmers must be considered carefully. Particularly in the short term, it is likely to be counter-productive –
especially for small and marginal farmers, to suggest that off-farm sources must be the major engine that
drives their growth in income. In the long run, if sufficient success is seen in the government’s various
initiatives to develop skills and capacity for non-agricultural work among the rural populations, substantial
growth in off-farm opportunities can indeed be expected. However, in the interim, it might be far more
prudent to focus the attentions on substantially increasing the output from farm/ allied activities –
particularly for small and marginal farmers.
68 Quoting the CEA, Arvind Subrahmaniam 69 http://www.nsda.gov.in/state/profile/Tamil%20Nadu%20State%20Profile.pdf
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5.2.2 Income support for farmers:
- As the cost of cultivation increases, and margins remain narrow, income support for farmers would be
vital to ensuring that their basic necessities and standards of living are met.
In light of the recent agrarian distress, ensuring that farmers earn a sufficient amount of money for their
basic necessities is indeed a responsibility of the government. In the absence of many of the benefits
associated with the formal sector, it is increasingly vital to provide some sort of unconditional income
support to the farmers, as terms of trade increasingly go against the agrarian sector.
Under the 7th Pay Commission, it has been determined that the minimum monthly pay should be around
₹ 18,000 – assuming expenses and costs towards a family of 3. Adjusting this amount for a family size of
4 in rural areas, and also adjusting the amount for rural prices, an amount of ₹ 16,800 per month would
be the minimum monthly earning required in rural areas. However, farmer incomes are far below these
levels. As per estimates of the Rangarajan Committee, the rural poverty line was drawn at a monthly per
capita expenditure of ₹ 972 in 2011-12 prices70; at current prices this translates to ₹ 1320 per capita. In
Tamil Nadu, the median family size is approximately 4; thus as per these estimates, the poverty line would
be drawn at ₹ 5280 per month, for a 4-member family. While it seems unlikely that this amount could be
provided for each of the 8 million operational landholdings in Tamil Nadu, some amount of income
support could go a long way in ensuring their financial security.
5.2.3 Addressing the issues of urea subsidy:
- While the soil health card, and other initiatives may be used to control the per acre usage of urea,
there is a need to address the broader distortions in the market caused due to the current urea policy.
Over the next 5-10 years, it is crucial that the distortions in the fertilizer market due to abnormally low
urea costs are addressed. We estimate that an annual decrease in the urea subsidy of 10%, over a five-
year period can result in savings of around ₹ 63,000 crores71. The government has also experimented with
some innovative solutions such as making the urea bags available only in 45 kgs instead of 50 kgs. Thus
farmers would end up using two bags of urea weighing 90 kgs in place of 100 kgs. Recent estimates from
the agriculture ministry indicates that urea per acre consumption has reduced by 4-6 percent. It must be
noted this could also be due to the mandated production of 100 percent neem coated urea, reducing
leakages towards industrial activities.
70 http://pib.nic.in/newsite/PrintRelease.aspx?relid=108291 71 Calculations are presented in Appendix A
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It would be highly beneficial to farmers, if these savings were instead spent on:
- Subsidizing compost, and organic farming – strategies that are likely to have returns in the long run,
for outcomes such as soil health and productivity.
- Off-setting the fiscal burden created, by MSP hikes, and additional price support schemes by the
central/ state governments
5.2.4 Minimum Support Price:
The table below shows the price realization for the major crops cultivated during the last farmed season
across the four districts surveyed. Interpreting from this table, the price realization for paddy is lower
than the MSP for 2016-17 (being the survey period) across four districts, the worst situation being in
Dharmapuri. Dharmapuri farmers have sold their crops such as cotton and maize at rates much higher
than the MSP, while groundnut earned less than half of the MSP rates. Black gram seems to be extremely
productive in Nagapattinam and were sold at double the MSP rates, while price realization for paddy
seems to be much closer to MSP rates. Price realization for groundnut and paddy is lower than the MSP
rates with district-wise variations, pointing towards existing implementation gaps in the MSP scheme,
resulting in farmers earning lesser incomes for their produce.
Table 40: Price Realisation Crop-wise (District-wise)
No. of HHs reporting cultivation (over last farmed season)
Price from survey data (per kg)
Price from survey data (per quintal)
MSP (2015-16)
MSP (2016-17)
MSP (2017-18)
Villupuram
Paddy 95 13.8 1384 1410 1470 1550
Sugarcane 53 2.5 248 230 255 255
Cotton 7 36.2 3619 4100 4160 4320
Groundnut 23 31.8 3176 4030 4220 4450
Maize 13 12.3 1226 1325 1365 1425
Turmeric 11 40.2 4019
Ramnathapuram
Paddy 206 12.5 1254 1410 1470 1550
Cotton 3 31.3 3125 4100 4160 4320
Dharmapuri
Paddy 46 6.8 682 1410 1470 1550
Sugarcane 28 2.6 260 230 255 255
Cotton 45 51.9 5189 4100 4160 4320
Black gram 1 60.0 6000 3425 4000 4400
Groundnut 16 19.1 1908 4030 4220 4450
Maize 11 17.0 1695 1325 1365 1425
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Turmeric 28 56.3 5630
Nagapattinam
Paddy 171 14.6 1462 1410 1470 1550
Cotton 8 40.9 4095 4100 4160 4320
Blackgram 28 60.6 6055 3425 4000 4400
Groundnut 1 40.1 4008 4030 4220 4450
Total
Paddy 518 12.9 1294 1410 1470 1550
Sugarcane 81 2.5 251 230 255 255
Cotton 63 46.4 4640 4100 4160 4320
Black gram 32 58.9 5889 3425 4000 4400
Groundnut 40 27.3 2730 4030 4220 4450
Maize 24 13.7 1367 1325 1365 1425
Turmeric 39 50.3 5028
- While a MSP hike, as per the Swaminathan formula seems infeasible in the short term, there is a need
for a graded increase in the MSP – over and above the year-on-year adjustments for the cost of
production
- An alternative could be to create a buffer stock policy (potentially at state level, with some portion of
potential losses to be covered by the central government).
As per the M.S. Swaminathan formula, “fixing the MSP for crops at levels which are 50 percent more than
the weighted average cost of production72” will ensure more remunerative prices for the farmers.” (C2 +
50%). However, as the DFI Committee points out, such a sharp increase in MSP could result in detrimental
outcomes for the economy – increases in MSP may almost certainly lead to higher procurement costs,
which could result in a trade-off between inflation and growth73. A quick illustration adds to this point. In
2014-15, the MSP for the common grade of paddy was set at ₹ 1310. In the same time period, the value
for C2 was around ₹ 1397.7. As per the Swaminathan formula, the MSP should have been at least 50%
more than C2 – working out to around ₹ 2100. Given the current fiscal situation, such a sharp increase
overnight will almost certainly be unsustainable. The increase in MSP, to ₹ 1550 for common grade rice
(2017-18) is likely to place an additional burden of ₹ 3000 crore on the budget. Nevertheless, it is indeed
important to consider a graded increase in MSP, over and above the current year-on-year adjustments.
On average, the year on year increase in MSP for rice has been around 5.7%, and 5.9% for wheat. Pulses
72 The Commission for Agricultural Costs and Prices (CACP) provides three definitions of production costs: A2, A2+ FL and C2. A2 includes all the paid out expenses, both in cash and kind incurred on all inputs including labour, A2+FL covers the above components along with an imputed value of unpaid family labour while C2 costs accounts for A2+ FL as well as the rentals and interest foregone on owned land and fixed capital assets. 73 Page 6, “Status of Farmers’ Income: Strategies for Accelerated Growth”, August 2017
110
see slightly higher rises in the MSP – around 10%. A sharp increase of 15-20% increase in MSP is definitely
desirable, in the immediate future. If rolled out in conjunction with the de-control of urea subsidies, the
costs can be offset over a 5-year period. In the absence of a minimum support price increase, other
options include considering a buffer stock policy – which could be implemented at the state level, with
the center providing some cover for potential losses.
5.2.5 The Role of the Private Sector?
- What role should the government take in the agricultural sector in the long run?
- There is a very high potential to engage with private entities in the form of PPPs or other
arrangements; this could be a key step in realizing the untapped potential in Tamil Nadu’s agricultural
sector.
- The long term aim should be to remove the farmer’s dependence on subsidies, and instead create an
ecosystem where farmers realize profits at every level.
That agricultural value chains are highly complex, and encompass several intricate relationships and
mechanisms is well-known. The overall aim over the next decade must be to make the market linkages
more efficient, and improve the management of the producer to retailer part of the value chain – and
thus improving outcomes for the farmers. It is the right time to seriously consider the role the government
needs to take in this regard – the context being the emergence of several private enterprises focused on
various aspects of the value chain. As the costs incurred by the central and state government in investing
and maintaining agricultural infrastructure increase year on year, considerable thought must be given to
the role played by private entities in the sector. Harnessing the potential of public-private partnerships
could be a key step, in realizing much of the untapped potential in the agricultural sector. The huge
amounts of money that are spent on loan waivers, and other such schemes could instead be routed
towards establishing fairer markets, improving the quality and volume of post-harvest storage/ processing
facilities, and also in setting up safeguards to incentivize various stakeholders. In the longer term,
considering the harmful impact of subsidies on the broader economy must also be considered, the
ultimate goal being to enable farmers to realize profits. Once again, the government and private sector
must work together to achieve this, as there a great many complementarities in the goals and objectives
of these various entities.
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5.2.6 Land Reforms
The Agricultural Census 2011-12 and the 2011 Socio-Economic Caste Census reveals that across India 4.9
percent of farmers control 32 percent of India’s farmland. 101.4 million or 56.4 percent rural households
do not own any agricultural land. The average land given to the rural landless is small and declining, from
0.95 acres in 2002 to 0.88 acres in 2015 (a 7.4 percent drop over 13 years, indicating the slowing down of
taking land away from the rich landlords)74. As of December 2015, the surplus land (land that could be
taken away from landlords) was at 6.7 million acres; the government has appropriated over 6.1 million
acres and distributed 5.1 million acres to 5.78 million people75.
The land declared as surplus has been on the decline, between 1973 and 2002 average of 150,000 acres
were declared surplus and an average of 140,000 acres were distributed every year. Comparing this with
the estimates for 2002 to 2015, the land declared surplus every year averaged at 4000 acres, while the
land in government possession and distributed declined by 29,000 acres and 24,000 acres per year. This
clearly shows that less land has been declared surplus over the last 13 years76.
In Tamil Nadu alone, statistics show that around 27,000 hectares of land that have been declared surplus
remain undistributed77. While a draft bill78 was released towards a land reforms policy in 2013, its status
remains unclear. Stepping up the digitization of land records, and utilizing available means to address
these issues could improve the situation for many farmers in rural areas of Tamil Nadu.
74 Based on data from a publicly available RTI communication with the Department of Land Resources, Ministry of Rural Development. 75 http://www.indiaspend.com/cover-story/land-reforms-fail-5-of-indias-farmers-control-32-land-31897 76 Committee on State Agrarian Relations and Unfinished Task of Land Reforms from 2009.) 77 http://www.indiaspend.com/cover-story/land-reforms-fail-5-of-indias-farmers-control-32-land-31897 78 http://dolr.nic.in/dolr/downloads/pdfs/Draft_National_Land_Reforms_Policy_July_2013.pdf
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6. Conclusion
Data collected during the course of this study shows that real incomes in Tamil Nadu have reduced in
2016-17. Major reasons for this could include the repeated weather shocks that the state suffered, the
related market instabilities, and additional scarcity of water supply from the Kaveri. In order to double,
or even substantially improve farmer’s incomes by 2022, the need of the hour is re-assess strategies,
and ensure the resources are invested in areas that are most likely to beneficial to a maximum number
of people, in a short amount of time.
The various recommendations highlighted above provide a broad strategy to substantially increase
farmer’s incomes in Tamil Nadu. However, as mentioned above, there are various short term points of
action that are cost-effective, relatively less difficult to implement, and can ensure immediate impact. The
short term strategy may be presented as follows:
- Reduction in input costs, through better nutrient management:
by controlling fertilizer usage through the SHC, and also through promotion of integrated
farming practices.
- Improving dry season cultivation strategies:
Ensuring growth of high value crops in the off-season, with high cropping intensity
Actively improving the share of horticulture crops
- Increasing the role of animal husbandry/livestock rearing, as a source of secondary income, while
promoting integrated farming as much as possible.
- Utilizing e-NAM or similar private facilities to eliminate intermediaries, and improve benefits to the
farmer.
- Better price realization for the farmers, by:
Improving the usage of post-harvest storage
Leveraging market linkages, and post-processing to ensure substantial increase in value
addition to farmer’s produce
- Reduction in losses – improved implementation of insurance, and other risk mitigation measures
It does not seem feasible – particularly for small and marginal farmers – to suggest that an increased focus
on off-farm activities will lead to substantial increases in income, particularly in the short term.
Over the next 1-3 years, it is crucial that all of these action points are implemented together – it is only by
leveraging a variety of complementary approaches that income can be boosted. This requires a
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coordinated and detailed approach by all the concerned departments, in order to ensure that there is a
sufficient acceleration in farmer’s incomes.
Over a longer time period, the following steps are crucial in ensuring accelerated income growth in Tamil
Nadu
- Improving the skill levels of the rural populations, particularly that of farmers and members of farming
households, so that off-farm income opportunities may be adequately leveraged.
- A substantial increase in MSP for the currently covered crops, accompanied by appropriate buffer
stock policies at the state level to ensure that farmers are adequately protected against market risks.
- Reductions in urea subsidy, in order to control the dumping of nitrogen into the soil, and also to ensure
that the usage of other fertilizers go up. An annual 10% reduction in the urea subsidy can result in a
saving of around ₹ 63,000 crores – this can be used to offset the MSP hike, incentivize organic farming/
composting, and also to make the buffer stock policy mentioned above feasible.
- Income support for farmers would also prove to be an important strategy, as part of a longer term
attempt to ensure farmer well-being. Providing any sort of income support to all farmers would be a
far more equitable and economical strategy, as opposed to loan waivers. Once again, from a fiscal
perspective, the urea subsidy, if decontrolled, frees up a huge amount of money – a portion of which
may be used towards this.
- Enlisting the help of private players, and developing a substantial ecosystem of public private
partnerships are likely to be the most cost-efficient, and high-impact ways to accelerate farmers’
income growth. Currently, there are many efforts led by state/ local government, that are aimed to
increasing farmers’ incomes, and in parallel, there are similar efforts being run by start-ups, private
firms, and other such entities. It is vital to identify avenues for collaboration, and set up as many
public-private linkages as possible, particularly in areas such as infrastructure development,
marketing, and sales.
These actions will require a substantial increase in public and private investment in agriculture, along-with
improved focus on the productive use of agricultural credit. Additionally, there needs to be a convergence
of the initiatives of the government, private enterprises, markets and other non-governmental efforts.
Currently, the number of fragmented approaches trying to achieve the same ends are unlikely to be as
productive and fruitful, as a more organized and commonly aligned set of strategies encompassing all key
stakeholders.
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Appendix A
Among all the subsidies that are provided by the central government, a majority of the amount is spent
on three areas – food, petroleum, and fertilizers. Together, these three sectors accounted for 95% of the
total subsidy budget in FY 2015 (Gulati and Banerjee, 2015). In the budget estimates for FY 2017-18, the
fertilizer subsidy alone amounted to ₹ 70000 Crores, or 25.7% of the entire budget estimate for subsidies,
or 2.8% of the total budget estimate for the financial year. Almost 70% of this amount is earmarked for
subsidies towards urea, while the remainder is utilized to provide concessions to the farmers under the
nutrient based subsidy (NBS) scheme.
Table 41. Fertilizer Prices
Year Urea DAP NP/NPKs
2013-14 31192 11784 10577
2014-15 32029 12002 10861
2015-16 32858 12212 11142
2016-17 33677 12413 11420
2017-18 33754 12764 11841
As per the government’s policy on urea subsidies, urea prices have been maintained at ₹ 5360 per tonne
while for other fertilizers, the prices are calculated as per the Nutrient Based Subsidy Scheme (NBS). It is
no secret that urea is extremely cheap; it must be noted that the MRP is maintained at ₹ 5360 per tonne
despite rising costs of production. In 2017-18, it is estimated that average production costs per tonne
could be around ₹ 1800079-₹ 20000, while the costs could rise to as high as ₹ 41000, dependent on various
factors. Since April 2010 - when the NBS regime was introduced, the prices of all non-urea fertilisers have
shot up significantly. For example, the MRP of di-ammonium phosphate increased from ₹ 9,350 to around
₹ 23000 a tonne, while a 300% rise from ₹ 7197 to ₹ 21450 for the 10:26:26 NPK complex fertiliser was
also seen. During the same period, the price of urea increased by a meagre 11%- ₹ 4830 to ₹ 5360.
79 http://indianexpress.com/article/business/business-others/after-petrol-and-diesel-govt-may-deregulate-urea/
115
Table 42. Fertilizer Usage
Table 43. Fertilizer Requirements (MT)
Fertilizer 2016-17 2017-18
Urea 7.76 10.09
DAP 2.51 3.39
MOP 2.52 3.24
Complex 5.07 5.68
Farmers in Tamil Nadu have been cautioned against excessive usage of urea in the past, however the
usage of urea continues to remain high. The projected fertilizer requirements for the 2017-18 show a
clearly high reliance on urea. Data from the sample survey also shows a very high reliance on Urea. 84%
of the sample reports using Urea, while only 20% of the sample reports using any form of organic fertilizers
(Manure, compost, etc.). This evidence raises two concerns:
- Incorrect usage of fertilizer doses on plots – incorrect ratios, and incorrect amounts.
- Overlooking the role of organic fertilizers like compost and manure, in maintaining soil
health.
Regular soil testing, combined with the proposed changes to the existing soil health card scheme can
address some of these concerns – however, without attempting to address the market distortions caused
by the abnormally price of Urea, larger scale reforms in fertilizer usage will be hard to implement.
To this end, there are two potential options that exist:
1) Shifting the Urea subsidy to be calculated as per the existing Nutrient Based Subsidy scheme.
The NBS scheme calculates subsidies for the fertilizer based on the chemical composition of the fertilizer.
The scheme has been in effect since 1st April, 2010. Under this Policy, the subsidy on Phosphatic and
Potassic (P&K) fertilizers is announced by the Government on an annual basis for each nutrient i.e.,
Nitrogen (N), Phosphorous (P), Potash (K) and Sulphur (S), on a per kg basis. These amounts are then
converted into subsidy per tonne depending on the respective grade of fertilizer. While this has indeed
led to the decontrol of the prices of other fertilizers, it is widely accepted that the scheme has in fact led
to an increased consumption of urea, among other nitrogen based fertilizers.
In terms to understand how the urea subsidy would change if it were to brought under the NBS scheme,
a brief analysis is presented below. The 2016-17 rates under the nutrient subsidy scheme are used
(presented below). As per the NBS scheme, we look at the chemical composition of Urea (46-0-0-0). In
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other words, a kilo of urea would have 46% Nitrogen, by weight. If the subsidy for urea were to be
calculated as per this scheme, it would work out to an amount of ₹ 7.3 per kilo of Urea, or an amount of
₹ 7300 per tonne80. This is considerably less than the current level of subsidy of around ₹ 12,500-₹ 14,000
per tonne.
Table 44. Nutrient Subsidy Rates
Year Per Kg subsidy rates (in Rs.)
N P K S
2016-17 15.854 13.241 15.47 2.044
However, while this suggestion has indeed been floated and discussed earlier, an overnight change from
the existing level of subsidy, to the NBS scheme based subsidy will not be without significant
repercussions. At the current demand, of around 34,000 thousand tonnes, the total urea subsidy amount
works out to ₹ 24,616 crores – almost half the current amount budgeted. As a result, the MRP would
increase by a factor of at least 120-130 per cent, which is highly undesirable as a short term change.
2) Decontrolling the Prices of Urea
Another scenario that has been discussed vastly over the past few years pertains to the deregulation of
urea prices, over a period of time. In theory, this would be the simplest way to address the market
distortions that currently exist. An immediate reduction in urea subsidies by 10%, would definitely result
in a steep increase in MRP. However, over a 5 year period, assuming constant demand81, an annual 10%
reduction in the subsidy amount from each preceding year would mean that amount of subsidy would be
roughly similar to that provided to other fertilizers82.
Table 45. YoY Increase in Urea MRP (Projected)
MRP YoY % increase Year
5360 Year 0
7824 46% Year 1
10191.6 30% Year 2
12479.94 22% Year 3
14704.82 18% Year 4
16880.86 15% Year 5
The MRP of Urea would also be comparable to that of the other fertilizers available in the market. Over
the course of a 5-year period, a deregulation of the kind mentioned above would free up at least ₹ 64,000
crores, that would have otherwise been spent on a level of subsidy equivalent to the current amounts.
Post this period, Urea could be included under the NBS scheme as well, as the subsidy amounts would
work out to be roughly similar. At the same time, the soil health card schemes need to be implemented
successfully, and another option that can be considered is imposing an additional limit on the number of
bags of urea that may be purchased per farmer.
80 0.46 X 15.854 X 1000 81 It may be argued that with successful usage of the Soil Health Cards, combined in increase with MRP, the demand may fall annually by at least 10%. However, we stick to basic assumptions for the purpose of this analysis 82 We assume a 5% year-on-year increase in the cost of production, on a base of an average production cost of INR 20,000 per tonne (calculated based on estimated demand, and current subsidy level).
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Sl. No Fertilizer MRP
1 MOP 12234.7
2 Imported 15-15-15-9 17812.02
3 12-32-16 21619.46
4 SSP-Granular 7644.26
5 Imported 16-16-16 17840
6 Zincated 20-20-0-13 18580
7 DAP 21951.22
8 Imported DAP 21750.22
9 10-26-26 21499.94
10 20-20-0 16524
11 City Compost 3995.42
12 16-20-0-13 16420
13 14-35-14 22440
14 Ammonium Sulphate 13178.49
15 SSP Zincated (Powder) 7173.58
16 24-24-0 20307
17 Imported 20-20-0-13 17278.84
18 Zincated DAP 22390
19 SSP-Boronated 7579
20 20-20-0-13 17047.28
21 17-17-17 19735.62
22 15-15-15 17745
23 28-28-0 22440
24 Imported 10-26-26 21342.9
25 SSP-Powdered 7233.15
26 SSP Zincted (Granular) 8263.67
27 24-24-0-8 19320
28 19-19-19 21420
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Appendix B: Table 46:Level of Depletion of Ground Water (Difference between 2012 and 2013)
Higher than the State Average Lower than the State Average
Ariyalur (5.9), Coimbatore (7.9), Dindigul (3.3), Cuddalore (1.6), Dharmapuri (0.9), Kancheepuram (1.6),
Erode (5.1), Madurai (7.5), Perambalur (6.7), Kanniyakumari (1.3), Karur (0.7), Krishnagiri (0.5),
Pudukkottai (2.3), Salem (4.3), Theni (7.7), Nagapattinam (1.9), Namakkal (0.3), Ramanadhapuram
Tirunelveli (5.3), Tiruppur (4.0), Thiruvarur (3.9), (1.4), Sivagangai (1.0), Thanjavur (0.6), Tuticorin (0.9)
Tiruchirappalli (5.6) and Virudhunagar (2.3). and Thiruvannamalai (1.4).
Note: 1. The ground water levels in three districts Viz., Vellore,Thiuvallur and Viluppuram did not experience any fall.
2. Figures in brackets indicate the fall in the level of ground water in meters. Source: Tamil Nadu Water Supply and
Drainage Board, Chennai – 5.
Table 47. Yield and Revenue per Hectare
Yield and Revenue per Hectare (Yield in kgs per hectare)
HHs(No.) Mean * SD Median Min Max
Marginal farmers
Owned(acre) 457 1.4 0.5 1.5 0.8 2.5
Owned(hectare) 457 0.6 0.2 0.6 0.3 1.0
Irrigated(acre) 451 1.4 0.5 1.5 0.8 2.5
Total farmed (acre) 457 1.4 0.8 1.3 0.5 6.5
Total farmed (hectare) 457 0.6 0.3 0.5 0.2 2.6
Rice yield(per hectare) 276 3739.0 1372.0 3750.0 1395.0 6510.0
Rice revenue 276 47412.6 27302.6 48500.0 0.0 97500.0
Sugarcane yield (per hectare) 23 85446.3 38385.7 75000.0 29166.7 133333.3
Sugar revenue 23 204100.0 113074.9 178750.0 62500.0 372500.0
Cotton yield (per hectare) 35 1360.7 857.1 1250.0 416.7 3750.0
Cotton revenue 35 64122.5 35283.3 58333.3 22500.0 150000.0
Blackgram yield (per hectare) 20 396.5 285.8 275.0 31.3 1000.0
Blackgram revenue 20 25209.2 21998.0 23750.0 0.0 67500.0
Groundnut yield(per hectare) 28 1383.2 788.5 1050.0 400.0 3050.0
Groundnut revenue 28 35060.7 42029.2 22650.0 0.0 122250.0
Maize yield(per hectare) 11 3051.1 2662.9 1750.0 375.0 7500.0
Maize revenue 11 46635.6 42521.1 26125.0 0.0 112500.0
Turmeric yield (per hectare) 17 2062.7 1378.6 1750.0 500.0 6000.0
Turmeric revenue 17 161710.8 93056.0 175000.0 30000.0 270000.0
Small farmers
Owned(acre) 236 3.2 0.6 3.0 2.5 4.9
Owned(hectare) 236 1.3 0.2 1.2 1.0 1.9
Irrigated(acre) 236 3.1 0.7 3.0 0.8 4.9
Total farmed (acre) 236 2.7 1.0 2.9 0.5 6.5
Total farmed (hectare) 236 1.1 0.4 1.2 0.2 2.6
Rice yield(per hectare) 136 3682.7 1475.2 3616.7 1395.0 6510.0
Rice revenue 136 46521.8 27266.2 45000.0 0.0 97500.0
Sugarcane yield (per hectare) 30 74350.2 29956.4 67500.0 29166.7 133333.3
Sugar revenue 30 193201.2 89416.9 178003.3 62500.0 372500.0
Cotton yield (per hectare) 19 1617.5 1086.8 1333.3 416.7 3750.0
Cotton revenue 19 76238.6 43287.7 73333.3 22500.0 150000.0
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Blackgram yield (per hectare) 6 650.0 272.0 725.0 200.0 1000.0
Blackgram revenue 6 30704.2 10415.7 33675.0 12000.0 43000.0
Groundnut yield(per hectare) 8 1275.5 850.1 1150.0 331.8 3050.0
Groundnut revenue 8 34852.7 18494.9 39500.0 0.0 60000.0
Maize yield(per hectare) 8 2015.6 1595.5 1562.5 333.3 5000.0
Maize revenue 9 24560.0 23581.6 17500.0 0.0 75000.0
Turmeric yield (per hectare) 13 1543.6 837.3 1500.0 500.0 3500.0
Turmeric revenue 13 81955.1 66763.6 86666.7 0.0 200000.0
Semi-medium farmers
Owned(acre) 127 5.9 1.1 5.5 5.0 8.0
Owned(hectare) 127 2.4 0.4 2.2 2.0 3.2
Irrigated(acre) 127 5.4 1.6 5.3 1.0 8.0
Total farmed (acre) 127 4.3 1.8 5.0 0.5 6.5
Total farmed (hectare) 127 1.7 0.7 2.0 0.2 2.6
Rice yield(per hectare) 78 3702.3 1629.9 3462.3 1395.0 6510.0
Rice revenue 78 51204.6 26767.9 50697.1 0.0 97500.0
Sugarcane yield (per hectare) 21 71858.0 23086.3 75000.0 29166.7 125000.0
Sugar revenue 21 179534.8 79279.4 186112.5 62500.0 372500.0
Cotton yield (per hectare) 9 1964.3 932.8 1666.7 666.7 3750.0
Cotton revenue 9 84841.3 44705.0 66666.7 40000.0 150000.0
Blackgram yield (per hectare) 5 622.5 268.4 687.5 350.0 1000.0
Blackgram revenue 5 38495.0 24558.6 31800.0 9375.0 67500.0
Groundnut yield(per hectare) 2 915.9 826.1 915.9 331.8 1500.0
Groundnut revenue 2 27636.4 28798.5 27636.4 7272.7 48000.0
Maize yield(per hectare) 3 2605.6 3168.9 1066.7 500.0 6250.0
Maize revenue 3 30333.3 39501.1 16000.0 0.0 75000.0
Turmeric yield (per hectare) 7 4571.4 4934.4 3000.0 250.0 15000.0
Turmeric revenue 7 111910.7 86466.1 120000.0 0.0 240000.0
Medium-large farmers
Owned(acre) 34 8.0 0.0 8.0 8.0 8.0
Owned(hectare) 34 3.2 0.0 3.2 3.2 3.2
Irrigated(acre) 34 7.6 1.0 8.0 4.0 8.0
Total farmed (acre) 34 5.8 1.2 6.5 2.0 6.5
Total farmed (hectare) 34 2.3 0.5 2.6 0.8 2.6
Rice yield(per hectare) 28 3377.4 1397.2 3208.1 1395.0 6510.0
Rice revenue 28 49355.9 26343.2 47727.3 0.0 97500.0
Sugarcane yield (per hectare) 7 71658.6 33310.1 75000.0 31818.2 125000.0
Sugar revenue 7 192136.8 98750.4 183593.8 76363.6 372500.0
Cotton yield (per hectare) 0 . . . . .
Cotton revenue 0 . . . . .
Blackgram yield (per hectare) 1 93.8 . 93.8 93.8 93.8
Blackgram revenue 1 4687.5 . 4687.5 4687.5 4687.5
Groundnut yield(per hectare) 2 1750.0 707.1 1750.0 1250.0 2250.0
Groundnut revenue 2 82812.5 37565.1 82812.5 56250.0 109375.0
Maize yield(per hectare) 1 333.3 . 333.3 333.3 333.3
Maize revenue 1 0.0 . 0.0 0.0 0.0
Turmeric yield (per hectare) 2 2975.0 3217.3 2975.0 700.0 5250.0
Turmeric revenue 2 41375.0 10783.4 41375.0 33750.0 49000.0
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Table 48:Type of Storage Facility
No of HHs Percentage Cumulative Percentage
Marginal farmers
Kutcha 41 11.4 22.0
Pucca 103 28.7 55.4
Semi-Pucca 42 11.7 22.6
Total 186 51.8 100.0
Small farmers
Kutcha 22 6.1 21.4
Pucca 63 17.5 61.2
Semi-Pucca 18 5.0 17.5
Total 103 28.7 100.0
Semi-medium farmers
Kutcha 13 3.6 25.5
Pucca 29 8.1 56.9
Semi-Pucca 9 2.5 17.6
Total 51 14.2 100.0
Medium-large farmers
Kutcha 2 0.6 10.5
Pucca 14 3.9 73.7
Semi-Pucca 3 0.8 15.8
Total 19 5.3 100.0
Total (across all districts)
Kutcha 78 21.7 21.7
Pucca 209
58.2 58.2
Semi-Pucca 72 20.1 20.1
Total 359 100.0 100.0
Appendix C
In the table below we detail the respective stakeholders and the key observations are noted below.
Stakeholder
Class
Name Key Observations
Key Director Agriculture,
State of Tamil Nadu
Thiru V.
Dhakshinamoorthy.,
I.A.S,
1. Soil Health Cards: minimises the use of fertilisers, reducing cultivation costs
2. Convergence schemes encouraging dryland farming: 3. 47 lakh acres covered by such schemes promoting millets, pulses,
oilseeds in place of paddy. 4. Some of these schemes include NADP (GOI), NFSM, ATMA, NMOO,
NMSRAD; state schemes include the MSDA; 5. Value-addition activities integrated with convergence schemes:
extracting oil from oilseeds, dal mills and provision of machineries for pulses
6. Collective Farming: organising small and marginal farmers into efficient collectives
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7. Micro-Irrigation: Schemes providing even 100 percent subsidy for small farmers.
8. PMFBY: Scheme covers both the cultivation risks as well as post-harvest losses.
9. -In 2016-17, 15.37 lakh farmers compensated with 2370 crores through PMFBY, of which 2150 crores have been transferred to bank accounts for Rabi 2016-17. (Drought relief accounted to 2,247 crores in 2016-17).
Key Director, Directorate
of Horticulture and
Plantation Crops,
TANHODA,
Tmt Archana Patnaik
I.A.S
1. Vision of horticulture department for TN entails aggressively promoting horticultural crops coverage.
2. An incremental increase in area under high-value crops, observed across young and educated groups; gradual increase in post-production activities (marketing, retail etc).
3. Supply Chain Management: convergence scheme with the agri-marketing dept, reached 10 clusters.
4. Collective Farming for market exposure, credit needs: Cocoa farmers in Coimbatore have organised themselves into contract farming.
5. Dryland farming of fruits like pomegranate, amla; schemes promoting fruit trees/crops as border crops
6. Homestead gardens in suburban areas, convergence schemes along with social welfare dept. (murangai and papaya in schools, anganwadis etc.)
7. Central govt. schemes such as -PMKSY: increased micro –irrigation coverage of 136,000 hectares in
2016-17.
-MIDH: Integrated Development of Horticulture with improved
marketing components entailing pack houses, cold chains, mobile vans,
refriver vans (collaboration with agri- departments, TNAU).
8. Scope for innovations in horticulture: -Promoting organic cultivation: organic chillies grown through FPOs
-Cultivation in saline areas:
The dept. requested TNAU for chillies that could be cultivated in saline
soils, with high oliorescent content (been undertaken in Virudhanagar,
Erode etc)
-Improved logistics and marketing infrastructure
1. Expansion of infrastructure in existing markets (eg for bananas,
mango pulp, jasmine etc. in Madurai has been undertaken)
2. Improvements in export quality to meet international technical
standards. (eg. tissue culture G9 standards in APEDA)
3. Collective ventures: Wherever successful, cold storages have been run
by farmer groups’. (Eg: cold storage in Theni for bananas)
-Protecting Indigenous varieties
(Under schemes like NADP, increasing area under jackfruit, bananas
etc.)
-Increasing food-processing, value-addition activities through Mega-
food parks, agro-processing centres (e.g. onion flakes, fried onions etc)
Key Joint Director
Agriculture(SS) i/c and
DDA(ATMA),
Agriculture
Department, Thiru S.
Shanmugham
1. Collectivisation: The state is in the process of forming around 10,000 farmer interest groups, and around 2000 FPGs. Such groups facilitate the collective purchase of inputs at competent prices, creates scope for cohesive combined harvesting etc, influence crop choice decisions etc. Around 975 FPGs been handed over to the agri-marketing department, 200 FPGs to be developed over the next six months.
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2. Manpower shortage to meet extension, dissemination requirements; with multiple schemes driven by different departments in operation, scope of extension services is limited.
3. Pushing the state strategy for doubling yields, tripling incomes 4. Specialised expertise in the agri-departments, recruiting technical
officers. 5. Need to focus on value addition activities, better marketing strategies.
Key Commissioner and
Director, Department
of Agriculture
Marketing and Agri-
business,
Thiru Shunchonngam
Jatak Chiru IAS
1. Quantification of current income levels is difficult, as well as determining the base year.
2. Policy targets have increased, while the actual allocations are on the decline.
3. Need proper implementation of MSP for pulses, and procurement systems. Pulses successful on production side, market failures due to higher price fluctuations.
4. Revamping the buffer stock policy, increased allocations and commitment towards procurement, this facilitates price stabilisation.
5. Increase pulses production, and stabilise their prices and production over a period of 5 to 10 years.
6. Ensuring stable markets and incomes, especially commodities like pulses; price stabilisation important for increasing farmer incomes.
7. e-NAM: 17 markets are on the e-NAM in Tamil Nadu. 12 markets allow for e-trading, and entire payment amounts are
credited to farmers’ accounts in t+2 days. Free, fair trading with lesser
waiting periods through e-NAM.
8. Model APMC Act: Volume of trade through regulated markets around 10,000 crores. The model APMC Act aims at rationalising the role of commission agents, and eradication of such agents. Freeing up of licenses for traders across districts, online marketing and
trading across states are other aspects of this Act.
APMC act to be amended to establish private markets, while they
already exist in TN.
9. Government of India reforms on Compulsory Marketing models implemented in UP.
10. Scope for private engagement in assaying labs, facilitate standardisation of quality and grade.
11. Govt. of Tamil Nadu drafting an act for Contract Farming. 12. Increase institutional financing options in post-harvest processes,
marketing along with finances for inputs, subsidies etc. 13. FPOs as aggregators, facilitating the sale and processing of farm
produce. 14. NMFP replaced with Sampadha for food processing; in TN around 12000
industries in food processing, and this could be doubled. 15. Enhancing storage duration for perishables, cold storage capacities etc,
tapping into private sector potential through Sampadha. Though TN second highest vegetable producer around 30 percent is wasted.
16. Value addition activities could be brought under the Integrated Food Parks scheme. Under Supply Chain Management, farmers grouped into 3 Primary Processing Centres per district (PPC allows for washing, grading, sorting, packing etc.); and these PPCs are directly connected to retailers such as Big Basket, eliminating intermediaries. This could increase incomes by around 15 to 20 percent, especially scope of PPCs run through public-private partnerships should be studied.
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Key Joint Director of
Agriculture, Dept. of
Agriculture Marketing
and Agri Business V.
Chandrasenan Nair
1. E-NAM: Establishing 15 regulated markets in 2017 been the target. Objectives included online trading, transparency, elimination of middle men, accessibility to traders from other states, agri-marketing lab to exist along with e-NAM markets wherein quality parameters such as moisture content, staple length etc. to be monitored and prices determined accordingly.
2. Database of all farmers and traders involved in the particular e-market; this aspect is still in its infancy stage. Integration of the 15 e-NAM markets, producing analytical reports online for future forecasts.
3. 102 cold storages for perishables across TN, proper utilisation of these could reduce post-harvest losses by around 30 to 35 percent.
4. Extension activities at regulated markets, training for trading through e-NAM markets.
5. Addressing challenges in e-NAM markets in its initiation stage such as slow servers etc.
6. Schemes such as Mega Food Parks and Terminal Market Complex to be established in Chennai, Madurai etc. wherein processing and post-harvest marketing would be integrated into one umbrella. A food Park at Dindivanam is under discussion.
7. While 197 out of 278 regulated markets in TN provide storage facilities, farmers have been utilising this only across 23 markets. Reasons hindering this being farmers having to dry and clean farm produce to store in these godowns, also farmers prefer immediate sales for liquidity concerns.
8. PAC storage space also not utilised by farmers, but for storing PAC inputs.
9. 99.5 crores have been requested by agri-marketing department from NABARD for revamping warehouses this year.
10. Crop diversification based on local contexts such that paddy cultivated during first season, followed by vegetables and pulses after February.
11. Informed farmers with knowledge about markets, value addition for produce, organic farming, inter-cropping and mixed cropping, reduction of cultivation costs, introduction of dairying and poultry activities etc: mixed basket of activities for increasing farmer incomes.
Managing Director,
Tamil Nadu
Warehousing
Corporation, Thiru K.
Nagarajan I.A.S,
1. Warehousing Capacity: TNWC has 36 warehouses in TN under the TNWR Act, 2007. In 2016-17, 2642 NWRs been issued to farmers of around 151. 53 crores; while in 2015-16, 2597 NWRs accounting to 186.10 crores have been issued.
2. Cold storages not immediate priority for warehousing department, due to power shortage issues that needs to be addressed.
3. Maintenance of warehouses at periodic intervals and ensuring profitability of these warehouses are other concerns. Only 14 godowns have been replaced by FCI stocks due to connectivity constraints between TNWC warehouses and railways, though FCI had initially requested TNWC for the construction of 24 godowns, resulting in losses.
4. Though TNWC reports 99 percent occupancy rates as of 2015, only 5 percent of the warehousing capacity across the state has been utilised by farmers. Private clients such as ITC for storing wheat, MFL, IFFCO, RCF, TASMAC, ONGC etc. have been utilising these warehouses.
5. TNWC offers rebates to increase occupancy in these warehouses, around 10 to 30 percent to farmers and 20 percent to other traders.
6. Other concerns include lesser occupancy of warehouses in delta regions due to droughts, acute staff shortage etc.
Key Chief General
Manager, NABARD
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Chennai, S. N. A.
Jinnah
Key Assistant General
Manager, NABARD
Chennai S. Jayashree
Key Deputy General
Manager, NABARD
Chennai, R.
Sankaranarayanan
Secondary CEO Sammunati, Mr
Anil
1. Role of aggregators: A farmer in a group should take up an aggregator’s role, and the buyers would be dependent on this aggregator. The aggregator facilitates increasing shelf life of produce, value-addition and realisation per unit produce. FPOs could also assume the role of aggregators, thereby facilitating purchase of cheaper inputs, providing advisory services for farmers, timely provision of right inputs etc.
2. Product Structuring: Loan repayments are usually tied to harvest timings, but restructuring products such a way that they loan repayments are tied to include time for harvest as well as some aggregation activities. This would mean restructuring loans products; such that co-terminus loans are allowed for a period of 6 months in place of 3 months.
3. Access to working capital: Providing access to working capital for the aggregator, introducing changes such that cost of aggregation falls per unit (aggregator could get a container instead of the usual small truck and the aggregation costs could reduce drastically) etc could improve the processes in the aggregation chain.
External Senior Manager,
Retail Business Group
HDFC, Mr. Harish
Dubey
1. Increasing incomes for farmers: Two ways for enhancing farmer incomes: either increasing volume of production or decreasing costs of cultivation. Inputs could be centrally driven through bulk buying and distributed selling via co-operatives or FPOs reducing costs, instead of the highly segregated input markets increasing per unit cost at every stage.
2. Diversifying farm enterprise: Intensifying agricultural enterprises through context-specific diversification such as dairying, bee-keeping, poultry and other allied agri-activities.
3. Revamping procurement value-chains: Currently cost efficiencies and margins are transferred to middlemen in the marketing process, and markets/ procurement value chains need to be regulated such that these efficiencies directly reach farmers. Pushing towards direct procurement from farmers, this is the reason why some megastores can sell at cheaper rates than market prices.
4. Bulk Buying and Distributed Selling: As aggregation is a concern, there is a need for investing in efficient co-operatives that facilitate bulk buying and distributed selling.
5. Labour mechanisation, rent and leased based models instead of ownership of inputs models (eg custom hiring centres)
6. Increasing public investments in agro-processing enterprises (government does not own a single agro-processing centre in India).
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7. Sustainability of FPOs: Increasing financial institutions willingness to lend without collateral, though this is dependent on the financial stability of individual FPOs.
8. Land reforms, wherein land rights would be provided by usage and not progeny.
Secondary
Agricultural Officer,
Villupuram
Around 85 percent of 5 lakh agricultural households in Villupuram
comprise of small farmers.
1. Increasing interest free loans and other credit opportunities for small farmers.
2. Channelizing such farmers into collectives. 3. MSP: Farmers have low awareness levels about MSP. At present,
procurement via MSP and payment of MSP is not assured. While announcement of MSPs are not sufficient, there is a need for proper implementation of the same. Also current MSPs are not set according to National Commission of Farmers recommendations, which proposed MSPs to be inclusive of the cultivation costs plus profits accounting to fifty percent of the cultivation costs.
4. Drip Irrigation schemes: The take-up for drip irrigation schemes is low, as small farmers are not interested in these investments.
5. Horticulture: Though this is a high profit-productive sector, some of the concerns include higher resource requirements such as labour demands and logistic requirements, connectivity to neighbouring markets and mobility issues as these include perishables.
6. Diversification into agri-allied activities: Scope of diversification into dairying, horticulture etc depends on land available for allied activities, time commitments for nuclear families, developing skills for household labour involved and marketing concerns, risk management measures that could be adopted by small farmers etc
7. Dryland Farming: In Villupuram, around 2000 hectares have been brought under millets, cumbu etc, while another 1300 hectares have been sown with blackgram.
Secondary Agricultural Officer,
Nagapattinam
1. Collective farming holds much scope in the district, around 243 FIGs have been formed in Nagapattinam (115 is exclusively for agriculture, while the remaining for horticulture).
2. Processing for better pricing: While paddy fetches around 13 Rs. Per kg, processed rice/ aval / flour earns around 70 rs. Per kg. The difference of Rs. 53 is now transferred to intermediaries, and farmers should be able to channelize these profits through processing ventures.
3. Farmers sell off produce at fields due to lack of awareness about credit /loans available at regulated markets based on stock/ storage produce, connectivity constraints to cities and neighbouring markets.
4. FPOs: Farmers in the FPO pool around 1000 Rs, and some of the successful FPOs include Kizhvelur, Sirkazhi and one of mango farmers in Vedaranyam, who have been also trying for a pulp industry. First successful FPO in TN was initiated in Erode for turmeric.
5. Uzhavar Sandai: A scheme towards increasing production, but has been closed down in the district. These allowed for direct sale of fresh farm produce by farmers to consumers at rates lower than retail, and higher than wholesale prices. This provided markets for local varieties such as poyur kathrika, palluvakai etc, and only Vedaranyam was suitable for horticultural activities.
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6. Credit as a major constraint for FPOS, and lack of resources for different business models of FPOs. (Rasi Masala in Velankanni as a good case study in this regard).
7. TANSEDA Scheme offers seed subsidies and agricultural department procures seed, processes the same and then circulates them to respective depots. Seed village as private seeds are expensive.
8. Insurance take-up: Farmers are aware of insurance in the district and in 2016-17, 355 crores were released to more than 1 lakh farmers in the district (ie. Around 402 Rs per acre). Insurance take-up is extremely essential. ‘
9. Extension towards Diversification: ATMA provides training for utilisation of farm technologies, ancillary activities such as bee-keeping, inland fishing through farm ponds etc.
10. Integrated Farming: Small farmers can adopt models of integrated farms, wherein animal wastes are recycled and inter-cropping/ multi-cropping could be practised. IFS is not common across the district.
Secondary Agricultural Officer,
Ramanathapuram
1. Soil and water management: Continuous utilisation of groundwater could increase soil alkalinity. Underground water is becoming increasingly saline, rivers are drying up and in this context rain water harvesting through farm ponds could be practised, and later directed to the fields. Ramanathapuram with 5181 farm ponds has the highest number of farm ponds in the state, and these serve as an alternative /supplementary source of irrigation for at least one season. Except for few blocks like Kamudi and Mandapam, there is no scope for irrigated agriculture. In sandy areas, ring wells and drip irrigation could be adopted for
coconut plantations.
2. Higher rates of awareness about insurance in the district, due to its risk prone nature. Paddy cultivators are entirely dependent on the north-east monsoon, and failure of the same ensures higher incomes through insurance, drought relief funds etc.
3. Other major source of income for the district include foreign remittances and dairying.
4. Last favourable year for cultivation has been 2013-14, and 2016-17 witnessed the most severe drought in 141 years.
5. Regulated markets in the district include Ramanathapuram, Parambikulam, Muthugulathur and others such as Etivayal, Thiruvadanai and Parambakudi have storage capacities of 2000 metric tonnes. Etivayal also has a cold storage facility of 2000 metric tonnes inaugurated in Nov 2017. A small cold storage facility in Parambakudi of 100 mt for minor millets, and another of 25 metric tonnes in Kamudi for chillies are the other cold storages. Farmers are utilising this facility on a lease basis. NWR is not implemented in the district, while PAC godowns are not utilised for storing facilities.
6. Horticulture crops: Chillies cover around 20, 000 hectares and varieties such as mundu, chamba chillies are traded in the market. Another important tree crop is the prosiphus covering around 60,000 hectares in the district and utilised in the charcoal-making industry, firewood etc. Other crops include brinjal, ladies finger, tomatoes, fruits etc. Jasmine saplings are sent from Ramanathapuram to Madurai due to deteriorating quality of ground water. Under the scheme Maadithottam (roof-top gardens), seeds and manures for vegetables are distributed during the Aadi month.
7. National Mission for Sustainable Agriculture: This scheme entails providing goats to farmers with one-hectare land, along with 50 percent
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subsidy on the first crop, Rs 23,500 subsidy on pulses (second crop). Started three years back, 11, 000 farmers have been covered through this scheme across the district. Mission for Sustainable Dryland Agriculture provides 50 percent subsidy to farmers on all inputs. Farmers in villages across 5 blocks (5000 hectares) would be identified and trained under the scheme, and crops such as paddy are cultivated using 1000 to 2200 mm water over 3 to 4 months and pulses are grown using 400 to 500 mm water. At present, 1300 farmers and 1000 hectares have been covered.
8. Collectivisation: Out of 8 FPOs in the district, one of them is state funded through the SAFC (supported by the Dhan Foundation) while the other 7 are NABARD funded. FPOs offer much scope in initiating and marketing millets, chillies and promoting traditional paddy varieties (CIKS etc.) One of these FPOs specialises in chillies, and exports them to Bangalore Virudhunagar etc. An integral feature for the success of these FPOs include the support of a strong CEO, like the case in Neithal FPO. Paddy hulling machines worth Rs. 60,000 was bought through this FPO, and 1000 farmers utilise this for processing rice. Immense potential for chilly, rice processing in the district through FPOs.
Secondary NABARD DDM
Nagapattinam
1. Some of the constraints include peculiar irrigation potential off this district due to over exploitation of groundwater and salinity issues. While around 6000 mm rainfall was recorded in 2016-17, there is a need to maintain water conservation structures. Due to sea water intrusion, around 20 to 30 percent of the land has been ruined (Out of 11 blocks, 7 blocks are coastal).
2. Diversification of crops: Farmers need to diversify across crops and crop varieties, and practise inter-cropping on the same plot.
3. Price analysis, trend analysis that would be beneficial to traders, farmers etc. (could be done by KVKs etc.)
4. Storage infrastructure is sufficient, while liquidity constraints result in small farmers not preferring to store.
5. FPO facilitator, or the board of the FPO is integral to the stability of the FPO. Sustainability for FPOs would be the major concern.
6. Diversification even within FPOs; an FPO in Sirkazhi with 30 percent women shareholders. An FPO in Kollidam, producer companies trained women for producing palm products and marketing these to Chennai. Women earned around Rs. 2000 per month through such activities. Value addition activities through women, producer companies helped them in marketing vermi-compost to Pondicherru, Chennai etc, for kitchen gardens.
7. Post-harvest losses: Incurred due to the usage of poor storage, transportation utilities such as gummy bags etc.
8. MSP: MSPs cannot be increased beyond certain levels, as this would impact consumers. Farmers aware of MSPs as well as crop insurance schemes, but follow a ‘wait and see approach’.
9. Horticulture: Confined to certain blocks such as Vedaranyam and Majavaram due to some groundwater recharge available.
10. Farm Ponds: 146 farm ponds were subsidised by NABARD in Kilvelur, only 28 were constructed finally as farmers were not willing to pay the rest 50 percent of farm pond cost.
11. Dairy requires time, water and can be only practiced in areas with sufficient groundwater. Fodder is expensive; and this sector is high-maintenance unlike goat farming, wherein the returns are low.
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12. Aquafarming: Inland fishing activities not very popular; conflict of interests between prawn culturists and farmers, claiming that stagnant salt water damages groundwater quality.
13. Soil fertility: Soil testing needs to be enforced once in two or three years, and this could be linked to bank credit. Credit availability could be tied to favourable soil reports, consistent across a period of time.
14. Crop insurance, could be inclusive of pest attacks, compensation could be provided for difference in crop produce quality depending on height and size of grains. If poor quality, then the farmer could be compensated for this.
15. Tapping renewable energy sources for irrigation, other purposes etc. 16. Engaging youth in agriculture, while young farmers were willing to enter
into fisheries, marine activities and dairying, also attracting them towards farming.
17. Credit constraints: For loans beyond a lakh, private banks provide agri-jewel loans. Collateral for bank credit is a challenge, and private banks would lend without collateral upto 1.5 lakhs. Banks engage in lending to meet their financial targets, and sanction loan amounts for assets more than their actual worth. For loans at FPO level, credit per acreage, per farmer should be worked out depending on their income levels.
Secondary NABARD DDM
Villupuram
1. Concerns relating to agriculture in Villupuram and India: Fragmented landholdings, extreme dependency on moneylenders, farmers unaware of schemes, produce not reaching regulated markets wherein payments are delayed due to procedures and are sold off immediately on field, understaffing issues etc.
2. Adaptability and switching to drought-resistant varieties: Interventions and extension activities in this regard, and necessary support systems for farmers educating them about schemes, shifting from paddy to other crops etc.
3. Collectivisation: Organising farmers into groups, and promoting these farmer interest groups/ farmers clubs to FPOS (farmer producer organisations), Joint Liability Groups (JLGs) engaging in agri -ancillary activities, and later converting them to Farmer Producer Companies
4. Animal Husbandry: These activities could be undertaken within FPOs, a Dairy FPO in Keelmalajanur, Villupuram comprises of 1000 farmers owning 2 animals each, accounting to around 2000 animals in total. While milk earns around 18 rupees per litre in the market, the FPO earns around 26 rupees per litre for their milk.
5. Schemes and Insurance: Proper routing of schemes/ subsidies to increase farmer incomes, low insurance penetration due to lack of awareness etc.
6. Organic Farming: This helps revamping the soil, however the process in establishing and certifying themselves as organic farmers would take around 6 to 7 years.
7. Dryland Farming: People migrate out of drought affected villages due to labour scarcity, debt burdens etc and dryland farming offers an opportunity in such areas. Villages with ample water resources are not interested in diversification as they earn sufficient incomes, while drought affected farmers are more inclined towards diversification in dryland farming, dairying, other allied agri-activities.
8. Households need to diversify their activities for an earning, and all sources put together could result in increased incomes for these households.
18. 9. Cold Storage: Perishables need to be stored in cold storages, such as to increase incomes.
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Secondary NABARD DDM
Ramanathapuram
1. Banks-NGOs credit linkages: Credit linking with banks such as NABARD for micro-entrepreneurship development through SHGs/ NGOs for allied, agri-related or other activities. Some of such activities pursued include tailoring/ sewing classes etc.
2. NABARD has sponsored godowns with the PACs. Societies/ PACs reluctant to use their godowns for storage purposes, as farmers are unwilling to store and hence used for storage of other inputs.
3. Water crisis is severe in the district, entirely monsoon dependant and there are no functional rivers in the district.
4. Crop cultivated: Farmers mainly cultivate paddy across Thiruvadanai belt, while crops such as chilly and cotton are grown in Parambakudi. Farmers have a bias against growing chilly/ cotton crops in Thiruvadanai, as this could deteriorate the soils.
5. Farmers very well aware of crop insurance schemes, and take-up rates are high in the district, wherein insurance is substantial source of income.
6. Major sources of income for agri-households in the district include: claim payouts, drought relief funds, foreign mainly middle-east remittances, dairying, goat/sheep rearing and poultry finally. Poultry not very successful in the district, not commercialised or scientifically practiced.
7. Majority of the women engaged in dairy, are tied up with Aavin through tripartite agreement.
8. Farm-ponds: 5131 farm ponds have been constructed through a special scheme sanctioned for the district. Till 2015, the ponds were full and the water was used for paddy, chilly and cotton cultivation as well as fisheries. Farmers provided land around 30*30 *2 ft depending on their land sizes, and a fully recharged farm pond could sustain three seasons. In total, the district has around 5260 farm ponds. Drip-irrigation/ sprinkler irrigation may not be efficient for the district due to salinity issues; except for coconut and palms.
9. Farmers prefer co-operative banks, PACs for loans; as commercial banks are reluctant to provide crop loans, and are interested only in providing agri-jewel loans.
10. Insurance companies have sanctioned pay-outs to non-loanee farmers agitating loanee farmers, many of those who are yet to receive their pay-outs. Loanee farmers should be given preference in such cases.
11. Crop Insurance challenges: 51 villages were identified as pre-emptive sowing though these have been clear cases of crop failures. Such errors due to wrong calculations estimated from satellite imageries, and the imageries for these villages showed the proliferation of prosopis guilfora which was misinterpreted as paddy. Villages were randomly inspected, and still 25 villages have not received full claim payments.
12. FPOs: NABARD promoted 7 FPOs in the district, such FPOs are run by NGOs and more than 10 NGOs have been associated with NABARD in the district. FPOs such as Neithal Sustainable promoted by CIKS procures chilly, coriander and directly sells to market; credit support to NGOs/FPOs only for three years and to be sustained by the board of directors after this period. Challenges with regards to FPOs include slow enrolment rates (jasmine flower FPO in Mandapam block) and sustainability concerns. Neithal has earned 1 lakh profit through chillies, another successful example includes Ramanthapuram FPC (which is a seeds NGO). FPOs could be the way forward; farmers should be trained on other enterprises such that they are not fully dependant on agriculture.
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13. Horticulture: Farmers are not willing to engage in horticulture on their agricultural lands, but only on bunds. A widely quoted example is of the Akal Farm in Vallanthai village, wherein a group of Punjabi farmers have been growing fruit crops such as guavas, sapotas, watermelons etc through mechanised farming practices and selling to the Madurai market.
14. Farmers in certain blocks are getting better prices than MSP through brokers, and quality is not much of a concern for these brokers. Regulated markets check for quality for produce, and transportation raises challenges in accessing regulated markets. PAC godowns are not usually utilised for their purpose of storing farm produce due to absence of scientific maintenance and lack of personnel.
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