Enhancing Income of Farmers - Rakesh Kapur, Chairman, Fertiliser Association of India, New Delhi

India is an agrarian country with about 140 Million Farmers. Around 85% of them are small &marginal farmers. Average farmer income is 30 to 40% of per capita income of their urban counter parts with an ever widening gap. The country has shown impressive treads in Agriculture during last three decades. The food grain production has more than doubled from 104 Million Tonne (MT) in 1973 to remarkable level of 265 MT in 2013. The increased production was result of productivity increase due to improved technology, high yielding variety seeds, irrigation, inputs and pricing policies rather than expansion of cultivated area (~140 Million hectare).

Despite impressive progress in recent years, the agriculture production has witnessed diminishing returns. Farmers are increasingly realizing that repeated cultivation on same parcel of land yields less than proportionate returns. Farmers are increasingly realizing that repeated cultivation on same parcel of land yields less than proportionate returns. They are aware that infusion of more labour and capital, year by year, will not increase the return per unit. Demography of Indian Agriculture is changing. Economic growth and improved urban infrastructure is making rural dwellers to shift to better pay jobs outside agriculture, in turn leading to increase in agricultural wages. Natural calamities and pest attacks aggravate the problem pushing farmers to indebtedness. Therefore, there is need for pragmatic reforms and policy initiatives to sustain Indian agriculture and improve economic condition of farmers. Income of farmers needs to be supplemented substantially by allied activities of dairying, fisheries, horticulture, medicinal and aromatic crop cultivation etc.

Present global population is estimated to grow from 7.4 Billion to reach 9.6 Billion by 2050. With change in demographic trends, will the current agriculture productivity be adequate to cater to the anticipated food demand? Are the Farmers, Economists and Policy makers, Research Institutions geared up to meet the growing challenges in Agriculture and boost sustainable agricultural production, especially in developing countries in Asia and Africa where most of the population growth is expected. 

Our Honourable Prime Minister has set the target of doubling farmers' income by the year 2022. For this objective, he has also listed seven strategies which inter alia include judicious use of nutrients based on soil testing &soil health, enhancing Water Use Efficiency (WUE) through per drop more crop and creation of national farm market for enabling economic returns to farmers. Let us look at these and other relevant issues with remedial measures to increase farm income.

Yield Paradigm

India's yield for major crops is drastically lower than even BRICS counterparts. Average yield of cereals and pulses per hectare in India was 2692 kg compared to 5690 kg in China in 2012. The yields of major crops are substantially lower than even Bangladesh, Sri Lanka and World average. Further, there are huge inter-regional variations. There is need to harness the yield potential of different crops to fill the gap between attainable yield of research farm and at farmer's field.

Ecological Imbalance

Agriculture is vulnerable to climate change. Irrigated areas, which were responsible for bringing Green Revolution and food self-sufficiency, are facing problems due to unsustainable practices. Farmers in these areas have shifted towards water intensive crops like sugarcane and paddy. Water intensive crops continued to be grown in spite of poor rainfall and ground water depletion. Ever increasing exploitation of ground water for agriculture & human use in last two decades is resulting in ever depleting water tables. Further, water bodies or aquifers which not only helped to store rain water but also helped in recharging of ground water have disappeared due to encroachment. Mono cropping is causing depletion of soil nutrients, leading to suboptimal yields.

Fertilizer Use Efficiency and Imbalance Fertilization

Intensity of fertilizer use is low in India compared with other countries. Disproportionately high use of nitrogenous fertilizers coupled with changing climate, wide spread deficiency of secondary and micronutrients has emerged as major constraint in effectiveness of fertilizer use in the country. N:P:K use ratio has deteriorated due to over usage because of its artificially low controlled price. On the other hand, prices of phosphatic and potassic (P&K) fertilizers have increased due to continuous reduction in subsidy under Nutrient Based Subsidy (NBS) scheme and depreciation of Indian currency. NPK use ratio deteriorated from 4.3:2:1 in 2009-10 to 8:2.7:1 in 2013-14 with some improvement in 2015-16. Urea being disproportionately cheaper than P&K fertilizers, the distortion is expected to continue.

Fragmentation of Farm Holdings

Small and marginal holdings constitute 85% of land holdings of the size below 1 hectare. Fragmented holdings have resulted in economically unviable units of irrigated land due to higher cost of inputs. Fragmentation has an adverse effect on the ability to use certain mechanical equipments that lead to serious problems of dependence on scarce manual labour for performing agriculture operations.

Rain Fed Agriculture

More than 60 percent of arable land remains dependent on rains. Due to fluctuations in rainfall and distribution, farm productivity in rainfed areas has been affected due to lack of infrastructure & support in terms of rural connectivity, rain water harvesting etc. Rainfed farmers have limited risk bearing capacity and invest conservatively in inputs like seeds, fertilizers, agrochemicals, etc. Multi-cropping is not practiced. Further, scarcity of feed, fodder and potable water in rainfed region which is habitat to 75 percent of cattle population of the country is prohibiting farmers to diversify into allied areas.

Remunerative Agriculture - Market Barriers

Farmers do not get remunerative prices for their produce due to skewed marketing opportunities. When agri-commodity prices are depressed or even when commodity prices rise, farmers are unable to fully exploit the market conditions. Unavailability of storage capacity, exploitation by mandis and middleman and restriction on private buyers hinder trading. Lack of price support to farm produce other than the selected / essential food grains causes losses to farmers in distress years.

Remedial Measures

There is need to have multi-pronged approach such as increasing yield per hectare with optimum use of inputs, safeguard against weather anomalies and fair price realization to enhance farmer's income.

Price support system has to be more universal and needs to be tweaked every year depending on supply-demand of agriculture commodities. Penetration and availability of crop insurance should give the needed comfort level to the farmers to diversify into delicate crops such as Oil seeds, pulses and fodder. Market reforms should be streamlined to free the farmers from stranglehold of middleman and mandis. Farmers are becoming increasingly involved in renewable energy from Solar, Wind and Biomass, and rural tourism.

Land Reforms

With increasing population, land fragmentation is unavoidable. However, a new approach to cultivation and management may sustain productivity. At present, tenant farmers are cultivating under informal arrangements and refrain from making any capital investment. Certainty of price, time period and other attendant conditions under formal leasing agreement can give assurance to both land owner and lessee. State government should devise a mechanism for consolidation of land from willing sellers into economically viable land units and setting up of farmers' cooperatives. Government may also consider enabling other land aggregating measures such as long term leases for select crops and help promote long-term investments in technology. Opening of Public Private Partnership (PPP) model can be another initiative to enable multiple farmers, multiple aggregators and marketers to work together to enhance farmers' incomes.

Prudent Use of Fertilizers

There is need for Balanced and integrated use of nutrients based on soil test with thrust on application of deficient secondary and micro-nutrients. A lot still needs to be done on soil testing. 14 crore Soil Health Cards are to be distributed by Government in about 6 lakhs villages. Similarly, fertilizer application methods, their quantity and doses for different nutrients need to be followed to increase their use efficiency. There is need to provide crop specific solutions consisting of specialty fertilizers alongwith value added services.

Implementation of Nutrient Based Subsidy for P&K fertilizers was a positive step by the Government. 100% Neem coated urea will be instrumental in controlling deterioration of soil fertility in the longer run. Swachh Bharat (Clean India) mission of Government to extend Subsidy to City Compost for usage are steps in the right direction, however, quality issues prevail. Approx. 62 MT of organic waste is expected to be converted into compost for use in agriculture with total nitrogen content of about 5 lakh tonne.

Re-orientation of Fertilizer Subsidy

Management of costly farm inputs can hardly be over emphasized. Skewed policies for providing subsidy to mineral fertilizers have contributed to unbalanced and inefficient fertilizer use. There is imperative need to align the subsidy policy of Urea and P&K fertilizers.

In fact, fertilizer subsidy bill of Central Government is higher than entire agriculture budget of Central Government. During 12 th plan period, fertilizer subsidy budget is Rs. 3.5 lakh crore compared to entire agriculture budget of Centre of Rs. 1.1 lakh crore. Artificially suppressed retail price of urea, which is about 30% of its cost of production/ import does not favour its prudent use by farmers. In fact some of the subsidy provided to urea should be diverted to capital investment in agriculture infrastructure such as green houses, water conservation & restoration bodies, more efficient water pumps, irrigation schemes, infrastructure for transportation and power distribution, land reclamation, post-harvest processing etc. The facilitation of making expensive farm machines available through sales point on hire basis is an encouraging trend to make it affordable for small and marginal farmers.

Increase in Public as well as Private sector investment has become even more important due to declining farm size and tenant farming.

Technology Infusion - Precision Agriculture

Innovative farm-technologies, their dissemination and adoption holds the key to increasing food grain production from current level of 252 Million MT to 325 Million MT by 2025. Emergence of Drone Technology and Satellite imaging would be instrumental in better crop management, documenting losses and enabling faster crop insurance claims. Real-Time Monitoring and all the necessary information tools/analytics are available to provide actionable insight to farmers. The Internet of Things (IoT) is transforming the agriculture industry, enabling farmers to contend with the enormous challenges they face. There is need for encouragement of such Big Data methods, analysis and approaches which can deliver information at faster and in affordable way. Branding of the commodities can also provide value addition in enhancing farm incomes.

Government Initiatives

Government has taken a number of laudable initiatives to increase farm productivity and farmers income. Some of these include Pradhan Mantri Krishi Yojana, Fasal Bima Yojana, e-National Agriculture Market (e-NAM), providing soil health cards to farmers, etc. Extending high support price to pulses again is a right step for crop diversification. C luster based facilities consisting of collection centres, grading and assaying centres, infrastructure such as cold storage, packaging unit, and quality control facility will arrest post-harvest losses and reduce transport cost of agri-produce, price discovery through agri-commodity exchanges, thereby acting as incentives for increasing productivity and enhancing farm incomes. According to media reports, contract / cooperative farming, direct purchase of farm produce by private players, keeping fruits and vegetables outside mandis, etc. are under consideration.

For effective outcome, all these endeavors need to be backed by allocation of sufficient funds and implementation strategy with realistic goals. More importantly, policies for related sectors have also to keep pace with reforms in agriculture sector. Present skewed fertilizer subsidy and pricing policies will not be able to fulfill the objectives of policy initiatives in agriculture sector. Therefore, immediate corrective measures are required in fertilizer policies to make the right products available to the farmers.


The review of agriculture growth and condition of Indian agriculture shows that agriculture sector needs major reforms at various levels viz. land laws, marketing laws and fertilizer policies. There should be significant growth in capital investment in agriculture for more stable long term growth. There should be significant growth in capital investment in agriculture for more stable long term growth. These reforms and prudent use of inputs and services can help to increase crop yield and rate of return to the farmers. All stake holders viz central and state governments, cooperatives, industry and farmers need to work together to realize vision of Hon'ble Prime Minister to double the income of farmers.


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