Saturday, August 20, 2016
Doubling Farmer’s Income – A Roadmap for Bihar farmers
Prime Minister Sri. Narendra Modi has given a target of doubling farmers’ income in next five years. While some supported it, few called it a dream or goal which cannot be achieved. This debate is very relevant for Bihar which has predominant agrarian economy with 68% population dependent upon agriculture contributing about 22% of state GDP. Further Bihar agriculture is a low investment, low productive, low profit enterprise. So it is worth examining whether farmers’ income can be doubled in given environment or not.
The profitability of any enterprise can be increased through three routes: (i) reducing cost of inputs; (ii) increasing the system efficiency of enterprise; and (iii) increasing price of end product through government intervention which in this case is to be higher minimum support price. Out of these three, third alternative is easiest to adopt and implement but is fraught with consequences for overall economy. Further it has not much for regions where penetration of public procurement agencies is not sufficient. Thus first two options need to be examined about their feasibility.
Cost of cultivation of any crop is made up of two components: Fixed cost and Operational cost. Fixed cost is rental value of owned land, rent paid for leased in land, land revenue etc., depreciation and interest on fixed capital. Operational cost includes cost of labour (human, animal & machine) seed, fertilizer & manure, insecticide, irrigation, miscellaneous and interest on working capital. Although fixed cost has a role in estimating cost of cultivation but for an ordinary farmer, it is operational cost which matters. Thus here we will examine whether target of doubling farmers’ income is feasible or not and if yes what should be road map.
Table 1 gives data on components of operational cost of different crops for North Bihar conditions. It is evident from table that human labour cost is the highest among all components with maximum in paddy. Let us analyze cost of which component can be reduced. In case of paddy the share of human labour is the highest due to labour used in transplanting. If use of paddy transplanter could be popularized as well as better paddy transplanter could be designed to be suitable for small and marginal farmers, the cost of labour can be reduced significantly. Similarly with better mechanization in wheat and maize, the cost of labour can be easily reduced by 25% if not by 50%. Second cost component of seed will increase if we replace existing seed with certified good quality seed. Thus the cost of seed will increase by 50% but the productivity will increase by minimum 10%. Third cost component is fertilizer whose cost can be reduced by using soil health card information properly. It has been found in few studies that fertilizer use has reduced by 25% if targetter fertilizer is used. Further if at village level vermi-compost is prepared using organic household waste (linking with Swachhchh Bharat) and payment of labour wages from MANREGA, the cost of fertilizer can be reduced significantly by atleast 25%. The cost of labour is about 40% percent of total cost of vermin-compost and therefore, MANREGA funds can be used both for job creation as well as reducing cost of cultivation. In a study conducted by author, it has been found that in alluvial aquifer zone (to which North Bihar belong), if diesel pump is replaced by electric pumps the cost of water is reduced by 80%. If centrifugal pump presently in use is replaced by efficient submersible pumps, the cost will further reduce.
Thus if we can reduce labour cost by 25% through mechanization, fertilizer cost by 25% through targeted fertilization and village level production of vermi-compost, irrigation cost by 80% through replacing diesel pump by electric pump and increasing seed cost by 50% through seed replacement the net return will increase by 81.04% for paddy, 12.09% for wheat and 19.13% for maize. If we assume that just by seed replacement, yield will increase by 10% which is at lower end of estimate, the income will increase by 126.09% for paddy, 32.66% for wheat and 36.75% for maize. It will further increase if we could reduce post harvest losses and do some value addition.
If the whole scenario is seen in terms of crop rotation i.e. paddy-wheat and paddy-maize, the net return for a full year the income will increase by 28% and 30%, respectively if no increase in productivity is assumed. With 10% increase in productivity, which is minimum found to be due to seed change alone, the increase will jump to 54.22 and 52.44 respectively. If 5% increase in gross return due to reduction in post harvest losses accounted, the increase in net return is 68.63 and 64.78% respectively which increase to 83.76 and 88.21% respectively if we account for 5% increase in gross return with local level value addition.
It is therefore evident that enhancing farmers’ income by 100% is not that difficult especially in low investment low productivity, low income scenario of North Bihar agriculture. Only requirement is proper mechanization compatible to conditions of small and marginal farmers, reduction in cost of fertilizer with targeted fertilizer as well as production of vermin-compost by converging MANREGA funds, seed replacement, and electrification of irrigation pumps on input cost side. On the output side we need to reduce post harvest losses by adequate storage facilities and develop infrastructure for part value addition at local level.