Graphic: Ahmed Raza Khan
Graphic: Ahmed Raza Khan

Rural indicators point to worsening farm distress

Sluggish wage growth, lower crop planting, fluctuating prices paint a dismal picture for farmers and the agriculture sector

New data released by the government on rural wages, crop prices and sowing of winter crops reveals that rural distress is worsening.

Planting of wheat, the main winter crop, between October and early January was 5% lower than a year ago due to lower sowing in Madhya Pradesh by close to a million hectares; area under oilseeds was lower by over 5%.

Rajasthan accounted for most of the decline in oilseed cultivation because of 0.7 million hectares lower sowing of mustard.

Similarly, data on nominal rural wages, a bellwether for rural demand, is showing sluggish growth. According to the labour bureau, in October 2017, nominal rural wages for ploughing (men) rose 6.6% year-on-year.

At the same time, crop prices continue to be a point of concern for farmers.

Worsening rural distress holds serious political implications. Not just because it is an election year, with eight state assemblies going to the polls, including Karnataka, Madhya Pradesh, Rajasthan and Chhattisgarh which are plagued by farm distress. The Gujarat election results showed that the Bharatiya Janata Party (BJP) bore the brunt of farmer angst and was able to scrape together a win only because it made up the rural vote deficit in urban areas.

“There is little doubt that farmers are in pain but I suspect whether rural distress is directly proportional to anti-incumbency. Despite its poor performance in rural Gujarat, BJP increased its vote share by almost 2%. The same may happen in other states," said Abhay Kumar Dubey, a professor at the Delhi-based Centre for the Study of Developing Societies.

The tepid progress in winter planting is due to uneven rainfall during the monsoon last year, leading to moisture stress. Worryingly, it follows an estimated 2.8% dip in India’s rain-fed kharif production in 2017-18, compared with the year before.

In the case of rural wages, while the growth is higher than the growth of 5% and 3.1% seen in the previous years (October 2016 and 2015, respectively), it is well below the growth of 17% and 17.6% growth in nominal wages witnessed in October 2014 and 2013, respectively, implying stressed farm incomes and sluggish labour demand.

Farmer protests began in several states such as Madhya Pradesh, Maharashtra, Rajasthan and Haryana in June last year to press for remunerative prices for farm produce and loan waivers, following a collapse in prices of most pulse varieties and oilseeds such as soybean.

Wholesale prices of major horticulture crops such as potatoes, tomatoes and onions have fluctuated sharply, forcing farmers, in some instances, to dump their produce.

“The biggest problem for the Indian farmer is falling profitability, which has come down dramatically for most crops. Against sky-high expectation of at least 50% profit over costs (BJP’s promise during 2014 general elections), the disillusionment has manifested in the continuous protests by farmers over the past year," said Ashok Gulati, agriculture chair professor at the Indian Council for Research on International Economic Relations, Delhi.

Gulati added that it will be prudent for the government to acknowledge the problem and speed up implementation of flagship programmes on crop insurance and irrigation, which are lagging behind due to poor implementation. “Now that the BJP is ruling in as many as 19 states, the prime minister should force these states to reform agriculture markets, which will help farmers get a better price for their produce," Gulati said.

In 2014-15 and 2015-16, both drought years, growth in agriculture contracted by 0.2% and rose by 0.7%, respectively, before rebounding to a high of 4.9% in 2016-17 following a normal monsoon (in 2016) and a bumper harvest. GDP advance estimates released on 5 January showed that farm growth rate is estimated to plummet to 2.1% in 2017-18. This implies a dismal 1.9% average agriculture growth rate in the first four years of the BJP-led National Democratic Alliance government.

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