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.