Without Govt Support, A Good Monsoon Wouldn't Make A Difference To Farm Income

Last week the India Meteorological Department said that the country will have an 'above-normal' monsoon for 2024. This is good news for farmers, as agricultural productivity is heavily dependent on monsoon rains. Over half of the nation's land relies on rain-fed agriculture. While a good monsoon season usually boosts both Kharif and Rabi crop yields, the benefits may not necessarily result in increased incomes for farmers.

“A good monsoon means a good crop and a good crop means that the price is crashing at the time of the harvest… whenever there has been a good monsoon, the benefit hasn't really passed on to farmers,” agricultural policy expert Devinder Sharma told The Core.

In 2023, India experienced a significant drop in monsoon rainfall – the lowest since 2018. This affected the production of pulses, maize, soybean, cotton, and paddy across various regions. Below-average monsoon rains sparked inflation worries and slashed farmer incomes due to reduced yields and crop damage. As rural incomes took a hit, it dampened rural demand.

This year the story looks different. The monsoon is expected to be approximately 106% of the long-period average. Better monsoons always translate into better income for farmers. But the dependence on monsoon alone to increase farm income has not paid off. 

Favourable monsoons have not translated into a corresponding increase in farm incomes over the years. Studies, including those by the Organisation for Economic Cooperation and Development (OECD), indicate that the loss to Indian farmers in 2022 due to lower prices was Rs 14 lakh crore. According to Sharma, the OECD found farmers have been incurring losses since the year 2000, with total losses amounting to a staggering Rs 45 lakh crore in the period from 2010 to 2016.

Farmers Unhappy

Farmers’ bodies have been highlighting the lack of government support and subsidies to cover farmers' losses in India, unlike in countries such as Argentina and Vietnam. The farmers' unions, under the banner of Samyukt Kisan Morcha (SKM non-political), had launched its protest at Punjab’s Shambhu border on February 13, 2024, to press for various demands, including a legal guarantee on Minimum Support Price (MSP), farm-loan waivers, release of farmers arrested during earlier protests, among others. Sharma also said that there was a need for a legal guarantee on MSP to ensure farmers receive fair compensation for their produce.

“Unfortunately, India is the only country where the losses are not covered up by budgetary support. And even in Vietnam and Argentina, the losses are covered up by budgetary support if they see a shortfall or after the prices are paid to farmers, whatever is left, the losses are covered up,” Sharma said. 

Often, experts and industry observers consider tractor sales and sales of two-wheelers as the barometer for the well-being of the rural economy. While sales of fast-moving consumer goods and two-wheeler purchases recorded a significant decline in rural markets, tractor sales surged to a record high in FY23. The situation is further complicated by the transition of labour from manufacturing back to agriculture, as evidenced by the increased demand for jobs under the social welfare programme Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

“I think it is a wrong assessment… The two-wheeler sales, four-wheeler sales, and tractor sales are an indication of how the country's economy is performing in the rural areas. The latest NSO (National Statistical Office) Survey in 2021 for agriculture households, tells us very clearly that the farmer is at the bottom of the pyramid, the average farm income in the country is Rs 10,218, that's for the agricultural households,” Sharma said. 

Climate Challenge

The climate crisis and the onset of erratic monsoon patterns have worsened the case for farm incomes. A recent study by the Council on Energy, Environment, and Water found a notable surge in southwest monsoon rainfall throughout India. Over the last decade (2012-2022), 55% of tehsils or sub-districts have witnessed a rise of over 10% in rainfall levels. The findings highlight the influence of climate change on monsoon behaviour, especially in historically arid areas like Rajasthan, Gujarat, central Maharashtra, and certain parts of Tamil Nadu. Notably, approximately a quarter of these sub-districts have experienced a significant rise in rainfall, surpassing 30% during the June to September timeframe.

Despite monsoon being crucial for India's agriculture-dependent economy, the study showed that 11% of tehsils, particularly those located in the Indo-Gangetic plain, northeast India, and the upper Himalayan region, have witnessed a decline in southwest monsoon rainfall. These regions are essential for agricultural production and host ecosystems that are extremely susceptible to climate fluctuations.

In such an unpredictable scenario, it becomes more important to have strategies to preserve agricultural sustainability. This involves exploring innovative irrigation methods and refining cropping patterns to adapt to changing climatic conditions.

“There is no denying that climate change is going to pose another bigger problem in the years to come. The hit that the agriculture sector is receiving because of the climate variation is that farm incomes are dwindling,” Sharma said.