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Event Report

This event was held at NIICE on 02 September 2022, where a discussion on why Indian farmers are poor was held. The focal person for this event was Professor Nilanjan Banik, Program Director at Mahindra University, India. With his expertise in international trade, as well as in development economics, he exposited the main reasons why Indian farmers are poor, backed with empirical evidence, as well as possible interventions to lessen the likelihood of farmers living below the poverty line, if not alleviating it entirely.

He began the event by stating that 260 million Indians live below the poverty line, with       80 percent living in the countryside. Almost half of the population (49 percent) is earning their livelihood under the agricultural sector, making some aspects inaccessible to small and marginal farmers. Backed with relevant data, Professor Banik provided eight reasons why Indian farmers are poor, namely:

1. Access to Land – In India, the average landholding size that can be acquired by farmers is 1.15 hectares, where 86 percent of the farmers are considered as small and marginal farmers, acquiring less than two hectares of land. This makes land parcels to be scattered, affecting the farmers’ productivity. The low amount of productivity equates to low income.
2. Access to Farming Equipment – With their low productivity due to small land share, they do not have the means to mechanise their work. This incapacity to mechanise the agricultural sector, affecting the farmers’ household income, which is projected to be at Rs 172,694 per annum for 2022-23 on average. This also includes the 0.6 percent of Indian farmers who have at least 10 hectares of land.
3. Access to Finance – Out of the 86 percent of small and marginal farmers, only 15 percent of which have access to formal loans. Being used normally for life-cycle events such as marriage, or health concerns, loans vary on cost difference depending on whether it is formal or informal, which averages on 30 to 45 percent per annum.
4. Access to Cold Storage – As most agricultural products, under the likes of fruits, vegetables, and milk, are perishable, access to cold storage is deemed as a must, with a minimum capacity of 50,000 quintals for a farmer’s produce. In the case of small farmers (whose landholding size ranges between one and two hectares), and marginal farmers (whose landholding size is less than one hectare), only 23.61% of small farmers and only 22.22% of marginal farmers grow high value crops.
5. Access to Transport – On average, farmers must be able to book a truck with a capacity to carry 100 quintals (10,000kg), as well as an agricultural yield of around 2,070kg per hectare. It is difficult, as Prof. Banik said, with their average landholding size, they can only acquire 2,400kg, or roughly 24 quintals.
6. Access to Market – There are very limited agricultural markets and mandis across India. With the limited transport and markets to be found within vicinity, farmers are to sell it to middlemen who usually get a huge fraction of the profit.
7. Access to E-Mandi – Despite having interconnected wholesale markets across eight states, computer literacy is an issue, as opposed to the idea to divert mandis electronically.
8. Access to Information/Financial Products – A huge percentage of farmers are not aware of debt schemes subsidised by the government, as well as other financial products, making ownership of such products lower as well. With that being said, only 1.67 percent of farmers own crop insurance and cattle insurance.

Prior to the conclusion of this webinar, Prof. Banik provided possible solutions, recommendations, and interventions, in order to lessen the likelihood of Indian farmers staying below the poverty line. The following are:

1. Farm Loan Waivers and Irrigation Facilities – It provides an immediate, and one-time benefit to small and marginal farmers.
2. Building More Cold Storage and Food Processing Units – The establishment of more cold storage is crucial for perishable goods such as fruits, vegetables, and milk, lessening the likelihood of farmers being poor by 3 to 7 percent.
3. Building E-Mandi – Building e-markets are important on the idea of doubling farmers’ incomes through establishing unified licences and mechanisms for the online market.

Such recommendations, as Prof. Banik concluded, would be beneficial on the farmers’ end in order to fully utilise their limited resources for them to increase their productivity, their income, and to lessen the poverty rate in India where the agricultural sector plays a huge part in their economy.

Prepared by Liam Jay Atienza, Intern at NIICE.