December 5, 2021

Farm incomes have fallen in India in 7 years

The average monthly income per farm household (considering only paid expenses) is not the same as the “net income / revenue earned by a farm household through cultivation”

In the popular imagination, increased food production is often confused with the income and prosperity of farmers.

Quarterly data on gross domestic product (GDP) and gross value added (GVA) are produced by the Ministry of Statistics and Program Implementation or MoSPI).

It is linked to various sectors of the economy such as “agriculture, forestry and fishing”, “constructions”, “manufacturing industry”, etc. But even that does not shed much light on the income earned by farmers or farm households.

The most reliable estimates of farm household income (and not a farmer’s average income over a given period) are produced by the National Statistics Office (under the MoSPI).

However, agricultural researchers, social scientists and economists had to wait almost seven years this time to obtain the latest available data regarding the 77th cycle of the National Sample Survey (NSS).

The Situation Assessment Survey (SAS) of Farm Households and Households Land and Animal Farms in Rural India (NSS 77th Round) was recently published.

It provides information on the income of agricultural households in the 2018-19 campaign and on indebtedness in 2019. (at the date of the survey), among others.

Data relating to the old SAS (as part of the 70th round of the NSS), which was conducted in 2013, became available in 2014.

Change in nominal farm income

Let’s try to understand the changes that occurred in the income of agricultural households between the 2012-13 and 2018-19 campaigns.

It should be mentioned at the outset that in the 77th cycle of the NSS, an agricultural household was defined as a household receiving a product value of over Rs 4,000 from agricultural activities.

These activities included the cultivation of field crops, horticultural crops, fodder crops, plantations, animal husbandry, poultry, fishing, pigsty, beekeeping, vermiculture, sericulture, etc.

The other criterion was that such a household must have at least one independent member in agriculture, either in main status or in subsidiary status during the last 365 days.

Households that were entirely agricultural working households and households that received all income from coastal fishing, rural artisan activity and agricultural services were not considered agricultural households.

They were kept out of the scope of the investigation. The income threshold used in the 77th cycle of the NSS to identify farm households has been updated by adjusting for inflation.

However, in the 70th cycle of NSS, an agricultural household was defined as a household receiving a product value of over Rs 3,000 from agricultural activities.

Such a household also had at least one independent member in agriculture either as a principal or as a subsidiary during the last 365 days.

Readers should note here that in the NABARD All India Rural Financial Inclusion Survey 2016-17 (i.e. NAFIS 2016-17), the annual farm income threshold was Rs 5,000, which was not been discussed in this article.

Average monthly income (in Rs) per agricultural household (considering only paid expenses) of the 2012-13 and 2018-19 campaigns

To note: Inflation rate calculated by the author

Source: SAS 2019 NSS 77th round; SAS 2013 NSS 70th round; Indian Economy Statistics Handbook 2020-21, RBI; Indian Economic Statistics Handbook 2015-16, RBI

The graph above shows that the average monthly income of a farm household (when only paid expenses are taken into account) was 10,218 rupees in the 2018-19 crop year.

It was obtained by adding together various elements, that is to say “salary income” (Rs 4,063), “income from the rental of land” (Rs 134), “net income from crop production” (Rs 3,798), “net income from agricultural animal production” (Rs 1,582) and “net income from non-agricultural activities” (Rs 641).

The average farm income (i.e. Rs 6,427) of a farm household (when only paid expenses are taken into account) during the 2012-13 crop year was calculated by totaling various components.

These included “salary income” (Rs 2,071), “net receipts from cultivation / crop production when only paid expenses are taken into account” (Rs 3,081), “net receipts from animal husbandry. animals ”(763) and“ net receipts from a non-agricultural business ”(Rs 512).

The recently published report (NSS 77th cycle) clearly mentions that “farm household income from land rental” was not collected in previous SAS cycles.

However, in most media reports this fact has been overlooked. They compared the average farm income of a farm household between the 2012-13 and 2018-19 crop years.

They later concluded that average monthly farm incomes increased by nearly 59.0% between these two crop years. However, this type of comparison is methodologically incorrect as it compares apples to oranges.

In order to compare apples to apples, “land rental income” must be deducted from the average monthly income of a farm household in the 2018-19 crop year.

Once done, the modified average monthly farm income turns out to be Rs 10,084 for the 2018-19 crop year.

It would now be methodologically correct to assert that the average monthly income (in nominal terms) of an agricultural household has risen from Rs 6,427 to Rs 10,084 between the 2012-13 and 2018-19 seasons, or about 56.9 %.

Change in real farm income

It is found after calculation that the average “consumer price index – combined” increased by almost 34.0% between the 2012-13 and 2018-19 crop years.

If we take this into account, the growth in average monthly income per farm household (taking into account only expenses paid) in real terms during this period was 22.9% in India.

The average “CPI – Rural” increased by around 35.3% between the 2012-13 and 2018-19 campaigns.

If we take this into account, then the growth in average monthly income per farm household (considering only paid expenses) in real terms during this period was 21.6 percent at the national level.

In other words, in real terms, the average monthly income of a farm household (considering only paid expenses) increased between the 2012-13 and 2018-19 seasons. Seeing this, many would conclude that all is well for the farming community.

It should be borne in mind that the average monthly income per farm household (taking into account only paid expenses) is not the same as “net income / revenue earned by a farm household through cultivation”.

As explained above, the latter is only one component of the former.

If the inflation rate of 34.0 percent between crop years 2012-13 and 2018-19 (in average “consumer price index – combined”) is taken into account, then the growth in “net income Average monthly crop or crop production ‘per farm household (taking into account only expenses paid) in real terms during this period was -10.7 percent in India.

If the inflation rate of 35.3% between the 2012-13 and 2018-19 crop years (in average “CPI – rural”) is taken into account, then the growth in “monthly net revenue from crop production or of culture ”is taken into account. per farm household (considering only expenses paid) in real terms during this period was -12.0 percent in India.

Therefore, it can be said that in real terms, the “average monthly net income earned by a farm household through crops” (considering only paid expenses) decreased between the 2012-13 and 2018-19 seasons.

Between campaigns 2012-13 and 2018-19, the largest increase (in percentage) in real terms was observed for “average monthly livestock income”, followed by average monthly “wage income”.

Reference period

For the 77th cycle of the NSS, information was collected mainly for the agricultural year 2018-19 in two visits, namely visit-1 and visit-2.

For crops, information on culture expenditure and revenue was collected for the period July to December 2018 on visit-1 and for January to June 2019 on visit-2.

However, it was ensured that all crops, main or not, harvested during the 2018-19 agricultural year were duly taken into account in visit-1 or visit-2.

The same reference period was used for collecting information on productive assets. For the other data elements, different reference periods were used, such as “at the date of the survey” for indebtedness, “last 30 days” for animal husbandry and non-agricultural activities.

For information on land ownership, productive assets and cultivation expenditure and income, income from wages / salaried jobs, income from pensions / remittances, the reference period was from July to December 2018 in visit-1 and from January to June 2019 in visit-2.

The NSS 70th Cycle Survey was conducted in the 2013 calendar year (January 1, 2013 to December 31, 2013). The same household was visited twice during the survey period.

The period of the first visit (visit-1) was from January to July 2013 and that of the second visit (visit-2) was from August to December 2013. For crops, information on the expenditure and income of the culture were collected for the period from July to December. , 2012 in visit-1 and from January to June 2013 in visit-2.

However, it was ensured that all crops, main or not, harvested during the 2012-13 agricultural year were duly taken into account in visit-1 or visit-2. The same reference period was used for collecting information on productive assets.

For the other information, different reference periods were used, namely “at the date of the survey” for the possession of land and the indebtedness, “last 30 days” for the breeding of animals, the companies not agricultural and consumer spending and ‘Last 365 days days for the main source of income.

For information on productive assets and expenditure and culture revenue, the reference period was from July to December 2012 in visit-1 and from January to June 2013 in visit-2.

Shambhu Ghatak is Principal Associate Researcher, Inclusive Media for Change Project, www.im4change.org

The opinions expressed are those of the author and do not necessarily reflect those of Down to earth