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DOUBLING FARMERS’ INCOMES:

Strategies and Recommendations for Tamil Nadu

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Acknowledgements

We would like to sincerely thank NABARD for funding, and supporting this study in its entirety. In

particular, the team is grateful to Mr. S Nagoor Ali Jinnah (CGM, NABARD), Dr. BD Nayak, Mr

Sankaranarayan, Mr. Greville Kharlukhi, and all other officials from NABARD who facilitated the smooth

progress of the study. We are grateful to Mr. N Srinivasan, whose inputs and guidance have been

invaluable to the team, and Ms. Parul Agarwal, and Mr. Amulyakrishna Champatiray from IFMR LEAD for

their constant guidance and suggestions. We are extremely thankful to the stakeholders who took some

time out of their valuable schedules to speak with us, and provide inputs and comments on the topic at

hand. We also appreciate the IFMR LEAD field team’s efforts and commitment to this study – this has

been instrumental to the timely and proper completion of all data collection.

Copyrights

This study was commissioned by NABARD. The Financial Inclusion team at IFMR LEAD conducted the

study. The entire study was designed and conducted by a team of researchers comprising Dr. Ajay

Tannirkulam, Suraj R Nair, and Divya Mary, who were the primary authors of this report. Additional

support in report writing was provided by Anisha Singh, and Khushboo Gupta.

Authored by IFMR LEAD

Copyright © NABARD, and IFMR 2017. All Rights Reserved. Published in India

This publication or parts of it may not be reproduced, stored by means of any system or transmitted, in

any form or by any medium, whether electronic, mechanical, photocopied, recorded or of any other type,

without the prior permission of NABARD and IFMR LEAD.

Abbreviations

APMC - Agricultural Produce Market Committee

ATMA - Agricultural Technology Management Agency

DAC - Department of Agriculture and Cooperation

DAP - Di-Ammonium Phosphate

DFI - Doubling Farmers Incomes

E-NAM - Electronic National Agricultural Market

E-RAKAM - e-Rashtriya Kisan Agri Mandi

FPC - Farmer Producer Company

FPO - Farmer Producer Organization

GSDP - Gross State Domestic Product

GSVA - Gross State Value Added

ICT - Information and Communications Technology

IFS - Integrated Farming Systems

JAM - Jan Dhan-Aadhar-Mobile

KAPC - Karnataka Agricultural Produce Committee

KVK - Krishi Vigyan Kendra

LMT - Lakh Million Tonnes

MSME - Micro, Small and Medium Enterprises

MSP - Minimum Support Price

NABARD - National Bank for Agriculture and Rural Development

NADP - National Agricultural Development Program

NCDEX - National Commodity and Derivatives Exchange Limited

NEM - North East Monsoon

NFSM - National Food Security Mission

NGO - Non Governmental Organization

NMOOP - National Mission on Oilseeds and Oil Palm

NP/NPKs - Nitrogen-Phosphorous/ Nitrogen-Phosphorous-Potassium

NSDA - National Skill Devlopment Authority

NSSO - National Sample Survey Office

PCI - Per Capita Income

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PHH - Priority Household

PMFBY - Prime Minister's Fasal Bima Yojana

ReM - Rashtriya e Market Services Pvt Ltd.

RIDF - Rural Infrastructure Development Fund

RRB - Regional Rural Bank

SFAC - Small Farmers Agri-Business Consortium

SHC - Soil Health Card

SRI/ SPI - System of Rice/ Paddy Intensification

SSI - Sustainable Sugarcare Initiative

SWM - South West Monsoon

TANHODA - Tamil Nadu Horticulture Development Agency

TAWDEVA - Tamil Nadu Water Development Agency

TFP - Total Factor Productivity

UMP - Unified Market Platform

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Executive Summary

Agriculture and its allied sectors play a very vital role in the economy of Tamil Nadu. Around 42 percent

of the state’s workers rely on cultivation or on agricultural wage labour – a decline of 7 percentage points

when compared with the data from Census 2001. On the whole, the sector accounted for 11.6 percent of

the Gross State Value Added (GSVA) in 2016-17.

Tamil Nadu is a highly water constrained state, given that it has access to only about 3% of India’s

freshwater resources. The state has also been at the mercy of multiple weather shocks over the last

decade particularly. In 2016-17, the state faced the worst rainfall in the last 140 years. In addition to the

failure of both monsoons, there was reduced availability of Cauvery water, poor storage in all reservoirs,

the cyclone Vardah, and severe drought.

Understanding the importance of the agricultural sector to both household economies and the state

economy as well as the increasing constraints specific to the agricultural sector, the TN State government

had declared “Doubling Yield, and Tripling Income” as its goal for agriculture in the TN Vision 2023

document. The objective was to ensure that the benefits of economic growth are made available to one

and all, including the farmers and the rural poor. In this context, understanding current income levels of

farmers in the state is particularly important, as this provides a benchmark to assess the progress so far,

and understand the necessary actions and focus areas that needs to be prioritised. This also provides an

opportunity to assess strategies being followed to double farmers’ incomes across the country, in line

with the Prime Minister’s announcement, and understand which of these could be the most appropriate

given the local state context.

The study utilizes a ‘mixed methods approach’, entailing both quantitative data collected through well-

designed survey instruments and qualitative data collected through focus groups and stakeholder

discussions etc. During the period July -December 2017, quantitative data (through household surveys),

and qualitative inputs (from focus groups and stakeholder interactions) were compiled and collated into

this report. The household survey sample comprised of 854 households, spread across the four sample

districts in four agro-climatic zones of Tamil Nadu. Respective blocks and districts for the study were

selected based on relevant indicators such as ground water potential and irrigation intensity, per capita

income indicators and contribution of agriculture towards the District Domestic Product. 1

Three blocks were selected within a district based on ground water potential data (refer2); one each from

the respective zones ie., Over exploited (greater than 100 percent water consumption), Critical/Dark

1 Refer table on groundwater depletion levels between 2012 and 2013. 2 http://www.nicra-icar.in/nicrarevised/images/publications/Tbu_NRM_Guidelines%20For%20Augmentation%20Of%20Groundwater%20Resources.pdf )

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( between 90-100 percent) and Semi-critical/ Grey (70-90 percent). The following blocks were selected

within each district based on the above indicators.

Villupuram: Kallakurichi, Chinnasalem, Gingee

Dharmapuri: Pennnagaram, Hosur, Dharmapuri

Nagapattinam3: Kolidam, Mayiladuthurai and Thirumarugal

Ramnathapuram: Thirupullani, Tiruvadanai and Ramnathapuram

Two villages with reasonable total area of land under cultivation were selected within a block, one each

from the north and south of the block. Within a particular village, based on consultations with the local

agricultural officers at the village or panchayat level and the land owning criteria, 35 households were

randomly selected for the detailed household survey. An average number of farming households/farmers

identified for the household survey within land ownership categories in a village have been detailed

below:

More than 5 acres: 5 farmers (14 percent)

2.5-5 acres: 10 farmers (29 percent)

Less than 2.5 acres: 20 farmers (57 percent)

Data collected from farmers as a part of this study shows that (Section 3), there has been a decrease in

farmers’ real income in Tamil Nadu in 2016-17, mainly due to the multiple weather shocks, and related

issues. The annual income for farmers in the 4 districts is estimated to be ₹ 125,228 (2015-16 prices).

Thus, if the Doubling Farmer’s Incomes Committee’s target of ₹ 232,505 for Tamil Nadu is seen the

benchmark that has to be achieved in the next 5 years (by 2022-23), the implication is that farm based

incomes have to increase by 134% from the current level, assuming that the share of farm income in the

total income basket is around 55%. At the same time, this also places the demand of an annual 7% growth

in non-farm incomes during the period 2017-18, which is slightly higher than the DFI committee’s estimate

of 5% for the longer 7-year duration. At current income levels, therefore, a substantial amount of

coordinated effort, across various stakeholders and government agencies will be required over the next

5 years to double farmers’ incomes in Tamil Nadu. For small and marginal farmers in particular, it seems

unlikely that focusing on off-farm income sources can significantly contribute to accelerating farmers’

incomes.

3 Declared as distressed in 2016-17

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Thus in the immediate 5 years to come, the highest priority should be given to actions focused on:

- Improving resource use efficiency (Aim to achieve at least a 25% improvement in resource use efficiency)

- Focusing on diversifying to high-value crops (Aim for 14-15% contribution of diversification to high-value crops in increasing farm incomes)

- Significantly improving price realization by farmers (Developing strategies to improve price realization; 15% contribution to income growth to be the aim)

- Boosting livestock sector productivity

Towards this end, potential short term strategies that the state may undertake are:

1. Improving Cultivation Strategy in the Dry Season:

- Identification of district/ agro-climatic zone appropriate low-cost/high-return crops for cultivation

in the off season – vegetables, herbs, spices etc. is an immediate requirement in the Tamil Nadu

context. 5 to 10% of the farmers’ land must be devoted to these crops to ensure year round

income.

- ‘Machan’ based/ vertical growth based models (<100 sqft), that are cheap to implement and

utilize minimal resources, while providing high returns must be explored. They provide at least

two harvests a year, with average profit >₹ 5000 per harvest4. Immediate pilots should be taken

to ensure the scalability and easy replicability of these interventions

- Larger farmers can be encouraged to grow a larger share of tree crops on their land.

2. Improving Farming Practices through Better Nutrient Management

- The SHC scheme must cover all farmers, and soil testing facilities must be made available within

one hours’ travel from any given farm. Necessary performance indicators/ quality standards must

be maintained for Soil test labs to be enforced strictly.

- Additionally, the TN government must explore all avenues to make soil testing mandatory for all

farmers, at least twice a year, and link farmers’ access to the fertilizer subsidy (for nitrogen based

fertilizers) in particular to soil test results.

- The SHC can also be linked to other incentives in order to enforce its serious usage – like credit,

in the longer term – these linkages effectively incentivize soil health.

- The efficacy of the proposed interventions must be determined by implementing pilots

immediately.

3. Providing a strong crop insurance product to the farmers

- Better performance monitoring for both insurers and state government.

- Profits must benefit the farmers as well – as a means to improve confidence, and boost renewal

rates

- Insurance market needs to be made more competitive, especially with regards to coverage of

high-risk/ high return crops like mushrooms.

4 Data collected from field visits in Uttar Pradesh

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4. Improving the usage of warehousing infrastructure

- Immediate need to incentivize farmers to use warehouses, and for warehouses to cater to farmers

(current usage rate by farmers is under 5 per cent in Tamil Nadu)

- Various innovations may be considered to improve the value proposition for warehouses – these

could range from funding warehouses to develop their own procurement infrastructure, to adding

a number of grading/ sorting, and post-processing options on site. These additional services will

have to vary from district to district, catering to the various needs arising from the specific crops

cultivated etc. Testing and piloting of these interventions can begin on a pilot basis, on priority.

- There is a dire need for cold storage infrastructure to be scaled up immediately – however, cold

storages alone will not solve the wastage problem, without also improving the availability of cold

storage trucks, and other infrastructure that ensure end-to-end flow of fruits/ vegetables and

other produce, with little to no disruptions.

- Collective approaches will be key to ensuring that ease of access for farmers to warehouses and

other storage facilities improves, while real transaction costs for warehouses will come down

when interacting with groups, as opposed to individual farmers.

5. Revamping the Agricultural Extension System

- There is a need for constant training, capacity and knowledge upgradation for extension officers,

in order to ensure that they are able to better handle the requirements of the various farmers

they work with

- Leveraging new forms of technology to ensure that details on latest farming practices, market

prices, and other such information could be key to ensuring better output from farms in Tamil

Nadu.

- Extension workers need to be able to ensure that recommendations provided to the farmers are

aligned with the agro-climatic conditions specific to the respective areas.

6. E-NAM

- Evidence from other states has shown that relying on online marketplace type approaches has

very significant increases in prices realized by farmers, in the range of 10% on average.

- It is too early to assess the impact of Tamil Nadu’s markets under e-NAM, on price realization;

90% of the markets are yet to be brought under the e-NAM scheme. Ensuring their immediate

conversion should be a priority action point for the government.

7. Food Processing

- Value addition from food processing has the genuine potential to increase the earnings for all of

the stakeholders across various value chains in Tamil Nadu.

- In Tamil Nadu, immediate steps should be taken to improve the quality of supply chain

management.

- Tying in with the value chain approach, identifying high value crops, that have large potential for

value enhancement through food processing must be identified, and farmers encouraged to move

towards these value chains.

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8. Accelerating Income from Livestock, and Promoting Integrated Farming

- Currently, farmers in Tamil Nadu earn under 10% from the livestock sub-sector. Ensuring that the

contribution of this sub-sector is at least doubled in the immediate short term is vital in ensuring

that farmers’ incomes are enhanced.

- Particularly small and marginal farmers need to have at least a couple of milch animals, that are

sufficiently productive to ensure that commercial sale, and personal consumption are both

possible.

9. Digitizing the agricultural value chain

- As collective/ group-based approaches are increasingly being highlighted as the means to reduce

input costs, and improve profit margin for farmers, the role of digital services in improving these

outcomes even more must be considered, as a means to further reduce costs, and streamline

various processes.

- Digitized end to end platforms have the potential save huge sums of money for farmer groups,

which can be spent on various other pursuits, such as infrastructure development/ equipment

purchase, etc.

- The idea is not new – various portals have been launched in the recent years, ranging from e-Kisan

(by the SFAC), to e-RAKAM (a portal that enables farmers to sell their food produce to bigger

markets), and most recently, the e-NAM that links the various mandis. The objective must to be

to centralize these disparate approaches into one common portal, that can be administered at

the level of the state governments.

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Contents

List of Tables and Figures ............................................................................................................................ 12

1. Agriculture in Tamil Nadu – An overview ....................................................................................... 14

2. Farming Households in Tamil Nadu (4 Districts) - An Assessment ................................................. 23

2.1 Present Estimates ....................................................................................................................... 23 2.2 Methodology, and Sample Selection .......................................................................................... 24 2.3 Key Stakeholders - Agriculture in Tamil Nadu ............................................................................ 27

3. Data Analysis, and Key Observations .............................................................................................. 29

3.1 Definitions, and Reference Period ............................................................................................. 29

3.2 Key Observations........................................................................................................................ 29

4. Increasing Farmer’s Incomes – A Review of Strategies and Approaches Across India ................... 71

4.1 Doubling Farmers’ Incomes - Is There a Precedent? .................................................................. 71 4.2 Consideration of Other Determinants ........................................................................................ 72 4.3 Building a Comprehensive Roadmap to Double Farmers’ Incomes – Current Strategies .......... 73

5. Doubling Farmers’ Incomes in Tamil Nadu – The Way Forward? ................................................... 80

5.1 Short term recommendations: ................................................................................................... 88 5.1.1 Improving cultivation strategy in the dry season: .................................................................. 88

5.1.2 Improving Farming Practices Through Nutrient Management ............................................... 89

5.1.3 Providing a strong crop insurance product to the farmers ..................................................... 91

5.1.4 Improving the usage of warehousing infrastructure .............................................................. 94

5.1.5 Revamping the agricultural extension system ........................................................................ 98

5.1.6 Rethinking agricultural credit .................................................................................................. 99

5.1.7 E-NAM ................................................................................................................................... 101

5.1.8 Food processing – the untapped potential ........................................................................... 102

5.1.9 Accelerating Income from Livestock, and Integrated Farming Systems ............................... 103

5.1.10 Digitizing the agricultural value chain ................................................................................... 105

5.2 Longer Term Recommendations ............................................................................................... 105 5.2.1 Skill Development and Off-Farm Income Opportunities ...................................................... 106

5.2.2 Income support for farmers: ................................................................................................. 107

5.2.3 Addressing the issues of urea subsidy: ................................................................................. 107

5.2.4 Minimum Support Price: ....................................................................................................... 108

5.2.5 The Role of the Private Sector? ............................................................................................. 110

5.2.6 Land Reforms ........................................................................................................................ 111

6. Conclusion ..................................................................................................................................... 112

Appendix A ........................................................................................................................................... 114 Appendix B: .......................................................................................................................................... 118 Appendix C ............................................................................................................................................ 120

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List of Tables and Figures Table 1. Agricultural Land-holdings in India _________________________________________________________ 15 Table 2. Foodgrain Production in Tamil Nadu (LMT) __________________________________________________ 16 Table 3. Area, Production and Productivity (2017-2018) _______________________________________________ 20 Table 4. Sampled Districts - Key details ____________________________________________________________ 25 Table 5. Stakeholders in Agriculture- Tamil Nadu ____________________________________________________ 28 Table 6. Sample Composition ____________________________________________________________________ 30 Table 7. Cultivation Experience ___________________________________________________________________ 36 Table 8. Animal Husbandry/ Livestock Rearing ______________________________________________________ 37 Table 9. Experience in Animal Husbandry/ Livestock Rearing ___________________________________________ 38 Table 10. Livestock/ Poultry Ownership ____________________________________________________________ 39 Table 11. Value of Livestock/ Poultry Owner per HH __________________________________________________ 39 Table 12:Distribution of Number of Holdings and Area Operated (Tamil Nadu) ____________________________ 41 Table 13:Owned, and Irrigated Land ______________________________________________________________ 41 Table 14: Perennial Crop Cultivation ______________________________________________________________ 45 Table 15: Household Indebtedness ________________________________________________________________ 46 Table 16: Performance of Principal Crops in Tamil Nadu _______________________________________________ 51 Table 17: Yield Gap in Select Crops ________________________________________________________________ 51 Table 18: Yield and Revenue per Hectare ___________________________________________________________ 52 Table 19: Comparison between Prices Data from Survey and MSP _______________________________________ 52 Table 20. Post-Harvest Storage (On-farm) in the last Three Years _______________________________________ 54 Table 21. Type of Storage Facility _________________________________________________________________ 55 Table 22. Total Storage Capacity _________________________________________________________________ 55 Table 23. Post-Harvest Losses per Farmed Season ___________________________________________________ 56 Table 24. Training and Information _______________________________________________________________ 58 Table 25. Mechanization. _______________________________________________________________________ 60 Table 26. Crop Insurance ________________________________________________________________________ 61 Table 27. Mean Annual Income - Various Sources ____________________________________________________ 65 Table 28. Components of Income - Survey Data _____________________________________________________ 67 Table 29. Income Composition - by Land-holding Categories (₹ Values) __________________________________ 68 Table 30. Net Receipts from Cultivation ____________________________________________________________ 68 Table 31. Estimated Amount of Investment _________________________________________________________ 70 Table 32. Composition of Farmers' Income _________________________________________________________ 73 Table 33. Impact of Irrigation on Income (₹) (Jin et al. 2012) ___________________________________________ 75 Table 34. Prospects of growth in farm income (Satyasai & Mehrotra, 2016) ______________________________ 78 Table 35. Parameters Affecting Farm Income _______________________________________________________ 82 Table 36. Contributions to Growth in Farm Income ___________________________________________________ 82 Table 37. Revised Projections - 5 year Contributions to Growth in Farm Income ____________________________ 82 Table 38: Crop Insurance ________________________________________________________________________ 92 Table 39: Crop quantity produced and sold (in kgs), and revenue earned over last farmed season _____________ 94 Table 40: Price Realisation Crop-wise (District-wise) _________________________________________________ 108 Table 41. Fertilizer Prices ______________________________________________________________________ 114 Table 42. Fertilizer Usage ______________________________________________________________________ 115 Table 43. Fertilizer Requirements (MT) ___________________________________________________________ 115 Table 44. Nutrient Subsidy Rates ________________________________________________________________ 116 Table 45. YoY Increase in Urea MRP (Projected) ____________________________________________________ 116 Table 46:Level of Depletion of Ground Water (Difference between 2012 and 2013) ________________________ 118 Table 47. Yield and Revenue per Hectare __________________________________________________________ 118 Table 48:Type of Storage Facility ________________________________________________________________ 120

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Figure 1. Sector-wise Share of GSVA (Current Prices) ................................................................................................. 14

Figure 2. Paddy, Millets and Pulses - Total Production in TN ....................................................................................... 14 Figure 3. GSVA -Sub-sectors of Agriculture (Current Prices) ........................................................................................ 16 Figure 4. Agro-climatic zones of Tamil Nadu ............................................................................................................... 17 Figure 5. Farm Households with Income Below Poverty Line (2011-12) ...................................................................... 23 Figure 6: Agricultural Households by Social Group ...................................................................................................... 31 Figure 7. Sample Composition - Social Groups............................................................................................................. 31 Figure 8. Respondent Age ............................................................................................................................................ 33 Figure 9. Education Status ........................................................................................................................................... 35 Figure 10. Ration Card Type ......................................................................................................................................... 37 Figure 11. Average Size of Landholdings ..................................................................................................................... 40 Figure 12. Sample Composition - by Landholding Class ............................................................................................... 41 Figure 13. Main Income Earning Activities .................................................................................................................. 42 Figure 14. Crops Cultivated - Last Complete Farming Season ..................................................................................... 44 Figure 15. Loan Sources across Land Categories ......................................................................................................... 47 Figure 16. Loan Sources ............................................................................................................................................... 48 Figure 17: Loan Sources across Land Categories ......................................................................................................... 48 Figure 18. Largest Outstanding Loan - Source ............................................................................................................. 49 Figure 19. Primary Purpose - Largest Outstanding Loan ............................................................................................. 49 Figure 20. Main Information Sources for Farmers ....................................................................................................... 59 Figure 21: Average size of Landholdings ..................................................................................................................... 62 Figure 22: Durables owned by household .................................................................................................................... 64 Figure 23. Share of Income Categories ........................................................................................................................ 67 Figure 24. Income Composition - by Land-holding Categories..................................................................................... 68 Figure 25 Increasing Farmer's Incomes - Targets. ....................................................................................................... 69 Figure 26. Yield gaps (Satyasai & Mehrotra, 2016) ..................................................................................................... 74

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1. Agriculture in Tamil Nadu – An overview

Agriculture and its allied sectors play a very vital role in the economy of Tamil Nadu. Around 42 percent

of the state’s workers rely on cultivation, or on agricultural wage labour – a decline of 7 percentage points

when compared with the data from Census 2001. On the whole, the sector accounted for 11.6 percent of

the Gross State Value Added (GSVA) in 2016-17. Following a trend similar to the rest of the country, the

share of the agriculture sector in Tamil Nadu’s economy has declined sharply. In the period 1981-1993 the

share of the sector in the Gross State Domestic Product (GSDP) was 23 percent, which declined to 11.87

percent in 2004-05 and further to 7.76 percent in 2013-14. The employment in agriculture however

reduced by a mere 10 percent, from 54 to 44 percent during the period 1981-2010. The major crops

cultivated in the state include paddy, millets, pulses, oilseeds, sugarcane, cotton, coconut and

horticultural crops. Paddy is the staple food crop and is extensively cultivated in all the districts in a normal

area of 1.77 million hectares, with the production being around 6.4 million tonnes. On average, paddy

accounts for about 30 percent of the gross sown area and 50 percent of the total irrigated area of the

State.

Figure 1. Sector-wise Share of GSVA (Current Prices) Figure 2. Paddy, Millets and Pulses - Total Production in TN

Agriculture in the state is predominantly rain-fed. It depends either on irrigation through the Cauvery

system, or on the North East Monsoons (NEM). There are also 15 major reservoirs which receive inflow

mainly during South West Monsoon (SWM). As a result of these dependencies, Tamil Nadu is one of the

most water starved states in the country – it has access to roughly 3 per cent of the nation's water

resources. The per capita availability of water resources is 750 cubic meters per year as compared to the

all India average of 2,200 cubic meters. Tamil Nadu receives an annual rainfall of around 921 mm. As the

0%

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2011-12 2012-13 2013-14 2014-15 2015-16

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state lies in the rain shadow region of Western Ghats, it is deprived of rains during SWM season (which is

the assured monsoon for the rest of the country, and thereby is forced to depend primarily on the NEM

in the months of October - December to recharge its water resources. Consequently, any monsoon failure

leads to acute water scarcity and severe drought, as seen during 2012-13 and 2016-17. Between 2011 and

2013, the gross area sown reduced by 12.7 percent, gross area irrigated by 15 percent and fallows

increased by 17.3 percent. The total production dropped by 45 per cent, from 101.52 lakh tonnes to 56.05

lakh tonnes. Production of paddy declined by 46 percent. In 2016-17, the state faced the worst rainfall in

the last 140 years. In addition to the failure of both monsoons, there was reduced availability of Cauvery

water, poor storage in all reservoirs, the cyclone Vardah, and severe drought etc. ultimately leading to a

decrease in cultivated area under crops. This resulted in a decline in paddy production of nearly 50

percent from 12 million tonnes to 6.5 million tonnes. This correlates with the crop coverage data, which

fell more than 40 percent from 1.27 million hectares in 2015-16 to 0.74 million hectares in 2016-17. In

this period, the area under paddy cultivation declined by 0.48 million hectares to 1.27 million hectares. In

such a scenario, the use of technology becomes vital for maximizing production. However, the pattern of

land ownership imposes limitations on the kinds of technologies that can be adopted for agricultural

development. The average size of land holding in the State is only 0.80 hectare compared to 1.15 hectare

at the National level. The Agricultural Census (2010 -11) shows that marginal and small holdings (less than

2 hectares) account for 92 percent of the total holdings and 61 percent of the total operated area in the

state. The small land sizes, being inefficient for conventional technology and machinery use, have led to

a process of marginalization of small and marginal farmers and casualization of agricultural labourers.

Table 1. Agricultural Land-holdings in India

Category Number of holdings (Millions)

Area operated (Million ha.) Average size of holdings (ha.)

2005-06 2010-11 2005-06 2010-11 2005-06 2010-11

Marginal (< 1 hectare) 6.23 6.27 2.29 2.29 0.37 0.37

Small (1 to 2 hectare) 1.23 1.18 1.72 1.64 1.39 1.39

Medium ( 2 to 10 hectare) 0.71 0.65 2.43 2.20 3.41 3.37

Big (> 10 hectare) 0.02 0.02 0.39 0.35 20.58 20.59

Total 8.19 8.12 6.82 6.49 0.83 0.8

Source: Agricultural Census (2010 -11)

During 2011-12 agricultural production made a record with food grain production exceeding 10 million

tonne mark. However, as discussed above, the drought of 2012-13 led to a growth rate of negative 10

percent highlighting the high vulnerability of agriculture to climate uncertainties and its impact on overall

16

growth of the state. As per the Final Estimate of 2015-16, the food grain production of the State is 113.69

Lakh MT which is 43% increase over the food grain production achieved in 2010-11. During the period

2011-12 to 2016-17, the value added from the livestock sector has also increased, standing at 36% of the

total output from the primary sector currently.

Table 2. Foodgrain Production in Tamil Nadu (LMT)

Crop 2011-12 2012-13 2013-14 2014-15 2015-16* 2016-17**

Rice 74.59 40.5 71.15 79.49 73.57 40.38

Millets 23.24 13.4 32. 73 40.79 34.27 16.63

Pulses 3.69 2.13 6.14 7.67 5.85 3.31

Total Food grains 101.52 56.05 110.02 127. 95 113.69 60.32

*Final estimate, **Fourth advance estimate

Figure 3. GSVA -Sub-sectors of Agriculture (Current Prices)

Tamil Nadu has seven agro-climatic zones based on soil typologies, precipitation and irrigation, and

cultivation patterns. Among the various zones the Cauvery Delta zone enjoys relatively higher rainfall

when compared with the rest of Tamil Nadu. It benefits from a good share of the NEM in normal years.

Additionally, irrigation water through canals is also available for six to seven months in normal rainfall

years, in the catchment area of the Cauvery River. It is one of the most economically important zones and

is considered to be the ‘granary of Tamil Nadu’. However, the coastal parts of the region are affected by

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Forestry and logging Fishing and aquaculture

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salinity due to sea water intrusion. In the Northeast zone, which includes the Palar river basin and its

catchment, irrigation from natural and man-made tanks is possible. The annual rainfall of the zone

(excluding hills) varies from 800-1400 mm. The Northwest zone, which is characterized by semi-arid to

sub-humid climate with frequent occurrence of drought, has a mean Annual Rainfall of 877.6 mm. The

south zone receives on average about 816 mm of annual rainfall and like the Northwest zone is prone to

frequent droughts. The Western Zone is the only part of the state that receives some rain from both the

SWM, and NEM. It receives around 774.6 mm of rainfall on average, which is on the lesser side.5

Figure 4. Agro-climatic zones of Tamil Nadu

Despite constraints on land and water availability, Tamil Nadu registers high agrarian productivity

compared to the other states in India. For crops such as Maize, Cumbu, Coarse Cereals, Groundnut,

Oilseeds, the productivity is close to double the national average in Tamil Nadu. As far as horticultural

crops are concerned, Tamil Nadu is at the fore – it is the largest producer of Banana, Tapioca, Plantation

Crops, and Loose Flowers in the country. It is indeed noteworthy that the state has identified horticulture

crops as high-return/ high-value, and invested in promoting their cultivation.

5 Sources: http://planningcommission.gov.in; Tamil Nadu Agriculture University

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Overall, Tamil Nadu has aimed to ensure that farmers receive support from relevant schemes and policies,

in order to ensure their improved productivity and wellbeing. In 2012-2013, the annual policy note

discussed the state government’s commitment to usher in the Second Green revolution in Tamil Nadu

through various schemes targeting at improving agricultural production, food security and balanced

nutrition. The strategy has been to ‘develop agriculture at the farm level’ through farm-level

interventions such as computer-based Farm Crop Management System integrating farmers, extension

and research activities and ensuring timely availability of quality inputs, adoption of suitable technologies,

monitoring crop growth as well as pest and diseases, understanding market linkages and connectivity of

village farms to nearby markets; converting fallow lands suitable to agriculture into cultivated areas,

promoting Integrated Farming Systems and accommodating agriculture with allied activities such as

animal husbandry, poultry, aquaculture, sericulture etc. and adopting crop diversification for sustaining

farmer incomes. Initiatives such as the comprehensive Farmers Integrated Handbook providing farm-

based recommendations and suitable cropping patterns based on soil, irrigation and microclimate,

Permeation of Innovative technologies such as SRI, technologies for Improved pulses production at farm

level as a whole village concept, Sustainable Sugarcane Initiatives, Precision Farming, Micro-irrigation etc.

were implemented with the aim of doubling production and tripling farmer incomes, especially small and

marginal ones. State government has appointed specialists and other technical staff to strengthen the

farm-level extensions activities and ensure the penetration of existing schemes to deserving farmers, with

the target of doubling food grain production to 120 LMT in 2012-13 during the 12th five-year plan.

Some of the state government’s approaches towards improving the economic status of such farmers have

included increasing their net cultivable area and productivity through crop-specific interventions, soil

health and water resources management approaches, input supply management system, crop specific

strategies for bridging yield gaps, increasing productivity and farmer incomes by three-folds through

mainly farm-based interventions and IFS approach, crop diversification especially through commercial

crops, developing research and extension activities with end to end involvement of farmers and capacity

building. The thrust areas according to the government as per the 2012-13 agriculture policy note that

introduced the concept of doubling yields and tripling incomes, focusses on soil health care and per area

unit productivity, revamping agriculture infrastructure, promoting micro irrigation and water use

efficiency, increased cropping and irrigation intensity, improved access to quality inputs, and augmenting

farmer incomes. The agriculture policy note 2017-2018 details a stronger policy framework towards

achieving the second green revolution, including farmer friendly strategies for increasing cropped area,

evolving crop-specific practices to improve productivity and farmers’ income, designing infrastructure

19

that could transform subsistence farming into a commercial activity, mechanisation of agricultural

operations creating time-cost efficiencies, promoting the use of ICTs in improving farming knowledge,

fostering efficient marketing systems and extension services. Plagued with water scarcity, the state

government has taken steps to popularize micro-irrigation schemes in the state, that aims to ensure

“more crop per drop” and ensure quality agricultural produce with efficient usage of inputs. 100 percent

subsidy is extended to small and marginal farmers, while 75 percent subsidy is provided to other farmers.

Tamil Nadu “Vision 2023” aims to ensure that the benefits of its rapid economic growth to reach its

farmers, and making it one of the economically prosperous and progressive states of the county. With the

aim of developing agriculture at the farm level, the state has laid down certain objectives and strategies

towards achieving the second green revolution. The state objectives as per the recent 2017-2018 policy

note constituted revamping institutional mechanisms for ‘policy, planning, monitoring and evaluation6’,

ensuring sustainable utilization and conservation of natural resources, devising appropriate agro-climatic

and eco-friendly farming systems, increasing farmer incomes through diversification towards high value

farming and ‘retaining the competence in food crops and nutritional security’ , revamping and developing

infrastructural facilities in seeds, fertilizers, pesticides, agricultural implements, extension services, value

addition and marketing across agricultural supply chains and facilitating adaptation and mitigation

towards climate change. Some of the strategies devised towards Vision 2023 included increasing

cultivated area by bringing fallow lands under cultivation, increasing agricultural production and

productivity through improving soil health and input efficiency, devising an ecology-cum-economics crop

cafeteria in irrigated and rain-fed regions wherein poor farmers can choose crop combinations and

adopt modern crop husbandry practices, ensuring ‘timely availability of inputs’ such as seeds, fertilisers,

bio-fertilisers, biocides/ bio-agents, agricultural machinery etc., reducing cultivation costs through better

‘crop management practices’, encouraging cost-effective indigenous inputs, promoting input use

efficiency, adopting context-specific innovative technologies, creating awareness amongst farmers on

agricultural practices, promoting utilisation of non-conventional energy resources, encouraging private

participation in agriculture and agro-based infrastructure in rural areas, reducing monsoon dependency

through better irrigation and water harvesting techniques, developing climate resilient cropping systems

with protective measures such as crop insurance and generating alternate livelihood sources through

allied activities, and reducing yield gaps through improved technologies and ICT tools.

6 Adopted from the State agricultural policy note 2017-18.

20

Area, Production and Productivity Programmeme for 2017-18

The estimated area under cultivation, production and productivity of various agricultural crops during

2017-18 are given below:

Table 3. Area, Production and Productivity (2017-2018)

Crop Area (L. Ha.) Production (L. MT) Productivity (kg/ Ha)

Rice 17.8 60 3,370

Millets 9.3 34 3,656

Pulses 9.4 6 638

Total food grains 36.5 100

Oilseeds 5 12 2,400

Cotton (*) 1.8 5.77 545

Sugarcane (**) 3 309 103

Total 46.3

(*) Production (L. Bales); (**) Productivity (MT/Ha.)

With the aim of achieving food and nutritional security in the context of degrading land resources,

increasing water scarcity, depleting per capita land available, outmigration of agricultural labourers and

climate change impacts, the government aims at transforming agriculture into a ‘more productive,

resource-efficient and climate resilient’ activity through specific policies and strategies for agro-ecological

intensification. Some of the objectives included achieving food and nutritional security through

sustainable agriculture area intensification, narrowing yield gaps and input use -efficiency gaps through

agronomic revolution: precise crop management through affordable technologies, technologies for

increasing water and energy efficiency, achieving nutrient management through micro-irrigation,

conservation agriculture etc. for increased production, reducing cultivation costs through soil health

restoration, optimum fertiliser application and cautious use of irrigation water, arriving at a precise input

supply system allowing for equity in accessing critical inputs and improved delivery mechanisms,

implementing socio-economic support programmemes for farmers especially women, improving crop-

tree-livestock interactions in farming systems and optimising recycling and use of biomass for preserving

the environment, maximising the production potential of rain-fed areas, devising contingency crop plans

based on weather forecast and insurance modules for mitigating crop losses, innovating in digital

agriculture solutions through ICT tools, investing in agriculture infrastructure, fostering knowledge-

sharing platforms and equipping farmers with technology options.

21

NFSM: National Food Security Mission for Rice has been implemented across 8 districts in 2016-17, and

involved activities such as Cluster demonstrations on direct seeded rice, line transplanting and cropping

system based demonstrations, green manure planting with paddy, distribution of high yielding quality

seeds, providing assistance for custom hiring paddy transplanters and combine harvesters for an outlay

of Rs, 20.64 crore. This scheme is to be continued during 2017-18. Government has been promoting the

machine transplantation of paddy from 2014-15, and in 2016-17 the scheme covered around 1.72 lakh

hectares, while during 2017-18 this technology would be adopted across 2 lakh hectares. Direct sowing

method of paddy requires less water, involves lower cultivation costs and lesser duration crops to be

cultivated across 5.15 lakh acres across the state during 2016-17.

For pulses, NFSM has been implemented across all districts except Chennai and Nilgiris, and along with

the above techniques, incorporated efficient water application tools establishment of mills etc, and the

total outlay was around Rs 41.64 crores, and would be continued in 2017-18 with an outlay of Rs. 41.13

crore. The NFSM for coarse cereals has been implemented in 10 districts, during 2016-17 around Rs.8.22

crores were spent towards promotion of millet cultivation. This would be continued during 2017-18 also.

NFSM for Sugarcane has been implemented during 2016-17 in Cuddalore, Villupuram and Tiruvannamalai

districts. Around 47.75 lakhs has been extended towards subsidies for demonstrations on inter-cropping,

breeder seed production and state level training. This would be extended during 2017-18 with an outlay

of Rs. 49.42 lakhs. NFSM for Cotton has been implemented during 2016-17 in Virudunagar and Perambalur

districts, and around 48.42 lakhs have been spent on demonstrations on integrated crop management,

seed production etc. During 2017-18, a total outlay of 51.25 lakhs have been allotted towards NFSM for

cotton.

NADP: Through this initiative, the objective has been to encourage context and problem-specific

initiatives for paddy so as to increase productivity and farmer incomes, through components such as

incentives for certified seeds, subsidies for high-yielding varieties, popularisation of machine planting, use

of power tillers etc. The outlays for this initiative has been around Rs. 63.1 crore. Pulses Improvement

programmeme under the NADP comprised of activities such as foliar spray of DAP, production-distribution

of quality seeds, promoting redgram transplantation etc. at Rs 23.58 crores during 2016-17, and would be

continued through 2017-18. An amount of 2.69 crores were spent during 2016-17 under NADP and 4

crores during 2017-18 towards millet production.

SRI/ SPI: SRI packages a bouquet of technological practices for efficient water use, and has been

implemented across 5.81 lakh hectares during 2016-17. The state aims to promote this across 9.91 lakh

22

hectares during 2017-18. The System of Pulses Intensification scheme covered 2000 villages across an

area of 1.25 lakh hectares in 2016-17, and this would be adopted in 2000 villages in 2017-18.

National Mission on Oil seeds and Oil Palm (NMOOP) was initiated in 2014-15 to meet the edible oil

requirements, and aims to increase the vegetable oil requirements by oil seeds, oil palms and tree borne

oil seeds. Tamil Nadu ranks first in the productivity of oilseeds, and the schemes for this purpose aim at

increasing the irrigation coverage under oilseeds from 26 % to 36 %, area diversification from low-yielding

cereals to oilseeds, inter-cropping oilseeds with cereals, pulses, sugarcane and utilising fallow lands after

paddy cultivation for this purpose. Around 4.22 lakh hectares have been brought under oilseeds every

year with a production of 9.62 lakh metric tonnes. During 2016-17, the expenditure under the scheme has

been around 12.62 crores and during 2017-18 the financial allocations are around 18.77 crores.

Sustainable Sugarcane Initiatives incorporated a set of agronomic practices such as transplantation of

young seedlings, adoption of new planting methods such as wider spacing, precision farming/ drip

fertigation across 275 hectares during 2016-17. During 2017-18, an area of 16,000 hectares would be

brought under this SSI scheme, while an area of 14,000 hectares would be brought under micro-irrigation.

Overall, Tamil Nadu7 has set a target to achieve 5 percent annual average growth in the Agricultural sector

by the year 2023. The initiatives identified in this vision include promotion of market driven agricultural

produce, accelerating innovation and extension mechanism, functional consolidation of land holdings,

emphasis on mechanization, Improvement in productivity, assurance of timely irrigation, creation of a

robust supply chain, and skill development in agriculture. The total proposed investment to drive this

growth is around ₹ 40,000 Crores.

7 http://www.tn.gov.in/dear/Agriculture.pdf

23

2. Farming Households in Tamil Nadu (4 Districts) - An Assessment

The NSSO data on Consumption Expenditure Survey (2011-2012) suggests that more than 20% of rural

households that are self-employed in agriculture as their primary occupation have an income below the

poverty line; this is highest for the states of Jharkhand and Odisha. Additionally, the relative farm income

per cultivator is nearly one-third to one-fourth the income of a non-agriculture worker (as of 2015-2016)8.

Growth in farm income after 2011–12 has fallen to around 1% (Chand, 2016); low income in absolute and

relative terms is considered the primary reason for agrarian distress across India. In Tamil Nadu, close to

20% of the farmers are viewed as having income below the poverty line. Against this backdrop, the

Government has set the goal of doubling farmers income from farming in real terms by 2022-2023 as the

pivotal route to ensuring farmers’ welfare, increased income parity and reduced agrarian distress.

Figure 5. Farm Households with Income Below Poverty Line (2011-12)

2.1 Present Estimates

It must be noted that there is a serious dearth of data that captures the income of agricultural households,

over a period of time. While the NSSO has two datasets (2002-03, and 2012-13) that capture some data

on estimates and income sources, at a nation-wide level, the definitions of farming households used in

both datasets are different, hence affecting the comparability. For most part, this report relies on data

and estimates from the 2012-13 dataset, and literature or analyses that have been done using this data.

In 2012-13, the average annual income of a farming household was ₹ 77,112 – 60 percent of this amount

being contributed by farm sources (cultivation, and farming of animals), and 40 percent from non-farm

sources (wages, salary etc.). This amount works out to an average monthly income of ₹ 6,426. The average

8 NITI Aayog Policy Paper

24

monthly household expenses of an agricultural household add up to around ₹ 6,223, as per the same

dataset. This translates into a meager saving of ₹ 223 per month, or a little more than ₹ 2600 per year. In

Tamil Nadu, the data paints a marginally better picture – the average monthly income of a farming

household is ₹ 6,980, while the average household expenses add up to ₹ 5,803 – a monthly saving ₹ 1,177.

Two years have passed since the goal of doubling farmer’s incomes was announced; the time is indeed

ripe to assess the progress that has been made thus far. There is a need for a careful estimation of the

current income level of farmers, and the composition (in various agro-climatic zones, holding size-wise,

social class wise, etc.). It is only through such an exercise that the extent of progress, and the success of

the various schemes initiated by the State and Central governments can be reviewed, and modified as

necessary in order to ensure maximum benefit to the farmers. This is indeed the primary objective of this

study. Additionally, the study aims to understand the constraints faced by the farming community

(including the distress situations, their frequency) that are limiting opportunities to income enhancement

of the farmers. The overall objective is to be able to identify the kind of support, facilities, and policy level

changes that are required that in order to substantially improve farmer’s incomes by 2022. To this end,

this study relies on data from sample survey focusing on 4 districts, from different agro-ecological zones

of Tamil Nadu. Additionally, this study also gathers a number of opinions, insights and perspectives from

key stakeholders in the agricultural space in Tamil Nadu. These further inform the objectives of the study,

and provide direction to its findings.

2.2 Methodology, and Sample Selection

The research methodology followed has been the mixed methods approach, which entails both

quantitative and qualitative data collection through well-designed survey instruments and focus groups,

stakeholder discussions etc. During the period July 2017-December 2017, quantitative data (in the form

of household surveys), and qualitative data (in the form of focus group discussions and key stakeholder

interactions) was collected.

The sample comprised of 854 households across four districts in 4 agro-climatic zones of Tamil Nadu. The

respective blocks and districts for the study were selected based on relevant indicators such as ground

water potential and irrigation intensity, per capita income indicators and contribution of agriculture

towards the District Domestic Product. 9

9 Refer table on groundwater depletion levels between 2012 and 2013.

25

Table 4. Sampled Districts - Key details

District Irrigation Intensity PCI (2010-11) Agro-Climatic Zone

Dharmapuri 1.31 46828 North Western Zone

Nagapattinam 1.13 34640 Cauvery Delta Zone

Villupuram 1.07 30181 North Eastern Zone

Ramanathapuram 1.00 37707 Southern Zone

1. Household Surveys: The quantitative data collection comprised of around 800 Household Surveys

across four districts, 200 surveys in each district. Three blocks were selected within a district based

on ground water potential data (refer10), one each from the respective zones ie, Over exploited

(greater than 100 percent water consumption), Critical/Dark ( between 90-100 percent) and Semi-

critical/ Grey (70-90 percent). The following blocks were selected within each district based on the

above indicators.

Villupuram: Kallakurichi, Chinnasalem, Gingee

Dharmapuri: Pennnagaram, Hosur, Dharmapuri

Nagapattinam11: Kolidam, Mayiladuthurai and Thirumarugal

Ramnathapuram: Thirupullani, Tiruvadanai and Ramnathapuram

Two villages with reasonable area of land under cultivation were selected within a block, each

from the north and south of the block. Within a particular village, based on consultations with the

local agricultural officers at the village or panchayat level and the land owning criteria, 35

households were randomly selected for the detailed household survey.

More than 5 acres: 5 farmers (14 percent)

2.5-5 acres: 10 farmers (29 percent)

Less than 2.5 acres: 20 farmers (57 percent)

2. Focus Groups: While the household survey provided data on land area under cultivation and allied

farm activities, credit and risk mitigation strategies of household, farm input usage, expenditures and

incomes from all possible sources of agricultural households, farm productivity estimates and

irrigation statistics, penetration of marketing, MSP awareness indicators , insurance take up etc. the

qualitative methods such as focus group discussions facilitated understanding the reasons for

cropping choices, preferences in farm decisions and income-earning activities etc.

10 http://www.nicra-icar.in/nicrarevised/images/publications/Tbu_NRM_Guidelines%20For%20Augmentation%20Of%20Groundwater%20Resources.pdf ) 11 Declared as distressed in 2016-17

26

Sample selection for Focus Groups: Around 10 to 12 farmers were selected within a village

community based on consultations with the local agricultural officer at the village/panchayat

level, and in adherence to the land criteria mentioned above for farmers. The focus groups

ensured participation of at least 2 women farmers, as it facilitated understanding preferences,

decision-making and risk-management choices related to agriculture and associated activities

from a gender perspective.

3. Stakeholder Interviews: Detailed interviews with relevant stakeholders, both private and government,

comprised an integral part of this project owing to the immediate policy implications of the study,

both at the national and state level.

Sample selection: A stakeholder mapping exercise was performed to identify and map the

relevant stakeholders within the agricultural sector. 12After multiple discussions within the

research team, we finalized on a set of stakeholders to be interviewed for the study, based on the

focus areas and discussion themes of the study, wherein secondary and primary data had to be

substantiated with policy perspectives and implementation aspects from the field.

12 Please refer to the stakeholder mapping section for further details.

27

2.3 Key Stakeholders - Agriculture in Tamil Nadu

The primary stakeholders - who are the main focus of this study – are the farmers and cultivators

(including those pursuing husbandry and fishing activities). These stakeholders are directly affected by

policy decisions on agriculture and allied activities. Key stakeholders include all individuals/ entities

influencing the design, implementation, and ultimately the success of the various policies and schemes

whose aim is to increase farmers’ incomes, and improve their wellbeing and welfare. These could be the

government departments involved in deciding the budgetary allocations towards agriculture and allied

activities, departments engaged in deciding, streamlining the schemes and activities for agriculture for

the respective financial year and implementing them on ground. These stakeholders have the influence

to determine/ shape the policies with regards to doubling or improving farmers’ incomes. Secondary

stakeholders function as intermediaries between farmers (primary stakeholders) and respective

government departments (key stakeholders shaping the policy landscape for increasing farmers’ incomes)

and affect the system in roles wherein they do not directly influence the farmers’ income policies (in

capacities related to monitoring and implementation, advisory roles) however are essential to this

framework. External stakeholders are those who are not directly involved in enhancing farmer incomes,

but are involved in the process, means and outcomes of policies with regards to increasing farmer

incomes. The following chart illustrates the relationship and flow of stakeholder interactions within this

framework, and following table would describe the major findings from stakeholder discussions. During

the course of this study, key stakeholders representing various facets of the landscape mapped out below

were interviewed in detail. Their inputs and suggestions have been incorporated throughout the study.

28

Table 5. Stakeholders in Agriculture- Tamil Nadu D

epa

rtm

enrt

of

Ag

ricu

ltu

re(T

N S

tate

)/

Co

mm

issi

on

ara

te

Agricultural Engineering

Agricultural Marketing and Agri-Businees Directorate

Agriculture Department

Layers of Organisation (Secretary, Director at the State level, JD at district, AD at block levels etc.)

Village level: Agricultural OfficerSeed Certification Dept.

Organic Certification Dept.

Horticulture and Plantation Crops Department

Department of Sugar

Other Undertakings / Boards

Tamil Nadu Agriculture Marketing Board /APMC

Tamil Nadu Agricultural UniversityDirectorate of Extension

EducationATMA

Agricultural Colleges in Tamil Nadu

TN Watershed Development Agency (TAWDEVA )

TN Horticulture Development Agency (TANHODA)

TN Horticultural Producers Co-operative Enterprises

TN State Agricultural Marketing Board

Pri

vate

Sta

keh

old

ers

Research Institutes

NGOs (working in agri space)

Input Suppliers Farmers

Intermediaries (brokers)

WholesalersProcessor/ Exporter

Manufacturer/ retailer

Govt Markets

Consumers

Formal chains (retail stores etc. )

Farmer groups

Cre

dit

Lin

kag

es Public sector banks

NABARD

Cooperatives/RRBPrivate/

commercial banks

29

3. Data Analysis, and Key Observations

All survey data was collected digitally, and quality checked. Qualitative data was transcribed, and

incorporated along-with insights from the data. The key points of note from the collected data that are of

relevance to the study, and the broader recommendations proposed are presented below.

3.1 Definitions, and Reference Period

In designing the survey instrument and detailing the concerned sections, the National Sample Survey

Office (NSSO) reports for the 59th and the 70th round of surveys were used as reference. The Situation

Assessment Survey of Farmers in NSS 59th round defines farmer as a person operating on some land

(owned or leased or otherwise) and engaged in agricultural activities such as cultivation of field crops,

horticultural and plantation crops, animal husbandry, poultry, fishery, etc. on that land during last 365

days before the survey. In our survey we extended the definition of farmers to include those farming over

the past three years, as this helps understand whether farmers had stopped cultivating any crops in the

past three years due to various constraints.

The possession of land was also an essential condition in the survey, similar to the 59th round of NSS, and

unlike the 70th round which included households which may or may not possess land. Data was collected

for the last farmed season of the farmer which included farm expenditures as well as incomes from

harvest, over the past three years (2014-15, 2015-16, 2016-17). A failed farmed season in terms of crop

damage due to delayed monsoons or flooding was not accounted as a farmed season, due to lack of

income data from agricultural produce across households for such seasons. Expenditures incurred and

incomes earned from cultivation were estimated at the household level across agricultural households for

the last farmed season; incomes and expenses for livestock, aquafarming and poultry activities were

collected for the last 30 days; non-farm incomes and expenditures were collected for the last 12 months

(as disaggregating non-farm expenditures for business or others were difficult on a monthly basis),

household consumption expenditures on education, health , medical and other purposes were estimated

for the past 30 days.

3.2 Key Observations

This chapter presents some of the key observations with regards to household economics. Estimates of

the current farmer income levels and the composition of the income basket of the household, across

varying holding sizes and social classes are presented. Details on the credit situation of agricultural

30

households, agricultural indebtedness of households etc., findings with regards to information/training

levels, and skilling facilities for agricultural households are also included in the report. Focus groups with

farmers and interactions with relevant stakeholders facilitated the identification of constraints and

distress situations faced by the farming community such as droughts, floods and the potential for

diversification of the income basket of households, through allied, off-farm and non-farm activities.

The below paragraphs brief the key observations from the survey, focus groups and stakeholder

interviews substantiated with relevant secondary data from the NSSO surveys as well as literature

evidence from previous studies elsewhere.

1. Estimated number of agricultural households in Tamil Nadu and Survey Sample:

The Situational Assessment Survey of Agricultural Households estimated that during the agricultural year

July,2012- June 2013 rural India had around 90.2 million agricultural households, constituting about 57.8

percent of the rural households within the country. Out of 93,607 rural households in Tamil Nadu, around

32,443 households were agricultural (i.e. around 34.7 percent of the rural households). 13. Tamil Nadu has

a total cultivated area of 5,994,501 hectares as of 2014-15, the net area sown is around 4,819, 018

hectares and the area sown more than once is 1,175,483 hectares14.

The data collection for the study was done between September to November 2017 across four districts in

Tamil Nadu. The overall sample size was 854 households, and the distribution of households across the

districts are detailed in provided in Table 6. Some other important characteristics of farming households

surveyed include household size which on average was around 4.72 (SD is 1.95). 18.7 percent of those

surveyed included women farmers as well (159/854 respondents).

Table 6. Sample Composition

District No. of HHs Percentage

Villupuram 215 25.18

Ramanathapuram 214 25.06

Dharmapuri 214 25.06

Nagapattinam 211 24.71

Total 854 100

13 Key Indicators of Situation of Agricultural Households in India, NSS 70th Round, MOSPI December 2014 14 Tamil Nadu at a Glance 2016, Socio Economic Indicators of Tamil Nadu and India, Department of Economics and Statistics Tamil Nadu

31

2. Distribution of Agricultural Households by Social Groups

Figure 6: Agricultural Households by Social Group

7 percent of the farming households were from the forward caste (Fig. 6), while the rest belonged to

socio-economic backward castes. 36 percent of the sample were from the Most Backward Castes, 25

percent belonged to the Backward caste and 28 percent fell under the Scheduled Caste category.

Figure 7. Sample Composition - Social Groups

1%

28%

3%

7%36%

25%

Scheduled Tribe

Scheduled Caste

Other Backward Caste

Forward caste

Most Backward Caste

Backward caste

32

From Fig. 7, it is observed that the small and marginal farmers are mainly from the Most Backward Castes

as well as the SC and BC caste categories. Among medium-large farmers, around 20 percent belong to

forward castes – a higher representation compared to other land categories. The NSSO reports15 show

that are significant caste based differences in the economic status of agricultural households, and

scheduled caste farm households followed by OBC households have the highest deficits (average monthly

income lesser than sum of average monthly consumption and net investment in productive assets).

Forward castes report larger landholding sizes (20 percent of large farmers in our data belonged to the

forward caste), increased share of household earnings from cultivation and non-farm activities. Socio-

economically challenged castes such as the SCs report their highest share of income from wage

employment and agricultural labour, making them more vulnerable to unemployment. 16

3. Agricultural households by Respondent(Farmer) Age:

53 percent of farmers surveyed were in the age group 40 to 60 years, only 6.7 percent of them were

young farmers under thirty (between the age group of 20 to 30 years) who could have started farming

activities in the recent past, and 20 percent of them were in the age group 30 to 40 years. This reinforces

the general observations on agriculture wherein the younger demographic in the state (and across the

country) are no longer willing to adopt agricultural activities as an occupation, and are shifting out of

agriculture due to uncertainties and lower returns towards other non-farm opportunities.

Focus groups and individual discussions with these households revealed that young farmers or younger

generations within agricultural households were willing to enter into or take up dairying and husbandry

compared to cultivation activities. Dairying and husbandry offered profitable and sustainable returns as

well as better sources for institutional credit. The youth in the surveyed districts were interested in

dairying, husbandry etc. as these offered sustainable alternatives to cultivation, provided a daily income

source unlike seasonal earnings from agriculture and investments in dairying and husbandry activities

were lower compared to cultivation. Also institutional credit was available to farmers interested in rearing

cattle or other husbandry activities, and this provided the necessary support to enter into as well as

sustain their livelihoods through these ventures. Other observations from the field included the increasing

15 NSSO Situational Assessment Survey 16 http://www.livemint.com/Opinion/myrJLTnIfiNVSaJF8ovdRJ/Locating-caste-in-Indias-farm-economy.html

33

qualifications of the youth in villages with few graduating with professional degrees like engineering etc.,

and hence being lesser inclined towards agricultural activities.

Directed efforts in terms of institutional credit, extension and training activities through local agricultural

officers and KVK functionaries in motivating the youth towards such allied activities and improving their

operational efficiencies by staying informed, adopting modern practices in these regards and organizing

farmers involved in dairying or husbandry into at least local collectives could facilitate their participation

in such allied activities. A recent scheme aimed at skilling youth in agriculture, Attracting Rural Youth in

Agriculture (ARYA) along with the Agriculture Technology Management and Training (ATMA) scheme

extends extension services to rural youth. These schemes could be linked with activities such as

identification of barren lands with the support of the Agriculture-Science Centre, promoting suitable crops

according to climate-soil contexts, encouraging varied crop cultivation after harvesting paddy,

encouraging farmers to use fertilisers as per Soil Health Card, registering farmers onto a portal, improved

access to new technologies and connecting them through farmer groups (Dr. K. Ramasamy, VC TNAU,

2017)17. NSSO 2003 findings revealed that 27 percent farmers considered farming was not profitable

enough, and given options 40 percent of them wanted to shift out of agriculture (GOI, 2005).

Figure 8. Respondent Age

17 Source: https://thewire.in/111075/farmers-notebook-young-india-can-save-the-future-of-agriculture/

34

4. Migration Patterns:

22 percent of the households surveyed had a family member who had migrated for work or education in

the past 3 years. Seasonal migration has been on the increase due to declining agricultural employment

opportunities and has become an “irreversible trend” for such farming households (Mosse 2005 and

Breman, 1996). Haberfeld et al (1999) argue that seasonal migration functions as an effective coping and

risk management strategy for rural poor due to lack of employment, especially during droughts. Such

migrant households are usually characterized by lower educational levels and agricultural incomes.

Households with migrant labourers were found to have higher income levels compared to other

households (incomes from migrant labour accounts for 60 percent of the total annual household income).

Basu and Kashyap (1992) discusses that majority of such migrants constitute of off-season employment

for agricultural labourers and small/marginal farmers. Such “distress diversification” trends are observed

amongst agricultural labourers and landless alternating across agricultural and non-agricultural jobs

between crop seasons and during off/lean seasons to support their household incomes (S. Chandrasekhar,

Mousami Das and Ajay Sharma, March 2014, IGIDR Mumbai). 18

With increasing education levels and employment opportunities, men are more likely to move out of

agriculture. With such migration of men towards cities, there could be an increased role for women as

operators and decision makers with regards to farming. On an average, a woman spends around 3300

hours in the field during a crop season while a man spends around 1860 hours, the paradox being that

only 12.69 percent women have operational land ownership. While their role is crucial towards ensuring

food security, they remain unrecognized as farmers as the legal recognition is tied to land ownership.19 As

mentioned earlier, our survey had around 18 percent female farmers operating their landholdings, but

the legal ownership aspect has not been studied. This situation calls for a shift in policy focus in creating

a favourable ecosystem for women farmers, increasing engagement and extension activities with women

farmers and improving their accessibility to physical and financial resources (Prof. Hema Swaminathan,

Centre for Public Policy IIM Bangalore)20.

5. Education Status:

Education and skills of farmers are integral for improving farming practices, investments and productivity.

Lower educational levels of farmers could act as significant barriers in the public dissemination of

18 http://www.igidr.ac.in/pdf/publication/WP-2014-009.pdf 19 https://thewire.in/135617/women-farmer-suicide-crop-tamil-nadu-drought/ 20 http://www.thehindubusinessline.com/opinion/india-farming-women-policy-issues-migration/article9968781.ece

35

knowledge as well as diversification into allied farm or off-farm activities. The NSSO survey reports that

awareness about bio-fertilizers, minimum support prices and WTO is associated with educational levels,

lower among marginal and small farmers. 2160 percent of the farmers surveyed had not studied beyond

class 8, and only 31 percent farmers had completed high school or senior secondary school (between

classes 9 to 12).

Figure 9. Education Status

Literacy and mean years of education are lower for marginal and small farmers compared to the medium

and large ones. A National Commission for Enterprises in the Unorganized Sector Report shows that

literacy rates for small and marginal farmers were 55 percent and 48 percent respectively, lower than the

national average literacy rate of 72.98 percent, i.e. 67.6 percent in rural areas and 84.1 percent in urban

areas. Educational levels of farmers impact their uptake of government schemes, digital initiatives in the

agricultural space including the e-NAM and updating themselves with modern farming techniques22

( Mahendra Dev, 2012-14).

Education being one of the key variables influencing rural diversification, efficiencies of the rural

workforce can be tapped into only through generating awareness among the rural populations on the

importance of education and skilling and increasing the public expenditure on education. Farmers’

education, especially women farmers, has been shown to significantly increase the net household farm

income per acre of cultivated land(Sitakanda Panda,2015)23. Other studies also find a positive, significant

21 http://www.igidr.ac.in/pdf/publication/WP-2012-014.pdf 22 http://cf.orfonline.org/wp-content/uploads/2016/12/ORF_Issue_Brief_167_Small_Farmers.pdf 23 http://www.emeraldinsight.com/doi/pdfplus/10.1108/IJSE-12-2013-0278

36

relationship between level of farmers’ education and productivity. Also agricultural productivity increases

with educational levels across caste categories. Government and NGOs should work towards higher

investments in farmer education and awareness for increasing agricultural productivity and incomes (Atal

Bihari Das, Dukhabandhu Sahoo, 2013). 24

6. Farming/ Cultivation Experience

68.5 percent of the households surveyed had been engaged in cultivation for more than 20 years, 22

percent had been involved in cultivation for the last 10-20 years, 6 percent had taken up cultivation in the

past 5 to 10 years. Only 1 percent of those surveyed had started farming activities in the last 1 to 3 years.

Table 7. Cultivation Experience

Goran Djufeldt and Srilata Sircar in their book “Structural Transformation and Agrarian Change in India”

(2016) elaborate on such trends, wherein family farmers have stronger tendencies to opt out of

agriculture than large landowners.25 Stronger odds for entry into farming or allied activities exist for

marginal and landless labour households as well as non-agrarian ones due to lesser saving capacities and

inabilities in purchasing land and the existing lease structures.

7. Ration Card Status

As per the survey data, a majority of the households have Priority Household (PHH) Ration cards (as

mandated under the National Food Security Act, 2013) that allows for ration purchases of all essentials

including rice, sugar, oil, pulses etc.

24 http:///www.inderscience.com/offer.php?id=52312 25 A family farm is essentially a family operated farm, with its ownership transferred from generation to generation (Djurfeldt,

1996).

Experience (Years) No of HHs Percent

1-3 years 9 1.06

3-5 years 17 2.00

5-10 years 53 6.23

10-20 years 189 22.21

More than 20 years 583 68.51

Total 851 100

37

Figure 10. Ration Card Type

According to the recent modifications in ration cards, Priority Households are those earmarked with the

urgent need of being alleviated from poverty. The PHH tagging ensures that such households in most need

of supplies benefit from other targeted schemes such as the Annapurna Yojana. The larger proportion of

households across our sample falling into this Priority Household category shows the relevance and urgent

need for increasing the scope of livelihood and income-earning opportunities for such households.

8. Animal Husbandry/ Livestock Rearing

Table 8. Animal Husbandry/ Livestock Rearing

No. of HHs Percentage

Villupuram

Yes 135 62.8

No 80 37.2

Total 215 100.0

Ramanathapuram

Yes 125 58.4

No 89 41.6

Total 214 100.0

Dharmapuri

Yes 154 72.0

No 60 28.0

Total 214 100.0

Nagapattinam

Yes 126 59.7

No 85 40.3

38

Total 211 100.0

Total (All districts)

Yes 540 63.2

No 314 36.8

Total 854 100.0

63.2 percent of the households surveyed were engaged in animal husbandry including livestock, and

poultry activities - contributing to their household income or food consumption. 4.6 percent of the

households had entered animal husbandry in the past 1-3 years while another 7.2 percent in the last 3-5

years. Animal husbandry seems to be an attractive option for rural agricultural households as compared

to cultivation, at least 11.8 percent households had initiated some husbandry activities in the last 5 years

while only 3 percent households had taken up farming. Livestock can be reared within smaller

landholdings and yield favourable returns (labour demands vary as cattle are high maintenance and

provide higher earnings, while goats are low maintenance with negligible earnings) as compared to

cultivation wherein the odds of entry as well as remaining in the same are high, especially for small and

marginal farmers. Weather fluctuations and distress situations impacts cultivation more than animal

husbandry, the challenges here too are addressing issues of water and fodder scarcity during droughts,

labour availability within households or elsewhere and accessibility to risk management strategies

through insurance as well as timely credit. The cattle insurance penetration is extremely low in Tami Nadu,

the penetration across our survey districts was around 2 percent.

Table 9. Experience in Animal Husbandry/ Livestock Rearing

Experience (Years) No. of HHs Percent

Less than 1 year 2 0.37

1-3 years 25 4.62

3-5 years 39 7.21

5-10 years 111 20.52

10-20 years 121 22.37

More than 20 years 243 44.92

Total 541 100

We find zero report of aquafarming in our study sample. We had sampled farmers for the survey based

on land ownership criteria and hence fishermen engaged only in fishing activities in the sea without any

cultivable land could not be taken into consideration. This definition has been adopted in lines of the

agricultural census 2013 that defines farmers based on land holding criteria. A major reason for fishermen

39

with cultivable land not engaging in aqua activities included dried up farm ponds and water reservoirs due

to drought conditions and unpredictable, scanty rains that usually recharge such surface water sources.

This was quite surprising for the research team that even in coastal districts like Ramanathapuram and

Nagapattinam, the sample showed no mention of aquafarming or inland fishing activities. We had

followed up on this with surveyed farmers as well as through our focus groups and learned that seasonal

variations had to be accounted for as inland aquafarming activities were extremely dependent on water

availability in farm ponds, surface water sources etc. (past two years of 2016-17 witnessed severe drought

conditions, the worst in 140 years). Farmers engaged in aquafarming activities in the past mentioned that

their farm ponds have been dried up in the recent seasons due to scanty rainfalls (also verified first hand

through our surveyors) and in surveyed areas, freshwater sources were becoming increasingly saline due

to sea water intrusion making them unfit for such aquafarming activities, except prawn culture. On

average, households seem to own 1-2 milk cows, and an even smaller number of milk buffaloes. We find

a very low number of male buffaloes or bullocks reported across the surveyed households. The average

poultry ownership is around 8 heads per household.

Table 10. Livestock/ Poultry Ownership

(Type) Mean SD Min Max

Milk cows 1.3 1.8 0 15

Milk buffaloes 0.1 0.4 0 4

Male buffaloes 0.0 0.1 0 1

Bullocks 0.1 0.5 0 10

Goats 1.5 5.0 0 70

Sheep 0.4 5.4 0 110

Poultry 8.0 174.4 0 5000

Aquafarming 0.0 0.0 0 0

Table 11 shows the average total value of livestock across different categories with those households reporting ownership.

Table 11. Value of Livestock/ Poultry Owner per HH

(Type) No. of HHs Mean SD Min Max

Milk cows 426 55412.0 51613.3 1000 450000

Bullocks 27 39518.5 94160.4 0 500000

Milk buffaloes 34 41911.8 24562.1 5000 100000

Male buffaloes 5 27400.0 12401.6 12000 45000

Sheep 11 209818.2 271306.8 4000 880000

Goats 219 21150.7 38878.3 1000 420000

Poultry birds 136 4073.5 22899.8 100 250000

40

9. Land Ownership:

The average size of land holdings across surveyed households was 1.2 hectares (average landholding size

across India as per the 2010-11 census was 1.16 hectares).26 However, this was larger than the state

average of 0.8 hectares, as per the last available data. According to the Agricultural Census 2010-11,

marginal and small holdings constituted for 92 percent of total holdings in the state, and 61 percent of

total operated area. Tamil Nadu accounts for only 4 % of the total area operated in all-India at 159.2

million hectares. The total number of operational land holdings in Tamil Nadu declined from 81.93 lakh

(2005-06) to 81.18 lakh (2010-11), a decline by 0.9 %. Tamil Nadu has a share of 5.9 percent in the total

all-India operational holdings at 137. 8 million. The total area operated also declined from 68.24 lakh

hectares in 2005-06 to 64.88 lakh hectares in 2010-11 (4.9 % decline).

This decline could be attributed to farmers having given up on cultivation due to lucrative land prices

offered, also noted in our focus group interactions with farmers and especially prevalent in villages closer

to urban areas. Small landholdings limit the utilization of technology and machinery for improving

production and productivity, and has resulted in the marginalization of small and marginal farmers and

the casualization of agricultural labour. Thus farmers would have to engage themselves in farmer groups,

thereby encouraging sharing and judicious use of scarce resources as well as better accessibility to

technical inputs. Fig.11. shows the average size of holdings by land category acoss the surveyed

households. This data compares favourably with the state averages for operational landholdings across

land categories as given in Table 12.

Figure 11. Average Size of Landholdings

26 Source: Government of India, 2012.

41

Figure 12. Sample Composition - by Landholding Class

Table 12:Distribution of Number of Holdings and Area Operated (Tamil Nadu)

Category Number of holdings (lakhs) Area operated (lakh ha) Average size of holdings (ha)

2005-06 2010-11 2005-06 2010-11 2005-06 2010-11

Marginal (< 1 hectare) 62.28 62.66 22.86 22.92 0.37 0.37

Small (1 to 2 hectare) 12.34 11.82 17.21 16.44 1.39 1.39

Medium ( 2 to 10 hectare) 7.12 6.53 24.26 22.03 3.41 3.37

Large (> 10 hectare) 0.19 0.17 3.91 3.50 20.58 20.59

Total 81.93 81.18 68.24 64.88 0.83 0.80

Source: Department of Economics and Statistics, Chennai – 6.

From Fig. 12, it is observed that across the surveyed households, 53 % constituted of marginal farmers

(less than 2.5 acres of land), 27% are small farmers (between 2.5 to 5 acres of land), 16% are semi-medium

farmers (owning between 5 to 10 acres ) and 4 % are medium-large farmers (more than 10 acres of land).

Table 13:Owned, and Irrigated Land

Mean Sd Median

Marginal Farmer

Owned(acre) 1.40 0.54 1.50

Owned(hectare) 0.56 0.21 0.60

Irrigated(acre) 1.40 0.52 1.50

Small Farmer

Owned(acre) 3.21 0.60 3.00



Semi-Medium Farmer

Owned(acre) 5.97 1.19 5.50



42

Medium-large Farmer

Owned(acre) 13.26 5.26 11.50



Total

Owned(acre)* 3.10 2.90 2.00

Owned(hectare)* 1.24 1.16 0.80

Irrigated(acre)* 2.94 2.82 2.00

10. Primary Income Sources of Farming Households Across Land Categories

Respondents were asked about their three main income-earning activities, and cultivation of crops was

the primary source of income for these households in our sample. 47.5 % of marginal farmers and 35.2 %

of small farmers report agricultural labour as the second most important source of income for their

households, and the proportion of households engaged in agricultural labour decline with the increasing

size of landholdings. 20.8 percent of households of marginal farmers reporting wage labour as another

important income earning activity, while this reduced to 15% and 8.8% respectively among the semi-

medium and medium-large farmers. The proportion of agricultural households reporting cultivation as a

significant income earning activity increases across the land categories, 95.3 percent among the semi-

medium farmers and 100 percent among the medium-large farmers. The dependency on agricultural

labour, wage labour and NREGA for household incomes is significantly higher amongst those with smaller

landholdings, as observed in the case of marginal and small farmers.

Figure 13. Main Income Earning Activities

89

.7%

93

.6%

95

.3%

10

0.0

%

47

.5%

35

.2%

14

.2%

23

.5%

25

.4%

25

.0%

24

.4%

23

.5%

20

.8%

15

.7%

15

.0%

8.8

%

15

.3%

15

.7%

9.4

%

11

.8%

11

.6%

4.7

%

11

.0%

14

.7%

7.2

%

5.5

%

7.9

%

5.9

%

M A R G I N A L S M A L L S E M I - M E D I U M M E D I U M - L A R G E

PER

CEN

TAG

E O

F H

OU

SEH

OLD

S

Cultivation Agri- Labourer Husbandry Wage labourer NREGA Business Salaried

43

Marginal and small farmers show a higher dependency on family labour for agricultural operations, and

also work as agricultural labourers on a contract basis or for large farmers, as earnings from their small

landholdings would not alone sustain their household incomes.

The major determinants identified as drivers of rural non-farm diversification from previous studies

include agricultural growth, commercialization of agriculture, unemployment, urbanisation, real wages

and public expenditure. Different studies have attributed this diversification to both push and pull factors.

Vaidyathan (1986) discusses the ‘residual sector’ hypothesis, showing a significant relationship between

push factors such as unemployment rates and rural non-agricultural sector across states in India. He

refuted this argument in 1994, as real wages in rural areas were on the rise in the 1980s and gradually the

‘residual sector’ case was weakened as on average non-agricultural workers were better-off than

agricultural workers.27

To understand the rural non-farm diversification determinants, it would be essential to analyse trends in

this regard. Stagnation in rural non-farm employment between 1987-88 to 1993-94 was attributed to the

economic liberalization. Sen (1998) argues that public expenditure in rural areas was a significant driver

in raising rural non-farm employment till 1987-88, and the stagnation in non-farm employment

afterwards could be attributed to declining public expenditure, due to stabilization and structural

adjustment.

It can be observed that between 1977-78 to 1999-00, the share of male self-employed and regular workers

had declined in agriculture and increased for non-agriculture. Diversification from agriculture to non-

agriculture has increased over the years, and during the period 1977-78 to 1999-2000, rural non-farm

employment increased by 9.4 percentage points among men and 2.8 percentage points among women.

Casualisation of labour (shift from regular and self-employment towards casual labour in agriculture and

non-agriculture) has been on the rise as a survival mechanism for the bottom 40 percent of the workers.

While diversification has increased over the years, it has been a gradual process for women in rural areas.

With regards to non-farm work in rural areas, cultivator households and agricultural worker households

have lower odds of rural non-farm work, SC households have higher odds of RNF, marriage and higher

agricultural employment growth decreases the odds of RNF work, and higher schooling and higher

household incomes increases the odds of RNF work.28

27 (Sen, 1998; Papola, 1991). (Vaidyanathan (1986), Visaria and Basant (1993) Mahendra Dev (1993), Chandrasekhar (1993),

Chaddha (1999), Unni (1996), Sen (1998), Lanjouw and Shariff (2000) 28 https://globalpoverty.stanford.edu/sites/default/files/publications/187wp.pdf

44

Agricultural technology is integral in improving agricultural growth, and along with improvements in the

rural non-farm sector can create productive employment, and thereby reduce rural poverty.

Improving rural incomes entails policies for higher growth in agriculture through raising public investment

in agriculture, elimination of both domestic and external controls on agriculture, liberalizing the leasing

of land, development of non-cereal crops and expansion of the rural non-farm sector (Mahendra Dev and

Robert Evenson, Stanford University, October 2003)29.

11. Crops Farmed in Last Season

Seasonal Crops: The “last farmed season” for the purpose of this survey is defined as the most recent

complete farming season for the farmer, which accounts for both expenses as well as incomes for that

season. In few cases farmers report that due to monsoon failure or flooding crops had been damaged,

and hence there were no incomes earned for that particular season. For this reason, we take into account

their last farmed season with expected yields and incomes earned, as this would be comparable with the

expenses over the farmed season. The major crops cultivated across these surveyed households are

shown in the chart below. 60 percent of the surveyed households cultivated Paddy, followed by Sugarcane

(9.6 %), Millets (8.7 %), Cotton (7.3%), Horticulture crops (5.4 %), Turmeric (4.8 %) Groundnut (4.7%) etc.

Figure 14. Crops Cultivated - Last Complete Farming Season

Perennial Crops: 20 percent of the total agricultural households surveyed were engaged in some perennial

crop cultivation. 34 percent and 27 percent of the surveyed households in Dharmapuri and Villupuram

cultivated perennial crops respectively.

29 Working Paper on Rural Development in India: Agriculture, Non-farm and Migration

60.7

9.6% 8.7% 7.3% 5.4% 4.8% 4.7% 3.7% 3.2% 2.7% 0.6%0%

10%

20%

30%

40%

50%

60%

70%

Cultivation Percentage

45

Table 14: Perennial Crop Cultivation

District No of HHs Percent (%)

Villupuram

Yes 58 27.0

No 157 73.0

Ramnathapuram

Yes 12 5.6

No 202 94.4

Dharmapuri

Yes 73 34.3

No 140 65.7

Nagapattinam

Yes 29 13.7

No 182 86.3

Total (Across all districts)

Yes 172 20.2

No 681 79.8

Total 853 100

The perennial crop mix included coconuts, mangoes, fruit trees and tamarind. Among those households

cultivating perennial crops, 94.7 percent cultivated coconuts among the perennials. 41.7 percent of the

households cultivating coconuts were in Dharmapuri and 33.7 percent were in Villupuram respectively.

12. Indebtedness of Agricultural Households

According to our survey data, 71.3 percent of households surveyed were indebted (609 households out

of 854 HHs had outstanding loans) and across land categories 65 % of marginal farmers, 76 % of small

farmers, 65 % of medium farmers and 91 % of large farmers were indebted. Around 82.5 percent of

agricultural households in Tamil Nadu were indebted, while Andhra Pradesh had the highest share or

indebted households (92.9 percent) followed by Telangana (89.1 percent), while the national

indebtedness was at 52 percent.30 This was one of the primary reasons for 55 percent of the farmer

suicides in 2015, and more than 300,000 farmers have committed suicide since 1995. 31

Outstanding Loans: On average, a household in our sample reported around 2.35 outstanding loans,

irrespective of the land categories. The average outstanding amount for the largest loan was around ₹

134,944 (SD: 116,098) ranging between 15,000 and 459,856 ₹, with 6 percent of them being interest free.

The average principal of the largest outstanding loan was around ₹ 125, 630 (SD: 110,868).

30 Situation of Agricultural Households, NSSO 31 IndiaSpend Report dated January 2, 2017

46

As per the Situation of Agricultural Households estimates, the total amount of outstanding loan per

agricultural household was around ₹ 115,900 for Tamil Nadu, while this was the highest for Kerala at ₹

213,600 followed by Andhra Pradesh at ₹ 123,400 ₹ and Punjab at ₹ 119,500.

Table 15: Household Indebtedness

No of HHs Mean* SD Min Max

Marginal farmers

No of Outstanding Loans 315 2.3 1.6 1 10

Principal Amount of Largest Outstanding Loan 315 98139.7 85886.2 18000 450000

Outstanding Amount on Largest Outstanding Loan 315 104181.0 91733.5 15000 459856

Small farmers




Semi-medium farmers




Large farmers








47

13. Loan Sources

This section details the loan sources from which agricultural households borrow, across land categories.

From the Fig 15., it can be observed that as the size of land holdings increases, the accessibility to formal

banking institutions also increases, implying the higher dependence of marginal and small farmers on

informal sources of lending. In this fig, the y-axis indicates a proportion ie, total number of outstanding

loans (across formal and informal sources) over the total number of HHs with outstanding loans across

each land category. The proportion exceeds one as a household can have more than one outstanding loan,

and hence the total number of outstanding loans exceeds the total number of households in each land

category. From the fig, it is clearly shown that accessibility to institutional increases with landholding

sizes, and the dependency on informal sources increases with the decline in landholding sizes.

Figure 15. Loan Sources across Land Categories

Accessibility to formal credit positively impacts the net farm returns as well as the per capita monthly

household expenditure of agricultural households (Anjani Kumar et. al)32. The emphasis has to be on

eliminating barriers in accessing institutional credit for marginal and small farmers, reduce dependency

on informal sources as well as restructuring agricultural credit so as to cater to farmers’ credit

requirements effectively. Figure 16 describes the sources from which an agricultural household borrows,

government banks were the most preferred option and 40 percent of the households had borrowed from

government banks. 23.5 percent borrowed from co-operatives and another 22 percent from private

32 https://www.sciencedirect.com/science/article/pii/S093936251730050X

0.9

1.1

1.21.3

0.80.7

0.6

0.5

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Marginal Small Semi-medium Medium-large

Pro

po

rtio

n o

f lo

ans

take

n o

ver

HH

s w

ith

o

uts

tan

din

g lo

ans

Land Categories

Formal Sources Informal Sources

48

banks. 70 percent of the households borrowed from informal sources including moneylenders (34

percent), friend and relatives (15.9 percent), Pawnbrokers (13.8 percent) and others.

Figure 16. Loan Sources

Fig 17 illustrates the loan sources for agricultural households surveyed by land categories. Semi-medium

and large farmers borrow mainly from formal lenders, both private and nationalised banks (47 percent

and 58 percent of medium and large farmers respectively) , while marginal and small farmers depend

mainly on moneylenders (40 percent of marginal and small farmers respectively) and other informal

sources. Only 23 percent and 16 percent of medium and large farmers respectively across the survey

sample reported having outstanding loans from moneylenders, and the same applied to other informal

sources as well.

Figure 17: Loan Sources across Land Categories

39.6%

34.0%

23.5%22.3%

15.9%13.8%

9.0%

4.9%2.5% 2.3% 1.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Loan Sources

Pe

rce

nta

ge

Govt. Bank

Moneylender

Co-operatives

Private Bank

Friends/ Relatives

Pawnbroker

NGO/MFI

SHG

Chitfunds/NBFC

Financiers

35

%

22

%

17

%

19

%

40

%

13

%

24

%

42

%

18

%

29

%

16

%

40

%

15

%

15

%

47

%

33

%

29

%

11

%

23

%

13

% 22

%

58

%

26

%

39

%

6%

16

%

16

%

13

%


49

As far as the largest outstanding loan amount per agricultural household was concerned, 28.9 percent of

the farmers surveyed reported borrowing from government banks followed by moneylenders (19.1

percent), private banks (15.5 percent), co-operative societies (14.5 percent), MFIs/ SHGs (9.7 percent),

informal sources such as relatives and friends (6.9 percent) as well as pawnbrokers (4.1 percent).

Figure 18. Largest Outstanding Loan - Source

14. Primary Purpose of Loans

Figure 19. Primary Purpose - Largest Outstanding Loan

Fig 19. discusses the primary purpose of the largest outstanding loan amount borrowed. 64.4 percent of

the households reported the purchase of farm inputs as the primary purpose of this loan, 9.6 percent

households reported house repairs, 7.7 percent indicated meeting educational expenses as their major

50

loan purpose, 6.9 percent reported weddings, functions etc. and 5.9 percent reported the purchase of

farm and business equipment.

The All India Debt and Investment Survey 2013 data shows that loans for farm businesses across India

have fallen by half over a decade from 58 % in 2002 to 29 % in 2012. Health has emerged as a significant

reason for household borrowings, and our data shows that at least 2.6 percent of households surveyed

indicated this as the major purpose of largest outstanding loan. With negligible savings and low quality

government health services, farmers ended up borrowing money to visit expensive private hospitals,

escalating their debts for health expenditures. NSSO data shows that more than half of India’s rural

population uses private healthcare, four times costlier as public healthcare, and such expenditures

account to at least 20 percent more than 15 times their usual monthly expenses for the poor33. The

Household Indebtedness in India survey as part of the NSS 70th Round, January to December 2013 showed

that “households of the bottom decile class incurred a relatively small part of their debts for productive

purposes” and among the rural populations, the percentage share of debts for productive purposes was

seen to vary between 11 % to 56 % among the decile classes. Findings from our sample show that at least

6.9 percent of the sample had their highest debts on unproductive expenditures such as weddings or

social functions. This still throws light upon the huge expenditures towards unproductive activities, and a

reasonable share of households (6.9 %) reporting such functions as the primary purpose for single largest

outstanding loan.

15. Last Farmed Season:

Paddy, Sugarcane, Cotton, Groundnut, Black gram, Maize, Turmeric were the major crops cultivated

over the last farmed season across the surveyed households. Last farmed season is defined as the

most recent season for that particular household with both expenditures incurred on cultivation as

well as incomes from the same. The most recent season with expenditures on farming but negligible

or zero incomes from the same due to distress situations like droughts or flooding would not be

considered, and the previous season complete with both expenditures and incomes would be

accounted for.

Moving out of cultivation: 15.2 percent farmers stopped cultivating some crop in the last 2 years due

to water scarcity issues intensified through delayed and inadequate rains. Addressing the water

scarcity issue through irrigation, dryland farming etc.

33 Source: Indiaspend article http://www.indiaspend.com/cover-story/dodgy-data-farm-suicides-drop-67-in-6-years-54551

51

Agricultural Inputs: 90 percent of farmers among those surveyed (777 HHs) purchased fertilisers from

private dealers, 8 percent from co-operative societies, and from other sources.

91 percent farmers (701 HHs) purchased seeds from private dealers, 6 percent from co-operative

societies, and less than 2 percent from friends/ neighbors etc.

16. Yield and Revenue per hectare for Last Farmed Season

Increasing agricultural production and productivity are crucial towards achieving improved farm incomes

as well as ensuring food security within the state. Table 16 reports the performance of principal crops in

Tamil Nadu through the area under cultivation (in lakh hectares), production (kgs per hectare) and yield

(in lakh tones) estimates for the respective years 2011-12, 2012-13, and 2013-14, and the figures for 2013-

14 are forecast estimates.

Table 16: Performance of Principal Crops in Tamil Nadu

Crops 2011-12 2012-13 2013-14#

A Y P A Y P A Y P

Paddy 19.04 3918 74.59 14.93 2712 40.50 18.49 3097 57.26

Millets 6.38 3643 23.24 6.42 2092 13.42 9.10 2747 25.00

Pulses 6.67 554 3.69 5.11 415 2.13 7.73 414 3.20

Foodgrains 32.09 3164 101.52 26.46 2118 56.05 35.32 2420 85.46

Sugarcane@ 3.46 113 389.75 3.48 98 340.14 3.58 105 375.46

Cotton* 1.36 481 3.82 1.33 326 2.55 1.50 361 3.18

Oilseeds 4.49 2481 11.14 3.90 2092 8.16 4.61 2245 10.35

Note: A – Area in lakh hectares; Y – Yield in kgs per hectare; P -Production in lakh tonnes * in terms of lint;

@ - in terms of cane # - Forecast estimates. Source: Department of Economics and Statistics, Chennai – 6

Table 17 illustrates the yield gaps for some major crops, comparing the average yield data for 2011-12

with potential yield, as per estimates from the Agriculture Development Strategy for Tamil Nadu – 2004,

State Planning Commission.

Table 17: Yield Gap in Select Crops34

34 Source: Agriculture Development Strategy for Tamil Nadu – 2004, State Planning Commission

Crop Potential Yield (kg/ha) Average Yield (2011-12) (Kg/ha) Yield Gap (Kgs/ha.)

Paddy 6000 3918 2082

Red Gram 1500 870 630

Black Gram 1270 580 690

Sugarcane 146000 113000 33000

52

We compare the yield data, and the yield gaps existing for principal crops with the yield estimates from

our sample provided in Table 18. While the average yield for paddy across our sample is around 3704 kgs

per hectare (comparable to the average yield for 2011-12 at 3918 kgs per hectare), there exists a yield gap

of around 2296 kgs per hectare from the potential yield. Likewise, the average yield for sugarcane from

the survey is around 79682 kgs/hectare which is lower compared to 113,000 kgs/hectare, indicating a

larger yield gap of around 66,318 kgs/hectare on the ground. As per our field findings, the average yield

for black gram from our data is at 490 .8 kgs/ hectare, much lower than the state average for 2011-12 i.e.

around 580 kgs/hectare and the yield gap is around 780 kgs/hectare. 35

Table 18: Yield and Revenue per Hectare

Yield and Revenue per Hectare (Yield in kgs per hectare)

HHs(No.) Mean * SD Median Min Max


Owned(acre) 854 2.9 2.0 2.0 0.8 8.0

Owned(hectare) 854 1.2 0.8 0.8 0.3 3.2

Irrigated(acre) 848 2.8 1.9 2.0 0.8 8.0

Total farmed (acre) 854 2.4 1.6 2.0 0.5 6.5

Total farmed (hectare) 854 1.0 0.7 0.8 0.2 2.6

Rice yield(per hectare) 518 3704.0 1440.0 3700.6 1395.0 6510.0

Rice revenue 518 47874.5 27129.0 47958.3 0.0 97500.0

Sugarcane yield (per hectare) 81 79682.3 31295.4 75000.0 29166.7 133333.3

Sugar revenue 81 196639.8 93808.9 183593.8 62500.0 372500.0

Cotton yield (per hectare) 63 1478.3 950.7 1333.3 416.7 3750.0

Cotton revenue 63 68388.0 39337.5 60000.0 22500.0 150000.0

Black gram yield (per hectare) 32 490.8 298.9 500.0 31.3 1000.0

Black gram revenue 32 28112.6 20821.6 28750.0 0.0 67500.0

Groundnut yield(per hectare) 40 1290.7 781.2 1110.0 331.8 3050.0

Groundnut revenue 40 35585.6 38177.8 35000.0 0.0 122250.0

Maize yield(per hectare) 23 2595.2 2323.3 1666.7 333.3 7500.0

Maize revenue 24 36217.7 35753.4 18750.0 0.0 112500.0

Turmeric yield (per hectare) 39 2373.1 2515.2 1750.0 250.0 15000.0

Turmeric revenue 39 127405.8 88589.6 105000.0 0.0 270000.0

Table 19: Comparison between Prices Data from Survey and MSP

Principal Crops Price from survey data

(per quintal)

MSP

(2015-16)

MSP

(2016-17)

MSP

(2017-18)36

Price37

(per kg)

Paddy 1292 1410 1470 1550 13

Sugarcane 247 230 255 255 2

Cotton 4626 4100 4160 4320 46

Black gram 5728 3425 4000 4400 57

35 Average yield for principal crops at an all-India level. (http://agritech.tnau.ac.in/agriculture/agri_cropscenario_india.pdf) 36 http://cacp.dacnet.nic.in/ViewContents.aspx?Input=1&PageId=36&KeyId=0 37 Based on survey data

53

Groundnut 2757 4030 4220 4450 28

Maize 1396 1325 1365 1425 14

Turmeric 5369 54

Cotton

(medium staple) 3800 3800 3860 4020

Table 19 compares the average price per quintal for principal crops across the surveyed households with

their MSP over the years. The actual price realization for paddy per quintal currently seems to be much

lower than the MSP, and is drastically lower for groundnut, the difference between the MSP 2016-17 and

the market prices for groundnut is around Rs 1463 per quintal. One major reason– particularly for paddy

- is likely to be spot purchase of paddy by various private entities, and the sale of paddy soon after harvest

(within a day or two) so as to address their liquidity constraints as understood from interactions with

farmer groups. The price realization for farmers growing sugarcane and maize is much closer to the MSP

as observed from the table. For cotton and black gram, farmers seem to be better remunerated compared

to the MSP.

17. Post-harvest

In this section, we address the postharvest processes, storage of grains and the quality of storage

structures involved as well as actual constraints in utilizing storage options.

All 854 households surveyed across four districts had stored their crop produce in household facilities,

such as separate rooms in their house or in bags stored in a barn etc. Only 42 percent of households

surveyed i.e. 359 HHs reported storing their produce over the past three years (in rooms at home, except

one or two cases wherein the final produce was stored in a village godown or a godown outside of the

village). Transportation or access costs involved in reaching the nearest government godown or

warehouses due to poor proximity of such storage facilities, delays in sale of produce at the regulated

market godowns and deterioration of produce quality through the transit process and the long wait for

produce to be sold at godowns (waiting period for sale of produce at the regulated market could go upto

even 2-3 days), delayed payments or higher chances of payment issues (payments took around 10 days

to be processed) affecting the repayment of loans especially towards moneylenders (as loans are linked

to the harvest timing, and such delays could cause liquidity constraints in repaying loans), loss of working

days for farmers in the waiting process and the long queues at such procurement centres and regulated

markets deter farmers from selling at these centres or utilizing the storage facilities offered in these

godowns. Farmers hence preferred selling their produce to traders who collected the same from their

fields or homes, even if the prices offered per quintal were lower than the MSP. In some areas, farmers

54

claimed that selling through traders fetched higher returns, as no stringent measures for quality testing

on criteria such as moisture content of grains or pulses were needed as in case of regulated markets. At

the regulated markets, prices per quintal of grains varied based on the quality and moisture content. The

regulated markets procured only grains such as rice and wheat (mainly rice in Tamil Nadu) at the MSP,

and hence this was not beneficial to farmers growing other crops.

Table 20. Post-Harvest Storage (On-farm) in the last Three Years

Storage (Yes/No) No. of HHs Percentage Cumulative Percentage

Marginal farmers

Yes 186 21.8 40.7

No 271 31.7 59.3

Total 457 53.5 100.0

Small farmers

Yes 103 12.1 43.6

No 133 15.6 56.4

Total 236 27.6 100.0

Semi-medium farmers

Yes 51 6.0 40.2

No 76 8.9 59.8

Total 127 14.9 100.0

Medium-large farmers

Yes 19 2.2 55.9

No 15 1.8 44.1

Total 34 4.0 100.0

Total (across all districts)

Yes 359 42.0 42.0

No 495 58.0 58.0

Total 854 100.0 100.0

From Table 20, it can be observed over the last three years, higher proportion of medium and large

farmers had stored their produce (56 percent) compared to marginal and small farmers (only 40 percent

and 44 percent reported storage respectively). Marginal-small farmers were highly dependent on

moneylenders, and required immediate liquidity to repay their loans soon after harvest (as loans were

tied to harvest timings, and were short term loans of average three months) without defaulting along with

the added burdens of escalated interest rates. Such liquidity constraints dissuaded marginal-small

farmers from storing their produce for better returns at a later period, probably two to three months

after harvest of the crop.

55

Though all households surveyed stored their produce within home facilities, the type of storage facilities

utilized for the purpose varied based on the structure of their house. Table 21 shows the kind of storage

facilities utilized by the 359 households that reported storing some produce over the past three years,

which in turn affected the quality of the produce stored. More than 40 percent of the households stored

their produce in some kutcha or semi-pucca household facility, and such poor storage conditions could

have deteriorated the quality of produce and resulted in reduced returns.

Table 21. Type of Storage Facility

Storage facility (type) No. of HHs Percentage

Kutcha 78 21.7

Semi-Pucca 72 20.1

Pucca 209 58.2

The table shows the average total storage capacity in kilogrammes within households across different

land categories, and as expected the storage capacity of medium-larger farmers is much higher than those

of marginal and small farmers. With increased production and returns from larger landholdings, medium-

large farmers have the need for and resources to support larger storage capacities. The pest control

measures for their stored produce included sun drying (98.6 percent households) and removal of infested

grains (13 percent households).

Table 22. Total Storage Capacity

No.of HHs Mean (Total storage capacity kgs) SD Min Max

Marginal farmers 181 1852.4 2032.3 5 20000

Small farmers 92 2316.0 1905.4 410 10000

Semi-medium farmers 46 2893.3 2305.4 200 10000

Medium-large farmers 18 6222.2 5717.9 630 24000

Total 337 2315.48 2557.2 5 240

18. Post-Harvest Losses:

33.65 percent of the households surveyed (287 households) reported some post-harvest loss in the last

three years, and this could have been translated into a significant share of an agricultural household’s

income. Another observation to be noted is that a good proportion of farmers were not even aware or

could not account for post-harvest losses, given their priority was to sell off the harvest from the field

directly if possible within a day or two.

56

Table 23 details the post-harvest loss on average per farmed season for the principal crops cultivated

across the surveyed districts and the state. The average loss percentage for any crop in a farmed season

is around 7 percent of the total produce as per our study sample. The quantity lost in kgs per farmed

season for a particular crop is also shown in terms of the total equivalent value loss or price loss.

The post-harvest losses have been estimated only for those farming households who reported having

losses in their harvest due to multiple reasons, but a considerable number of farmers were genuinely

unaware of post-harvest losses as the produce was sold off to traders within a day or two and hence could

not comment on the same.

Tapioca, a horticultural crop seems to show extremely high losses ranging between 8650 to 34,450 Rs

over a farmed season, while the value loss for paddy is around Rs 2769 on the harvested produce, Rs

14762 for sugarcane, Rs. 6477 for cotton, Rs. 2253 for groundnut, Rs 1700 to 1800 for the pulses, Rs 1500

to Rs 2000 for millet varieties. Gingelly, coconut, maize and jowar seem to have lower post-harvest

losses. This affirms the high value-high returns and high losses scenario associated with horticultural

crops such as vegetables (seen in case of tapioca) and fruits, and hence making a case of increased and

quality investments in post-harvest processes for horticultural sector in improving market accessibility

and linkages, cold storage connectivity etc.

Table 23. Post-Harvest Losses per Farmed Season

Primary Crop Mean SD Count Median

Paddy

Quantity lost(kgs) 214 267 234 124

Quantity lost(percentage of total harvest) 6 4 233 5

Price loss over a season(Rs) 2769

Cholam(Jowar)


Quantity lost(percentage of total harvest) 2 2 3 1.5


Maize




Samai




57

Green gram



Price loss(Rs) 1845

Black gram



Price loss(Rs) 1799

Sugarcane




Tapioca



Price loss over a season(Rs) 8650-34450

Cotton


Quantity lost(percentage of total harvest) 10 9 2 10


Groundnut




Gingelly

Quantity lost(kgs) 6 . 1 6

Quantity lost(percentage of total harvest) 4 . 1 4

Price loss(Rs) 300

Coconut


Average yield (nuts per palm per year) 100

Quantity lost annually (nuts per palm) 6

Price loss annually per palm( Rs) 72

Price loss per household(Rs) 144

Total

Quantity lost(percentage of total harvest) 7.0 6.2 279 5

58

19. Training and Information for Farmers

16 percent of farmers (spread across 144 households) in the sample have undergone some formal

training. 84.5 percent of farmers reported they are not members of any farmer associations or groups,

while only 5.6 percent indicated they are members in some local or panchayat farmer’s association, 3.5

percent reported they are members in some women’ group or association and another 3.16 percent

report membership in some co-operatives or producers’ groups. A majority of the farmers (91.8 percent)

report having access to farming related information from various sources including other extension

officers,other farmers and friends, agriculture related programmemes on TV and radio etc.

Table 24. Training and Information

Information (yes/No) No. of farmers Percentage

Marginal farmers

Yes 404 90.4

No 43 9.6

Total 447 100.0

Small farmers

Yes 215 93.5

No 15 6.5

Total 230 100.0

Semi-medium farmers

Yes 118 92.9

No 9 7.1

Total 127 100.0


Yes 32 94.1

No 2 5.9

Total 34 100.0

Overall Sample

Yes 769 91.8

No 69 8.2

Total 838 100.0

Feder, Lau and Slade (1987) showed that investing in training farmers is worth the effort, and the Training

and Visit system of agricultural extension in India resulted in a “high probability of at-least an acceptable

rate of return to intensified extension”. As a result of these extension activities, significant improvements

were recorded in farm management and not necessarily in the adoption of new inputs. Extension activities

with a bottoms-up approach wherein a regionally specific curriculum is followed, farmers understand the

benefit of agricultural reforms and participate in planning the same, and their indigenous knowledge and

traditional practices are integrated into the training or extension modules would facilitate favourable

59

outcomes (Examples to be drawn from the Orissa Social Forestry Project launched in 1983, Glendinning,

Mahapatra and Mitchell, 2001).

The chart below illustrates the information sources for farmers across the study districts, and it can be

observed that majority of the farming households had access to farming related technical information or

advice primarily through fellow farmers, followed by friends/ family and agricultural programmemes on

Doordarshan, TV, Radio etc. Extension officers were also a relevant source of technical information for

farming households and this highlights the relevance of effective extension activities for illiterate farmers

with little exposure on modern farming practices, strategies for optimising post-harvest losses and

effective price realisation for crops cultivated, secondary income sources for the household etc.

Figure 20. Main Information Sources for Farmers

20. Farm Mechanisation

The table below illustrates the extent of mechanization within the survey sample, 94 percent of the

households utilised a tractor for farming purposes, 79 percent used a sprayer, and other equipments used

included a rotovator (43.4 percent) and harvester (49.3 percent). Majority of these equipments were

leased and not owned, and a recommendation to this regard could be increasing farmers access to such

equipments’ on a lease, rental basis at affordable prices. This could reduce cultivation costs to a greater

extent, and thereby encourage farmers to depend on leased machinery for various steps involved within

cultivation and harvesting. This could make for an argument for leasing or renting farm machinery within

farmer collectives, wherein such groups purchase their own farm equipments’ and lease them to

members of the farmer group at affordable prices.

60

Table 25. Mechanization.

Land category Tractor Sprayer Harvester Rotovator Thresher

Own Lease Own Lease Own Lease Own Lease Own Lease

Marginal 4 424 23 337 0 226 2 176 0 22

Small 11 211 23 161 0 106 9 109 2 14

Semi-medium 16 103 21 82 1 67 8 49 0 9

Medium-large 13 21 13 15 0 21 5 13 0 6

Total 44 759 80 595 1 420 24 347 2 51

Total No. of HHs using each equipment 803 675 421 371 53

Total % households using each equipment 94.03% 79.04% 49.30% 43.44% 6.21%

21. Insurance Penetration

Given the extreme drought conditions and reduction of premium rates, around 15.2 lakh farmers in Tamil

Nadu bought crop insurance under the new PMFBY38 scheme in Samba/ Rabi 2016-17 (the main crop in

Tamil Nadu), almost double the number of farmers who purchased crop insurance the previous year (8.6

lakh farmers). The state government aims to cover around 30 lakh hectares in 2017-18 (from 12.6 lakh

hectares in 2016-17) and around 23.9 lakh farmers (spread over 15.1 lakh farmers in samba/rabi and 8.8

lakh farmers in kuruvai/kharif seasons).

Along with this peril-based insurance (coverage) approach for delayed sowing or pre-plating risk due to

rainfall and weather fluctuations, a total crop insurance package that covers seed insurance, complete

crop cycle insurance, prepaid insurance card for weather insurance and options for rainfall insurance can

be designed as coping mechanisms for yield loss, and expected income loss for smallholder farmers

(Ferroni, 2016 and Dey and Maitra, 2017). Though PMFBY lowered premium rates and promoted the use

of technology, improved penetration rates amongst non-loanee farmers and efficiencies can be achieved

only through addressing lower awareness levels and conflicting interests of multiple parties in insurance

product design, pricing and distribution.

The PMFBY scheme allows for claims settlement frequency and indemnity level at 70 percent, 80 percent

and 90 percent for agricultural major crops and 100 percent for cotton, horticultural crops on the basis of

38 http://tnagrisnet.tn.gov.in/fcms_old/documents/go/25-GOMs123.pdf and http://agritech.tnau.ac.in/pdf/pmfby.pdf

61

the risk profile of clusters. The post-harvest losses data showed that the average post-harvest loss was

higher for horticultural crops like tapioca, as well as cotton.

The state government has disbursed around Rs 404 crores to around 2.96 lakh insured farmers for

damages of samba crop in 2015-16 (through NAIS scheme). Districts that received almost 90 percent of

compensation amounts include Nagapattinam (Rs 205 crore), Tiruvarur (Rs. 101.7 crore) and Cuddalore

(Rs. 45.15 crore). 39 Two of the surveyed districts Ramanathapuram and Nagapattinam fall under the high

risk profile districts in the state.

From the survey data, around 28 percent households (239 HHs) had their crops insured. The average

annual premiums paid per hectare as well as the claim amounts received per hectare are detailed in Table

26. Of those 239 households with crops insured, 45.6 percent (109 households) had raised claims request

in the last 12 months, and 74 percent (81 households) had their claims processed.

Cattle Insurance Penetration: Only 2.7 percent of the surveyed households (23 households) have their

cattle insured, and only one farmer out of the insured had raised a claims request in the past 12 months

and he had also received his claim payments worth Rs 30,000 for his cattle. The mean sum insured was

23,422 Rs (median is 10,000 Rs) and the mean annual premium was around 1,086 Rs (median is 500 Rs).

Table 26. Crop Insurance

Land Category Mean sd Median Count Min Max

Marginal

Annual Premium (per hectare) 1270.3 1348.8 875.0 115 0 9000

Claims received (per hectare) 34199.7 20961.8 30000.0 45 5000 100000

Owned land (hectare) 0.6 0.2 0.6 457 0 0.988

Small

Annual Premium (per hectare) 767.9 419.9 785.7 63 0 2628.572

Claims received (per hectare) 27790.4 16926.3 25000.0 23 2857.143 71428.57


Semi-medium

Annual Premium (per hectare) 832.2 477.1 761.4 48 145.8333 2500

Claims received (per hectare) 27480.8 17030.1 22714.3 16 6250 71428.57


Medium-large

Annual Premium (per hectare) 581.8 496.5 425.0 12 107.1429 1687.5

Claims received (per hectare) 16488.1 10169.0 17500.0 5 2857.143 27083.33

Owned land (hectare) 5.3 2.1 4.6 34 4 14

39 Source: http://www.thehindu.com/news/national/tamil-nadu/govt-plans-to-expand-crop-insurance-scheme/article18579154.ece

62

Total

Annual Premium (per hectare) 1014.2 1020.7 825.0 238.0 0 9000

Claims received (per hectare) 30340.5 19161.6 26666.7 89.0 2857.143 100000

Owned land (hectare) 1.2 1.2 0.8 854.0 0 14

22. Farmer Distress

Over 58 percent of rural households depend on agriculture for their livelihoods, and the share of

agriculture and allied sectors (including agriculture, livestock, forestry and fishery) is 17.3 percent of the

Gross Value Added (GVA) during 2016-17 at 2011-12 prices. 40 Increasing farmer agitations across the

country especially Tamil Nadu, Maharashtra and MP and the alarming number of suicides draws attention

towards some of these challenges of farming households.

Some of the these include land fragmentation, liquidity constraints faced by small landholders for

investments in land, infrastructure and other farm inputs, weather conditions such as delayed monsoons

and declining soil fertility, increased fluctuations in inputs prices and highly distorted product market,

price realisation below MSP and exploitation by traders/middlemen, APMC markets controlled by cartels

of licensed traders, casualization of agricultural labour and unwillingness on the part of young people to

take up or stay in farming due to falling returns. The graph shows the declining average size of

landholdings across India from 2.2 hectares in 1970-71 to 1.15 hectares in 2010-11(Agricultural Census

from 1970-71 to 2010-11)41.

Figure 21: Average size of Landholdings

40 2nd advised estimates by the Central Statistics Office 41 http://agcensus.nic.in/document/agcensus2010/agcen2010rep.htm

63

Agricultural production in the state depends on a good monsoon, and frequent failures, uncertainties and

skewed distribution of this significantly affects yields; fragmented and smaller plot sizes resulting in higher

input costs (92 percent of all agricultural holdings in Tamil Nadu are small and medium, lesser than five

acres each), poor economic conditions and low literacy levels of farmers and agricultural households

slowing down the adoption of scientific techniques, dilapidated irrigation systems due to insufficient

funds affecting crops, livestock and human livelihoods.

Failing monsoons, Growing Water Scarcity: Much of the Kuruvai (summer crop) in 2016 was lost due to

water sharing disputes over Cauvery river between Tamil Nadu and Karnataka and samba (winter) crops

failed due to the weak North east monsoon (between October to December 2016), during which the state

usually gets most of its rainfall. In 2016, the North east monsoon recorded a deficit of 62 percent and

usually districts receiving less than 20 percent normal rainfall are declared drought affected, making this

one of the worst droughts over a century42. A Supreme-court appointed technical committee reported

that the Kuruvai crop has been a ‘lost cause’ in Tamil Nadu with two farming seasons been reduced to one

and farmers now being entirely dependent on the October-January samba season.

Lower Productivity: The Economic Appraisal in 2014 shows that paddy yield is 2.08 tonnes lower than

potential yield per hectare across the state, also shown in the yield gaps analysis (Table 17). Small

landholdings and financial constraints have been major reasons for the low yield rates, making new

scientific techniques difficult to implement. 43

Diminishing agricultural labour returns: The agrarian crisis has affected the landless farm labourers,

constituting at least 40 percent of Cauvery delta population. The diminishing farming season has

compelled them to fully depend on NREGA for earnings, reducing their daily earnings from Rs. 500 to Rs.

600 per acre for harvesting and crop planting respectively to Rs 100 to Rs. 200 a day.

As regards to constraints to farming for these households over the recent years, 90.5 percent of the

households (773 HHs) reported water scarcity as the major challenge, incidence of pests and diseases (32

percent), challenges due to weather fluctuations (24.8 percent), increasing input costs (8.1 percent) and

lower price realisation for their produce (6.8 percent) as significant risks posed to their households.

Major shocks faced by these households in the past 12 months include medical emergencies such as

illness, injury etc (57 percent ie 487 HHs), harvest or livestock loss due to weather conditions (53.2

42 K Sivasubrahmaniyan, Associate Professor at the Madras Institute of Development Studies 43 https://scroll.in/article/819424/cauvery-dispute-in-tamil-nadu-parched-lands-push-farmers-into-distress

64

percent ie. 455 HHs) and loss of wage labour, including both agricultural and non-agricultural (13.7

percent ie. 115 HHs).

Surveyed households reported their agricultural activities to have been significantly affected in the

past three years due to following events: Weather related events (83.4 percent ie. 712 households),

Health related issues in household (48 percent ie. 410 households), Pests and diseases (43.4 percent

ie. 371 households), Unexpected price fluctuations in market (9.7 percent ie. 83 households) and

Unexpected price fluctuations of inputs (8.2 percent ie. 70 households).

Irrigation: 86.4 percent households reported they had intermittent water supply affecting their

agricultural activities, 6.2 percent reported they had enough water for their current cultivation but

could expand their agricultural activities with more water made available, and only 8 percent reported

they had sufficient water available for their agricultural needs.

The major coping mechanisms included further borrowing (70 percent ie. 582 HHs), taking up other

temporary jobs (14.2 percent ie. 119 households), sale of livestock assets (1.5 percent, 13 households),

sale of other assets (0.8 percent, 7 households), utilizing their savings (6.4 percent, 54 households) and

few households did not do anything about this situation (14.04 percent, 117 households).

23. Other Household Characteristics

The Fig.22 shows the durables owned by the surveyed households, and it can be observed that majority of

these households own a mobile phone (841 out of 854 total households), and television (829 HHs) and

these technologies could be tapped into for imparting awareness on agriculture and allied activities related

information. Agricultural programmemes on television and Doordarshan were mentioned as an important

source of farming associated information for these farmers (as seen in the above chart).

Figure 22: Durables owned by household

65

Farmers’ Income in Tamil Nadu – Current Status

The sample survey captures income data for the period October 2016- October 201744. For the purpose

of income estimation, we consider the following categories under which data was collected and

aggregated:

1. Net Receipts from cultivation: Collected for two periods ranging from October 2016-March 2017,

and March 2017-October 2017.

2. Net Receipts from livestock: a 30-day period

3. Income from wages and salaries: 30-day period

4. Net receipts from non-farm business/ other non-farm income: 30-day period

For the purpose of estimating annual income, we use the method wherein the net receipts from both

cultivation periods are added together to obtain an annual estimate of income from cultivation. Data from

all other categories are multiplied by 12 in order to obtain annual estimates for each of those categories.

It must be mentioned upfront that the timing of the study presents a challenge to obtaining precise

income estimates; estimating the returns from the cultivation in the 2017 Kuruvai seasons in particular is

challenging.

Mean Annual Income

Table 27. Mean Annual Income - Various Sources

Survey Cultivation Livestock Non-farm Business

Wages and Salaries

Average Total Income (Current Price)

Average Total Income (2011-12 Price)

NSSO 70th Round 36950 10016 6209 24801 77976 70118

IHDS 36954 6018 9044 45783 97799 87943

As per the NSSO 70th Round data, the average income of an agricultural household in Tamil Nadu is ₹

85,031 (current prices, 2012-13), or ₹ 76,461 (constant prices, base=2011-12). At current prices, the

average annual income in Tamil Nadu is about 9% higher than the all India average. The DFI Committee

also provides estimates for average annual incomes from the India Human Development Survey (IHDS) –

this amount is considerably higher than the NSSO estimates. The DFI committee ultimately uses NSSO

data to benchmark the income, and make further estimations with regards to the strategies to accelerate

44 The aim is to be able to cover as much of the Samba / Thaladi / Pishanam 2016-17, and the Kar/ Kuruvai /Sornavari 2017 season in the study

districts as possible. The timing of the study effectively means that most of the Kar/ Kuruvai /Sornavari 2017 harvest for Dharmapuri and Ramanathapuram will not be captured in the data. For the other areas, in many cases, the study has collected expenditure data on cultivation in Kuruvai 2017, but only has predicted yields/ no yield data in 2017. We try to overcome this shortcoming by conducting a rapid phone based follow-up to capture as much data as possible. (Ref. http://www.tn.gov.in/crop/Part9.htm)

66

income growth. Thus for all our comparisons, we will rely on the benchmark created at 2015-16 prices by

the DFI committee, based on the 70th round NSSO estimates.

Our survey data suggests that the average annual income from the four districts, for the period in question

is around ₹ 1,31,490 at current prices45. In terms of reference, data published by the DFI committee shows

that the average annual income for Tamil Nadu at around ₹ 1,33,568 in 2015-16. At constant prices (2015-

16), the real income in the 2016-17 period would then be around ₹ 1,25,228. The decline in incomes can

be attributed to the poor outputs from cultivation, due to the drought and poor rainfall that impacted

agriculture in period 1. The output from period 2 is considerably larger.

Around 34% of annual income is generated from cultivation, while 54% of the amount is realized from

wages and salaries. On average, total farm sources (livestock + cultivation) contribute to 41.5% of annual

income, while total non-farm sources contribute the remainder. This compares with the NSSO data46 for

Tamil Nadu, wherein cultivation and livestock activities together occupied a share of 43.2 percent of the

average monthly income per agricultural household. While the share of agriculture (including cultivation

and livestock activities) of the total average monthly income per agricultural household for rural India was

around 60 percent, this was as low as 30.3 percent in West Bengal, 34.5 percent for Kerala and 43.2

percent for Tamil Nadu. Also the share from agricultural activities towards the average monthly income

per agricultural household was the highest for states such as Madhya Pradesh (76.5 percent), followed by

Assam (74.8 percent) and Telangana (72.9 percent). The data also showed that for the agricultural year

July 2012-June 2013 (taken into account being the recent estimate) agricultural activities accounted for

more than half of the average monthly income per agricultural household except in all major states,

except West Bengal, Kerala and Tamil Nadu.

It is equally surprising that the actual contribution from non-farm business etc., and livestock incomes are

relatively low. With regards to livestock, this is surprisingly low, given that around 63% of the sample

report owning livestock. At the same time, the low share of the non-farm business etc. in the income

basket highlights that diversification towards non-farm activities is likely to be very challenging, and

investments towards this segment have to be carefully considered. There is indeed a lot that remains to

be done if the income composition should reach the level of 70% from farm based sources, as

recommended by the DFI committee.

45 INR 95,977.92 at 2011-12 prices, deflated using the Rural CPI Index average data for 2017 for Tamil Nadu. 46 Income, Expenditure, Productive Assets and Indebtedness of Agricultural Households, Jan-Dec 2013.

67

While the share of wage or salary accounted for 32.2 percent of the average monthly income per

agricultural household at the all India level, the share of wage or salary in the average monthly income

per farming household was the highest for West Bengal (53.4 percent), followed by Kerala (44.2 percent)

and Tamil Nadu (41.6 percent). Our survey showed that 53 percent of the average annual income per

farming household was from wages and salaries.

Table 28. Components of Income - Survey Data

Wages and

Salaries

Livestock Non-

farm

Cultivation

71414.45 9231.14 5545.71 45298.45

Figure 23. Share of Income Categories

Further analysis reveals that there is considerably large variation in the income composition, across the

land categories. While the contribution of wages and salaries is over 60% in the marginal farmers’

category, it drops to under 30% in the medium-large farmers’ category. At the same time, the contribution

from cultivation is the largest for the medium-large farmers – accounting for a little over 50% of the total

annual average income. Notably, the share from non-farm business is also that largest for the medium-

large farmers. The total average annual income for a marginal farmer in the study sample is around ₹

1,14,540, and this amount increases to ₹ 2,25,190 for a medium-large farmer. In brief, this considerable

amount of variation highlights the need for varying the strategies to boost income across different

categories of farmers in Tamil Nadu.

53%

7%

4%

36%

Wages and Salaries Livestock

Non-farm Cultivation

68

Figure 24. Income Composition - by Land-holding Categories

Table 29. Income Composition - by Land-holding Categories (₹ Values)

Category Wages and Salaries Livestock Nonfarm Cultivation

Marginal 75251.23 7369.545 2045.455 29873.85

Small 65333.16 9919.111 6328.889 42726.37

Semi-medium 72712.48 12560.96 7710.843 82650.11

Medium-large 55642.11 15663.16 39157.89 114726.8

Given the drought situation, along-with poor rainfall through the 2016-17 period, stagnation in incomes

was indeed expected. It must be noted that due to the selection of districts in the study sample, these

effects are unlikely to be captured in full. The most affected district out of the four in the sample was

Nagapattinam district, and some evidence to this fact may be seen in the net receipts from cultivation,

for the period 1 (October 2016- March 2016). The average income for this period is considerably lower in

Nagapattinam, than Dharmapuri and Villupuram.

Table 30. Net Receipts from Cultivation

District Net Receipts from Cultivation (Period 1)

Dharmapuri 24937.09

Nagapattinam 19225.4

Ramanathapuram 4513.462

Villupuram 33512.23

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Wages and Salaries Livestock Nonfarm Cultivation

69

Keeping the 2015-16 annual average income for Tamil Nadu (₹ 1,33,568) in mind, the target for 2022-23

would be to improve the annual average income to at least ₹ 2,67,136 (constant prices, 2015-16), or ₹

3,52,418 at current prices. Given the current income level from the 2016-17 period, this would require a

13.5 per-cent real annual growth rate in income. Given the current trends, this level of growth seems

extremely challenging to achieve and sustain in Tamil Nadu. The DFI committee itself has broadly pointed

out that most states/UTs will be unable to double income in real terms in seven years if past/ current

trends are to be continued. If a doubling of the average farmers’ income is indeed to be realized, then it

requires a concerted set of policies that are complementary in nature, focusing on accelerating growth in

both farm and non-farm spheres. The challenges here are manifold – as seen in the analysis above,

accelerating the incomes of small and marginal farmers will prove the toughest task, given the several

constraints involved.

Figure 25 Increasing Farmer's Incomes - Targets.

The committee sets a more realistic target of ₹ 2,32,505 (2015-16 prices) to achieve – the assumption

being a doubling of farm income (livestock and cultivation), and 40 per cent increase in the non-farm

income. This target can be achieved with an annual real growth rate of 10.87%. For a state like Tamil Nadu

with a relatively large service and manufacturing sector, these targets have a significant implication in

planning and allocation of resources. For instance, there is an immediate need to evaluate and identify

potential areas for investment and development as far as non-farm income is concerned - this will be

crucial to adding to the income base of farming households. Concerted efforts will also have to be made

to ensure that the districts currently faring poorly will have to sufficiently catch up with the other districts,

0

50,000

1,00,000

1,50,000

2,00,000

2,50,000

3,00,000

2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

DFIT Committee Target Doubling Farmers Income

70

in order to ensure that the projected growth is indeed equitable. Effectively it can be said that the doubling

of real income in this relatively short time-period in Tamil Nadu will require a large number of changes in

agrarian policy at both state and central level, accompanied by significant increases in investment.

Thus far, Tamil Nadu has remained well below the national average when it comes to public and private

investments, in and for agriculture. It is estimated that Tamil Nadu will require a total private and public

investment of at least ₹ 1,19,973 crores during the period 2015-16 to 2022-23. The annual growth rate

for private investment will have to be roughly 25% during this period, while the annual growth rate for

public investment is estimated to be around 15%. These are highly substantial growth rates, and require

concerted efforts from all parties involved in order to ensure full implementation. It is highlighted earlier

that the governments’ plan to invest around ₹ 40,000 crore, in order to achieve the TN Vision 2023

strategy needs to be re-looked, given the considerations below.

Table 31. Estimated Amount of Investment

State Total Private Investment Total Public Investment

Agriculture and Allied Activities 18,230.00 26,884.00

Irrigation 19,440.00

Rural Energy 17,899.00

Rural Road -Transport 37,520.00

Total 18,230.00 1,01,743.00

71

4. Increasing Farmer’s Incomes – A Review of Strategies and Approaches Across

India

4.1 Doubling Farmers’ Incomes - Is There a Precedent?

To assess the feasibility of this goal, it is imperative to understand if there has been a precedent in

doubling of farmer’s income. The most recent estimates of farm income for the period 1983-1984 to 2011-

2012 and extrapolated to 2015-2016 result suggest that the total farm income per cultivator has just about

doubled in the 22-year time period with an annual growth of 3.30 per cent in real terms (Chand et al.

2015). However, the Government of India’s initiative to double farmers’ income does not allow for 22

years, and a closer look at a shorter time period (similar to 2015-2016 to 2022-2023) is required. Using

2015-2016 as the base year, an annual growth of 10.41% is required in farmer’s income to reach the goal

by 2022-2023. Thus, to assess feasibility, other authors take a more granulated look at the shorter time

frame from 2003-2013.

There were a number of policies aimed at targeting various factors to increase farmer’s income in the

period of 2003 to 2013:

The Rashtriya Krishi Vikas Yojana successfully contributed to agricultural growth by focusing on State and

district level incentivization for agricultural planning and investment and a decentralized approach to flow

of funds, however, net investments in productive assets remained low.

During 2004-2007, the Government of India successfully doubled the flow of agricultural credit at the

aggregate level, however, this did not have a significant impact on net investments at the household level.

To increase income, the minimum support price for paddy and wheat was increased and Farmer Producer

Organizations were formed with the aim of ensuring remunerative prices. Various States implemented

de-centralised procurement of food and grains and invested in irrigation with funding from the Rural

Infrastructure Development Fund (RIDF).

Using data from the NSSO’s Situation Assessment Survey of Farmers conducted in 2003 and the Situation

Assessment Survey of Agricultural Households in 2013, Chandrashekhar and Mehrotra (2016) estimate

growth in farmers’ total income in real terms against the backdrop of these policy pushes. The 2013

dataset presents the principal source of income for agricultural households: for 63.5% the principal source

of income is from cultivation, for 3.7% from livestock, for 1% from other agricultural activity, for 4.7%

from non-agricultural enterprises, for 22% from salaried employment, for 1.1% from pension, for 3.3%

72

from remittances and others at 0.7%. There is considerable state-wise variation and variation by land

ownership. More importantly, a large number of households are engaged in multiple income-generating

activities. Essentially, in addition to income from cultivation, there are other income sources that facilitate

increase in farmer’s income.

When accounting for income from wages, net income from cultivation, net income from farming of

animals and net income from non-farm business, there is no evidence of doubling of total income (in real

terms) across India. The average monthly income, in real terms, increased by a factor of 1.34; Odisha

crossed the threshold of 2, with Haryana at 1.93. In Tamil Nadu, farmer’s income increased by a factor of

1.48 between 2003 and 2013. The picture is grimmer for other states; Bihar and West Bengal experienced

a decline in farmer’s income over the time period. Net income from cultivation increased by a factor of

1.32 across India, with Chhattisgarh experiencing growth of 2.05 and Tamil Nadu, by a factor of 1.16. For

Bihar, Jharkhand and West Bengal, there was a decline in income from cultivation. In contrast, many states

experienced a decline in income from non-farm business and a doubling of income from farming of

animals; all-India average is at 1.00 and 3.21 respectively (Chandrashekhar & Mehrotra, 2016).

4.2 Consideration of Other Determinants

It is clear that despite the measures taken by the central and state governments, the real total income of

agricultural households did not increase over the 2003 to 2013 time-period. Thus, focusing policy

measures on increasing income from cultivation might not be sufficient; other factors need to be

considered whilst devising a comprehensive strategy to double farmer’s income. Based on the above

analysis, policy measures that take into consideration increasing net income from animal farming could

form the key driver of doubling farmers’ income in the future.

Size of land ownership plays a large role in income growth; households with over 10 hectares of land did

experience a doubling of their income in real terms and any household with at least one hectare of land

experienced an increase of at least 1.5 times for income from cultivation and total income. The table

presented below highlights the importance of size of land ownership in determining livelihoods. Thus, it

is essential to also consider the role played by legalizing and liberalizing land titling and land leasing

through “agricultural efficiency, equity, occupational diversification and rapid rural transformation” in

enabling income growth for farmers (Chandrashekhar & Mehrotra, 2016). Niti Aayog, in an occasional

paper, highlights land leasing and land titles as one of the five main issues that need addressing to ensure

improvement in farmer livelihoods.

73

Table 32. Composition of Farmers' Income

2003 2013

Size-Class of Land Possessed

Income from Wages

Net Receipt from Cultivation

Net Receipt from Farming of Animals

Net Receipt from Non-farm Business

Income from Wages

Net Receipt from Cultivation

Net Receipt from Farming of Animals

Net Receipt from Non-farm Business

<0.01 71 2 9 18 64 1 26 10

0.01-0.40 60 16 6 18 58 16 15 11

0.41-1.00 42 40 6 11 39 412 12 9

1.01-2.00 29 58 5 8 24 57 11 8

2.01-4.00 19 71 3 7 15 69 11 5

4.01-10.00 11 82 2 6 10 78 8 4

>10.00 5 85 4 7 3 86 6 4

All classes 36 49 5 11 32 48 12 11

Calculated from unit level data NSSO, 2003, and 2013

4.3 Building a Comprehensive Roadmap to Double Farmers’ Incomes – Current

Strategies

To build a comprehensive strategy for growth and assess the feasibility of reaching an annual growth of

10.41% in the next decade, it is essential to consider the various sources of growth that need addressing.

The current literature, research and conversations with various stakeholders highlight three main pillars

to doubling farmers’ income: enhancing gross income, reducing costs and stabilizing income. The number

of sources that can contribute to each pillar are highlighted below.

i. Agricultural productivity

Due to the diversion of agricultural land area to non-agricultural uses, increasing agricultural output needs

to focus on increasing agricultural productivity per unit of land. Except for wheat, productivity for most

crops is below the world average with significant state-wise variation. The crop sector constitutes

approximately 70% of the income from agriculture and 30% from livestock. Chand (2017) estimates that

if the current growth rate of crop productivity and livestock production is maintained, total farm income

will increase by 16.7% and 10.8%, totaling 27.5% in seven years. Some of the variation in crop productivity

can be attributed to access to irrigation; however, even districts with the same levels of irrigation access

have differing yield outcomes. Productivity in India can be enhanced by focus on two key areas: access to

irrigation, and adoption of technology.

74

Current yield gaps for crops covering cereals, pulses, oilseeds, vegetables and fibre are large; some crops

such as cotton exhibit a 495% yield gap. In the short-term and long-term, strategies to increase yield could

include integrated pest management and conventional breeding or biotechnology respectively. These

gaps can be reduced by agronomic measures such as intercropping, crop rotation, line sowing, weed

control, and increase of micronutrients (Satyasai & Mehrotra, 2016). As the chart below shows, there is

already a substantial gap between the experimental and realizable yields. However, examining the gaps

between the farmers’ actual, and realizable yields reveals a vast difference – it is estimated that bridging

the gap by 50% can increase gross farm income by at least ₹ 10,000 and net income by ₹ 5600 (per 1.02

hectare of farm land).

Figure 26. Yield gaps (Satyasai & Mehrotra, 2016)

ii. Total Factor Productivity

Total factor productivity accounts for efficiency gains due to technological changes, skill development,

better utilization of inputs and infrastructural enablers; it is part of the output that is not directly

measured by inputs. Between 2004-2012, the Indian agricultural sector experienced a 2.62% annual

increase in total factor productivity (Fuglie & Rada, 2015). Assuming the corresponding increase in

farmers’ income – if the same rate of growth is maintained, farmers’ income will increase by 26.3% by

2022-2023.

0 500 1000 1500 2000 2500

Finger Millet

Maize

Pigeon Pea

Horse Gram

Cowpea

Ground Nut

Sun Flower

Gap: Realisable <-> Farmers' Yield Gap: Experimental <-> Realisable yield

75

iii. Role of Water and Irrigation

In terms of water stress, 54% in India experience extremely high water stress with groundwater declining

at the same rate. As farming is water intensive, managing water resources adequately is imperative for

agricultural productivity. Currently, less than 10% of area feasible for micro-irrigation is covered;

additional coverage can increase output through area, productivity and cropping pattern effects, thereby

positively influencing income. Currently, the Prime Minister’s Krishi Sinchayi Yojana (PMKSY) focuses on

source of water, distribution and end-use. In terms of contribution to farmer’s income, Jin et al (2012)

suggest that as per plot-wise data from NCAER’s REDS survey, average net return from a hectare of land

under irrigation is Rs. 32,980 as compared to a net return of Rs. 25, 276 from a hectare of land that is

rainfed, giving an additional income of Rs. 7,704 per annum per hectare subject to further increase with

cropping pattern effects.

Table 33. Impact of Irrigation on Income (₹) (Jin et al. 2012)

Irrigated Rainfed

Gross Returns 54243 38090

Net Returns 32980 25276

Additional income per hectare 7704

iv. Cropping intensity

Focused irrigation initiatives can increase the cropping intensity by enabling farmers to grow a secondary

short duration crop in the period between kharif and rabi. As per recent land use statistics, the second

crop is grown only on 38.9% of the net sown area and crop intensity is increasing by 0.7p.p. annually. This

growth rate will lead to an approximate increase in farmer’s income by 3.4% by 2022-2023, however, with

more focus on irrigation, crop intensity should increase further.

Rajasthan and Micro-Irrigation

In Rajasthan, currently around 35-40% of agricultural land is irrigated, however, less than 10% of

cultivatable land is covered by micro-irrigation. The state plans to bring its entire irrigated area under

micro-irrigation by 2022-23. To promote this, the Government of Rajasthan has an added focus on

micro-irrigation and provides an additional 5% top-up subsidy over the Government of India’s subsidy

on sprinklers and drips for all farmers. To further increase efficiency in resource usage, there is an

ongoing initiative to reduce the dependence on electricity through the introduction of subsidies on

solar energy based pumps.

\

76

v. Diversification toward high value crops and non-farm activities

Using CSO and DES data from 2013-2014, Satyasai & Mehrotra (2016) estimate that staple crops that

occupy up to 77% of the gross cropped area, only contribute around 41% of total output by the crop

sector. On the other hand, high value crops that occupy only up to 19% of gross cropped area, contribute

41% of the total output as well. In terms of productivity, authors estimate the average productivity of high

value crops at Rs. 1,41,777 per hectare, as compared to an average productivity of staple crops at Rs. 41,

169 per hectare. Thus, a one-hectare shift from staple crops to high value crops can increase gross returns

by over Rs. 1 lakh per hectare. Additionally, in terms of productivity, a 1% increase in land area under high

value crops would lead to an 0.319% increase the total output of the crop sector. If past trends in

diversification continue, diversification has the potential to increase farmer’s income by 5% by 2022-2023.

Secondly, there is also scope to increase income realizations through diversification toward other allied

enterprises such as forestry.

Lastly, diversification is not limited to cropping choice; diversification toward livestock, poultry and non-

farm activities can also bring in additional streams of income for small land-owners. NSSO data between

2004-05 and 2011-12, highlights a decline of 2.04% annually in the agricultural workforce in terms of

agricultural labour as well as cultivators. However, employment diversification is still gradual mainly due

to high requirement of skill and education for various non-farm sector employments (Chand & Srivastava,

2014).

Need for Training: The need to diversify in crop and employment choice also calls for a need for training

of farmers in technical, risk-management, managerial and financial skills to meet the growing

sophistication of the agricultural value chain and skill requirements in other sectors. Karnataka and

Rajasthan and Crop Diversification

To promote crop diversification, the Government of Rajasthan is focusing on micro-irrigation as

well as water efficient cropping pairs such as soya bean-coriander. The state has also established

crop specific Centers of Excellence that aim at building awareness on best practices for

horticultural farmers under crops such as mandarin, date, guava, citrus, mango and spices.

Additionally, the state has set up an International Horticulture Innovation and Training Centre for

capacity building on hi-tech horticulture. Given these measures, the state witnessed a significant

increase in cultivation of a number of horticultural crops post 2014. Lastly, the Government is

promoting agro-forestry to grow fodder/fruit trees/timber on a portion of the farmland to ensure

long-term income security.

77

Manipur provide some examples in terms of the various kinds of initiatives that can be taken, in order to

improve the capacity and skill levels of the famers in respective states.

vi. Bringing down Costs of production

a. Soil Nutrient Management: The soil health card programme was introduced to ensure a soil test based

application of fertilizers to increase productivity in an otherwise micronutrient deficient Indian soil.

Though study estimates in Gujarat highlight an increase in yields for farmers with soil health cards, the

main challenge of the programme lies in the fact that only about 11% of farmers display a favourable

attitude toward the programme (Patel & Chauhan, 2012). Building awareness among farmers of the

importance of soil health and adequate micronutrient application.

b. Organic Farming: Organic farming, precision farming, and low external input sustainable agriculture are

being promoted to reduce farmers’ excessive use of costly inputs such as fertilizers and pesticides. In the

last one decade, cultivated area under organic farming has grown from 42,000 hectare in 2003-04 to 7.23

lakh hectare in 2013-14. States such as Karnataka, Gujarat, Rajasthan, Uttaranchal, Maharashtra, Madhya

Pradesh, Tamil Nadu, Kerala, Mizoram, Nagaland, and Sikkim have been promoting organic farming over

the recent years.

c. Farming Systems Approach: More efficient management of by-products can help reduce costs of

purchased inputs. Integrated Farming System (IFS) can help increase efficiency in land use and animal

Karnataka and Training

As a skill-building initiative under shifting to horticultural plantations, the state has set up a Center

of Excellence on precision farming to demonstrate hi-tech horticulture and distribute quality

planting material to increase the productivity per water drop.

Manipur and the Phased Skill Building Plan

The Government of Manipur has a comprehensive initiative to enhance farmer’s income that is

divided into the short-term, medium-term and long-term. Under skill building, in the short-term

segment, farmers will be on-boarded onto basic best practices and farming techniques, and select

high capability farmers will be identified for specialized training such as integrated farming and hi-

tech farming methods. The state will ensure these capable farmers are also introduced to

institutions that can provide credit facilities to enhance investment in specialized farming

techniques. In the medium-term and long-term, specialized training will be provided to farmers on

adoption of IFS and ancillary services.

78

management techniques thereby increasing sources of farmer income. For example, if coupled with dairy

(1 animal) and 8-10 sheep, net income from groundnut farming system would be approximately Rs. 22,000

per hectare as compared to Rs. 5059 per hectare if groundnut is grown singularly.

Taking a number of these growth sources together, at current trend rates, farmer’s income might have

potential to double in a 10-year time span as highlighted in the table below. Doubling of income by 2022-

2023 would require an additional 33% growth over current growth rates. Some strategies to achieve this

can be seen in measures adopted by various states.

Table 34. Prospects of growth in farm income (Satyasai & Mehrotra, 2016)

Source Scope Contribution

Remarks 7 10

Crop Productivity 70% seg 3.1 16.7 25 Same as in 2001-13. For crop sector

(70%) ag.

Livestock value added 30% seg 4.5 10.8 16.6 Same as in 2004 to 2014

Improvement in resource use efficiency

2.26 16.7 25 Same as in 2005 to 12

Crop Intensity (70% seg) 1 pp. 3.4 4.9 Same as during 2001-12

Rajasthan and Soil Health

Fertilizer quality control units have been set up in 6 regions in Rajasthan along with an extensive

network of 101 soil-testing laboratories. The state plans to expand this network to distribute soil

health cards over the coming few years and is planning for digital soil mapping and the use of

technology such as drones to ensure optimized resource usage.

Karnataka and Integrated Farming Systems Pilot

The Karnataka Agriculture Price Commission (KAPC) selected eight villages in 2016 for a pilot

programme to implement integrated farming systems in an effort to enhance farmers’ income.

Under this pilot programme, the Institute for Social and Economic Change (ISEC) will conduct a

baseline socio-economic survey, post which Krishi Vigyan Kendras (KVKs) in each village will

prepare an integrated farming system and undertake implementation of the programme. For

example, in one of the villages, Chitradurga, the focus is on a millet-based integrated farming

approach, whereas, in Kalaburagi the focus is on a pulses-based farming system. The KVKs are also

undertaking measures to raise awareness on the programmes and facilities available to farmers

under Center and State initiatives to enhance income. Additionally, KVKs will implement soil quality

testing farmers’ health check-ups in the selected villages. The Government plans to use the results

from these pilot villages to develop district-level blue prints and work toward enhancing the

farmers’ income.

79

Crop Diversification (70% seg) Area increase - 3.13 per

cent, elasticity 0.319 5 7.3

Better Price Realization 13% 9.1 9.1 Implemented in 7 or 10 years

Shift to non-farm occupation 1.81% 13.4 19.6 Same as in 2005 to 12

Total 75.1 107.5

vii. Price Realization by Farmers: The Government of India recently introduced the e-NAM to focus on

improving benefits accruing to the farmer, by giving them direct access to the market. Successful

implementation of market reforms and a unified agricultural market at a national level can be an effective

strategy in increasing farmers’ income by 2022-23. Karnataka has had a successful experience in this

regard. Estimates indicate that after the creation of the online trading platform, prices in mandis in

Karnataka displayed a much higher increase as compared to wholesale prices of the same commodity in

the rest of the country; the average increase in prices received by farmers in a short span of time was

13.4% in real terms which translates to a 9.1% increase in farmers’ income. This initiative highlights that

the application of small reform to the system of marketing can increase price realization for farmers.

Karnataka and Unified Markets Platform: Under ReMS, a joint initiative of the Government of

Karnataka and NCDEX Spot Exchange Limited, an online marketing platform, Unified Market Platform

(UMP), was created in 2014 and operational soon after. This platform allowed auctioning of farm

produce on an electronic platform.

Manipur and Agricultural Markets: In the medium-term, the Government of Manipur plans to focus

on developing agricultural markets to ensure farmers’ can access adequate marketing facilities and

remunerative prices for their produce. This will be facilitated by support of credit facilities and is being

supported by legislation on “The Manipur Agricultural Produce and Livestock Marketing (Promotion

and Facilitation) Bill, 2017”.

80

5. Doubling Farmers’ Incomes in Tamil Nadu – The Way Forward?

Our findings from the sample survey reinforce the point that the agriculture sector in Tamil Nadu is fast

reaching a critical point. Faced with continuous weather uncertainty, the few preceding years have been

exceedingly difficult for Tamil Nadu’s farmers, having suffered from floods, drought, and cyclones at

different points in time. In addition, the agrarian sector in general in India has faced a severe set of

pressures that continue to be exacerbated – the number of cultivators is on the decline47, while the

population is on the rise; available resources for production are dwindling, and input costs have risen

tremendously - while returns from agriculture have not increased in commensurate terms.

Notwithstanding these issues other serious challenges include the scarcity of labour, and a highly volatile

price market for agricultural produce that has severely damaged farmer’s interests48. At the same time

the pressure to improve land productivity, and increase agricultural output is higher than ever. This is

indeed the primary contradiction of the agrarian sector today – it is more resource constrained and carries

more risk, than ever before – and yet, output is expected to stay constant at the very least, if not to

improve significantly as each year passes by.

Being a lower riparian state, Tamil Nadu’s dependence on rain-fed agriculture is unlikely to reduce in the

near future. The dependence on the North-East monsoons makes it improbable to expect all farmers to

be able to cultivate 2 or more full crops in year, with sufficient output for commercial sale to supplement

the household income. With regard to increasing farmer incomes under these constraints, the need for

diversification has been put forth as a strategy for the future, the aim being to ensure that farmers are

able to leverage income from various farm and non-farm sources. The advantages of such a strategy are

obvious – most importantly, the increasing risks faced by farmers can be hedged by investments in

multiple areas, thus ensuring that in the event of weather related uncertainty, income remains

unaffected. However, the disadvantages of this strategy also need to be considered – for a small and

marginal farmer, having to focus on multiple activities to obtain income is almost certain to lead to

increased pressure on available resources – consider the shortages of land, technological know-how/

access to technology, and the credit and monetary constraints that prevent adequate investment in

various income generating activities. In the short term, relying on diversified income streams certainly

appears to be a useful strategy to mitigate risks, and ensure sufficient income generation. However, in

47 Insert reference from TN Policy Note, and also from the CoI data. 48 The recent case of tomato prices falling to under a rupee per kilo (See: the Hindu – 26th December 2017), or the well documented issues with the market prices of pulses in India are prime examples of the price risks faced by famers today (See: RBI Annual Report (August 2017), or Livemint – June 2017.)

http://www.thehindu.com/news/national/andhra-pradesh/when-tomato-brought-tears-to-farmers/article22282484.ece

http://www.livemint.com/Money/7XGrabrzzvavCPOOGkU5dL/The-problem-with-pulses-in-three-charts.html

81

the longer term, it merely seems inefficient to suggest that farmers should be focusing on a variety of

activities, instead of ensuring maximum productivity, and full price realization in the areas where they

have competitive advantage – cultivation, and farm related activities. An analysis of the income data from

this survey provides an overview of where the maximum gains can be expected.

Both Chand (2017) (see Section 4) and the DFIT committee suggest that the components of income from

farm sources maybe thought of as comprising the following parts:

- Improvement in crop productivity

- Improvement in livestock productivity

- Increased cost-efficiency in production

- Increase in cropping intensity

- Diversification towards high value crops

- Better price realization

- Shift to Non-Farm opportunities

For each of these categories, the DFIT committee estimates parameters of income growth potential, based

on trends from past data (2003-2012) (Table 35). The estimated contributions from each of these

categories to income growth is also presented below (Table 36)

Based on the 2015-16 income of ₹ 133,568, the growth in farm incomes based on parametric trends is

only likely to be around 81.5%. The DFIT Committee’s accelerated targets provide a good overview of the

role of these individual factors in income growth, in doubling, or even a substantial increase in farmer’s

incomes is likely to be achieved. It must be noted that these estimates are focused on doubling farm based

incomes, the overall assumption being that in 2015-16, farm income contributes to around 43% of the

total annual income of the farmer. The aim of the accelerated growth parameters is to boost the share of

farm income to around 54% by 2022-23.

However, as data from this survey shows (Section 3), there has been a decrease in farmers’ real income

in Tamil Nadu in 2016-17, mainly due to the multiple weather shocks, and related issues. The annual

income for farmers in the 4 districts is estimated to be ₹ 125,228 (2015-16 prices). Thus, if the DFIT

Committee’s target of ₹ 232,505 is seen the benchmark that has to be achieved in the next 5 years (by

2022-23), the implication is that farm based incomes have to increase by 134% from the current level,

assuming that the share of farm income in the total income basket is around 55%. At the same time, this

also places the demand of an annual 7% growth in non-farm incomes during the period 2017-18, which is

slightly higher than the DFI committee’s estimate of 5% for the longer 7-year duration.

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Table 35. Parameters Affecting Farm Income

Crop

Productivity Livestock

Productivity Resource use

efficiency Crop

Intensity Crop

Diversification Price

realization Shift to

NFS

Parameters as per 2003-2012 data

0.63 9.87 1.92 1.06 3.93 6.5 1.71

Adjusted targets (accelerated)

3.5 11.84 2.26 1.33 4.92 13 2

Source: DFI Committee Estimates

Table 36. Contributions to Growth in Farm Income

Crop



efficiency Crop

Intensity Crop



NFS Total

Estimated from data 2.6% 39.2% 14.2% 4.4% 4.7% 3.8% 12.6% 81.5

%

Adjusted targets (accelerated)

15.8% 49.9% 16.9% 5.6% 7.4% 7.5% 14.9% 118.1

% Source: DFI Committee Estimates

Table 37. Revised Projections - 5 year Contributions to Growth in Farm Income

Crop



efficiency Crop

Intensity Crop



NFS Total

TN-Growth Revised

16.0% 42.5% 24.0% 5.1% 14.1% 15.7% 16.5% 134.0

% Source: Authors Calculations

83

Therefore, this has resulted in a need to re-assess, and recalibrate the growth targets for the remaining 5

years, in order to highlight the areas for significant intervention and action. The share of farm income in

the 2016-17 income estimates from this survey (₹ 125,228) is around 41% - quite similar to the 2015-16

estimates. However, the real challenge is presented by reduction in farm income in real terms – thus

suggesting that higher growth targets are to be met for the remaining 5 years in order to achieve the 134%

(Table 37) increase from the current income level. Projections suggest that in order to achieve this level

of growth in farm incomes in the next 5 years, the focus needs to be devoted to components of income

that can be increased with investment and short-term effort. However, it is crucial to remember then,

that the aim of reaching a peak income by 2022-23 is not the goal – instead, it is to ensure that incomes

substantially increase by that year, and continue to increase, or remain stable at the very least.

Thus in the immediate 5 years to come, the highest priority should be given to actions focused on:

- Improving resource use efficiency (Aim to achieve at least a 25% improvement in resource use

efficiency)

- Focusing on diversifying to high-value crops (Aim for 14-15% contribution of diversification to high-

value crops in increasing farm incomes)

- Significantly improving price realization by farmers (Developing strategies to improve price

realization; 15% contribution to income growth to be the aim)

- Boosting livestock sector productivity

These are areas of high short-term gains, and significant advances can be achieved in a limited period of

time with concerted effort from policy makers and practitioners. The following recommendations are

therefore in tune with these analyses.

Organizing Farmers – the Missing Ingredient?

For any intervention to succeed in improving profits across the agrarian sector, scale and scope are huge

factors in lowering costs, improving access to resources and bargaining power, and ensuring that

maximum benefits reach all farmers (see Bernard and Spielman, 2009; Biénabe and Sautier, 2005; Datta,

2004). There is indeed a belief that in the absence of effective organization, Indian farmers are suffering

from poverty and exploitation, and even isolation from economically viable agricultural activities

(Croucher, 2010). From this perspective a collective approach to farming is a vital ingredient then, in the

pursuit of increasing farmer’s incomes.

84

The concept of an organized, or collective approach to farming is not new to India – the cooperative model

has long existed in India – in a range of sectors. However, the benefits for the farmer have reduced over

the years, until confidence in the cooperative model of organizing farmers was completely lost, despite

the successes realized in the 70s and the 80s (Trebbin and Hassler, 2012). It was with the aim of addressing

this situation that the concept of producer companies (FPC/FPO) came into being, in 2002. By taking the

elements of the cooperative model, and by making the farmers the shareholders of a company, it was

hoped that they would be better placed to commonly and sustainably manage and develop community

resources such as land and water. The concept got a further boost, when Farmer Producer Organizations

(FPO) were given policy support (credit guarantee scheme, and equity guarantee scheme) under the XII

Five Year Plan.

However, the concept has met with limited success in Tamil Nadu thus far. In 2014 – dubbed the year of

FPOs by the Department of Agriculture and Cooperation (DAC), Ministry of Agriculture, Tamil Nadu had

only 1000 farmers enrolled in 50 Farmer Interest Groups (FIGs), and only 1 registered FPO49. This later

increased to a total of 11 registered FPOs, as per available data50. Data from the sample survey also shows

that around 80% of the farmers report having no association to any local agricultural groups or

cooperatives51. In 2017, the government of Tamil Nadu launched a programmeme to promote organized/

group-based farming, the target being to promote 2000 Farmer Producer Groups52 (FPGs) covering around

2 lakh farmers. The objective of the programmeme is to leverage collective farming, for “credit

49 http://agritech.tnau.ac.in/farm_association/pdf/Year-of-FPO2014.pdf 50 http://sfacindia.com/PDFs/List-of-FPO%20identified-by-SFAC/List%20of%20FPOs%20in%20the%20State%20of%20Tamil%20Nadu.pdf 51 We suspect some under reporting of any associations with group-based lending activities. 52 Around 10 FPGs would together form an FPO, in a contiguous area – thus the overall target would be to form 200 FPOs.

Organizing farmers in Tamil Nadu – progress in 2017

- 975 Farmer Producer Groups have been formed, and handed over the Agri-Marketing Department - Objective of the FPGs: Channel to educate farmers about growing high-yielding varieties (HYV), seed treatments, training in new technology, sensitization on the scope of value-addition, and processing. - Successful business plans worth up-to INR 7 lakhs for the FPGs to be approved by the government, with INR 5 lakhs subsidy per business plan to be contributed by the government.

- Number of FPOs (registered) in Tamil Nadu has increased to 167 (NABARD).

-

85

mobilization, better adoption of technology and to facilitate effective forward and backward linkages”53.

A total amount of ₹ 100 crore was earmarked, to provide a corpus fund for each of the FPGs (₹ 5 lakh per

FPG). In parallel, many private initiatives – launched by various NGOs, or agri-business firms are

attempting to mobilize the farmers of Tamil Nadu into collectives, the end objectives being the same as

described above. The challenges are many – including the various socio-economic differences that have

prevented a truly successful and meaningful organization of farmer groups in the past, notwithstanding

various political pressures.

Ultimately - whether through private means or through government aided ones, the successful

implementation of farmer collectives and groups is an absolutely necessity. It is the need of the hour, and

ensuring the successful collectivization of Tamil Nadu’s farmers must be given the highest priority –

without this crucial building block in place, the aim of doubling farmer’s incomes may well remain a distant

dream.

Given this context, the report identifies three broad guiding principles, that provide the overall framework

for a comprehensive strategy, while going forward. Accordingly, presents a set of short term

recommendations, whose implementation is to be considered immediately (within 1-3 years), and a set

of a medium-to-longer term recommendations (timeframe to be considered for this set would be in the

range of 5 to 10 years) are provided.

1) Promoting the value chain approach: All farmers – small and marginal farmers in particular, need

to be integrated into a well-developed agricultural value chain, that focuses on value addition to

the produce at each and every stage. This integration will ensure that the farmers too are able to

benefit from market access. Strong linkages to the market are vital in ensuring the timely

availability of good quality inputs, and capital - at affordable prices. Farmers also benefit from

these linkages, by being able to realize the best price for their produce - thus gaining maximum

profits. It must be noted however, that farmers also need to be adequately protected against

price fluctuations and other such issues, which greatly influence the income generated by the sale

of farmer’s produce. The long term aim should be to transition farmers in India from having to

rely on price support, to improving productivity and profitability by utilizing the various links and

networks inherent to the supply chain. In the short term:

53 http://cms.tn.gov.in/sites/default/files/go/agri_e_ms_164_ap4_2017.pdf

86

- The need is to carefully consider and identify appropriate value chains that can benefit

farmers – accounting for variation in resource availability and other conditions across

various agro-climatic zones, and allocate funds to ensure maximum profitability from these

value chains.

- Several high return value chains exist – bamboo, mushrooms etc. that are suitable for the

Tamil Nadu context. – the need of the hour is to carefully assess these options and their

suitability in different districts/ agro-ecological zones, and allocate investment in order to

both ensure appropriate market linkages, and also to incentivize farmers to shift towards

these value chains. The table below highlights some high potential value chains that may

be pursued for immediate development in the various agro-climatic zones in Tamil Nadu.

North Eastern Zone Drought tolerant fruits, horticulture, floriculture, pulses, oilseeds , coconut

North Western Zone Mango value chain - mango pulp, and processed mango, sugarcane, tapioca, tamarind, chilly, samai

Western Zone Pulses, Coconut, Maize, Tomato, Drumstick, Castor

Cauvery Delta Zone Alternatives to Kuruvai paddy - Cotton, Hybrid Maize, Horticulture, Coconut etc.

Southern Zone Pulses, Oilseeds, Coir based industries, Crops like chillies in drier areas of Ramanathapuram

High Rainfall Zone Lack of development in agro-industries, high potential for a wide range of crops including paddy, pulses, oilseeds, fruit crops, vegetables, flower crops, spices and plantation crops. Focus should thus be on infrastructure development, and ensuring value addition to all produce

Hilly Zone Hill vegetables/ off-season vegetables, hill spices, floriculture, fruits

Successful examples for development of the value chain exist for each of the cases discussed above, in

various states across the country:

- In Gulbarga, implementation of a value chain approach for chilli cultivation has been

successfully undertaken. The intervention, which included training on integrated pest

management resulted in manifold increases in yield, while farmers have reported significant

gains and improvements in terms of crop quality and profit realization. This is a useful

example, as there are many areas in Tamil Nadu where similar climatic conditions persist, and

similar interventions could be relevant.

- In Tamil Nadu, some research aimed at improving the output, and drought resistance for

paddy has been undertaken by reseachers from TNAU, and Rutger’s University. The study

finds a widespread need for the adoption of drought tolerant rice varieties, given the higher

https://avrdc.org/chili-on-the-value-chain-in-karnataka/

https://ageconsearch.umn.edu/bitstream/188111/2/Selvaraj747.pdf

87

returns. However, there needs to be an enabling ecosystem in place – including improved

seed supply, market linkages, and extension/ advisory in order to improve cultivation

practices.

- In Maharahtra, Jaljeevika demonstrates a means of implementing and sustaining inland

fisheries in a manner beneficial to many landless farmers. Jaljeevika’s interventions include

promoting aquatic livelihoods, building necessary institutions in order to promote inland

fisheries, and ensuring that the necessary development along the value chain is undertaken,

in order to fully support inland fisheries.

2) Building farmer’s capacity in strategies for risk management, loss minimization, and climate

change adaptability: In the face of increasingly uncertain weather patterns, and highly

unpredictable rainfall, farmers need to be able to adapt, and mitigate various kinds of risk.

Developing this capacity among farmers – by leveraging technological solutions (during pre-

cultivation, cultivation, and post-harvest phases), influencing crop choices and cultivation

patterns, and ensuring the insurance of the various production risks - is crucial in ensuring the

continued success of the agrarian sector in Tamil Nadu. However, there is a lack of a well-rounded

strategy to achieve this goal. The landscape of risk management solutions remains highly

fragmented – private players tend to mainly be in the insurance space, while the government has

a numerous set of schemes focused on various aspects ranging from irrigation, to warehousing

etc. However, the state needs to adopt a consistent and well-round strategy that seeks to leverage

the strengths of all key stakeholders, in order to ensure the the necessary capacity to manage and

mitigate risks is built in each and every farmer.

3) Addressing soil health, reducing yield gaps, and related Issues: Like many other states in India,

the overall productivity of the land continues to remain low in Tamil Nadu; additionally, soil health

is an increasing concern, especially given that the overuse of urea and the gap between the

recommended NP ratio vis-à-vis the current situation on ground. Thus the strategy ahead should

aim to extract maximum realizable yield from available land (even during the dryer summer

season), while maintaining the health of the soil, and that of the surrounding ecosystem.

https://www.jaljeevika.org/

88

5.1 Short term recommendations:

5.1.1 Improving cultivation strategy in the dry season:

While programmemes aimed at improving the cultivation of horticultural and dryland crops are underway

in Tamil Nadu, careful thought and planning needs to be undertaken in order to ensure that the land is

used efficiently, and maximum output is obtained. In various other parts of the country, inter-cropping of

high value vegetable crops, with pulses or oilseeds has been undertaken – at great returns to the farmer.

One example is the “machan” model of cultivation that has been seen, especially in Uttar Pradesh. The

machan or the multi-tier system involves the use of vertical space on a small portion of land, thus allowing

the farmer to grow multiple high value crops at the same time. It has been seen that building a “machan”,

on 0.08 acres of land allows two vegetable crops to be grown simultaneously, at minimal cost (the system

is highly resource efficient), and with high returns54. The machan can be maintained throughout the year,

which means at least two harvests can be made, by growing crops such as bittergourd, turmeric etc. This

speaks to a broader point about identifying an appropriate set of high-value options, for a given area –

based upon market assessments (demand analysis) etc. Every farmer should thus be able to grow a regular

crop in the rainfed season, and reinforce his or her options with a mix of high-value crops in the dry season.

Thus the following steps need to be immediately undertaken, to improve cultivation in the dry season:

- 5 to 10 percent of a small/ marginal farmers’ land (a minimum of 100 square feet) must be

devoted to cultivating high value crops – vegetables, herbs etc. - that consume minimal resources,

and yet prove highly profitable, particularly in the off-season. Up-to 5 crops can be grown in a

year, and the margins for a single crop range upwards of ₹ 5000.

- It is estimated that the contribution from horticulture crops has to be significantly increased

where possible. The DFI committee presents two strategies towards this: a) shifting of area into

horticulture at 4 per cent per annum for seven years, or a more pragmatic approach b) shifting of

area in favour of horticulture by replacing staple crops at 2 per cent per annum for the first three

years and thereafter shifting at the rate of 4 per cent per annum for the next four years.

o Tamil Nadu is already the second largest cultivator of horticultural crops in the country,

accounting for 7% of the production, and 6% of the area under cultivation. Increasing area

54 Net returns were around INR 7000, as per one case study (http://www.tatatrusts.org/article/inside/Multi-crop-to-multi-income)

89

under cultivation to the extent suggested by the DFI committee needs to be carefully

examined, to assess feasibility.

o While the government has indeed programmemed to increase the area under

horticulture crop cultivation from 34 lakh hectares in 2016-17 to 39 lakh hectares in 2017-

18, it is equally important to ensure maximum value addition to the output, and minimize

wastage. Currently, the wastage is estimated to be at around 30-35%.

- For larger farmers, with more land area, shifting a portion to longer term tree crops can be

considered.

5.1.2 Improving Farming Practices Through Nutrient Management

Tamil Nadu has a fast deteriorating soil quality – the deviation from the optimal N:P ratio is assessed at a

little over 40%55 - a definite warning sign. The poor soil health could have serious implications for

productivity, and thus for income generation in the near future. A major reason for the poor health of the

soil is the overuse of urea, given the very high rate of subsidy it attracts. A very small portion of study

sample (around 7%) reported using soil tests – a clear warning that much needs to be done in order to

ensure farmers pay more attention to soil health, and soil fertility. The soil health card will play an

invaluable role in ensuring that farmers are maintaining the health of their lands. A study conducted by

National Productivity Council (NPC) in 2016 has shown that 84% of farmers have expressed that they have

applied the nutrients recommendations suggested in soil health card that have proven to be beneficial to

them in reducing the cost of cultivation and improving productivity of crops. It is estimated that as a usage

55 Ministry of Agriculture, 2014

Dryland Agriculture Scheme

Across TN, 2 lakh hectares have been identified for dryland clusters (Kharif crops cover around

1,17,000 hectares) across 25 districts. The criteria considered comprises of a village having dryland

in a continuous manner, not under the ambit of any irrigation source and not growing any

horticultural crops. Cluster Development Teams have been formed for its implementation. The

scheme has formed 200 clusters across 2 lakh hectares in 25 districts, covering 2,30,000 farmers.

The aim is to form 1000 clusters, over a four-year time-period.

INR 80 lakhs is allotted to every cluster. The coverage includes subsidies for ploughing, contour/

compartmental bunding, 50 percent subsidies for seeds, and fertilizers (only organic). Value

additive machinery such dal mills, oil extracting equipment worth INR 10 lakhs are to be provided

per cluster. 80 percent subsidies to be given on tractors and animal husbandry activities will also be

provided.

90

of the soil health cards, an overall reduction of 8% to 10%, in the usage of chemical fertilizers was seen in

2016-17 as compared to the previous year56. Additional information released by the Ministry of

Agriculture suggests that the costs of paddy farming have decreased by 16 to 25%, while the cost of

production for pulses and oilseeds have decreased by around 10 to 15%57. These findings have significant

implications for Tamil Nadu, as all three crops are important to the farmers.

A variety of immediate steps could be taken to ensure that the soil health card is fully utilized as a tool for

monitoring and maintaining soil health:

- Soil health cards to all: All agricultural landholdings should be provided with soil health cards, and soil

tests should be encouraged before the start of each cropping season. It must be noted that each soil

sample uses around 5 SHCs – thus provisions must be made to provide a minimum of at least 10 SHCs

per agricultural holding (assuming 1 plot, 2 cropping seasons, and 1 sample per cropping season).

Under the SHC scheme, the current cycle per farmer is a 3 year one. This could be changed – ideally

to a bi-annual cycle/coinciding with the farming seasons.

- Our phone follow-ups with a random sample of farmers across four districts surveyed showed there

were serious implementation gaps in the soil health card scheme in Tamil Nadu, wherein test samples

were either not taken with the soil health cards or though the samples were taken results were not

made available to farmers. In few cases, farmers were unaware of how soil test results could be

interpreted or utilized. This hence pushes towards the better implementation of the soil health card

scheme in Tamil Nadu, wherein our survey as well as other surveys show a higher penetration of SHCs

compared to other states in India.

- Studies (an A/B testing in Bihar) by Shawn Cole (Harvard Business School) and Garima Sharma(MIT)

have demonstrated that fertilizer usage has substantially increased over the years, from 10 kgs per

hectare in 1970 to 128 kgs per hectare in 2011 and site-specific nutrient management strategies could

reduce fertilizer expenses as well as improve yields. Farmers lack awareness about the timely

application and right quantities of soil nutrients, and hence this scheme could be extremely beneficial

if executed efficiently. The study shows that Tamil Nadu has achieved 97 % coverage of the

distribution target of 7,000,000 SHCs as of July 2017, and other states to have surpassed TN with 100%

of the distribution targets achieved are Madhya Pradesh and Himachal Pradesh.

- SHC scheme has the potential to improve agricultural productivity (higher per unit yield) and increase

agricultural incomes within the state, given that TN is among the four states with better penetration

56 http://pib.nic.in/newsite/PrintRelease.aspx?relid=169150 57 http://pib.nic.in/newsite/PrintRelease.aspx?relid=163342

91

of SHCs (79.1%), the others being Gujarat, Andhra Pradesh and Goa. Initiatives in this direction could

be further distribution of SHCs and strengthening the testing infrastructure within the state.58

- Implementation gaps such as delays in test results made available to farmers, poor quality of soil test

results and farmers’ lack of awareness in interpreting these results are to be addressed on a priority

basis. Farmers should be trained in inferring soil test results, and be able to trust and act on the SHC

recommendations, and extension networks such as local agricultural officers have the potential to fill

the existing gaps in this system. 59

- Limiting nitrogen based fertilizer purchase, based on soil health: Farmers may be asked to submit

the soil health cards at the time of fertilizer procurement, and limits on urea purchase may be

imposed, based upon the soil health report.

- Incentivizing soil health: The soil health card may also be used as a means to provide incentives to

farmers, that are tied to the maintenance of an optimal N:P:K ratio in any given farmer’s land; these

incentives could be in the form of input cost discounts, or direct transfers to the farmer.

- Soil health, JAM, and digitization: As the sector moves towards direct transfer of the fertilizer subsidy

to the farmers, the transfer of subsidy itself may be made conditional upon the submission of periodic

soil tests. The soil health card may be linked to the farmer’s Aadhar, and his digitized land record, thus

allowing the creation of a soil health database for each individual plot. This database may also be used

to then provide optimal fertilizer recommendations, while ensuring that the farmer is periodically

checking on the quality of the land. In the longer run, other options such as linking the SHC to avail

credit/ working capital, or other products must be considered.

However, in order to ensure the feasibility of these steps, soil health testing facilities need to be made

commonly available, and easily accessible for all farmers. Ideally, farmers should be able to have a soil

test facility within an hour’s travel60 by public transport at the very least, in order to ensure efficient usage.

5.1.3 Providing a strong crop insurance product to the farmers

The PMFBY scheme has been implemented in Tamil Nadu since the Kharif season of 2016. Around 16 lakh

farmers were covered (Khari + Rabi, 2016-17) – a little over a third of the estimated total number of famers

in the state. The state had the highest number of non-loanee farmers enrolled across the country as well.

However, data from the sample survey shows that only 28% of the households had taken crop insurance

in the crop year 2016—17. Major issues were particularly experienced on the side of the payouts. Across

58 https://darpg.gov.in/sites/default/files/Soil%20Health%20Card.pdf 59 http://www.ncaer.org/Events/IPF-2017/IPF-2017-Presentation-Cole-Sharma-Conf-vesion.pdf 60 A current complaint from farmers is that the labs are too far off to access – travel times of over three hours have been observed

92

Tamil Nadu, 55% of the farmers who suffered crop losses in the crop year 2016—17 were yet to receive

their payouts. The role of crop insurance in protecting small and marginal farmers in Tamil Nadu cannot

be emphasized enough, in ensuring adequate protection against various risks.

As per our survey sample, only around 28 percent households (239 HHs) had their crops insured in 2016-

17. Of these 28 percent households in the sample, 45.6 percent (109 households) had raised claims

request in the last 12 months, and 74 percent (81 households) had their claims processed. The data points

towards the existing poor penetration rates of the crop insurance scheme in the state as a whole, even

while TN was going through tough seasons of droughts and irregular rains. Of the 28 percent penetration,

at least half of the households had requested claims owing to the climatic conditions. This demonstrates

the importance of the crop insurance scheme in mitigating the effect on household incomes and

livelihoods, and the existing loopholes such as irregular or delayed payments of claims, denial of genuine

claims need to be tackled efficiently.

Table 38: Crop Insurance

Land Category Mean (Rs) Sd (Rs) No. of HHs

Marginal

Annual Premium (per hectare) 1270.3 1348.8 115

Claims received (per hectare) 34199.7 20961.8 45

Owned land (hectare) 0.6 0.2 457

Small




Semi-medium




Medium-large




Total




93

Addressing the implementation related issues with the PMFBY is crucial to ensuring that the take-up of

insurance is further enhanced. Further steps that might be considered include:

- Improving accountability for faster claims processing: Currently, in the absence of strong monitoring

and performance indicators for insurers, there is a lack of sufficient pressure on insurers to stick to

timelines. At the same state governments also are not held sufficiently accountable, for delays in

payouts to the insurers. Strong accountability frameworks, with clear penalties (and incentives in the

event of compliance) must be laid down, in order to ensure smooth functioning of the scheme.

- Sharing the benefits of profits: As the design of the PMFBY scheme, there is a clear mechanism to

ensure that insurers are protected, in the event of premium to claims ratio exceeding 1:3.5, or in the

event of claims to sum-insured ratio exceeding 35%. In Kharif 2016, the example of Tamil Nadu

provides a clear example as to why there is also a need to devise a mechanism to share the profits.

The PMFBY covered 16,000 farmers in Tamil Nadu in Kharif 2016, while the total premium collected

was around ₹ 10.2 crore. As per data from the ministry of agriculture, the Kharif 2016 season saw zero

reported claims from the farmers in Tamil Nadu. The entire premium collected essentially translated

into profits for the insurers.

Considering mechanisms to share some portion of the profit with the famers, or to provide some

discounts in lieu of the profits for the succeeding season’s premium amounts, are some options that

can be considered. Such initiatives will not only improve the trust in the insurers, while also ensuring

that renewal rates (an often overlooked area in the insurance sector) are influenced.

- Making the insurance market more competitive: the crop insurance market in India currently

revolves around the highly subsidized PMFBY scheme, the level of subsidy making it currently unviable

for private insurers to offer any alternative product offerings. However, market competition is vital

providing alternatives and options to the farmer, allowing them to choose the most suitable and best

performing product. Specifically, the need of the hour is to expand coverage, and include high-risk

high return crops like mushrooms.

94

5.1.4 Improving the usage of warehousing infrastructure

Tamil Nadu has an extensive warehousing infrastructure – the Tamil Nadu Warehousing Corporation alone

operates instalments with a total capacity of 648,000 MT, at an average occupancy position of 88%61.

However, the majority of the occupancy is taken up by the FCI, private companies, and other entities

including TASMAC. A very small percentage of the actual available capacity is used by individual farmers62.

Sample survey data shows that there are only one or two farmers, in the total sample 854, who actually

use go-downs or warehouses to store their harvested produce. However, over 42% of the sample reports

storage within the premises of the house. A significant number of sample households also report post-

harvest losses.

Table 39 shows the potential for storage at a larger scale through warehousing options, demonstrating

the quantities of major crops produced and sold over the last farmed season (in kgs), and the revenues

earned from the sale of the same. The difference between the quantities produced and sold for each crop

would be that utilized for household consumption, as in the case of rice, turmeric, black gram and

groundnuts. Also the table shows that in certain crops like sugarcane, maize and cotton the quantities

sold over the last farmed season are slightly higher than the quantities produced indicating that few

households might have stored some produce from the previous farmed season. Our data also indicates

that farmers agreed to storing at least part of their produce within household facilities and hence this

assumption should hold reasonable. Thus if farmers could divert some of the produce sold into proper

storage options through warehouses and godowns, this could substantially increase their household

incomes.

Table 39: Crop quantity produced and sold (in kgs), and revenue earned over last farmed season

Crop quantities (in kg) and revenue over last farmed season

Count Mean (kgs) Sd Min (kgs) Max (kgs)

Villupuram

Rice produced (kgs) 95 4,617 6,231 20 53,940

Rice sold(kgs) 93 4,491 6,310 0 53,940

Rice revenue earned (Rs) 95 ₹ 59,781 ₹ 62,910 ₹ 0 ₹ 3,92,000

Sugarcane produce(kgs) 53 87,481 55,569 13,000 2,50,000

Sugarcane sold (kgs) 52 88,375 55,725 13,000 2,50,000

Sugar revenue earned (Rs) 53 ₹ 2,33,621 ₹ 1,84,903 ₹ 28,000 ₹ 9,12,000

Cotton produced(kgs) 7 13,471 33,747 300 90,000

Cotton sold(kgs) 7 13,471 33,747 300 90,000

Cotton revenue earned (Rs) 7 ₹ 37,985 ₹ 23,536 ₹ 11,550 ₹ 85,500

61 https://tnwc.in/vacant-storage-space/ 62 Under 5 percent, as per stakeholder interviews.

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Maize produced (kgs) 12 2,129 1,813 300 5,000

Maize sold (kgs) 12 2,129 1,813 300 5,000

Maize revenue earned (Rs) 13 ₹ 25,361 ₹ 25,444 ₹ 666 ₹ 78,000

Turmeric produced (kgs) 11 1,136 1,703 100 6,000

Turmeric sold (kgs) 11 1,118 1,716 0 6,000

Turmeric revenue earned (Rs) 11 ₹ 48,467 ₹ 48,245 ₹ 0 ₹ 1,54,800

Groundnut produced(kgs) 23 553 353 80 1,400

Groundnut sold(kgs) 19 452 386 0 1,400

Groundnut revenue earned(Rs) 23 ₹ 18,187 ₹ 21,304 ₹ 0 ₹ 87,500

Blackgram produced (kgs) 3 22 9 12 30

Blackgram sold (kgs) 1 0 . 0 0

Blackgram revenue earned (Rs) 3 0 0 0 0

Ramnathapuram


Rice sold(kgs) 196 3,114 3,042 0 18,600


Cotton produced(kgs) 3 3,000 2,598 1,500 6,000

Cotton sold(kgs) 3 3,000 2,598 1,500 6,000

Cotton revenue earned (Rs) 3 ₹ 75,000 ₹ 39,686 ₹ 45,000 ₹ 1,20,000

Dharmapuri


Rice sold(kgs) 27 1,814 1,489 0 6,000

Rice revenue earned (Rs) 46 ₹ 15,689 ₹ 21,036 ₹ 0 ₹ 96,000




Cotton produced(kgs) 45 711 463 150 2,000

Cotton sold(kgs) 45 711 463 150 2,000



Maize sold (kgs) 9 1,134 1,235 0 4,000


Turmeric produced (kgs) 28 792 635 130 2,500

Turmeric sold (kgs) 27 754 592 130 2,100


Groundnut produced(kgs) 16 718 1,177 84 4,960

Groundnut sold(kgs) 10 999 1,436 120 4,960

Groundnut revenue earned(Rs) 16 ₹ 15,029 ₹ 19,519 ₹ 0 ₹ 64,000

Blackgram produced (kgs) 1 250 . 250 250

Blackgram sold (kgs) 1 250 . 250 250

Blackgram revenue earned (Rs) 1 15000 . 15000 15000

Nagapattinam


Rice sold(kgs) 169 4,478 5,590 420 43,400

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Cotton sold(kgs) 8 2,763 3,503 200 10,000


Groundnut produced(kgs) 1 2,310 . 2,310 2,310

Groundnut sold(kgs) 1 2,100 . 2,100 2,100

Groundnut revenue earned(Rs) 1 ₹ 1,07,500 . ₹

1,07,500 ₹ 1,07,500

Blackgram produced (kgs) 28 518 669 3 3,500

Blackgram sold (kgs) 26 505 642 25 3,300

Blackgram revenue earned (Rs) 28 32354 50135 0 264000

Total


Rice sold(kgs) 485 3,781 4,788 0 53,940






Cotton sold(kgs) 63 2,498 11,309 150 90,000



Maize sold (kgs) 21 1,703 1,635 0 5,000


Turmeric produced (kgs) 39 889 1,037 100 6,000

Turmeric sold (kgs) 38 860 1,034 0 6,000


Groundnut produced(kgs) 30 689 933 0 4,960

Groundnut sold(kgs) 40 663 825 80 4,960

Groundnut revenue earned(Rs) 40 ₹ 19,157 ₹ 24,702 ₹ 0 ₹ 1,07,500

Blackgram produced (kgs) 32 463 642 3 3,500

Blackgram sold (kgs) 28 478 626 0 3,300

Blackgram revenue earned (Rs) 32 ₹ 28,778 ₹ 47,823 ₹ 0 ₹ 2,64,000

This suggests that there is indeed a requirement for good quality storage facilities. Thus more needs to be

done, in order to ensure that farmers are using available public infrastructure. To this end, the following

steps could be considered:

- The ease of access to go-downs, and warehousing, and other public storage facilities needs to be

reviewed – one major barrier in moving the harvest from the farm to the facility revolves around the

lack of availability of transport facilities, or the cost of the same. Two potential interventions may be

of relevance here:

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o Procurement infrastructure for the warehouses: Providing the warehouses with a few

vehicles – trucks, and tractors, which might be accessible at minimal rates to the farmer might

be an important step in improving the linkages between farmers and storage facilities.

o Improving awareness regarding warehouse receipts, and other storage related incentives: In

the credit constrained markets of rural India, warehouse based receipts are likely to be crucial,

in the coming years, in ensuring that farmers have access to working capital. Thus rekindling

interest on this front for both warehouse operators, and also for farmers – particularly the

small and marginal ones remains crucial. There is a clear lack of awareness regarding the

availability of these facilities – this must be fixed immediately.

- There is a clear mismatch between Tamil Nadu state’s agrarian strategy, and the existing

infrastructure. For example, one of the strategies that the current government has undertaken, and

invested resources in aims to bring about a substantial increase in the cultivation of horticulture crops.

However, the existing network of cold storage facilities in Tamil Nadu is absolutely inadequate to

support the potential growth in this regard, and has been cited several times as a disincentive to grow

such crops. Given the high levels of wastage in the fruit and vegetables sub-sector, adequate

infrastructure in cold storage, along with the development of sufficient linkages in the supply chain

can be considered as a strategy to minimize losses. Other factors too need to be considered, such as

the high maintenance costs, and also adequate supply of electricity etc.

- Given that most storage facilities have an abundance of space, developing them to allow for basic

processing (grading, sorting etc. are simple activities, with a huge value addition potential) on-site,

thus improving their value proposition. Recent proposals have also suggested that warehouses can

themselves be converted into markets, in order to improve access for the smallest farmers. Indeed,

the government’s move to convert accredited warehouses63 into mandis is a step in this direction.

One way of thinking about this could then be to develop warehouse sites into a single window

opportunity for farmers to avail a number of services – making them more attractive and cost-

effective from the farmer’s perspective, while also considerably improving the profitability of these

warehouses.

- There have been several cases of innovative solutions implemented in other states that may be

considered for adoption in Tamil Nadu as a means to overhaul the extension system. Some of these

63 https://www.financialexpress.com/industry/farmer-friendly-now-warehouses-part-of-e-nam/1278059/

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include smart farming solutions (Karnataka), and app-based warehousing services (Bihar) that have

been successful, and demonstrate the role of technology in improving the available landscape of

warehousing solutions available to farmers.

- In sum, the need of the hour is to translate access into usage. A lesson from many other sectors –

including India’s attempts at improving the financial inclusion of its people – highlights that providing

facilities alone does not ultimately translate into proper usage. There are serious knowledge/

awareness gaps, and other socio-economic issues which influence the usage of storage facilities by

farmers. This can be addressed by concerted campaigns that detail the benefits of storage, and also

provide adequate price information for farmers to realize better prices. At the same time an incentive

must be created for warehousing authorities to engage with farmers – the collectivization agenda

provides the ideal platform for this.

5.1.5 Revamping the agricultural extension system

In spite of increased mobile penetration and internet access, farmers are extremely reliant on trust

networks within their communities for farming and other important household decisions. Only 16% of the

farmers in the sample survey reported having received training from external sources. Many farmers are

also dependent upon private input dealers and traders purchasing their produce for advice relating to

farming decisions in the absence of efficient and up-to date extension systems. Effectively implemented

extension activities through local agricultural officers can plug information gaps, and familiarize farmers

to improved technologies, mitigation strategies, efficient farming practices with regards to fertilizer

Realizing Better Prices – Simple Solutions?

Exclusion from the public procurement, due to poor quality of crop common problem faced by farmers –

particularly small and marginal farmers. As a result, a large number of farmers are selling their produce for

below MSP rates. There are various simple and cost-effective solutions which can address these issues.

For example, maize (a 90-day crop) prices are dependent on the moisture content of the crop, and also the

presence of aflatoxin. In many cases, farmers who try to sell their maize crop immediately are at a

disadvantage because of higher moisture content, or aflatoxin levels, thus reducing the price realized. Drying

the harvest in a room for just three days - under halogen lights - has been shown to reduce the moisture

content significantly, and also prevent increased levels of aflatoxin. This can be done at the farmer’s home,

or any space that can be availed that is dry and sprayed down to prevent pest attacks. The need of the hour

is investment in such solutions.

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application and right sowing time, improving crop returns through minor processing activities and access

to better markets etc.

Currently, the major gap this study perceives in the extension system is a significant gap in the ability of

extension workers to provide highly localized, and up-to-date information and advisory on crop choices

that are sensitive to real time weather conditions, input usage advisory that is sensitive to the prevailing

soil health, etc. These are major gaps to be plugged immediately. This requires constant upgradation of

skills of the extension officers in reaching out to farmers in the context of market prices and technological

innovations etc. (acreage information etc.), and needs to be addressed with priority by the state/ central

governments. Thus it is crucial to invest resources in the training, and knowledge-building of the extension

officers themselves. At the same time, leveraging newly available forms of technology to make

information easily accessible by all farmers is equally important.

5.1.6 Rethinking agricultural credit

The debt burden of farming households has increased to unprecedented in recent times. The survey data

shows that on average, households in the study sample have an outstanding debt of around ₹ 1,29,567

(median = ₹ 1,00,000). While loan waivers have been very much at the heart of recent debates, it must

be stated categorically that loan waivers are inefficient, and place a huge fiscal burden on the states. At

the same time, the frequent mention of loan waivers by politicians and policymakers create an

expectation on the part of the farmers. In 2017, ₹ 7,760 crore worth of loans were waived in Tamil Nadu,

benefitting almost 20 lakh farmers - working out to an average loan waiver benefit of ₹ 40,000 per farmer.

This unprecedented scale of waiver placed a large strain on the state finances – effectively reducing the

amount of money available for investments in capital infrastructure, or other such productive

investments.

As per current lending norms, formal institutions will not offer credit to farmers in the next season, unless

and until the current seasons dues are paid off. As a result, several small and marginal farmers tend to

turn towards informal credit for their various purposes, thus accessing credit at a much higher cost –

adding to their indebtedness. It is in this context that loan waivers are increasingly being demanded. The

issues associated with the benefits of a loan waiver are well documented, especially the fact that waivers

cover only a tiny fraction of the farmer population64, and tend to leave out all those having outstanding

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loans from informal lenders, and NBFC-MFIs. Indeed, the 20 lakh farmers benefitting from the loan

waivers represent only about 25% of the total number of operational landholders in Tamil Nadu (81.8

lakh)65.

It is important to think about sustainable alternatives for these loan waivers – in the long run, increasing

farmers’ incomes, and ensuring the provision of well-functioning insurance products can prevent the debt

burden from spiraling out of control. In the short term however, it might be prudent to consider simples

alternative – in the form of debt relief – wherein various concessions in the form of loan holidays, or

flexible repayment schedules are made available to the farmer, with the government providing a credit

guarantee to the credit providers for the outstanding debt.

The situation reaffirms the need for revising the agricultural credit structure, and rethinking the way credit

is disbursed to agrarian households. Moving forward, the aim should be to ensure that borrowing for

agricultural purposes is limited to formal sources as much as possible, in order to prevent further

exploitation of particularly the small and marginal farmers.

- Syncing the design of credit contracts with the cropping cycle: It is no secret that the joint liability

model operated by MFI-NBFCs, or the standard bullet loan product that is often made available by

other financial institutions is ill-suited to the needs of farmers. There is a concerted need to mandate

that agricultural credit has to be disbursed in two or three tranches, in sync with the various key events

in the cropping cycle – thus allowing the farmer access to credit when he actually needs it. This

controlled disbursement also ensures that the farmer is not relying on credit originally borrowed for

agricultural purposes to mitigate health shocks, or other such issues.

- Annual term for crop loans: A major issue currently pertains to the fact that in the event of loan

default by the farmer – as a result of a bad season, his or her access to formal finance is locked off for

the next season. Breaking the debt trap becomes extremely difficult in such circumstances. A potential

option would to be increase the term of every crop loan to a year-long basis, and allowing farmers to

avail at a loan for each farming season in each year. The repayment may then be made co-terminus

as well. Initiatives like this could ensure that farmers are not blocked off from access to formal credit,

at all times.

65 http://cms.tn.gov.in/sites/default/files/documents/agri_e_pn_2017_18.pdf

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- Value-chain finance: the way ahead? The agricultural credit structure needs to shift from being based

on the financial health of the individual borrower, to being based on the health of the larger value

chain that borrower is situated in. The advantages of this shift will be manifold – the various linkages

in a value chain can be used to leverage many financial arrangements that are not possible in the

individual lending model. Some examples of these types of arrangements include third party

guarantees, working capital loans, asset finance, and also warehouse receipts.

- Responsible Lending: Farmers in Tamil Nadu rank among the most heavily indebted in the country.

The situation needs to be addressed immediately, and aggressively. The various lending agencies have

a moral responsibility to ensure that farmers are provided easy access to credit – however, they must

also ensure farmers are provided only the appropriate amounts of agricultural credit, at the correct

times, in order to prevent funds being spent on other expenses. Formal lenders have to particularly

ensure that small and marginal farmers are not turned away, forcing them to access informal credit

at much higher costs.

Among the various listed objectives and functions of the TN Warehousing Corporation, it is also tasked

with “Creation of Negotiable Instrument (Warehouse Receipt) for the expansion of credit through

Commercial Banks for the benefit of all producers, dealers and others who might be connected with rural

economy. However, due to poor demand and utilization of the warehouses by individual producers, the

use of this facility has been limited. In 2016-17, a mere 2642 NWRs were issued. A concerted effort should

be made to leverage such linkages in the different agri-value chains, in order to ensure that mutually

beneficial financial arrangements are made available to all actors. To this end, an immediate step that can

be taken is to link the 2000 FPGs that are being formed to the relevant warehouse facilities, and ensure

that the farmers are able to access, and use the storage facilities – thus realizing better prices, and also

improving access to credit.

5.1.7 E-NAM

Currently, there are 278 regulated markets across Tamil Nadu. 15 markets are on the e-NAM in TN as of

November 2017, out of which 12 markets have the e-bidding and e-trading facilities. The benefits of

having joined the E-NAM are many - they include:

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- Standardization of quality and grading/sorting/assaying through assaying labs established in proximity

to these markets (scope for private labs, currently through the support of Agmark labs).

- A single database of farmers, traders etc.

- As per the Act, amounts are credited to farmers' accounts directly on the same day or within a day.

- E-trading/online-trading ensures that buyers can bid and buy from anywhere in India – in other words,

providing for the first time free/fair bidding, while reducing leakages and waiting time for farmers to

receive payments.

It is far too early too early to evaluate the impacts on farmer incomes in Tamil Nadu. Many hurdles exist

in this platform, slow servers and these need to be addressed. If the experience of Karnataka is anything

to go by, an improvement in prices realized by farmers by at least 10% can be expected in the shorter

term, with the potential for larger increases depending on the sustained success of the initiative.

Therefore, it is extremely important to ensure that the remaining markets under the APMC act are

brought on to the e-NAM as quickly as is possible.

5.1.8 Food processing – the untapped potential

In India, around 2% of all agricultural and food produce is processed. The largest share is from the dairy

and livestock sub-sector, where 37% of the output is processed66. For fruits and vegetables, only 2-3% of

the total output is processed. In comparison, countries like Thailand and Malaysia have managed to create

value chains wherein up-to 70% of the output is processed, and ties into the retail industry. The value

addition from food processing has the genuine potential to increase the earnings for all of the

stakeholders across various value chains in Tamil Nadu. For example – paddy is procured at ₹ 13-20 per

kg; after processing into ‘aval’ (beaten rice), it retails at around ₹ 70 per kg. This implies that after

procurement from the farmer, processing/ packaging and other such activities effectively triple the value

of the produce; however, the ₹ 53 that is generated is all distributed among the various intermediaries.

There are many districts/ zone in Tamil Nadu that stand to benefit from this. For example, Dharmapuri –

a sample district – has high potential for processing of mango pulp, tamarind, and tapioca. Examples of

value chains where there is high potential for such development have been highlighted earlier. Similarly,

Tamil Nadu is one of the largest producers of gherkins, and this is again a high value chain where

substantial processing opportunities can be harnessed to add value to the produce. Across the country,

private players in the warehousing sector have been promoted by subsidies, incentives, loans on low

66 http://www.investingintamilnadu.com/tamilnadu/opportunities/agro_foodprocessing.php

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interest rates and other ways. The Tamil Nadu government’s steps to establishing food parks is in the right

direction. However, concurrently, other steps need to be taken including an assessment of cold storage

and other storage facilities, the aim being to enhance the storage of perishables through processing.

Minimizing the wastage of agricultural outputs, between the flow from farmer to retailer must be the

immediate priority. This can be achieved through concerted and coordinated supply chain management,

involving all actors in the chain.

5.1.9 Accelerating Income from Livestock, and Integrated Farming Systems

Currently, farmers in Tamil Nadu earn under 10% of their income from the livestock sub-sector.

Particularly for small and marginal farmers, focusing on doubling the contribution of this sector, at the

very least, is crucial to the aims of enhancing farmers’ incomes. Ensuring that each small and marginal

farmer has at least milch producing animals, with sufficient productivity for daily sale, results in a constant

income stream. Enhancing and improving the functioning of the dairy cooperative system is vital in this

regard. There are two key areas for intervention here: i) promoting integrated farming systems, and ii)

providing a strong livestock insurance product

The integrated farming approach specifically refers to the following: after farmers grow and harvest crops,

they feed livestock the leftover crop residue from the fields. This in turn provides nutrient-rich manure

that serves as an organic fertilizer for growing new crops. Over time, this maintains soil health, and also

serves as a a source of feed for livestock. Encouraging and incentivizing the integration of cultivation with

livestock rearing, or fishery has a huge potential to improve the overall agrarian economy. Overall,

Supply Chain Management

New initiative, to be pursued across 10 districts – by leveraging the FPOs that are being

registered. It is estimated that effective channeling of fruits and vegetables, and managing the

supply chain at all points can increase prices realized for farmers by at least 15%. This can be

achieved through adequate investments in infrastructure to minimize wastage, and improve

post-processing, while increasing the linkages to markets.

Back-end activities: grouping farmers into Primary Processing Centres (3 PPCs per district)

wherein washing, grading, sorting, packing and pulping etc. will be undertaken.

Front end activities: direct connection of the PPCs to major retailers, elimination of

intermediaries

Allocations: INR 400 crores

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integrating multiple agricultural enterprises results in the creation of interrelated, and sustainable

linkages between the soil, water, plants, and animals. Their interaction results in a farming system more

viable and profitable over the traditional monocrop/arable farming system. The presence of livestock on

a farm provides a steady supply of manure, milk for the household, and an income stream from

commercial sale where possible. This also means crop residue can be used as animal feed, and for other

purposes. A recent study in Tamil Nadu has found that integrated farming approaches have resulted in

“an increase in organic carbon content in the soil, which gives it structure and makes it healthier and

better for growing crops. Livestock reproductive performance has also gone up, including a 15% increase

in the cattle’s milk production as well as significant increases in the size of the goats.” Other experiments

across the country have shown that the added value from integrated farming systems can range from Rs

15,000 to Rs 1,50,000/ha/annum (Hanumantha et al. 2014). Evidence from Tamil Nadu shows that

margins of ₹ 1,30,000 was easily achievable, through a combination of cropping, poultry, piegon, goat and

fishery (Jayanthi et al, 2001).

The specific interventions to be followed here are:

- Providing training, and disseminating information to households, in both cattle/ livestock

management, and also on relevant techniques for integrated farming.

- There is a need for financial assistance – at least initially, in order to ensure that the integration

between livestock and crop cultivation is achieved in a sustainable manner

- Lastly, assistance can also be provided in terms of schemes to build the necessary infrastructure –

compost pits, cattle sheds etc, that can encourage the farmer to adopt these methods more quickly.

Cattle Insurance Penetration: Only 2.7 percent of the households surveyed (23 HHs) had their cattle

insured, and only one farmer among the insured had raised a claims request in the past 12 months and

had also received his claim payments worth Rs 30,000 for his cattle. The mean sum insured was 23,422

Rs (median is 10,000 Rs) and the mean annual premium was around 1,086 Rs (median is 500 Rs). It would

be interesting to understand if increased penetration of cattle insurance within Tamil Nadu, could improve

the livestock productivity within the state. While our survey shows around 63 percent HHs owning cattle,

the contribution of livestock income to the average annual income basket of a household was only 7

percent (mainly income from cattle, and this shows that cattle contributed mainly towards household

consumption needs). Thus improving the share of the livestock sector within household income could be

associated with increased penetration of cattle insurance schemes, thereby encouraging farmers to invest

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in more number of cattle per household, the average number of cattle owned per household was around

1.2 to 1.5.

5.1.10 Digitizing the agricultural value chain

As technology rapidly changes the manner in which various supply chains function, there is no reason that

it cannot be leverage to improve value realization in the agricultural sector. As collective/ group-based

approaches are increasingly being highlighted as the means to reduce input costs, and improve profit

margin for farmers, the role of digital services in improving these outcomes even more must be

considered. Various examples exist of digital platforms, that provide end to end services to FPOs,

including:

- Aggregating member orders, facilitating collective purchases

- Real time information on harvest times – allows to schedule the procurement/ delivery to the bulk

customers

Evidence from such digital platforms that have been implemented across parts of India suggest that

digitization is likely to bring huge benefits to FPOs and the farmers involved – by not only streamlining

and simplifying various processes, but also by significantly reducing transaction costs. An example from

Karnataka67shows that FPOs (of 1000 farmers) can retain upto ₹ 20-28 lakhs, by leveraging the advantages

of group buying/ selling through a digital aggregation platform. As the TN government has steps up the

focus on producing FPOs for small and marginal farmers, it is imperative that digital/ technology based

solutions, which facilitate easy aggregation, and significantly improve margins across the board are

piloted, tested, and widely encouraged. This is likely to be a crucial step in improving farmers’ incomes,

especially in the longer run. The idea is not new – various portals have been launched in the recent years,

ranging from e-Kisan (by the SFAC), to e-RAKAM (a portal that enables farmers to sell their food produce

to bigger markets), and most recently, the e-NAM that links the various mandis. The objective must to be

to centralize these disparate approaches into one common portal, that can be administered at the level

of the state governments.

5.2 Longer Term Recommendations

The DFI committee set up by the Government of India has broadly recommended that there is a need to

move towards providing farmers with income support, as opposed to providing them with price support.

67 https://easykrishi.com/

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In this vein, the committee has also pointed out that an increase in MSP – as is being demanded by many

stakeholders, might not be the best way forward. While increases in prices are indeed necessary, it is

going to be unlikely that this alone will solve the agrarian distress many farmers are facing currently.

Over the longer term, it is thus important to ensure that adequate income protection is provided for the

farmers, in order to ensure that farmers are able to withstand, and maintain a decent quality of living in

the event of adverse shocks, such as “life accidents”68 such as droughts and erratic weather conditions,

increasing cultivation costs and decreasing farm returns, declining opportunities in agriculture and

migration of youth from agriculture related activities. To this end, the following steps could be considered.

5.2.1 Skill Development and Off-Farm Income Opportunities

As the survey data shows, only 31 percent of the farmers in our sample had studied up-to the higher

secondary level, or beyond. Thus it is not wrong to suggest that already resource-poor farmers have few

options outside agriculture other than casual work, which is often far more deleterious in terms of impacts

on wellbeing. This sample data reflects a much larger concern for the state. During the e period 2017-

2022, it is estimated that there will be a skill gap of over 8 million persons – i.e, over 8 million persons in

the state of Tamil Nadu69 will require some form of skill building or training, across various sectors. The

National Skill Development Authority (NSDA) has identified five priority sectors for focus initially; these

include i. Auto, Auto Components and Machine tools, ii. Tourism & Hospitality services, iii. Health & Health

care services, iv. Transportation & Logistics, v. Engineering & MS&ME, with the aim of creating jobs in the

private sector, and driving growth.

Given the situation described above, the efficacy of off-farm strategies to accelerate income growth for

farmers must be considered carefully. Particularly in the short term, it is likely to be counter-productive –

especially for small and marginal farmers, to suggest that off-farm sources must be the major engine that

drives their growth in income. In the long run, if sufficient success is seen in the government’s various

initiatives to develop skills and capacity for non-agricultural work among the rural populations, substantial

growth in off-farm opportunities can indeed be expected. However, in the interim, it might be far more

prudent to focus the attentions on substantially increasing the output from farm/ allied activities –

particularly for small and marginal farmers.

68 Quoting the CEA, Arvind Subrahmaniam 69 http://www.nsda.gov.in/state/profile/Tamil%20Nadu%20State%20Profile.pdf

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5.2.2 Income support for farmers:

- As the cost of cultivation increases, and margins remain narrow, income support for farmers would be

vital to ensuring that their basic necessities and standards of living are met.

In light of the recent agrarian distress, ensuring that farmers earn a sufficient amount of money for their

basic necessities is indeed a responsibility of the government. In the absence of many of the benefits

associated with the formal sector, it is increasingly vital to provide some sort of unconditional income

support to the farmers, as terms of trade increasingly go against the agrarian sector.

Under the 7th Pay Commission, it has been determined that the minimum monthly pay should be around

₹ 18,000 – assuming expenses and costs towards a family of 3. Adjusting this amount for a family size of

4 in rural areas, and also adjusting the amount for rural prices, an amount of ₹ 16,800 per month would

be the minimum monthly earning required in rural areas. However, farmer incomes are far below these

levels. As per estimates of the Rangarajan Committee, the rural poverty line was drawn at a monthly per

capita expenditure of ₹ 972 in 2011-12 prices70; at current prices this translates to ₹ 1320 per capita. In

Tamil Nadu, the median family size is approximately 4; thus as per these estimates, the poverty line would

be drawn at ₹ 5280 per month, for a 4-member family. While it seems unlikely that this amount could be

provided for each of the 8 million operational landholdings in Tamil Nadu, some amount of income

support could go a long way in ensuring their financial security.

5.2.3 Addressing the issues of urea subsidy:

- While the soil health card, and other initiatives may be used to control the per acre usage of urea,

there is a need to address the broader distortions in the market caused due to the current urea policy.

Over the next 5-10 years, it is crucial that the distortions in the fertilizer market due to abnormally low

urea costs are addressed. We estimate that an annual decrease in the urea subsidy of 10%, over a five-

year period can result in savings of around ₹ 63,000 crores71. The government has also experimented with

some innovative solutions such as making the urea bags available only in 45 kgs instead of 50 kgs. Thus

farmers would end up using two bags of urea weighing 90 kgs in place of 100 kgs. Recent estimates from

the agriculture ministry indicates that urea per acre consumption has reduced by 4-6 percent. It must be

noted this could also be due to the mandated production of 100 percent neem coated urea, reducing

leakages towards industrial activities.

70 http://pib.nic.in/newsite/PrintRelease.aspx?relid=108291 71 Calculations are presented in Appendix A

108

It would be highly beneficial to farmers, if these savings were instead spent on:

- Subsidizing compost, and organic farming – strategies that are likely to have returns in the long run,

for outcomes such as soil health and productivity.

- Off-setting the fiscal burden created, by MSP hikes, and additional price support schemes by the

central/ state governments

5.2.4 Minimum Support Price:

The table below shows the price realization for the major crops cultivated during the last farmed season

across the four districts surveyed. Interpreting from this table, the price realization for paddy is lower

than the MSP for 2016-17 (being the survey period) across four districts, the worst situation being in

Dharmapuri. Dharmapuri farmers have sold their crops such as cotton and maize at rates much higher

than the MSP, while groundnut earned less than half of the MSP rates. Black gram seems to be extremely

productive in Nagapattinam and were sold at double the MSP rates, while price realization for paddy

seems to be much closer to MSP rates. Price realization for groundnut and paddy is lower than the MSP

rates with district-wise variations, pointing towards existing implementation gaps in the MSP scheme,

resulting in farmers earning lesser incomes for their produce.

Table 40: Price Realisation Crop-wise (District-wise)

No. of HHs reporting cultivation (over last farmed season)

Price from survey data (per kg)

Price from survey data (per quintal)

MSP (2015-16)

MSP (2016-17)

MSP (2017-18)

Villupuram

Paddy 95 13.8 1384 1410 1470 1550

Sugarcane 53 2.5 248 230 255 255

Cotton 7 36.2 3619 4100 4160 4320

Groundnut 23 31.8 3176 4030 4220 4450

Maize 13 12.3 1226 1325 1365 1425

Turmeric 11 40.2 4019

Ramnathapuram

Paddy 206 12.5 1254 1410 1470 1550

Cotton 3 31.3 3125 4100 4160 4320

Dharmapuri

Paddy 46 6.8 682 1410 1470 1550

Sugarcane 28 2.6 260 230 255 255

Cotton 45 51.9 5189 4100 4160 4320

Black gram 1 60.0 6000 3425 4000 4400

Groundnut 16 19.1 1908 4030 4220 4450

Maize 11 17.0 1695 1325 1365 1425

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Turmeric 28 56.3 5630

Nagapattinam

Paddy 171 14.6 1462 1410 1470 1550

Cotton 8 40.9 4095 4100 4160 4320

Blackgram 28 60.6 6055 3425 4000 4400

Groundnut 1 40.1 4008 4030 4220 4450

Total

Paddy 518 12.9 1294 1410 1470 1550

Sugarcane 81 2.5 251 230 255 255

Cotton 63 46.4 4640 4100 4160 4320

Black gram 32 58.9 5889 3425 4000 4400

Groundnut 40 27.3 2730 4030 4220 4450

Maize 24 13.7 1367 1325 1365 1425

Turmeric 39 50.3 5028

- While a MSP hike, as per the Swaminathan formula seems infeasible in the short term, there is a need

for a graded increase in the MSP – over and above the year-on-year adjustments for the cost of

production

- An alternative could be to create a buffer stock policy (potentially at state level, with some portion of

potential losses to be covered by the central government).

As per the M.S. Swaminathan formula, “fixing the MSP for crops at levels which are 50 percent more than

the weighted average cost of production72” will ensure more remunerative prices for the farmers.” (C2 +

50%). However, as the DFI Committee points out, such a sharp increase in MSP could result in detrimental

outcomes for the economy – increases in MSP may almost certainly lead to higher procurement costs,

which could result in a trade-off between inflation and growth73. A quick illustration adds to this point. In

2014-15, the MSP for the common grade of paddy was set at ₹ 1310. In the same time period, the value

for C2 was around ₹ 1397.7. As per the Swaminathan formula, the MSP should have been at least 50%

more than C2 – working out to around ₹ 2100. Given the current fiscal situation, such a sharp increase

overnight will almost certainly be unsustainable. The increase in MSP, to ₹ 1550 for common grade rice

(2017-18) is likely to place an additional burden of ₹ 3000 crore on the budget. Nevertheless, it is indeed

important to consider a graded increase in MSP, over and above the current year-on-year adjustments.

On average, the year on year increase in MSP for rice has been around 5.7%, and 5.9% for wheat. Pulses

72 The Commission for Agricultural Costs and Prices (CACP) provides three definitions of production costs: A2, A2+ FL and C2. A2 includes all the paid out expenses, both in cash and kind incurred on all inputs including labour, A2+FL covers the above components along with an imputed value of unpaid family labour while C2 costs accounts for A2+ FL as well as the rentals and interest foregone on owned land and fixed capital assets. 73 Page 6, “Status of Farmers’ Income: Strategies for Accelerated Growth”, August 2017

110

see slightly higher rises in the MSP – around 10%. A sharp increase of 15-20% increase in MSP is definitely

desirable, in the immediate future. If rolled out in conjunction with the de-control of urea subsidies, the

costs can be offset over a 5-year period. In the absence of a minimum support price increase, other

options include considering a buffer stock policy – which could be implemented at the state level, with

the center providing some cover for potential losses.

5.2.5 The Role of the Private Sector?

- What role should the government take in the agricultural sector in the long run?

- There is a very high potential to engage with private entities in the form of PPPs or other

arrangements; this could be a key step in realizing the untapped potential in Tamil Nadu’s agricultural

sector.

- The long term aim should be to remove the farmer’s dependence on subsidies, and instead create an

ecosystem where farmers realize profits at every level.

That agricultural value chains are highly complex, and encompass several intricate relationships and

mechanisms is well-known. The overall aim over the next decade must be to make the market linkages

more efficient, and improve the management of the producer to retailer part of the value chain – and

thus improving outcomes for the farmers. It is the right time to seriously consider the role the government

needs to take in this regard – the context being the emergence of several private enterprises focused on

various aspects of the value chain. As the costs incurred by the central and state government in investing

and maintaining agricultural infrastructure increase year on year, considerable thought must be given to

the role played by private entities in the sector. Harnessing the potential of public-private partnerships

could be a key step, in realizing much of the untapped potential in the agricultural sector. The huge

amounts of money that are spent on loan waivers, and other such schemes could instead be routed

towards establishing fairer markets, improving the quality and volume of post-harvest storage/ processing

facilities, and also in setting up safeguards to incentivize various stakeholders. In the longer term,

considering the harmful impact of subsidies on the broader economy must also be considered, the

ultimate goal being to enable farmers to realize profits. Once again, the government and private sector

must work together to achieve this, as there a great many complementarities in the goals and objectives

of these various entities.

111

5.2.6 Land Reforms

The Agricultural Census 2011-12 and the 2011 Socio-Economic Caste Census reveals that across India 4.9

percent of farmers control 32 percent of India’s farmland. 101.4 million or 56.4 percent rural households

do not own any agricultural land. The average land given to the rural landless is small and declining, from

0.95 acres in 2002 to 0.88 acres in 2015 (a 7.4 percent drop over 13 years, indicating the slowing down of

taking land away from the rich landlords)74. As of December 2015, the surplus land (land that could be

taken away from landlords) was at 6.7 million acres; the government has appropriated over 6.1 million

acres and distributed 5.1 million acres to 5.78 million people75.

The land declared as surplus has been on the decline, between 1973 and 2002 average of 150,000 acres

were declared surplus and an average of 140,000 acres were distributed every year. Comparing this with

the estimates for 2002 to 2015, the land declared surplus every year averaged at 4000 acres, while the

land in government possession and distributed declined by 29,000 acres and 24,000 acres per year. This

clearly shows that less land has been declared surplus over the last 13 years76.

In Tamil Nadu alone, statistics show that around 27,000 hectares of land that have been declared surplus

remain undistributed77. While a draft bill78 was released towards a land reforms policy in 2013, its status

remains unclear. Stepping up the digitization of land records, and utilizing available means to address

these issues could improve the situation for many farmers in rural areas of Tamil Nadu.

74 Based on data from a publicly available RTI communication with the Department of Land Resources, Ministry of Rural Development. 75 http://www.indiaspend.com/cover-story/land-reforms-fail-5-of-indias-farmers-control-32-land-31897 76 Committee on State Agrarian Relations and Unfinished Task of Land Reforms from 2009.) 77 http://www.indiaspend.com/cover-story/land-reforms-fail-5-of-indias-farmers-control-32-land-31897 78 http://dolr.nic.in/dolr/downloads/pdfs/Draft_National_Land_Reforms_Policy_July_2013.pdf

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6. Conclusion

Data collected during the course of this study shows that real incomes in Tamil Nadu have reduced in

2016-17. Major reasons for this could include the repeated weather shocks that the state suffered, the

related market instabilities, and additional scarcity of water supply from the Kaveri. In order to double,

or even substantially improve farmer’s incomes by 2022, the need of the hour is re-assess strategies,

and ensure the resources are invested in areas that are most likely to beneficial to a maximum number

of people, in a short amount of time.

The various recommendations highlighted above provide a broad strategy to substantially increase

farmer’s incomes in Tamil Nadu. However, as mentioned above, there are various short term points of

action that are cost-effective, relatively less difficult to implement, and can ensure immediate impact. The

short term strategy may be presented as follows:

- Reduction in input costs, through better nutrient management:

by controlling fertilizer usage through the SHC, and also through promotion of integrated

farming practices.

- Improving dry season cultivation strategies:

Ensuring growth of high value crops in the off-season, with high cropping intensity

Actively improving the share of horticulture crops

- Increasing the role of animal husbandry/livestock rearing, as a source of secondary income, while

promoting integrated farming as much as possible.

- Utilizing e-NAM or similar private facilities to eliminate intermediaries, and improve benefits to the

farmer.

- Better price realization for the farmers, by:

Improving the usage of post-harvest storage

Leveraging market linkages, and post-processing to ensure substantial increase in value

addition to farmer’s produce

- Reduction in losses – improved implementation of insurance, and other risk mitigation measures

It does not seem feasible – particularly for small and marginal farmers – to suggest that an increased focus

on off-farm activities will lead to substantial increases in income, particularly in the short term.

Over the next 1-3 years, it is crucial that all of these action points are implemented together – it is only by

leveraging a variety of complementary approaches that income can be boosted. This requires a

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coordinated and detailed approach by all the concerned departments, in order to ensure that there is a

sufficient acceleration in farmer’s incomes.

Over a longer time period, the following steps are crucial in ensuring accelerated income growth in Tamil

Nadu

- Improving the skill levels of the rural populations, particularly that of farmers and members of farming

households, so that off-farm income opportunities may be adequately leveraged.

- A substantial increase in MSP for the currently covered crops, accompanied by appropriate buffer

stock policies at the state level to ensure that farmers are adequately protected against market risks.

- Reductions in urea subsidy, in order to control the dumping of nitrogen into the soil, and also to ensure

that the usage of other fertilizers go up. An annual 10% reduction in the urea subsidy can result in a

saving of around ₹ 63,000 crores – this can be used to offset the MSP hike, incentivize organic farming/

composting, and also to make the buffer stock policy mentioned above feasible.

- Income support for farmers would also prove to be an important strategy, as part of a longer term

attempt to ensure farmer well-being. Providing any sort of income support to all farmers would be a

far more equitable and economical strategy, as opposed to loan waivers. Once again, from a fiscal

perspective, the urea subsidy, if decontrolled, frees up a huge amount of money – a portion of which

may be used towards this.

- Enlisting the help of private players, and developing a substantial ecosystem of public private

partnerships are likely to be the most cost-efficient, and high-impact ways to accelerate farmers’

income growth. Currently, there are many efforts led by state/ local government, that are aimed to

increasing farmers’ incomes, and in parallel, there are similar efforts being run by start-ups, private

firms, and other such entities. It is vital to identify avenues for collaboration, and set up as many

public-private linkages as possible, particularly in areas such as infrastructure development,

marketing, and sales.

These actions will require a substantial increase in public and private investment in agriculture, along-with

improved focus on the productive use of agricultural credit. Additionally, there needs to be a convergence

of the initiatives of the government, private enterprises, markets and other non-governmental efforts.

Currently, the number of fragmented approaches trying to achieve the same ends are unlikely to be as

productive and fruitful, as a more organized and commonly aligned set of strategies encompassing all key

stakeholders.

114

Appendix A

Among all the subsidies that are provided by the central government, a majority of the amount is spent

on three areas – food, petroleum, and fertilizers. Together, these three sectors accounted for 95% of the

total subsidy budget in FY 2015 (Gulati and Banerjee, 2015). In the budget estimates for FY 2017-18, the

fertilizer subsidy alone amounted to ₹ 70000 Crores, or 25.7% of the entire budget estimate for subsidies,

or 2.8% of the total budget estimate for the financial year. Almost 70% of this amount is earmarked for

subsidies towards urea, while the remainder is utilized to provide concessions to the farmers under the

nutrient based subsidy (NBS) scheme.

Table 41. Fertilizer Prices

Year Urea DAP NP/NPKs

2013-14 31192 11784 10577

2014-15 32029 12002 10861

2015-16 32858 12212 11142

2016-17 33677 12413 11420

2017-18 33754 12764 11841

As per the government’s policy on urea subsidies, urea prices have been maintained at ₹ 5360 per tonne

while for other fertilizers, the prices are calculated as per the Nutrient Based Subsidy Scheme (NBS). It is

no secret that urea is extremely cheap; it must be noted that the MRP is maintained at ₹ 5360 per tonne

despite rising costs of production. In 2017-18, it is estimated that average production costs per tonne

could be around ₹ 1800079-₹ 20000, while the costs could rise to as high as ₹ 41000, dependent on various

factors. Since April 2010 - when the NBS regime was introduced, the prices of all non-urea fertilisers have

shot up significantly. For example, the MRP of di-ammonium phosphate increased from ₹ 9,350 to around

₹ 23000 a tonne, while a 300% rise from ₹ 7197 to ₹ 21450 for the 10:26:26 NPK complex fertiliser was

also seen. During the same period, the price of urea increased by a meagre 11%- ₹ 4830 to ₹ 5360.

79 http://indianexpress.com/article/business/business-others/after-petrol-and-diesel-govt-may-deregulate-urea/

115

Table 42. Fertilizer Usage

Table 43. Fertilizer Requirements (MT)

Fertilizer 2016-17 2017-18

Urea 7.76 10.09

DAP 2.51 3.39

MOP 2.52 3.24

Complex 5.07 5.68

Farmers in Tamil Nadu have been cautioned against excessive usage of urea in the past, however the

usage of urea continues to remain high. The projected fertilizer requirements for the 2017-18 show a

clearly high reliance on urea. Data from the sample survey also shows a very high reliance on Urea. 84%

of the sample reports using Urea, while only 20% of the sample reports using any form of organic fertilizers

(Manure, compost, etc.). This evidence raises two concerns:

- Incorrect usage of fertilizer doses on plots – incorrect ratios, and incorrect amounts.

- Overlooking the role of organic fertilizers like compost and manure, in maintaining soil

health.

Regular soil testing, combined with the proposed changes to the existing soil health card scheme can

address some of these concerns – however, without attempting to address the market distortions caused

by the abnormally price of Urea, larger scale reforms in fertilizer usage will be hard to implement.

To this end, there are two potential options that exist:

1) Shifting the Urea subsidy to be calculated as per the existing Nutrient Based Subsidy scheme.

The NBS scheme calculates subsidies for the fertilizer based on the chemical composition of the fertilizer.

The scheme has been in effect since 1st April, 2010. Under this Policy, the subsidy on Phosphatic and

Potassic (P&K) fertilizers is announced by the Government on an annual basis for each nutrient i.e.,

Nitrogen (N), Phosphorous (P), Potash (K) and Sulphur (S), on a per kg basis. These amounts are then

converted into subsidy per tonne depending on the respective grade of fertilizer. While this has indeed

led to the decontrol of the prices of other fertilizers, it is widely accepted that the scheme has in fact led

to an increased consumption of urea, among other nitrogen based fertilizers.

In terms to understand how the urea subsidy would change if it were to brought under the NBS scheme,

a brief analysis is presented below. The 2016-17 rates under the nutrient subsidy scheme are used

(presented below). As per the NBS scheme, we look at the chemical composition of Urea (46-0-0-0). In

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other words, a kilo of urea would have 46% Nitrogen, by weight. If the subsidy for urea were to be

calculated as per this scheme, it would work out to an amount of ₹ 7.3 per kilo of Urea, or an amount of

₹ 7300 per tonne80. This is considerably less than the current level of subsidy of around ₹ 12,500-₹ 14,000

per tonne.

Table 44. Nutrient Subsidy Rates

Year Per Kg subsidy rates (in Rs.)

N P K S

2016-17 15.854 13.241 15.47 2.044

However, while this suggestion has indeed been floated and discussed earlier, an overnight change from

the existing level of subsidy, to the NBS scheme based subsidy will not be without significant

repercussions. At the current demand, of around 34,000 thousand tonnes, the total urea subsidy amount

works out to ₹ 24,616 crores – almost half the current amount budgeted. As a result, the MRP would

increase by a factor of at least 120-130 per cent, which is highly undesirable as a short term change.

2) Decontrolling the Prices of Urea

Another scenario that has been discussed vastly over the past few years pertains to the deregulation of

urea prices, over a period of time. In theory, this would be the simplest way to address the market

distortions that currently exist. An immediate reduction in urea subsidies by 10%, would definitely result

in a steep increase in MRP. However, over a 5 year period, assuming constant demand81, an annual 10%

reduction in the subsidy amount from each preceding year would mean that amount of subsidy would be

roughly similar to that provided to other fertilizers82.

Table 45. YoY Increase in Urea MRP (Projected)

MRP YoY % increase Year

5360 Year 0

7824 46% Year 1

10191.6 30% Year 2

12479.94 22% Year 3

14704.82 18% Year 4

16880.86 15% Year 5

The MRP of Urea would also be comparable to that of the other fertilizers available in the market. Over

the course of a 5-year period, a deregulation of the kind mentioned above would free up at least ₹ 64,000

crores, that would have otherwise been spent on a level of subsidy equivalent to the current amounts.

Post this period, Urea could be included under the NBS scheme as well, as the subsidy amounts would

work out to be roughly similar. At the same time, the soil health card schemes need to be implemented

successfully, and another option that can be considered is imposing an additional limit on the number of

bags of urea that may be purchased per farmer.

80 0.46 X 15.854 X 1000 81 It may be argued that with successful usage of the Soil Health Cards, combined in increase with MRP, the demand may fall annually by at least 10%. However, we stick to basic assumptions for the purpose of this analysis 82 We assume a 5% year-on-year increase in the cost of production, on a base of an average production cost of INR 20,000 per tonne (calculated based on estimated demand, and current subsidy level).

117

Sl. No Fertilizer MRP

1 MOP 12234.7

2 Imported 15-15-15-9 17812.02

3 12-32-16 21619.46

4 SSP-Granular 7644.26

5 Imported 16-16-16 17840

6 Zincated 20-20-0-13 18580

7 DAP 21951.22

8 Imported DAP 21750.22

9 10-26-26 21499.94

10 20-20-0 16524

11 City Compost 3995.42

12 16-20-0-13 16420

13 14-35-14 22440

14 Ammonium Sulphate 13178.49

15 SSP Zincated (Powder) 7173.58

16 24-24-0 20307

17 Imported 20-20-0-13 17278.84

18 Zincated DAP 22390

19 SSP-Boronated 7579

20 20-20-0-13 17047.28

21 17-17-17 19735.62

22 15-15-15 17745

23 28-28-0 22440

24 Imported 10-26-26 21342.9

25 SSP-Powdered 7233.15

26 SSP Zincted (Granular) 8263.67

27 24-24-0-8 19320

28 19-19-19 21420

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Appendix B: Table 46:Level of Depletion of Ground Water (Difference between 2012 and 2013)

Higher than the State Average Lower than the State Average

Ariyalur (5.9), Coimbatore (7.9), Dindigul (3.3), Cuddalore (1.6), Dharmapuri (0.9), Kancheepuram (1.6),

Erode (5.1), Madurai (7.5), Perambalur (6.7), Kanniyakumari (1.3), Karur (0.7), Krishnagiri (0.5),

Pudukkottai (2.3), Salem (4.3), Theni (7.7), Nagapattinam (1.9), Namakkal (0.3), Ramanadhapuram

Tirunelveli (5.3), Tiruppur (4.0), Thiruvarur (3.9), (1.4), Sivagangai (1.0), Thanjavur (0.6), Tuticorin (0.9)

Tiruchirappalli (5.6) and Virudhunagar (2.3). and Thiruvannamalai (1.4).

Note: 1. The ground water levels in three districts Viz., Vellore,Thiuvallur and Viluppuram did not experience any fall.

2. Figures in brackets indicate the fall in the level of ground water in meters. Source: Tamil Nadu Water Supply and

Drainage Board, Chennai – 5.

Table 47. Yield and Revenue per Hectare

Yield and Revenue per Hectare (Yield in kgs per hectare)

HHs(No.) Mean * SD Median Min Max

Marginal farmers

Owned(acre) 457 1.4 0.5 1.5 0.8 2.5

Owned(hectare) 457 0.6 0.2 0.6 0.3 1.0

Irrigated(acre) 451 1.4 0.5 1.5 0.8 2.5




Rice revenue 276 47412.6 27302.6 48500.0 0.0 97500.0


Sugar revenue 23 204100.0 113074.9 178750.0 62500.0 372500.0


Cotton revenue 35 64122.5 35283.3 58333.3 22500.0 150000.0

Blackgram yield (per hectare) 20 396.5 285.8 275.0 31.3 1000.0

Blackgram revenue 20 25209.2 21998.0 23750.0 0.0 67500.0




Maize revenue 11 46635.6 42521.1 26125.0 0.0 112500.0



Small farmers

Owned(acre) 236 3.2 0.6 3.0 2.5 4.9

Owned(hectare) 236 1.3 0.2 1.2 1.0 1.9

Irrigated(acre) 236 3.1 0.7 3.0 0.8 4.9




Rice revenue 136 46521.8 27266.2 45000.0 0.0 97500.0


Sugar revenue 30 193201.2 89416.9 178003.3 62500.0 372500.0


Cotton revenue 19 76238.6 43287.7 73333.3 22500.0 150000.0

119






Maize revenue 9 24560.0 23581.6 17500.0 0.0 75000.0



Semi-medium farmers

Owned(acre) 127 5.9 1.1 5.5 5.0 8.0

Owned(hectare) 127 2.4 0.4 2.2 2.0 3.2

Irrigated(acre) 127 5.4 1.6 5.3 1.0 8.0




Rice revenue 78 51204.6 26767.9 50697.1 0.0 97500.0


Sugar revenue 21 179534.8 79279.4 186112.5 62500.0 372500.0


Cotton revenue 9 84841.3 44705.0 66666.7 40000.0 150000.0






Maize revenue 3 30333.3 39501.1 16000.0 0.0 75000.0




Owned(acre) 34 8.0 0.0 8.0 8.0 8.0

Owned(hectare) 34 3.2 0.0 3.2 3.2 3.2

Irrigated(acre) 34 7.6 1.0 8.0 4.0 8.0




Rice revenue 28 49355.9 26343.2 47727.3 0.0 97500.0


Sugar revenue 7 192136.8 98750.4 183593.8 76363.6 372500.0

Cotton yield (per hectare) 0 . . . . .

Cotton revenue 0 . . . . .

Blackgram yield (per hectare) 1 93.8 . 93.8 93.8 93.8

Blackgram revenue 1 4687.5 . 4687.5 4687.5 4687.5



Maize yield(per hectare) 1 333.3 . 333.3 333.3 333.3

Maize revenue 1 0.0 . 0.0 0.0 0.0



120

Table 48:Type of Storage Facility

No of HHs Percentage Cumulative Percentage

Marginal farmers

Kutcha 41 11.4 22.0

Pucca 103 28.7 55.4

Semi-Pucca 42 11.7 22.6

Total 186 51.8 100.0

Small farmers

Kutcha 22 6.1 21.4

Pucca 63 17.5 61.2

Semi-Pucca 18 5.0 17.5

Total 103 28.7 100.0

Semi-medium farmers

Kutcha 13 3.6 25.5

Pucca 29 8.1 56.9


Total 51 14.2 100.0


Kutcha 2 0.6 10.5

Pucca 14 3.9 73.7


Total 19 5.3 100.0

Total (across all districts)

Kutcha 78 21.7 21.7

Pucca 209

58.2 58.2

Semi-Pucca 72 20.1 20.1

Total 359 100.0 100.0

Appendix C

In the table below we detail the respective stakeholders and the key observations are noted below.

Stakeholder

Class

Name Key Observations

Key Director Agriculture,

State of Tamil Nadu

Thiru V.

Dhakshinamoorthy.,

I.A.S,

1. Soil Health Cards: minimises the use of fertilisers, reducing cultivation costs

2. Convergence schemes encouraging dryland farming: 3. 47 lakh acres covered by such schemes promoting millets, pulses,

oilseeds in place of paddy. 4. Some of these schemes include NADP (GOI), NFSM, ATMA, NMOO,

NMSRAD; state schemes include the MSDA; 5. Value-addition activities integrated with convergence schemes:

extracting oil from oilseeds, dal mills and provision of machineries for pulses

6. Collective Farming: organising small and marginal farmers into efficient collectives

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7. Micro-Irrigation: Schemes providing even 100 percent subsidy for small farmers.

8. PMFBY: Scheme covers both the cultivation risks as well as post-harvest losses.

9. -In 2016-17, 15.37 lakh farmers compensated with 2370 crores through PMFBY, of which 2150 crores have been transferred to bank accounts for Rabi 2016-17. (Drought relief accounted to 2,247 crores in 2016-17).

Key Director, Directorate

of Horticulture and

Plantation Crops,

TANHODA,

Tmt Archana Patnaik

I.A.S

1. Vision of horticulture department for TN entails aggressively promoting horticultural crops coverage.

2. An incremental increase in area under high-value crops, observed across young and educated groups; gradual increase in post-production activities (marketing, retail etc).

3. Supply Chain Management: convergence scheme with the agri-marketing dept, reached 10 clusters.

4. Collective Farming for market exposure, credit needs: Cocoa farmers in Coimbatore have organised themselves into contract farming.

5. Dryland farming of fruits like pomegranate, amla; schemes promoting fruit trees/crops as border crops

6. Homestead gardens in suburban areas, convergence schemes along with social welfare dept. (murangai and papaya in schools, anganwadis etc.)

7. Central govt. schemes such as -PMKSY: increased micro –irrigation coverage of 136,000 hectares in

2016-17.

-MIDH: Integrated Development of Horticulture with improved

marketing components entailing pack houses, cold chains, mobile vans,

refriver vans (collaboration with agri- departments, TNAU).

8. Scope for innovations in horticulture: -Promoting organic cultivation: organic chillies grown through FPOs

-Cultivation in saline areas:

The dept. requested TNAU for chillies that could be cultivated in saline

soils, with high oliorescent content (been undertaken in Virudhanagar,

Erode etc)

-Improved logistics and marketing infrastructure

1. Expansion of infrastructure in existing markets (eg for bananas,

mango pulp, jasmine etc. in Madurai has been undertaken)

2. Improvements in export quality to meet international technical

standards. (eg. tissue culture G9 standards in APEDA)

3. Collective ventures: Wherever successful, cold storages have been run

by farmer groups’. (Eg: cold storage in Theni for bananas)

-Protecting Indigenous varieties

(Under schemes like NADP, increasing area under jackfruit, bananas

etc.)

-Increasing food-processing, value-addition activities through Mega-

food parks, agro-processing centres (e.g. onion flakes, fried onions etc)

Key Joint Director

Agriculture(SS) i/c and

DDA(ATMA),

Agriculture

Department, Thiru S.

Shanmugham

1. Collectivisation: The state is in the process of forming around 10,000 farmer interest groups, and around 2000 FPGs. Such groups facilitate the collective purchase of inputs at competent prices, creates scope for cohesive combined harvesting etc, influence crop choice decisions etc. Around 975 FPGs been handed over to the agri-marketing department, 200 FPGs to be developed over the next six months.

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2. Manpower shortage to meet extension, dissemination requirements; with multiple schemes driven by different departments in operation, scope of extension services is limited.

3. Pushing the state strategy for doubling yields, tripling incomes 4. Specialised expertise in the agri-departments, recruiting technical

officers. 5. Need to focus on value addition activities, better marketing strategies.

Key Commissioner and

Director, Department

of Agriculture

Marketing and Agri-

business,

Thiru Shunchonngam

Jatak Chiru IAS

1. Quantification of current income levels is difficult, as well as determining the base year.

2. Policy targets have increased, while the actual allocations are on the decline.

3. Need proper implementation of MSP for pulses, and procurement systems. Pulses successful on production side, market failures due to higher price fluctuations.

4. Revamping the buffer stock policy, increased allocations and commitment towards procurement, this facilitates price stabilisation.

5. Increase pulses production, and stabilise their prices and production over a period of 5 to 10 years.

6. Ensuring stable markets and incomes, especially commodities like pulses; price stabilisation important for increasing farmer incomes.

7. e-NAM: 17 markets are on the e-NAM in Tamil Nadu. 12 markets allow for e-trading, and entire payment amounts are

credited to farmers’ accounts in t+2 days. Free, fair trading with lesser

waiting periods through e-NAM.

8. Model APMC Act: Volume of trade through regulated markets around 10,000 crores. The model APMC Act aims at rationalising the role of commission agents, and eradication of such agents. Freeing up of licenses for traders across districts, online marketing and

trading across states are other aspects of this Act.

APMC act to be amended to establish private markets, while they

already exist in TN.

9. Government of India reforms on Compulsory Marketing models implemented in UP.

10. Scope for private engagement in assaying labs, facilitate standardisation of quality and grade.

11. Govt. of Tamil Nadu drafting an act for Contract Farming. 12. Increase institutional financing options in post-harvest processes,

marketing along with finances for inputs, subsidies etc. 13. FPOs as aggregators, facilitating the sale and processing of farm

produce. 14. NMFP replaced with Sampadha for food processing; in TN around 12000

industries in food processing, and this could be doubled. 15. Enhancing storage duration for perishables, cold storage capacities etc,

tapping into private sector potential through Sampadha. Though TN second highest vegetable producer around 30 percent is wasted.

16. Value addition activities could be brought under the Integrated Food Parks scheme. Under Supply Chain Management, farmers grouped into 3 Primary Processing Centres per district (PPC allows for washing, grading, sorting, packing etc.); and these PPCs are directly connected to retailers such as Big Basket, eliminating intermediaries. This could increase incomes by around 15 to 20 percent, especially scope of PPCs run through public-private partnerships should be studied.

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Key Joint Director of

Agriculture, Dept. of

Agriculture Marketing

and Agri Business V.

Chandrasenan Nair

1. E-NAM: Establishing 15 regulated markets in 2017 been the target. Objectives included online trading, transparency, elimination of middle men, accessibility to traders from other states, agri-marketing lab to exist along with e-NAM markets wherein quality parameters such as moisture content, staple length etc. to be monitored and prices determined accordingly.

2. Database of all farmers and traders involved in the particular e-market; this aspect is still in its infancy stage. Integration of the 15 e-NAM markets, producing analytical reports online for future forecasts.

3. 102 cold storages for perishables across TN, proper utilisation of these could reduce post-harvest losses by around 30 to 35 percent.

4. Extension activities at regulated markets, training for trading through e-NAM markets.

5. Addressing challenges in e-NAM markets in its initiation stage such as slow servers etc.

6. Schemes such as Mega Food Parks and Terminal Market Complex to be established in Chennai, Madurai etc. wherein processing and post-harvest marketing would be integrated into one umbrella. A food Park at Dindivanam is under discussion.

7. While 197 out of 278 regulated markets in TN provide storage facilities, farmers have been utilising this only across 23 markets. Reasons hindering this being farmers having to dry and clean farm produce to store in these godowns, also farmers prefer immediate sales for liquidity concerns.

8. PAC storage space also not utilised by farmers, but for storing PAC inputs.

9. 99.5 crores have been requested by agri-marketing department from NABARD for revamping warehouses this year.

10. Crop diversification based on local contexts such that paddy cultivated during first season, followed by vegetables and pulses after February.

11. Informed farmers with knowledge about markets, value addition for produce, organic farming, inter-cropping and mixed cropping, reduction of cultivation costs, introduction of dairying and poultry activities etc: mixed basket of activities for increasing farmer incomes.

Managing Director,

Tamil Nadu

Warehousing

Corporation, Thiru K.

Nagarajan I.A.S,

1. Warehousing Capacity: TNWC has 36 warehouses in TN under the TNWR Act, 2007. In 2016-17, 2642 NWRs been issued to farmers of around 151. 53 crores; while in 2015-16, 2597 NWRs accounting to 186.10 crores have been issued.

2. Cold storages not immediate priority for warehousing department, due to power shortage issues that needs to be addressed.

3. Maintenance of warehouses at periodic intervals and ensuring profitability of these warehouses are other concerns. Only 14 godowns have been replaced by FCI stocks due to connectivity constraints between TNWC warehouses and railways, though FCI had initially requested TNWC for the construction of 24 godowns, resulting in losses.

4. Though TNWC reports 99 percent occupancy rates as of 2015, only 5 percent of the warehousing capacity across the state has been utilised by farmers. Private clients such as ITC for storing wheat, MFL, IFFCO, RCF, TASMAC, ONGC etc. have been utilising these warehouses.

5. TNWC offers rebates to increase occupancy in these warehouses, around 10 to 30 percent to farmers and 20 percent to other traders.

6. Other concerns include lesser occupancy of warehouses in delta regions due to droughts, acute staff shortage etc.

Key Chief General

Manager, NABARD

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Chennai, S. N. A.

Jinnah

Key Assistant General

Manager, NABARD

Chennai S. Jayashree

Key Deputy General

Manager, NABARD

Chennai, R.

Sankaranarayanan

Secondary CEO Sammunati, Mr

Anil

1. Role of aggregators: A farmer in a group should take up an aggregator’s role, and the buyers would be dependent on this aggregator. The aggregator facilitates increasing shelf life of produce, value-addition and realisation per unit produce. FPOs could also assume the role of aggregators, thereby facilitating purchase of cheaper inputs, providing advisory services for farmers, timely provision of right inputs etc.

2. Product Structuring: Loan repayments are usually tied to harvest timings, but restructuring products such a way that they loan repayments are tied to include time for harvest as well as some aggregation activities. This would mean restructuring loans products; such that co-terminus loans are allowed for a period of 6 months in place of 3 months.

3. Access to working capital: Providing access to working capital for the aggregator, introducing changes such that cost of aggregation falls per unit (aggregator could get a container instead of the usual small truck and the aggregation costs could reduce drastically) etc could improve the processes in the aggregation chain.

External Senior Manager,

Retail Business Group

HDFC, Mr. Harish

Dubey

1. Increasing incomes for farmers: Two ways for enhancing farmer incomes: either increasing volume of production or decreasing costs of cultivation. Inputs could be centrally driven through bulk buying and distributed selling via co-operatives or FPOs reducing costs, instead of the highly segregated input markets increasing per unit cost at every stage.

2. Diversifying farm enterprise: Intensifying agricultural enterprises through context-specific diversification such as dairying, bee-keeping, poultry and other allied agri-activities.

3. Revamping procurement value-chains: Currently cost efficiencies and margins are transferred to middlemen in the marketing process, and markets/ procurement value chains need to be regulated such that these efficiencies directly reach farmers. Pushing towards direct procurement from farmers, this is the reason why some megastores can sell at cheaper rates than market prices.

4. Bulk Buying and Distributed Selling: As aggregation is a concern, there is a need for investing in efficient co-operatives that facilitate bulk buying and distributed selling.

5. Labour mechanisation, rent and leased based models instead of ownership of inputs models (eg custom hiring centres)

6. Increasing public investments in agro-processing enterprises (government does not own a single agro-processing centre in India).

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7. Sustainability of FPOs: Increasing financial institutions willingness to lend without collateral, though this is dependent on the financial stability of individual FPOs.

8. Land reforms, wherein land rights would be provided by usage and not progeny.

Secondary

Agricultural Officer,

Villupuram

Around 85 percent of 5 lakh agricultural households in Villupuram

comprise of small farmers.

1. Increasing interest free loans and other credit opportunities for small farmers.

2. Channelizing such farmers into collectives. 3. MSP: Farmers have low awareness levels about MSP. At present,

procurement via MSP and payment of MSP is not assured. While announcement of MSPs are not sufficient, there is a need for proper implementation of the same. Also current MSPs are not set according to National Commission of Farmers recommendations, which proposed MSPs to be inclusive of the cultivation costs plus profits accounting to fifty percent of the cultivation costs.

4. Drip Irrigation schemes: The take-up for drip irrigation schemes is low, as small farmers are not interested in these investments.

5. Horticulture: Though this is a high profit-productive sector, some of the concerns include higher resource requirements such as labour demands and logistic requirements, connectivity to neighbouring markets and mobility issues as these include perishables.

6. Diversification into agri-allied activities: Scope of diversification into dairying, horticulture etc depends on land available for allied activities, time commitments for nuclear families, developing skills for household labour involved and marketing concerns, risk management measures that could be adopted by small farmers etc

7. Dryland Farming: In Villupuram, around 2000 hectares have been brought under millets, cumbu etc, while another 1300 hectares have been sown with blackgram.

Secondary Agricultural Officer,

Nagapattinam

1. Collective farming holds much scope in the district, around 243 FIGs have been formed in Nagapattinam (115 is exclusively for agriculture, while the remaining for horticulture).

2. Processing for better pricing: While paddy fetches around 13 Rs. Per kg, processed rice/ aval / flour earns around 70 rs. Per kg. The difference of Rs. 53 is now transferred to intermediaries, and farmers should be able to channelize these profits through processing ventures.

3. Farmers sell off produce at fields due to lack of awareness about credit /loans available at regulated markets based on stock/ storage produce, connectivity constraints to cities and neighbouring markets.

4. FPOs: Farmers in the FPO pool around 1000 Rs, and some of the successful FPOs include Kizhvelur, Sirkazhi and one of mango farmers in Vedaranyam, who have been also trying for a pulp industry. First successful FPO in TN was initiated in Erode for turmeric.

5. Uzhavar Sandai: A scheme towards increasing production, but has been closed down in the district. These allowed for direct sale of fresh farm produce by farmers to consumers at rates lower than retail, and higher than wholesale prices. This provided markets for local varieties such as poyur kathrika, palluvakai etc, and only Vedaranyam was suitable for horticultural activities.

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6. Credit as a major constraint for FPOS, and lack of resources for different business models of FPOs. (Rasi Masala in Velankanni as a good case study in this regard).

7. TANSEDA Scheme offers seed subsidies and agricultural department procures seed, processes the same and then circulates them to respective depots. Seed village as private seeds are expensive.

8. Insurance take-up: Farmers are aware of insurance in the district and in 2016-17, 355 crores were released to more than 1 lakh farmers in the district (ie. Around 402 Rs per acre). Insurance take-up is extremely essential. ‘

9. Extension towards Diversification: ATMA provides training for utilisation of farm technologies, ancillary activities such as bee-keeping, inland fishing through farm ponds etc.

10. Integrated Farming: Small farmers can adopt models of integrated farms, wherein animal wastes are recycled and inter-cropping/ multi-cropping could be practised. IFS is not common across the district.

Secondary Agricultural Officer,

Ramanathapuram

1. Soil and water management: Continuous utilisation of groundwater could increase soil alkalinity. Underground water is becoming increasingly saline, rivers are drying up and in this context rain water harvesting through farm ponds could be practised, and later directed to the fields. Ramanathapuram with 5181 farm ponds has the highest number of farm ponds in the state, and these serve as an alternative /supplementary source of irrigation for at least one season. Except for few blocks like Kamudi and Mandapam, there is no scope for irrigated agriculture. In sandy areas, ring wells and drip irrigation could be adopted for

coconut plantations.

2. Higher rates of awareness about insurance in the district, due to its risk prone nature. Paddy cultivators are entirely dependent on the north-east monsoon, and failure of the same ensures higher incomes through insurance, drought relief funds etc.

3. Other major source of income for the district include foreign remittances and dairying.

4. Last favourable year for cultivation has been 2013-14, and 2016-17 witnessed the most severe drought in 141 years.

5. Regulated markets in the district include Ramanathapuram, Parambikulam, Muthugulathur and others such as Etivayal, Thiruvadanai and Parambakudi have storage capacities of 2000 metric tonnes. Etivayal also has a cold storage facility of 2000 metric tonnes inaugurated in Nov 2017. A small cold storage facility in Parambakudi of 100 mt for minor millets, and another of 25 metric tonnes in Kamudi for chillies are the other cold storages. Farmers are utilising this facility on a lease basis. NWR is not implemented in the district, while PAC godowns are not utilised for storing facilities.

6. Horticulture crops: Chillies cover around 20, 000 hectares and varieties such as mundu, chamba chillies are traded in the market. Another important tree crop is the prosiphus covering around 60,000 hectares in the district and utilised in the charcoal-making industry, firewood etc. Other crops include brinjal, ladies finger, tomatoes, fruits etc. Jasmine saplings are sent from Ramanathapuram to Madurai due to deteriorating quality of ground water. Under the scheme Maadithottam (roof-top gardens), seeds and manures for vegetables are distributed during the Aadi month.

7. National Mission for Sustainable Agriculture: This scheme entails providing goats to farmers with one-hectare land, along with 50 percent

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subsidy on the first crop, Rs 23,500 subsidy on pulses (second crop). Started three years back, 11, 000 farmers have been covered through this scheme across the district. Mission for Sustainable Dryland Agriculture provides 50 percent subsidy to farmers on all inputs. Farmers in villages across 5 blocks (5000 hectares) would be identified and trained under the scheme, and crops such as paddy are cultivated using 1000 to 2200 mm water over 3 to 4 months and pulses are grown using 400 to 500 mm water. At present, 1300 farmers and 1000 hectares have been covered.

8. Collectivisation: Out of 8 FPOs in the district, one of them is state funded through the SAFC (supported by the Dhan Foundation) while the other 7 are NABARD funded. FPOs offer much scope in initiating and marketing millets, chillies and promoting traditional paddy varieties (CIKS etc.) One of these FPOs specialises in chillies, and exports them to Bangalore Virudhunagar etc. An integral feature for the success of these FPOs include the support of a strong CEO, like the case in Neithal FPO. Paddy hulling machines worth Rs. 60,000 was bought through this FPO, and 1000 farmers utilise this for processing rice. Immense potential for chilly, rice processing in the district through FPOs.

Secondary NABARD DDM

Nagapattinam

1. Some of the constraints include peculiar irrigation potential off this district due to over exploitation of groundwater and salinity issues. While around 6000 mm rainfall was recorded in 2016-17, there is a need to maintain water conservation structures. Due to sea water intrusion, around 20 to 30 percent of the land has been ruined (Out of 11 blocks, 7 blocks are coastal).

2. Diversification of crops: Farmers need to diversify across crops and crop varieties, and practise inter-cropping on the same plot.

3. Price analysis, trend analysis that would be beneficial to traders, farmers etc. (could be done by KVKs etc.)

4. Storage infrastructure is sufficient, while liquidity constraints result in small farmers not preferring to store.

5. FPO facilitator, or the board of the FPO is integral to the stability of the FPO. Sustainability for FPOs would be the major concern.

6. Diversification even within FPOs; an FPO in Sirkazhi with 30 percent women shareholders. An FPO in Kollidam, producer companies trained women for producing palm products and marketing these to Chennai. Women earned around Rs. 2000 per month through such activities. Value addition activities through women, producer companies helped them in marketing vermi-compost to Pondicherru, Chennai etc, for kitchen gardens.

7. Post-harvest losses: Incurred due to the usage of poor storage, transportation utilities such as gummy bags etc.

8. MSP: MSPs cannot be increased beyond certain levels, as this would impact consumers. Farmers aware of MSPs as well as crop insurance schemes, but follow a ‘wait and see approach’.

9. Horticulture: Confined to certain blocks such as Vedaranyam and Majavaram due to some groundwater recharge available.

10. Farm Ponds: 146 farm ponds were subsidised by NABARD in Kilvelur, only 28 were constructed finally as farmers were not willing to pay the rest 50 percent of farm pond cost.

11. Dairy requires time, water and can be only practiced in areas with sufficient groundwater. Fodder is expensive; and this sector is high-maintenance unlike goat farming, wherein the returns are low.

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12. Aquafarming: Inland fishing activities not very popular; conflict of interests between prawn culturists and farmers, claiming that stagnant salt water damages groundwater quality.

13. Soil fertility: Soil testing needs to be enforced once in two or three years, and this could be linked to bank credit. Credit availability could be tied to favourable soil reports, consistent across a period of time.

14. Crop insurance, could be inclusive of pest attacks, compensation could be provided for difference in crop produce quality depending on height and size of grains. If poor quality, then the farmer could be compensated for this.

15. Tapping renewable energy sources for irrigation, other purposes etc. 16. Engaging youth in agriculture, while young farmers were willing to enter

into fisheries, marine activities and dairying, also attracting them towards farming.

17. Credit constraints: For loans beyond a lakh, private banks provide agri-jewel loans. Collateral for bank credit is a challenge, and private banks would lend without collateral upto 1.5 lakhs. Banks engage in lending to meet their financial targets, and sanction loan amounts for assets more than their actual worth. For loans at FPO level, credit per acreage, per farmer should be worked out depending on their income levels.


Villupuram

1. Concerns relating to agriculture in Villupuram and India: Fragmented landholdings, extreme dependency on moneylenders, farmers unaware of schemes, produce not reaching regulated markets wherein payments are delayed due to procedures and are sold off immediately on field, understaffing issues etc.

2. Adaptability and switching to drought-resistant varieties: Interventions and extension activities in this regard, and necessary support systems for farmers educating them about schemes, shifting from paddy to other crops etc.

3. Collectivisation: Organising farmers into groups, and promoting these farmer interest groups/ farmers clubs to FPOS (farmer producer organisations), Joint Liability Groups (JLGs) engaging in agri -ancillary activities, and later converting them to Farmer Producer Companies

4. Animal Husbandry: These activities could be undertaken within FPOs, a Dairy FPO in Keelmalajanur, Villupuram comprises of 1000 farmers owning 2 animals each, accounting to around 2000 animals in total. While milk earns around 18 rupees per litre in the market, the FPO earns around 26 rupees per litre for their milk.

5. Schemes and Insurance: Proper routing of schemes/ subsidies to increase farmer incomes, low insurance penetration due to lack of awareness etc.

6. Organic Farming: This helps revamping the soil, however the process in establishing and certifying themselves as organic farmers would take around 6 to 7 years.

7. Dryland Farming: People migrate out of drought affected villages due to labour scarcity, debt burdens etc and dryland farming offers an opportunity in such areas. Villages with ample water resources are not interested in diversification as they earn sufficient incomes, while drought affected farmers are more inclined towards diversification in dryland farming, dairying, other allied agri-activities.

8. Households need to diversify their activities for an earning, and all sources put together could result in increased incomes for these households.

18. 9. Cold Storage: Perishables need to be stored in cold storages, such as to increase incomes.

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Ramanathapuram

1. Banks-NGOs credit linkages: Credit linking with banks such as NABARD for micro-entrepreneurship development through SHGs/ NGOs for allied, agri-related or other activities. Some of such activities pursued include tailoring/ sewing classes etc.

2. NABARD has sponsored godowns with the PACs. Societies/ PACs reluctant to use their godowns for storage purposes, as farmers are unwilling to store and hence used for storage of other inputs.

3. Water crisis is severe in the district, entirely monsoon dependant and there are no functional rivers in the district.

4. Crop cultivated: Farmers mainly cultivate paddy across Thiruvadanai belt, while crops such as chilly and cotton are grown in Parambakudi. Farmers have a bias against growing chilly/ cotton crops in Thiruvadanai, as this could deteriorate the soils.

5. Farmers very well aware of crop insurance schemes, and take-up rates are high in the district, wherein insurance is substantial source of income.

6. Major sources of income for agri-households in the district include: claim payouts, drought relief funds, foreign mainly middle-east remittances, dairying, goat/sheep rearing and poultry finally. Poultry not very successful in the district, not commercialised or scientifically practiced.

7. Majority of the women engaged in dairy, are tied up with Aavin through tripartite agreement.

8. Farm-ponds: 5131 farm ponds have been constructed through a special scheme sanctioned for the district. Till 2015, the ponds were full and the water was used for paddy, chilly and cotton cultivation as well as fisheries. Farmers provided land around 30*30 *2 ft depending on their land sizes, and a fully recharged farm pond could sustain three seasons. In total, the district has around 5260 farm ponds. Drip-irrigation/ sprinkler irrigation may not be efficient for the district due to salinity issues; except for coconut and palms.

9. Farmers prefer co-operative banks, PACs for loans; as commercial banks are reluctant to provide crop loans, and are interested only in providing agri-jewel loans.

10. Insurance companies have sanctioned pay-outs to non-loanee farmers agitating loanee farmers, many of those who are yet to receive their pay-outs. Loanee farmers should be given preference in such cases.

11. Crop Insurance challenges: 51 villages were identified as pre-emptive sowing though these have been clear cases of crop failures. Such errors due to wrong calculations estimated from satellite imageries, and the imageries for these villages showed the proliferation of prosopis guilfora which was misinterpreted as paddy. Villages were randomly inspected, and still 25 villages have not received full claim payments.

12. FPOs: NABARD promoted 7 FPOs in the district, such FPOs are run by NGOs and more than 10 NGOs have been associated with NABARD in the district. FPOs such as Neithal Sustainable promoted by CIKS procures chilly, coriander and directly sells to market; credit support to NGOs/FPOs only for three years and to be sustained by the board of directors after this period. Challenges with regards to FPOs include slow enrolment rates (jasmine flower FPO in Mandapam block) and sustainability concerns. Neithal has earned 1 lakh profit through chillies, another successful example includes Ramanthapuram FPC (which is a seeds NGO). FPOs could be the way forward; farmers should be trained on other enterprises such that they are not fully dependant on agriculture.

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13. Horticulture: Farmers are not willing to engage in horticulture on their agricultural lands, but only on bunds. A widely quoted example is of the Akal Farm in Vallanthai village, wherein a group of Punjabi farmers have been growing fruit crops such as guavas, sapotas, watermelons etc through mechanised farming practices and selling to the Madurai market.

14. Farmers in certain blocks are getting better prices than MSP through brokers, and quality is not much of a concern for these brokers. Regulated markets check for quality for produce, and transportation raises challenges in accessing regulated markets. PAC godowns are not usually utilised for their purpose of storing farm produce due to absence of scientific maintenance and lack of personnel.

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