Trends in Costs and Incomes from Crop Production in India: Analysis of costs of cultivation data, 2000-01 to 2019-20

FOCUS

Trends in Costs and Incomes from Crop Production in India was published by the Foundation for Agrarian Studies (FAS) in November 2022. The report examines trends in profits, incomes, cultivation costs and inputs in ten crops over the previous two decades (2000-01 to 2019-20) in India. It utilizes state-level reports released by the Comprehensive Scheme on Costs of Cultivation/Production of Principal Crops of India (CCPC Scheme) and long-term statistics from the website of the Directorate of Economics and Statistics, Ministry of Agriculture and Farmer’s Welfare.

The ten crops under study include two cereals, three pulses and five oilseeds. In addition to profitability and trends in incomes and costs, the report also examines how yields and use of inputs vary across states. It also studies general price levels during the two decades under study and whether these were higher or lower than the minimum support prices (MSPs).

For each of the ten crops, the report provides seven distinct figures: 1) Cost A2 is the paid-out cost of physical inputs, hired human, animal and machine labour, interest of working capital, rent paid for leased land, depreciation and maintenance expenditure for own machinery and other fixed assets. 2) Cost A2+FL is Cost A2 and the imputed value of family labour. 3) Cost C2 includes A2+FL and the imputed value of own land and other fixed assets used for cultivation. 4) GVO is the gross value of output which is calculated as the sum of main product – total production multiplied by price realised by farmer – and the by-product. 5) FBI or farm business income includes income calculated according to Cost A2. 6) NI1 is net income as per Cost A2+FL. 7) NI2 is net income as per Cost C2.

The report finds there has been an overall decline in the profitability of all selected crops in recent years. Disparities in production costs across states have declined but variation have persisted in profitability, yield and real incomes. It notes that policy interventions are necessary to address regional imbalances and enhance overall agricultural income.

The 98-page report is divided into 15 sections: Introduction (Section 1); Methodology (Section 2); Paddy (Section 3); Maize (Section 4); Urad (Section 5); Gram (Section 6); Arhar/Tur (Section 7); Rapeseed and Mustard (Section 8); Groundnut (Section 9); Soybean (Section 10); Sunflower (Section 11); Sesamum (Section 12); Conclusion (Section 13); References (Section 14); and Appendix (Section 15).

    FACTOIDS

  1. As per the data collected by the National Sample Survey’s Situation Assessment of Agricultural Households and Land and Holdings of Households in Rural India, 2019, roughly 69 per cent of agricultural households in India are categorised as self-employed in crop production.

  2. The report notes that the farming industry sustained widespread losses prior to the green revolution. Only during the 1970s and 80s, with favourable costs and incomes, coupled with substantial public investment, did the agricultural sector witness growth. However, from the mid-1990s, there was a decline in agricultural income due to increasing costs and decreasing prices for farmers.

  3. The report states that there is a substantial yield gap that needs to be bridged when the average yield of India is compared to other countries. For instance, India’s average yield in paddy for 2019-20 was 40 per cent lower than in China. Within the country, some crops have witnessed an overall increase in average yield at the national level but disparities still persist at the state level. Odisha, for instance, had the lowest yield for paddy, averaging around 33 quintals per hectare, almost half the levels of Punjab (65 quintals per hectare).

  4. The report also notes an overall increase in the costs of cultivation, though the intensity varies from state to state. Such variation in the costs of seeds, fertilizers and irrigation has been attributed to policy measures that vary across states. The unit cost of fertilizer, for example, witnessed a decline till 2010-11 but increased in the following years.

  5. Profitability measures have shown a decline for all crops in recent years. Apart from rising input costs, this fall can also be attributed to the problem of non-remunerative prices as the gap between the actual prices realized by farmers and the MSP has widened since 2017. This can hinder the ability of farmers to invest in new technology, the report states.


    Focus and Factoids by Aseema.

AUTHOR

Foundation for Agrarian Studies, Karnataka

COPYRIGHT

Foundation for Agrarian Studies, Karnataka

PUBLICATION DATE

Nov, 2022

TAGS

#agriculture #crop-inputs #crop-prices

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