Agriculture sector after achieving a lot facing a sustainable crisis for a decade

After about a four-decade spell of good returns the agricultural sector, particularly the small and mid-size farming segments, are facing severe problems.

- Kishore Kumar Biswas

 The growth rate of the sector has been more than 3% but quite a huge number of farmers have been suffering from the realisation of favourable income. Many people consider the rural sector and the agricultural sector to be the same. But actually it is not. In the rural sector, a growing number of people have been engaging in non-farm activities like small trading, contract jobs, financial or other agencies and transports. Non-farm activities have not only been a complementary activity of the farm sector – rather it has been a major source of income in the rural areas. Whenever economists discuss the rural sector crisis, they generally point out the crisis of the non-farm activities.

Distress of the farm sector

The first macro criterion in analysing the crisis in agriculture has been the adverse terms of trade against industry as well as services. It is estimated that in FY22 the growth rate of the agriculture sector would be 3.9%, a very commendable performance. But this does not mean  that the farmers would be happy with it. This is because the terms of trade of agriculture are adverse against industry.

What is the term of trade? It simply means the gap between input prices of agricultural products and prices received by selling those products. It is known from the national income statistics that Gross Value Added (GVA) is projected to grow by 5.2% in FY22 whereas the non- agricultural GVA is projected to grow as high as 10%. It means that farmers must pay a much higher price for inputs and other consumption items like health and education of their family members compared to what they receive by selling farm outputs.

The Indian agriculture during Five Years Plan period