Importance of Agricultural sector:
- With a large population to feed, imports will not solve our problem if there is a severe drought and food shortage
- Though agriculture now accounts for less than 15% of gross domestic product (GDP), it is still the main source of livelihood for nearly half our population
Reason behind the current Agrarian crisis
(1). Landless Farmers
- Around 83% of rural households are either entirely landless or own less than 1 hectare of land
- Farmers’ tiny plots of land can no longer sustain whole families, especially in rain-fed agriculture, which accounts for two-thirds of India’s total cultivable area
(2). Shortage of money
- Landless or marginal farmers lack the resources to either buy or lease more land or invest in farm infrastructure like irrigation, power, farm machinery, etc.
- About 52% of agricultural households are estimated to be in debt, and the average size of household debt is Rs 47,000
(3). Different kind of Risks
- Weather: The large majority of small farmers are dependent on the rains. A weak monsoon or even a delayed monsoon means a significant loss of output
- Soil: The next risk is weak soil fertility, pests and plant diseases
- Price: The better the crop the lower would be the price
- Net income sometimes collapses if there is a very good crop of perishables
MSP benefits large traders instead of farmers:
- For foodgrains like rice and wheat, government procurement at the minimum support price is supposed to protect the farmer
- But MSP benefits the large traders who sell grain to the government
- Small farmers typically do not have enough marketable surplus to justify the cost of transporting the crop to government corporations in the towns
- In the case of other crops, Agricultural Produce Market Committees (APMCs) have the opposite effect
- Farmers have to sell their produce through auctions in regulated markets controlled by cartels of licensed traders
- These licences give traders oligopolistic market power
Solution to farmer problems: Cooperative farming systems
- There are several variants of cooperation ranging from collective action in accessing credit, acquiring inputs and marketing to production cooperatives.
- This also includes land pooling; labour pooling; joint investment, joint water management and joint production.
Advantage of Cooperative farming systems
The advantages of aggregating small farms into larger, voluntary, cooperatives include:
- Greater capacity to undertake lumpy investment in irrigation and farm machinery,
- More efficient farming practices,
- Greater bargaining power and better terms in the purchase or leasing of land,
- Access to credit,
- Purchase of inputs and the sale of produce
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