Why are farmers protesting? There are long-term structural reasons as well as a short-term reason for it
Last week, thousands of farmers turned up to protest on the streets of Delhi and Kolkata. A similar scenario had played out in Mumbai, sometime back. Why are farmers protesting? There are long-term structural reasons as well as a short-term reason for it.
What is the main structural reason?
The average size of the plot on which farming is carried out has shrunk over the decades, as it has been divided across generations. In 1970-71, the average size was 2.28 hectares (one hectare equals 2.47 acres). By 2015-2016, it had shrunk to 1.08 hectares. However, averages, as usual, hide the real story. The total number of farms stand at 145.6 million. Of this, around 99.9 million farms, or 68.5%, are marginal or less than one hectare in size. The average size of a marginal farm is just 0.38 hectares. In 1970-71, marginal farms comprised 51% of 71 million farms.
So, plot sizes have shrunk. Is it just that?
Smaller plots have made farming not as remunerative as it used to be. What has also not helped is that the size of agriculture, as a proportion of the overall economy, has come down dramatically over the years. In 2004-05, agriculture, forestry and fishing accounted for 21% of the economy (see chart above). By 2017-18, their share in the economy dropped to 13.6%. If we consider agriculture only, its share in the economy has fallen from 17.6% in 2004-05 to 12.2% in 2016-17. This means that those working in non-farm activities have done much better than farmers.
How fast has agriculture grown over the years?
Between 2004-05 and 2017-18, agriculture, forestry and fishing grew by 3.4% every year. The non-farm part of the economy grew by 7.6% every year.
So, the non-farm part of the economy has been growing much faster?
Yes. As any country moves from being developing to becoming developed, farmers move towards construction and real estate. This hasn’t happened in India. The centre announces a minimum support price (MSP) for 22 crops, so that farmers get a minimum price for their produce. This doesn’t help much as the centre has limited ability in influencing prices because it largely buys only rice and wheat directly from the farmer. A free market has never been allowed to emerge.
What is the short-term reason?
The government buys wheat directly from the farmer and has the ability to influence the prices of the crop. This year, even in the case of wheat, only in Punjab and Haryana were farmers able to get a price that was close to or higher than the MSP. For the remaining rabi crops, prices have largely been below the MSP. The same is true for a large number of kharif crops as well. This has made farmers angry.
What is the main structural reason?
The average size of the plot on which farming is carried out has shrunk over the decades, as it has been divided across generations. In 1970-71, the average size was 2.28 hectares (one hectare equals 2.47 acres). By 2015-2016, it had shrunk to 1.08 hectares. However, averages, as usual, hide the real story. The total number of farms stand at 145.6 million. Of this, around 99.9 million farms, or 68.5%, are marginal or less than one hectare in size. The average size of a marginal farm is just 0.38 hectares. In 1970-71, marginal farms comprised 51% of 71 million farms.
So, plot sizes have shrunk. Is it just that?
Smaller plots have made farming not as remunerative as it used to be. What has also not helped is that the size of agriculture, as a proportion of the overall economy, has come down dramatically over the years. In 2004-05, agriculture, forestry and fishing accounted for 21% of the economy (see chart above). By 2017-18, their share in the economy dropped to 13.6%. If we consider agriculture only, its share in the economy has fallen from 17.6% in 2004-05 to 12.2% in 2016-17. This means that those working in non-farm activities have done much better than farmers.
How fast has agriculture grown over the years?
Between 2004-05 and 2017-18, agriculture, forestry and fishing grew by 3.4% every year. The non-farm part of the economy grew by 7.6% every year.
So, the non-farm part of the economy has been growing much faster?
Yes. As any country moves from being developing to becoming developed, farmers move towards construction and real estate. This hasn’t happened in India. The centre announces a minimum support price (MSP) for 22 crops, so that farmers get a minimum price for their produce. This doesn’t help much as the centre has limited ability in influencing prices because it largely buys only rice and wheat directly from the farmer. A free market has never been allowed to emerge.
What is the short-term reason?
The government buys wheat directly from the farmer and has the ability to influence the prices of the crop. This year, even in the case of wheat, only in Punjab and Haryana were farmers able to get a price that was close to or higher than the MSP. For the remaining rabi crops, prices have largely been below the MSP. The same is true for a large number of kharif crops as well. This has made farmers angry.