The ironic — and troublesome — aspect of India’s sustained increase in farm production in the past 5-6 years has been the concurrent rise in farmers’ distress as the terms of trade have worsened.
India’s agriculture sector is all set to create an all-time high production record this year. According to the Second Advance Estimates of Production of Foodgrains for 2021-22, released by the Ministry of Agriculture and Farmers Welfare last week, India’s total foodgrains production will cross 316 million tonnes. This is 1.7 per cent higher than the total production the year before. But what truly captures the remarkable growth in India’s farm production is the stark trend in the past six years: Foodgrains production has gone up from 252 million tonnes in 2015-16 to 316 million tonnes now; rising every single year. Contrast this with the performance in the six years preceding 2016-17 — production fluctuated between 244 and 265 million tonnes.
While overall farm production has increased there are diverging trends. Among cereals, coarse grains such as jowar, bajra and ragi are expected to see a decline in output while maize is expected to buck the trend. Thanks to good monsoons, rice production, both in kharif and rabi seasons, is expected to increase by almost 3 per cent. Wheat production, too, is expected to go up by 2 per cent. Pulses are expected to see their output grow by almost 6 per cent with the exception of tur, which is likely to dip by 7 per cent. Oilseeds are expected to see a production growth of 3.3 per cent, thanks to significant increases in mustard and soybean, making up for the fall in groundnut production. Among the key cash crops, sugarcane is expected to see a jump of over 4 per cent while cotton production may decline by over 3 per cent.
There are two policy concerns emerging from this data. One, what happens to food inflation. For instance, wholesale inflation has been 10.5 per cent in wheat, 14.5 per cent in maize, over 23 per cent in oilseeds and 45 per cent in cotton. While domestic production is one big factor in influencing prices, the minimum support prices announced by the government (pulses) as well as the international prices (oilseeds) of these commodities also impact them. The combination of these factors will play out in the year ahead. For example, lower production in cotton when prices are already high will raise the raw material costs of the domestic textile industry, weakening its competitiveness. The other concern would be to ensure improved remuneration for farmers. The ironic — and troublesome — aspect of India’s sustained increase in farm production in the past 5-6 years has been the concurrent rise in farmers’ distress as the terms of trade have worsened.