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NEWS ALERTS | Farming became costlier between crop years 2012-13 and 2018-19, shows the latest available NSO data
Farming became costlier between crop years 2012-13 and 2018-19, shows the latest available NSO data

Farming became costlier between crop years 2012-13 and 2018-19, shows the latest available NSO data

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published Published on Oct 29, 2021   modified Modified on Oct 31, 2021

One is almost certain to hear this from an economist that if something is available at free of cost or at a subsidised rate thanks to government intervention, then people tend to overuse or overconsume such goods/ commodities. So, the best solution is to create a market for such 'almost freely available' or 'highly subsidised' goods or commodities. Once people start paying to use or consume such goods/ commodities, they will stop wasting them. That is why we often come across experts saying that if electricity is available at free of cost or at a subsidised rate, then there will be overexploitation of groundwater by the farmers for irrigation purposes (as has been noticed in the Green Revolution states). They will pump out excessive groundwater using electric water pumps for irrigation of water-intensive crops (like paddy, wheat, and sugarcane) even if it is not required. So, one of the solutions to save precious resources like groundwater from overexploitation is to install electricity meters so that the farmers start paying the full or at least the partial cost of electricity. This kind of market-based solution can be applied for other inputs as well, which are required for agriculture, such as chemical pesticides, chemical fertilisers, diesel, etc., argue experts. 

The counterargument often given by the crop growers is that the reduction in subsidies or decontrol of prices of inputs (thanks to India’s commitment to the Agreement on Agriculture-AoA under the World Trade Organisation-WTO) has pushed up the cost of cultivation enormously in the last 10-15 years. However, the prices received by the farmers from selling their produce have not increased commensurately in comparison to the rise in input prices (or out-of-pocket expenditure associated with cultivation). As a result, we find that the 'net receipt from cultivation/ crop production -- when only the paid out expenditure is considered' has reduced over the years, when it is adjusted against retail inflation. In various farm agitations, farmers have been demanding assured as well as remunerative prices for the produce they grow and sell after harvesting. 

While an attempt was made in our previous news alert to look at the trends in the average monthly income of a farm household between the crop years 2012-13 and 2018-19, in the present analysis we will check the trends in paid out expenses for crop production per household reporting crop production (which is different from a farm household) during the same time period. For the purpose of clarity, the readers should note that the percentage of agricultural households reporting production of all kinds of crops was 92.7 percent during the first half of the crop year 2018-19 and 72.5 percent during the second half of that crop year.  

A thing or two about data and methodology 

The Situation Assessment Survey 2018-19 (NSS 77th Round) states that as part of collecting information on various economic activities undertaken by the farm households, detailed information, including receipts and expenditure in respect of the crops harvested by the agricultural households during the two halves of the crop year was collected separately during the two visits of the survey. Item-wise expenditure on each of the agricultural inputs used for cultivation was collected in the survey, separately for the two halves of the crop year. Even if some expenses were incurred prior to the reference period for crops harvested during the reference period, the same was considered for reporting. Imputed expenses, wherever applicable, for crop production on unpaid family labour, farm-saved seeds and manure, etc., along with the paid out expenses, were also collected in the NSS 77th Round survey. Since the Situation Assessment Survey of NSS 70th Round only considered the paid out expenses for farm business, due care may be taken while comparing the estimates on expenditure for farm business generated from NSS 77th Round with the similar estimates of the NSS 70th Round. That is why in the present news alert, we have considered only the paid out expenses and not the imputed or implicit expenses. The average expenditure on productive assets and receipts from the sale of productive assets by farm households aside from the expenses and receipts for farming of animals have not been covered in this news alert. Our objective in this news alert is to see what happened to the expenses made on inputs vis-à-vis the receipts from crop cultivation between the crop years 2012-13 and 2018-19.

The SAS 2018-19 (NSS 77th Round) further informs us that as in the case of the previous surveys, the estimates related to crop production presented in the present report also include estimates related to agricultural production from plantation/ orchard crops.

The receipts from crop production included the value of (i) harvested quantity of crops, (ii) pre-harvest sale, and (iii) by-products. The value of harvested quantity was ascertained either by sale price (if at least some quantity of the produce was sold off during the reference period) or by using the local market price for the specific crop and its type, adds the SAS 2018-19 (NSS 77th Round) report.

Out-of-pocket expenditure versus receipts from crop production

Data analysis shows that at the national level, the average monthly paid out expenditure (in nominal terms) for crop production per household reporting crop production grew by almost 35 percent between the crop years 2012-13 and 2018-19. On the contrary, the average monthly receipts (in nominal terms) for crop production per household reporting crop production increased by almost 25.59 percent in India.  Please compare chart-1a against chart-1b.   

At the national level, the average net receipts (i.e., the difference between the average monthly receipts and the average monthly paid out expenditure for crop production per household reporting crop production) increased from Rs. 3,350 to Rs. 4,001 between the crop years 2012-13 and 2018-19 i.e., by +19.4 percent. This figure of +19.4 percent is lower than the rate of inflation in the average 'Consumer Price Index - Combined' (34.0 percent) as well as the rate of inflation in the average 'Consumer Price Index - Rural' (35.3 percent) between the crop years 2012-13 and 2018-19. 

Chart-1a shows that the highest level of average monthly paid out expenditure (in nominal terms) for crop production per household reporting crop production during the crop year 2018-19 was observed in Punjab (Rs. 11,277.0), followed by Haryana (Rs. 11,190), Andhra Pradesh (Rs. 8,847), Telangana (Rs. 6,543) and Maharashtra (Rs. 3,500), if we don’t consider the northeastern states. The lowest level of average monthly paid out expenditure (in nominal terms) for crop production per household reporting crop production during the crop year 2018-19 was seen in Jharkhand (Rs. 753), followed by Jammu and Kashmir (Rs. 998), Himachal Pradesh (Rs. 1,244), Odisha (Rs. 1,587), and Chhattisgarh (Rs. 1,996), if the northeastern states are ignored.    

Similarly, the highest level of average monthly paid out expenditure (in nominal terms) for crop production per household reporting crop production during the crop year 2012-13 was noticed in Punjab (Rs. 11,768.0), followed by Haryana (Rs. 6,228), Andhra Pradesh (Rs. 6,191), Telangana (Rs. 4,267) and Karnataka (Rs. 2,779), if the northeastern states are ignored. The lowest level of average monthly paid out expenditure (in nominal terms) for crop production per household reporting crop production during the crop year 2012-13 was seen in Jharkhand (Rs. 571), followed by Jammu and Kashmir (Rs. 583), Uttarakhand (Rs. 646), Odisha (Rs. 1,001) and Himachal Pradesh (Rs. 1,030), if the northeastern states are not considered.  
  
The highest jump in the average monthly paid out expenditure (in nominal terms) for crop production per household reporting crop production between the crop years 2012-13 and 2018-19 was noticed for Uttarakhand (258.98 percent), followed by Haryana (79.67 percent), Chhattisgarh (76.95 percent), Jammu and Kashmir (71.18 percent) and Odisha (58.54 percent), if the northeastern states are ignored. Negative growth in the average monthly paid out expenditure (in nominal terms) for crop production per household reporting crop production between the crop years 2012-13 and 2018-19 was seen in Nagaland (-60.0 percent), Arunachal Pradesh (-39.11 percent), Mizoram (-34.83 percent) and Punjab (-4.17 percent).
  

Note: Please click here to access the data in a spreadsheet format 

Source: For the crop year 2018-19 related data, please consult Statement 5.3A.1, Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019, NSS 77th Round, January 2019-December 2019, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access  

For the crop year 2012-13 related data, please consult Table-8 in Appendix A, Key Indicators of Situation Assessment Survey of Agricultural Households in India (January-December 2013), NSS 70th Round, Ministry of Statistics and Programme Implementation, GoI, December 2014, please click here to access, please click here to access 
---

Chart-1b indicates that the highest level of average monthly receipts (in nominal terms) for crop production per household reporting crop production during the crop year 2018-19 was observed in Punjab (Rs. 28,340), followed by Haryana (Rs. 23,209), Andhra Pradesh (Rs. 12,036), Telangana (Rs. 11,551) and Karnataka (Rs. 10,276), if we don't consider the northeastern states. The lowest level of average monthly receipts (in nominal terms) for crop production per household reporting crop production during the crop year 2018-19 was seen in Jharkhand (Rs. 1,865.0), followed by Jammu and Kashmir (Rs. 2,986), Odisha (Rs. 3,162), Himachal Pradesh (Rs. 3,800) and West Bengal (Rs. 4,026), if the northeastern states are ignored. 

Similarly, the highest level of average monthly receipts (in nominal terms) for crop production per household reporting crop production during the crop year 2012-13 was observed in Punjab (Rs. 28,117), followed by Haryana (Rs. 17,144), Telangana (Rs. 8,666), Andhra Pradesh (Rs. 8,482) and Karnataka (Rs. 7,908), if we don't consider the northeastern states. The lowest level of average monthly receipts (in nominal terms) for crop production per household reporting crop production during the crop year 2012-13 was seen in Jharkhand (Rs. 2,049.0), followed by Odisha (Rs. 2,438), West Bengal (Rs. 2,836), Uttarakhand (Rs. 3,255) and Bihar (Rs. 3,358), if we ignore the northeastern states.        

The highest jump in the average monthly receipts (in nominal terms) for crop production per household reporting crop production between the crop years 2012-13 and 2018-19 was observed for Uttarakhand (139.11 percent), followed by Bihar (52.62 percent), West Bengal (41.96 percent), Andhra Pradesh (41.9 percent) and Chhattisgarh (39.2 percent), if we ignore the northeastern states. Negative growth in the average monthly receipts (in nominal terms) for crop production per household reporting crop production between the crop years 2012-13 and 2018-19 was witnessed in Nagaland (-40.1 percent), Arunachal Pradesh (-26.68 percent), Jammu and Kashmir (-21.96 percent), Assam (-12.97 percent), Jharkhand (-8.98 percent) and Himachal Pradesh (-4.83 percent). 


Note: Please click here to access the data in a spreadsheet format 

Source: For the crop year 2018-19 related data, please consult Statement 5.3A.1, Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019, NSS 77th Round, January 2019-December 2019, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access  

For the crop year 2012-13 related data, please consult Table-8 in Appendix A, Key Indicators of Situation Assessment Survey of Agricultural Households in India (January-December 2013), NSS 70th Round, Ministry of Statistics and Programme Implementation, GoI, December 2014, please click here to access, please click here to access

---

The difference between the average monthly receipts and the average monthly paid out expenditure for crop production per household reporting crop production in the crop year 2018-19 was the highest for Punjab (Rs. 17,063), followed by Haryana (Rs. 12,019), Karnataka (Rs. 7,057), Uttarakhand (Rs. 5,464) and Telangana (Rs. 5,008). This difference was the lowest for Jharkhand (Rs. 1,112), followed by West Bengal (Rs. 1,569), Odisha (Rs. 1,575), Jammu and Kashmir (Rs. 1,988) and Himachal Pradesh (Rs. 2,556).  

The difference between the average monthly receipts and the average monthly paid out expenditure for crop production per household reporting crop production in the crop year 2012-13 was the highest for Punjab (Rs. 16,349), followed by Haryana (Rs. 10,916), Karnataka (Rs. 5,129), Telangana (Rs. 4,399) and Madhya Pradesh (Rs. 4,254). This difference was the lowest for West Bengal (Rs. 1,017), followed by Odisha (Rs. 1,437), Jharkhand (Rs. 1,478), Bihar (Rs. 1,904) and Andhra Pradesh (Rs. 2,291).  

Inflation in input costs 

Between crops years 2012-13 and 2018-19, the highest increase in the average monthly paid out expenses (in nominal terms) for crop production per agricultural households engaged in crop production for 'all size class' of land possessed was noted in the case of ‘irrigation’ (71.4 percent), followed by ‘interest’ (50.0 percent), ‘plant protection chemicals’ (49.1 percent), ‘all other expenses’ (45.3 percent), ‘human labour’ (41.9 percent), ‘seeds’ (36.4 percent), ‘lease rent for land’ (26.6 percent), ‘fertiliser/ manure’ (16.9 percent) and ‘animal labour’ (15.6 percent). Only in the case of ‘minor repair and maintenance of machinery and equipment’ (-11.6 percent), one can see a fall in the out-of-pocket expenses between crop years 2012-13 and 2018-19. Please consult table-1. 

As compared to the rate of inflation in the average 'Consumer Price Index - Combined' (34.0 percent) as well as the rate of inflation in the average 'Consumer Price Index - Rural' (35.3 percent) between the crop years 2012-13 and 2018-19, the input costs related to ‘irrigation’ (71.4 percent), ‘interest’ (50.0 percent), ‘plant protection chemicals’ (49.1 percent), ‘all other expenses’ (45.3 percent), ‘human labour’ (41.9 percent) and ‘seeds’ (36.4 percent) increased more.  

Table 1: Average monthly expenses (Rs.) and receipts (Rs.) for crop production per agricultural households engaged in crop production for each size class of land possessed in crop years 2012-13 and 2018-19

Note: * of machinery and equipment

# all other expenses include diesel, electricity, cost of hiring machinery and equipment for crop production, cost of crop insurance and any other expenses for crop production

Please click here to access the data in a spreadsheet format 

Source: For the crop year 2018-19 related data, please consult Statement 5.3A, Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019, NSS 77th Round, January 2019-December 2019, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access  

For the crop year 2012-13 related data, please consult Table-9 in Appendix A, Key Indicators of Situation Assessment Survey of Agricultural Households in India (January-December 2013), NSS 70th Round, Ministry of Statistics and Programme Implementation, GoI, December 2014, please click here to access 

---

If one looks at the percentage distribution of average monthly expenditure for crop production by type of input at the national level during the crop year 2018-19, it can be observed that the highest share of expenditure was made on 'all other expenses' (22.33 percent), followed by 'human labour' (22.09 percent), 'fertiliser/ manure' (20.78 percent), 'seeds' (11.52 percent), 'plant protection chemicals' (8.31 percent), 'lease rent for land' (6.76 percent), 'irrigation' (4.05 percent), 'interest' (1.62 percent), 'minor repair and maintenance of machinery and equipment' (1.28 percent) and 'animal labour' (1.25 percent).

In Punjab and Haryana, the percentage shares of expenditure incurred on 'lease rent for land' (with respect to the total paid out expenses at the state levels) in the crop year 2018-19 were 31.0 percent and 29.0 percent, respectively. No other state/ UT incurred so much expense on 'lease rent for land' with respect to their total paid out expenses in crop years 2018-19. The Green Revolution made it possible for large farming households to lease in land from small farming households for cultivation using indivisible inputs like tractors, tube wells, threshers, combine harvesters, etc. that require large investments.  

In crop year 2012-13, the net receipts (from crop production per agricultural households engaged in crop production) for possessed land’s size classes 'less than 0.01 hectares', '0.01-0.40 hectares', '0.41-1.00 hectares', '1.01-2.00 hectares', '2.01-4.00 hectares', '4.01-10.00 hectares', 'more than 10.00 hectares' and 'all sizes' were Rs. 428.0, Rs. 795.0, Rs. 2,188.0, Rs. 4,293.0, Rs. 7,448.0, Rs. 15,533.0, Rs. 37,672.0 and Rs. 3,350.0, respectively. 

In crop year 2018-19, the net receipts (from crop production per agricultural households engaged in crop production) for possessed land’s size classes 'less than 0.01 hectares', '0.01-0.40 hectares', '0.41-1.00 hectares', '1.01-2.00 hectares', '2.01-4.00 hectares', '4.01-10.00 hectares', 'more than 10.00 hectares' and 'all sizes' were Rs. 4,336.0, Rs. 1,100.0, Rs. 2,712.0, Rs. 5,318.0, Rs. 9,516.0, Rs. 19,796.0, Rs. 43,623.0 and Rs. 4,000.0, respectively.


References:

Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019, NSS 77th Round, January 2019-December 2019, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access 

Key Indicators of Situation Assessment Survey of Agricultural Households in India (January-December 2013), NSS 70th Round, Ministry of Statistics and Programme Implementation, GoI, December 2014, please click here to access 

News alert: Are we witnessing depeasantisation in Indian agriculture? Inclusive Media for Change, published on 2 October, 2021, please click here to access

News alert: Tax exemptions and incentives for the corporate sector continue despite reduction in corporate tax rates, Inclusive Media for Change, published on 18th March, 2021, please click here to access  

 

Image Courtesy: Inclusive Media for Change/ Shambhu Ghatak


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