SUPPORT SYSTEMS TO SECURE FARMERS INCOME ACROSS

WORLDDr G. V. Ramanjaneyulu

SECURING FARMERS INCOMES

To ensure parity of incomes between agriculture sector/ farmers and other sectors/ non-farmers, and thereby ensure a equality and justice in the society• Strong motivation for govts. to put in place the support system for farmers. Equality and justice are

goals worth pursuing in themselves. This is seen regardless of whether the country is capitalist or socialist, regardless of whether the country is poor or rich, regardless of whether the country is a food sufficient or food-insufficient. The difference is in the tools- direct payments or subsidies or a mix of both.

• USA, Europe, Australia, Malaysia, Japan, China Encourage Food Production and Ensure Food Sufficiency• Through subsidies and direct payments not to distort the market prices. Based on the concept of

producer bonus or targeted or minimum support price• Japan, China, Malaysia, AustraliaTo conserve, protect and sustain environment/ecology• To pay for the ecosystem services• Switzerland, USA, Australia, Coasta rica

UNITED STATES OF AMERICA• Market loan program as a price-support program:

• Originally it was just a short-term loan program designed to moderate supply and price fluctuations

• Offered marketing loan assistance to give farmers the ability hold onto their crop and sell when it is most needed on the market… Under the program, farmers take “nonrecourse” loans from the USDA using their crops as collateral, which allows farmers to default on the loans without penalty

• Direct Subsidies: • Conservation subsidies• Risk Management Agency: Insurance against both nature failures as well as market

failures• Disaster aid• Export subsidies• Decoupled Farm Income Support

EUROPEAN UNION• Direct Payments to make

• agri. sustainable and environmental friendly• parity between the farm and non-farm sectors• crop insurance against natural failures• payments for crop diversification and non-farm activities

• Agri. Provides 10% of employment but agri. Payments form 39% of the total budget of EU.

• Due to WTO compulsions subsidy payments have decreased but payments for protecting the environment and rural development have increased

SWITZERLAND 1996: New article (Article 104) in the Swiss Federal Constitution which talks about Multi-functionality and sustainability of SWISS agriculture. Multi-functionality means, The Confederation shall ensure that agriculture makes a major contribution through sustainable production geared to market demands so as to• ensuring food supplies for the population;• maintaining the natural resources and preserving the countryside;• maintaining a decentralised settlement pattern in rural areas.

Policy designed to Reduce subsidies Move from production based subsidies to Direct Payments Measured Against Animal Welfare Balanced use of fertilisers Ecological Compensation areas Crop Rotation Soil Protection

Instruments usedPrice supportDirect payments for basic servicesEcological direct payments

NEW AGRICULTURAL POLICY, SWITZERLAND Productivity increased by 1.6% per year Increase in gross and net calorie production by 10% and 5% respectively

Loss of Nitrogen down 14% Loss of Phosphorous down 70% Livestock numbers reduce by 10% Improvement in biodiversity

FARMERS INCOME SECURITY Australia: Farm household allowance for three years, every fortnight, equivalent to unemployment allowance is being given regardless of drought or any problem to all farm households, in addition to exceptional circumstances relief payments, and loan payments to farm families facing financial hardships.

China: Support to ensure domestic food security, raise farmers incomes, achieve sustainable development.direct payments for grain productionsubsidies for agri. Inputs, farm machinery purchase, for improved crop varieties

minimum purchase price for rice and wheattemporary purchase and storage policiesEnvironment protection policiesrural development policy. elimination of agricultural taxesRural-urban income gap to be reducedFarmers’ purchasing power to be increased

FARMER INCOMES FOCUS IN OTHER COUNTRIES

South Korea: • Direct income support• price compensation• payment for environment conservation• direct payment for less favored areas

Malaysia: • Productivity bonus• Price compensation• ecosystem services • Guaranteed minimum price• paddy price subsidy and control• Quantitative restrictions on rice imports to ensure rice production• Protects other crop farmers like tobacco, through high import tariffs• Export subsidies to promote oil palm

Japan: • Price support and direct income payments• New farm income support from 2010 for rice farms• High tariffs on imports are measures thru which farmers are protected

INDIA: FARM INCOME INSURANCE SCHEME• Objectives• To protect against Production Risk• To protect against price and market risks

• Main features• Determination of income level (Guaranteed Income) using past yield and MSP

(Reference price)• Fixation of indemnity level and premium based on the risk exposure • Assessment of the indemnity payments based on actual income i.e. the difference

between the product of actual yield and market price, and Guaranteed income• Premium 5%• Guaranteed income = MSP x Average Yield of last 7 years x Indemnity level (80-

90%).• Actual income = Market Price x the Actual Yield of the Unit Area which may be

Block or Tehsil (to be brought down to Panchayat level within three years)

MOVING AGRO-ECOLOGICAL APPROACH• Integrated farming systems integrating livestock, trees etc• Agronomic innovations like high density plantation in cotton or

SRI in paddy• Building soil organic matter, mulches etc• Conserving moisture and Rainwater harvesting• Locally adopted crops and varieties-millets, pulses, oilseeds,

vegetables….• Contingence planning• Moving away from agro-chemical use

Community Managed Sustainable Agriculture in Andhra Pradesh Basic Principles

Regenerative, ecologically sound practices

Organized action by communities in planning, implementing and managing the program

Govt/ngos playing facilitating agency role

2004-05 started with 225 acres in one dist and reached 7 lakh acres in 2007-08 in 18 dist. World Bank says this is a good tool for poverty eradication and now promoted as part of NRLM

With 50 % development expenditure one can double the incomes of the farmers

A national program called Mahila Krishi Sashaktikaran Pariyojana (MKSP) is launched based on this experience

0.225 25 200 700

1300

2000

2800

3500 3600

0.1 15 80 300600

10001500 1600 1770

0500

1000150020002500300035004000

Acerage ('000 acres) Farmers ('000)

FARMERS AND AREA COVERED UNDER CMSA

http://65.19.149.140/pilots/cmsanew/index.html

States/UTs 2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

kg/ha 2000-01

kg/ha 2009-10

Punjab 6900 5610 5975 6080 5760 5810 0.98 0.82Haryana 4520 4560 4600 4390 4288 4070 0.84 0.68Andhra Pradesh 2135 1997 1394 1541 1381 1015 0.34 0.09Maharastra 3030 3198 3193 3050 2400 4639 0.17 0.24Tamil Nadu 2466 2211 3940 2048 2317 2335 0.32 0.45Gujarat 2900 2700 2670 2660 2650 2750 0.30 0.29Kerala 360 571 545 780272.69 631 0.31 0.26Karnataka 2200 1638 1362 1588 1675 1647 0.17 0.14

Status of pesticide utilization in different states**

**Source: http://ppqs.gov.in/IpmPesticides.htm MT of active ingredient

1000 mt/year of a.i costs about Rs. 2000 cr/yr saving at the farmers level and Rs. 20,000 cr over 10 yearsWhere as investment is only on capacity building

AVERAGE REDUCTION IN COSTS AND NET ADDITIONAL INCOME FOR DIFFERENT CROPSCrops Reduction in

cost due to NPM (Rs)

Reduction in costs due to use of organic fertilisers/manures (Rs)

Net additional income (Rs)

Paddy 940 1450 5590Maize 1319 2357 5676Cotton 1733 1968 5676Chillies 1733 1968 7701Groundnut

1021 3462 10483

Vegetables

1400 390 37903rd Party Evaluation of Rashtriya Krishi Vikas Yojana (RKVY) : Community Managed Organic Farming implemented by SERP

Evaluation TeamProf. R. Ratnakar, Director, Dr. M. Surya Mani, Professor, EXTENSION EDUCATION INSTITUTE, (Southern Region), Ministry of Agriculture, Government of India

HEAVY MECHANIZATION AND STRAW BURNING

Brown cloud formed on October 12, 2002

BURNING STRAW IS BURNING NUTRIENTS Punjab uses 12 % of total chemical fertilisers

184 kg/ha use is highest in the country (Nitrogen alone accounts for 139.6 is kg/ha) 19.6 million tonnes of straw every year (rice and wheat), worth crores of rupees and losing38.5 lakh tonnes of organic carbon

Burnt nutrientsFertilizerequivalents

quantity (tonnes)

Total subsidy (Rs. Crore)

Farmers' cost (Rs. Crore)

59,000 tonnes of Nitrogen Urea 128261 384.78 64.34

DAP 327778 1329.04 318.73

2,000 tonnes of Phosphorus DAP 4348 17.63 4.23

SSP 12500 7.00 4.42

34000 tonnes of Potash MoP 56667 106.32 26.25

This is equal to Rs. 800- 2000 cr nutrients and Rs. 500-1500 cr ocf subsidy

PAYMENT FOR ECOSYSTEM SERVICES Ecosystem services are the conditions and processes through which natural ecosystems, and the species that make them up, sustain and fulfil human life

Payments for Ecosystem services recognises that farmers contribute not just the tangible outputs of food, fibre, fodder and fuel to the world, but

also many intangible benefits including the protection of biodiversity, soil

and water conservation, protection of natural land scape, ethical treatment of animals, lower use of fossil fuels as well as reduced levels of nitrate leeching into the soil due to changes in farming practices

ECOLOGICAL COSTS OF CONVENTIONAL FARMING Fertiliser Use High energy use and pollution in production -Fertilizer industry uses 25 % of Natural

Gas, 18 % of Naptha and 14 % of Fuel Oil 6% of GHGs in production Highly subsidised Rs. 1,20,000 cr at the national level and average upto Rs.

6,000/acre Use efficiency max 36% rest is leached into water bodies or as NO2 emissions (1.25

kg of N2O emitted per 100 kg of Nitrogen applied) …clean up costs! Pesticide Use Less than 1% of pesticide use kills insects rest in air, soil and water with long half

life Insect resistance and loss of diversity-eg. Bee collapse Pesticide residues in food

Water Use Huge dams- Economic costs, environmental costs, displacements, GHG emissions

(18.7% GHG emissions) Depletion of ground water Power for lifting water

ECOSYSTEM SERVICES THROUGH ECOLOGICAL FARMING Community/individual Ecosystems Recycling of the biomass-crop n animal waste Biodiversity conservation Soil and Water conservations-up to 3 lakh lit/acre water can be conserved

on farm Increased moisture holding capacity in soil to withstand prolong dryspells Pulse crops fixes about 60 kg N/acre SRI water saving by about 38% Healthy, diverse and nutritive food