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Farm Size and Farmers’ Income, Consumption, and Poverty in India
Using unit-level data from the 70th National Sample Survey round Situation Assessment Survey of Agricultural Households, the paper seeks to determine, for major states, the minimum size of cultivated land at which the average monthly income of farmer households from cultivation exceeds their average monthly consumption expenditure and the minimum farm size at which the average monthly income from all sources exceeds their poverty-line-equivalent income. Further, it examines the contribution of different sources towards their total income across farm-size categories and the incidence of poverty among such households. It then estimates the income support for those households that are not able to meet their average monthly consumption expenditure and which are below the poverty line.
Agricultural development has received the attention of policymakers since the First Five Year Plan as a large proportion of the workforce depends on it for their livelihood and because of its significant contribution to the gross domestic product (GDP) of India. Over the years, policymakers have prioritised the production and productivity of various crops through price and non-price measures to promote food security. While price support measures ensure a minimum price for some crops to incentivise farmers, non-price measures are implemented to boost the production and productivity of different crops and popularise the use of modern agricultural technologies like high-yield variety seeds, chemical fertilisers, augmented irrigation facilities, and other infrastructural support. The production- and productivity-centred approach yielded rich dividends as India not only became self-sufficient in foodgrain production but also became a food-exporting country.
There has also been a varying degree of increase in the production and productivity of various non-foodgrain crops. The increase in the production of foodgrains and other crops, however, did not result in a commensurate increase in farmers’ income, which is evident from their low income and the high incidence of poverty in comparison to the income and incidence of poverty among those employed in the non-farm sector. Importantly, an increase in agricultural production may not always translate to an increase in farmers’ income. This is due to factors like increases in input costs and decreases in the prices farmers receive for their crops in relation to the prices they pay for goods and services produced by other sectors.
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