Farmers are doing well | Business Standard Column

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In 2022, India will record the fifth consecutive year of bumper wheat crop

Mahesh Vyas

Labour statistics from CMIE’s Consumer Pyramids House­hold Survey has shown a large migration of workers towards ag­riculture in recent years. Dur­ing fiscal 2021-22, agriculture saw an estimated 4.5 million increase in employment. Dur­i­ng the pandemic-stricken 2020-21, while total employment fell by 21.7 million, agriculture provided employment to a substantial 3.4 million. In 2019-20, too, agriculture saw an addition of 3.1 million to its count of emp­loyed. Over the past three years, therefore, agriculture added 11 million jobs while the rest of the economy lost 15 million.

This sharp increase in employment in agriculture has generally been explained as a rise in disguised employment. When people fail to find jobs in non-farm sectors, they migrate back to their villages where their families are farmers. These migrants join them and claim to be employed in farming. This additional labour does not add much to output and is, therefore, considered to be mostly disguised unemployment.

This narrative of disguised unemployment needs to be qualified. The agricultural sector has done well during the past three years and, therefore, ceteris paribus, it had the ability to absorb additional labour fruitfully. The monsoon has been good in general and crops have done quite well on an aggregate basis. In 2019-20, agriculture grew by 5.5 per cent, while the non-agricultural sectors grew by a lower 3.5 per cent. In 2020-21, agriculture grew by 3.3 per cent while the rest of the economy shrank by 6.3 per cent. In 2021-22, while the rest of the economy recovered from its deep fall, agriculture continued to grow by 3.3 per cent. Agriculture output has had an unflappable record during the worst of times.

Agricultural prices have remained elevated as well. The wholesale price index for primary food articles was 25-30 per cent higher than the overall WPI in the past three years. Farmers have, therefore, seen the benefits of rising prices for their bumper crops and have also benefitted from favourable terms of trade. It is, therefore, logical to expect labour to move to agriculture. Agriculture was not just a safe haven; it was also a prosperous one.

Admittedly, while we have disparagingly called the swelling numbers of farmers as disguised employment, they have eloquently expressed their positivity or relative contentment. The index of consumer sentiments for farmers is head and shoulders above the other broad occupation groups.

In March 2022, the index of consumer sentiments for farmers was 18.1 per cent higher than it was a year ago. This is not only much better than the 15.4 per cent increase in the overall in­dex, it is also well above the next-best performance, which was a 16.1 per cent increase in the index for business persons. A year ago, in March 2021, when consumer sentiments of all groups were reeling under the effect of the second wave of Covid-19, the index for farmers was also down but it was the least affected.

The index of consumer sentiments for farmers in March 2022 was 21 per cent higher than the overall index of consumer sentiments. It was 25.5 per cent higher than that for the next-best index, which was for business persons. Farmers express better current and prospective sentiments compared to all other broad occupation groups.

In March 2022, 14.9 per cent of farmer households said that their income was better than a year ago; 23.2 per cent said their income was worse off; the rest said it was the same as a year ago. Similar proportions apply to expectations of household incomes a year into the future. First, this is the best record for farmers since the April 2020 lockdown shock. Second, this is the best performance among all major occupation groups.

It is very likely that farmers would continue to report cheery sentiments in the coming months.

In 2022, India will record the fifth consecutive year of bumper wheat crop. The crop goes into harvest during April-May. Gov­ernment procurement has continued to increase and so has the minimum support price. The Russia-Ukraine war has raised global prices to a point where they stand at twice their year-ago level. As the war threatens to be prolonged, the price is expected to remain elevated. The India Meteorological Department has announced that the 2022 south-west monsoon is expected to be normal at 99 per cent of the long period average. Farmer sentiments have several good reasons to continue to remain upbeat.

A significant sign of rising confidence among farmers reg­arding the future is their view on purchase of consumer dur­ables. In March 2022, while only 10.5 of all households believed that this was a better time to buy consumer durables than it was a year ago, 15.5 per cent of farmer households believed that this was a better time to buy consu­mer durables. In February 2022, only 12.6 per cent households had expressed such a view.

The proportion of farmer households that considers this to be a better time to buy consumer durables compared to a year ago has been rising on a steep gradient since May 2021 when only 2.3 per cent of the households felt it was a better time to do so.

There are good reasons to be­lieve that the rising trend of in­tentions to buy consumer du­rables among farmers should continue. But, early data for Ap­ril seem to indicate a little trouble. The index of consumer sentiments dropped by 7.6 per cent between the week ended March 27 and the latest week that ended on April 17. The rural index dr­opped by 10.3 per cent. In a co­u­ple of weeks, we will gain some insights into what has changed.

The writer is MD & CEO, CMIE P Ltd

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