Should the farmers also not have higher income?


In the last three years, wages of unskilled workers have gone up by almost three times. In rural areas, women workers in the agricultural sector  are paid Rs.100 per day against Rs.30 in 2006. Men workers get around Rs.150- Rs.200 a day against Rs.60 per day 3 years ago. Workers in the construction sites get about Rs.300 per day in towns. In the last 3 years, Central and state Government employees and as well as employees of public sector undertakings received substantial hikes (more than 100%) in their salaries by way of new pay scales, higher dearness allowances, higher house rent allowances etc. In many of the towns and villages, self employed people have hiked charges for their services by 100% or more. For example hair cutting charges have gone up from Rs.10 to Rs.20. Tailoring charges for a shirt has gone up from Rs.25 to more than Rs.60. Private doctors’ consultation charges have increased from Rs.20 to Rs.40. The shopkeepers have increased their profit margins.

Thus the people across several sectors of the economy have 100- 200% more money than they had 3 -4 years ago. Then why cannot they pay 50% more for their rice, wheat, pulses, sugar and vegetables?  30 years ago garlic sold at Rs.30 per kilo. In 2008 also garlic sold at Rs.30. Only recently it has gone up to Rs.60. In the last 3 years the increase in the prices of rice, wheat, sugar, vegetables etc. put together is less than 100%. When every other sector has got higher income, should not the farmers also get higher income by way of higher prices for their produce?

If one includes the supply of wheat, rice, pulses, sugar etc. in the public distribution system, the expenditure on food items of a family of low income (Rs.4,000- 2 workers in family earning Rs.200 per day for 20 days a month) is not even Rs.1,000 i.e. 25% of the income. Even in a very poor family, the expenditure on pilgrimages, sight-seeing, visiting friends and relatives, customary but avoidable ceremonies, beedies/cigarettes, alcohol, cell phone charges, transport charges – even the poor people ride motorbikes instead of cycles, cable connection for televisions, and such other items is much more than expenditure on food items.

Should the government worry about this “small increase” in the prices of agricultural produce when people have got “big increase” in their income? When the prices of vegetables like tomato crash to such a low level that the farmers do not harvest, the government does not worry about the losses to the farmers. When garlic price goes up by 50%, the government wants to bring down the price by allowing imports. When onion price goes up, exports are banned or curtailed and imports are allowed. Of course, government has also come to the support of farmers by waiving loans but this has left out many farmers. Instead of waiving loans or giving subsidies and grants, the government can allow the markets to decide the prices of all agricultural produce. If prices go up beyond the reach of the common people, government may buy from farmers at market rates and sell in public distribution system at subsidized rates.

Allowing prices of agricultural produce to go up, is the way to increase production. For a population of 1,300 million people, China produces 400-500 million MT of food grains i.e. an average of about 350 kg per head, per year while India produces only about 225 million MT for 115 million people i.e. only abut 200 kg per head per year! Excluding India, the world for a population of about 5,600 million, produces 1800-2000 million MT i.e. more than 320 kg per head!