What are the steps to revive farming & make Farmers 100% Profitable? How can this trigger Indian Economy in Covid & Post Covid times?

Current Farming Scenario:
While everybody knows Consumer Demand happens when Farmers are hands & mouth full, governments at both Centre and in states tend to patch the holes by providing farm loan waivers, minimum income schemes, minimum support price (MSP) for farm produce etc…, that will actually aid banks to recover farm loans, and farmer for some of the farm specific expenses, but not benefit the farmer & their family in a holistic way. This is the simple reason why farmers,

who stood as backbone for Indian Freedom Struggle right from 1857,
who paid 3X amount of Tax in British time,
whose next generations continued farming as duty, even post 1947 and till now, despite unfavorable conditions around,

are losing hope on agriculture & farming activity and thereby deciding to either stop the act and use that land for other purposes or sell agriculture lands or die forcefully at times of despair/state of helplessness, that’s caused by unbearable pressure to pay back outstanding farm loans at exorbitant interest rates, even in failed farm scenarios.

Even in such prevailing scenarios, Agriculture and allied sectors in India contribute 15.87% in GDP, which is second highest across the world, and after China, that amounts to US$375.61 billion (INR24,22,308 crore rupees at the forex conversion rate of INR64.49 per 1USD on December 01, 2017) in year 2017, as per statistictimes.com article.

Country side Cropland photo by Ákos Szabó, along with Barley & Ricegrain photos from Pexels

**I. Cannot we make Agriculture industry 100% Profitable, while**

giving farmer, the respect they deserve in the society and providing them guaranteed revenue for their effort?
creating lakhs of jobs in Agriculture & allies sectors
Government saving lakhs of crores of rupees, that used to be paid as farm loan waivers etc into a more recurring use purpose, in the scope of enabling support systems of agriculture?

II. What can be considered as Assured Income to land owning & tenant farmers?

For Land owning Farmers:

Minimum 100% Net Profit in successful crop scenario, the potential is up to 200% with Cereals & Pulses and 500% up to 500% with fruits, medicinal plants, spices etc…, when following the clear Supply & Demand Assessment Plan by the government, after clearing the different costs involved.
Guaranteed 40% farm investment value to be provided as Farmer’s livelihood cost, in case of unfulfilled crop scenario, paid to the farmer by insurance companies, along with farm loan payment to bank etc, after attempting to recover as much revenue from unfulfilled crop (due to natural calamities etc). This will ensure Farmer earns some revenue for his work, while being able to pay all bank issued farm loans (that cover all other costs) effectively

Note: With this guarantee, farmer will see growth when crop is reaped successfully, while farmer will be able to pay all loans and survive in distress times.

For Tenant Farmers:

Minimum 100% Net Profit in successful crop scenario, the potential is up to 200% with Cereals & Pulses and up to 500% with fruits, medicinal plants, spices etc…, when following the clear Supply & Demand Assessment Plan by the government, after clearing Land owner’s Lease amount along with other costs involved.
Guaranteed 40% farm investment value to be provided as Farmer’s livelihood cost, in case of unfulfilled crop scenario, paid to the farmer by insurance companies, along with farm loan payment to bank, lease amount payment to land lord etc, after attempting to recover as much revenue from unfulfilled crop due to natural calamities etc. This will ensure Farmer earns some revenue for his work, pays land lease amount to landlord, while being able to pay all bank issued farm loans (that cover all other costs) effectively

Note: With this guarantee, tenant farmer will see growth when crop is reaped successfully, while being able to pay land lease amount & other loans while being able to survive during distress times.

Some important Questions to people & governments:

Can we address decades older and stagnant problems in agriculture/farming industry?
What stakes are required from government & businesses in private sector?
Will Farmer pay Tax, if laid pragmatically by the government?
The whole process tracked and services delivered with technology as a medium?

III. Proposed Policy Changes & Activities that has to happen at Central Government & in State Government level include:

Government to establish a portal wherein, data about soil fertility along with list of crops that can happen in the area has to be marked and updated every year, to receive practical understanding of ground reality and farming potential across the length & breadth of the country.
Agriculture Departments of Central Government, in coordination with State Government, to publish Farming Budget explicitly, while mentioning the yearly farming goals, those that are pragmatically based upon nation wide supply & demand assessment plan, that will have to be made after considering Domestic & International supply requirements/commitments, in sync with soil potential to yield, while presenting the review of previous year’s farming accomplishments and to also propose sustainable solutions to address arising issues in both short term & long term into future.
Multi-crop possibilities to be explored, and mapped for each area across India, and campaigns to be run to create awareness in farmers.
While R&D activity is to be encouraged to create new varieties, gene modified variations are to be discouraged for everyone’s good.
Lands in areas that suit Medicinal plants cultivation has to be declared Special Medicinal Plantation Zones (SMPZ), for cultivation of qualitative medicinal value produce, that can be sent to Ayurvedic Medicine manufacturers.
Central Government and State Governments to establish Seed Banks in every district of every state, in coordination with Seed Growers & Societies, for guaranteed quality seed supply.
Government to encourage Solar Power generation and other Renewable Power Sources like Fuel Cells, while installing Smart Meters across the country, for farmers to utilize the required (from own supply and from grid, to fulfill their needs), while providing the excess of the generated electricity to the grid, overall reaching a situation that electricity supply happens 24/7 to the farmer. Electricity distribution companies (discoms) on other hand, can cost effectively and in an environment friendly way provide electricity to all their customers, anytime they need.
Central Government & State Governments along with RBI to coordinate with Banks in facilitating timely farm loans that covers all costs of the farmer chosen crop, along with re-payment schedules.
Central Government & State Governments along with IRDA to coordinate with Insurance Companies in facilitating Farm Loan Insurance, for 40% of the Total Bank Loan Value in addition to Total Bank Loan Value, at reasonable premium amount.
Central Government & State Governments along with RBI to coordinate with Banks in facilitating loans to Private Sector, for creating Warehouses & Cold Storages.
Central Government and State Governments to operate Multiple Warehouses & Cold Storages in every district, in PPP model in the scope of Design – Build – Finance – Maintain (DBFM), so Private Sector can earn regular payments, while Government can lease them from Private Sector and provide services to Farmers at a reasonable cost.
While Taxation may be out of scope of Agriculture Ministry, Finance Ministry at the Centre, in coordination with states, need to bring holistic taxation system, as a replacement of Income Tax, GST and Property Tax. While Transaction Tax has the potential, it may be a better replacement, once taxation is done in a non-cascading way. A proposal exists from Ideal Nation in this direction, known as Non-Cascading Transaction Tax.

With Tax Collection from Profitable Farmers, Government will have better opportunity to invest the same in facilitating better infrastructure enabling more growth to Agriculture, allied sectors and people across the country.
Central Government and State Governments to create a policy, that encourages farmers, to nurture Cows & Buffaloes in support of Agriculture, instead of selling them to Slaughter houses post milk giving times, as on one hand, it doesn’t go well with Indian Culture, while on other hand, Organic material like Urine & Dung of Cows & Buffaloes protects farming land from becoming desert, by perpetually preventing soil erosion through out their lifetime, while milk serves as a complimentary income to farmers.

Awareness has to be created in a clear way, so farmers can get the best benefit in terms of micro nutrients enrichment on the farming land, while customers can get more healthy food grains in the stores, and last but not least, the country can prevent farming lands from becoming into desert, by educating farmers, with the benefits of nurturing Cows & Buffaloes in every farm into long term.

A simple revenue comparison between Agriculture & Cows/Buffaloes meat industry follows:

Agriculture industry generated US$375.61 billion (i.e., INR24,22,308 crore rupees at the forex conversion rate of INR64.49 per 1USD, as on December 01, 2017) in year 2017.

Cow & Buffalo Meat industry generated US$4.8 billion (i.e., INR31,776 Crore rupees at the forex conversion rate of INR66.20 per 1USD, as on December 31, 2015), in year 2015. Data of 2015 year is used for comparison, since data that’s obtained w.r.t. year 2017 is not comprehensive.

While data that is available belongs to different time periods (with Agriculture specific revenue info taken for year 2017 and Cow/Buffalo meat industry specific revenue info taken for year 2015), Agriculture industry and allied sectors generated approximately 75 times higher revenue than Cow & Buffalo meat industry. Government to effectively communicate the essence and growth possibilities to farmers, so they continue nurturing Cows & buffaloes as Indians used to do from decades & centuries.

IV. Proposed Activities that Government has to do through Local Panchayat/District Administration include:

Establish a Mini Water Shed/Micro Water Shed in every village, based on the requirements of the village, in government lands or in Private lands with everybody’s contribution.
Establish a Soil Testing Laboratory in Every District of Every State in India.
Farmers are to be educated to grow multiple mutually co-existing crops on their farm land, for effectively reducing the requirement of chemical fertilizers & pesticides on the farm, enabling farmers to save huge costs, while availing them good price for nature friendly & healthy farm produce.
Farm Tilling Equipment Service Companies to be encouraged at District Level, to support with the tilling equipment requirements in the District.
Coordinate with Banks to ensure timely Loans at 6% diminishing interest rate are provided to Farmers, in a way that covers Crop Costs for farmer chosen crop.
Coordinate with Insurance Companies to Secure 40% Bank Loan Value in addition to Total Bank Loan Value, at reasonable premium amount.
Coordinate with Farmers in the region, to grow a range of crops based on soil, water availability and farmer choice, while ensuring everything is within Supply/Demand Equation across the Country and to also cover Export requirements.
Drip Irrigation Setup & Maintenance Companies to be encouraged at District Level.
Solar Energy Setup & Maintenance Companies to be encouraged at District Level.
Coordinate with Banks, to also provide Loans for Drip Irrigation, Solar Energy Setup etc, with physical Equipment as Security for the Loan and they Collect EMIs, on Quarterly/Half-Yearly/Yearly basis, in sync with Sale of Produce.
Coordinate with Insurance Companies, to also provide Theft Insurance w.r.t Solar Energy Setup, that will be installed in the Farms.
Coordinate with Seed Growers, so they follow a procedure in generating quality seeds, to be supplied through Seed Bank, to farmers in different panchayats of the district.
Organic Fertilizer and/or Pesticides making Firms/Companies to be encouraged at District Level, to support the fertilizer & pesticide requirements in the District.
Produce Reaping Equipment Firms/Companies to be encouraged at District Level, to support with reaping requirements in the District.
Warehouses to be operated by the Government, and services provided to Farmers at optimal cost. The other purpose is for the Government to use available space/unsold space for holding purchased produce, that they will package and sell to Traders and/or Customers, for a wholesale price, in it’s own brand or on white label basis.
Mills for Rice etc, to be coordinated in each Village/Mandal of the District.
Food Processing Units run by Private Companies and those Private label Food Processors to be coordinated with in each district.
Continuous Awareness Campaigns to Farmers in every village panchayat to be organized at regular intervals, so Farmers will learn to utilize all relevant services, while staying profitable at all times.

V. Government can Earn a Service fee, by taking responsibility with the following,

Yearly Soil Tests, for better understanding of changes in Soil Fertility.
Farmer Samrakshak/Farmer Guardian Service (Create a Crop Plan, based on Supply & Demand requirements in the country & outside, and then provide Regular Guidance & Monitoring through professionals in all related areas in support of farmer, while utilizing technology at the core).

Note 1: Bank Loans tracked using farmer portal, cost calculations done and estimated practically (covering farm investment, labour costs till reaping produce & transportation costs) as part of Farmer Samrakshak/Farmer Guardian Service.

Note 2: Insurance to be mandated, to cover all Farm Loan amount from banks and additional 40% of the farm loan value, to ensure reimbursements are made in failed crop scenarios (in times of natural calamities etc…) & distress times, to not only repay total bank loan value but also to provide the additionally insured value (i.e., extra 40% farm loan amount) to the farmer, in the scope of personal life expenses & survival costs. Govt to create full awareness to all farmers in terms of paying Farm Loan Insurance Premium on regular basis, while claiming Insurance benefits in true crop failure scenarios with clear documentation, for quick payouts.

Note 3: Periodic Farm visits and regular guidance through pre-recorded announcements and/or multi-lingual SMS/Email Notifications, in addition to Toll Free Calling facility all days of the week, to all Farmer Samrakshak/Farmer Guardian Service subscribers, across the country.
Warehouse & Cold storage service at a reasonable cost
Marketing Support Fee for guaranteed selling price for Farmers, through Farmer & Trader Portal, wherein

(i) Sold Vegetables are sent to Vegetable Shops/Super Markets/to Hawkers, who sell near homes

(ii) Sold Fruits are sent to Fruit Shops/Super Markets/to Hawkers, who sell near homes

(iii) Cereals & Pulses to be dried/sorted/cleaned by removing stones, debris etc and packaged, all while utilizing Warehouse & Cold storage options, for effective sale on Farmer Society brand/Govt company brand/private company brands
Quick Licensing & Quality Assurance Checks from FSSAI, along with periodic checks for food processing units

VI. Private Parties can Earn a Service Fee, by providing services as follows,

Quality Seeds Supply, through Seed Growers (Societies that maintain Seed Banks). Gene Modified Seeds to never be allowed to be sold in food crops, and their sale to be disallowed even in commercial crops, from now.
Provide Soil Tilling Equipment and/or operators, as appropriate to the crop choice.
Provide Drip Irrigation Setup, as per farm based crop requirements.
Provide Solar Power Setup & Maintenance.
Provide Organic Fertilizer/Pesticides, as appropriate to the crop choice.
Provide Reaping Equipments and/or operators, as appropriate to the crop choice.
Provide Warehouses & Cold Storages to government in PPP model in the scope of Design – Build – Finance – Maintain (DBFM), for regular payments from the government.
Jute based & plastic gunny bag production & sale, to hold raw materials in large quantities.
Low quantity holding packaging material production & sale.
Transportation of Raw Produce like Vegetables, Fruits from fields to Warehouses.
Transportation of Raw Produce like Vegetables, Fruits from Warehouses and to nearby Markets.
Transportation of Raw Cereals & Pulses from fields to Millers & then to Warehouses.
Milling of Cereals & Pulses.
Transportation of cleansed & packaged Cereals & Pulses from fields to processing centers & then to Warehouses.
Transportation of cleansed & packaged Cereals & Pulses from Warehouses to Super Markets/Retail Shops.
Food Processing Units buy raw materials to create packaged foods etc, while private label manufacturers earn service fee, for creating processed food to Farmer Societies.

VII. Banks can Earn Revenue, in following scenarios,

Earn 6% diminishing interest rate in a guaranteed way, on loans to Farmers, Private Parties etc., and while the interest rate is minimal, banks earn a good deal, as this happens on volume, while the customer base spans farmers, private businesses etc in a no risk scenario when combined with Farm Loan Insurance, NPAs will become non-existent in Agriculture and allies sectors, most of the time.
Banks may collect 2% pre-payment charges, so they may either earn principle amount with interest as per schedule or may recover some of the interest related value, in the form of 2% pre-payment charges in quick loan closure scenarios, so their revenues just do not drop, even though growth depends on volume and in a steady & continuous way.

VIII. Insurance Companies can Earn Revenue, in following scenarios,

High volume Farm loan insurance payments, that is backed by a clear Supply/Demand based plan.
Not Every Farmer will get effected even with natural calamities, when Farm loan insurance happens across geography of India.
Regular awareness campaigns help reduce malpractices, that is good for Farmers & Insurance Companies both, as it ensures Farmers can avail Farm Insurance in future, while Insurance Companies survive practically while being profitable in long term.
Technology backed process on average, that reduces mis-use and with moderate costs.

Current insurance policies are farm loan friendly, they need to be made Farmer Inclusive

IX. How much Governments at Centre & States potentially Save?

While 8 states announced INR190000 Crores value as farm loan waivers in year 2018, what quantum of amount the whole country needs, if farm loan waivers are to be done across the country?
Think, how much Governments at Centre & States can save when they create support systems that guarantee Profits to farmers, and that leads to job creation with & good revenues to all allied sectors, instead of relying on Minimum Support Price (MSP) schemes and farm loan Waivers?

X. Government can Earn Tax from,

Private Parties, on gross income, that is earned for delivered services to Farmers.
Private parties, on gross income, that is earned for providing services to governments in PPP model in the scope of Design – Build – Finance – Maintain (DBFM).
Government Companies/Agencies, on gross income, that is earned for delivering services to Farmers.
Government Companies/Agencies, on gross income, that is earned for selling raw produce/processed foods to Private parties/direct customers.
Farmers, on gross income, that will be earned by selling raw produce/processed foods to Private parties/direct customers.

XI. Some observations w.r.t. Policies of Central & some of the State Governments in India

Farmer Portal at https://farmer.gov.in/ that tracks Soil testing, provides seed dealers info, best practice guide for each crop etc, while it does quite a few, a lot more has to happen and the portal is surely a good start.
Pradhan Mantri Fasal Bima Yojana Farm Loan Insurance scheme from the Central Government is a sure help to Farmers, as Government pays a part of the Farm Loan Insurance Premium, in addition to Pradhan Mantri Kisan Samman Nidhi, a minimal income support scheme, that provides INR6000 per year to each farmer.
Telangana Government‘s attempt to Create a Supply/Demand Plan for the State Farmers, in addition to the Farm investment support scheme, that is popularly known as Rythu Bandhu, wherein, they provide INR10000/year/acre (on a INR5000 per acre, that is paid twice a year), to each Farmer of the State, who is with <5 acres of land.
Andhra Pradesh Government‘s attempt is to provide INR12500/year/farmer (by including Centre’s Pradhan Mantri’s Kisan Samman Nidhi), as farm investment support, in addition to interest free loans to farmers and tenant farmers both.

XII. How Economy can be triggered by de-risking Farming and making Farmers 100% Profitable?

While it’s evident that Sankranthi festival, that’s celebrated across India/Bharatavarsha and in the name of Pongal in Tamilnadu, is a celebration of people in the context of good yields in Farming, that gives boost to several sectors, as is visible in the form of timed Movie releases, increase in sale of automobiles, growth in cloth, food and many other industries.

Generation of Demand in textile, food & automobile sectors triggers intrinsic demand for creation of auxiliary units, that in turn triggers skill enhancement programs to fulfill growing supply requirements across the country and lakhs of jobs will be created every month, while India/Bharatavarsha becomes the manufacturing hub and major exporter to the World.

Summary:

With Covid Emergency and grounded Indian Economy, isn’t this time to ask the basic and most invaluable question,

Are we ready to de-risk Agriculture/Farming industry?

We need to be if we have to survive into future.

Time for people to make collaborative efforts in de-risking Agriculture or else, governments crumble to feed 1.3+ Billion people, the day Farmers announce unprecedented and non ending Crop Holiday, be reminded imports are never a dependable solution in those times, with current Geo political situations.

Governments at both Centre & States to stop this concept of Minimum Support Price (MSP), Farm Loan Waivers etc and step up responsible efforts to make Farmers Self Reliant and 100% Profitable, in all seasons and in all times around the year. The day Farmers smiles with a visible future for themselves & their children, (as a reward for their dedication & attachment to Mother Earth), we citizens/residents can stay assured that, India/Bharatavarsha is back on track and Indian Economy in it’s uprising times again.

Thanks to Shri D.Narasimha Raju garu (who is also known as Murthy Raju), Ex-Vice Chairman of APRDA, current member of TRDA and a farmer, for supporting & encouraging me with inputs, when penning down this farmer centric thought process, that can potentially trigger Consumer Demand once again in India/Bharatavarsha.

Also thanks to V.Prasad and other friends, for adding their inputs.

Some References:

http://statisticstimes.com/economy/sectorwise-gdp-contribution-of-india.php

https://www.livemint.com/Politics/zL8mErALC6vw96u5wcKlaP/8-states-19-trillion-Its-raining-farm-loan-waivers.html

https://www.financialexpress.com/economy/andhra-pradesh-roll-out-direct-benefit-transfer-for-farmers-on-october-15/1715293/

https://en.wikipedia.org/wiki/Rythu_Bandhu_scheme

https://en.wikipedia.org/wiki/Pradhan_Mantri_Kisan_Samman_Nidhi