Nudge TASF Report (2022)

Exec Summary

The “Transforming Agriculture for Small Farmers (TASF)” Team of The/Nudge conducted 107 in-depth interviews to familiarize themselves with small farmers, their farming process and their challenges. The interviews were done in Karnataka, Andhra Pradesh and Telangana between November 2021 and February 2022
We are grateful to Center for Collective Development, Pasidi Panta, Deshpande Foundation, Kalgudi and Mr. Gurulingappa P.H., for facilitating these interviews
We spoke to farmers who had 1-5 acres of irrigated land or upto 7 acres of rainfed land. 39% of them had taken on additional land (lease or sharecropping). They are an aging group and while they identify as farmers and are committed to farming, they feel it is a difficult profession with high effort and often low income. They do not want their children to become farmers
Their income from farming (cultivation) is not enough and they typically have 3 to 4 other sources of income including Agri labour, Govt DBTs and MGNREGA, Livestock, income from other members of the family, etc.
- While MGNREGA contributes 4 to 12% of income (number of days of work and rate varied by region), most farmers prefer it as it is an “easy task” and they would like more of it.
- Government schemes like PM Kisan and PDS have high penetration
Incidence of loans is high (84%). Of these 67% are crop loans from banks. Only 16% are repaying their loans – many are “evergreening” while others are only paying interest or not paying anything. This is because they feel they will get a loan waiver. 37% have loans from SHGs (ranging from 20k to 200k) – they are repaying these loans. Some also had loans from the informal sector (family and friends, other farmers, moneylenders) and they were typically paying 2% per month for these loans.
While 34% of farmers said they had received compensation (partial of full) from crop insurance, only 50% of farmers with bank loans were aware that crop insurance was bundled with their loan. Most of these farmers were not sure of the premium paid, sum assured or the process of claiming crop insurance
These farmers are well integrated into the farming ecosystem and are using “standard practices” that are prevalent across the country – high yield seeds, fertilizers, pesticides, Farm Yard Manure (if they have livestock), etc. The level of mechanization is high (as it makes economic sense and equipment is available on rent). 50% of them rotate crops to maintain soil health.
At the same time, they tend to use practices that they have historically used or are based on word of mouth. These practices vary a lot, for example there is a significant variation in inputs - amount of seeds or DAP used per acre even for the same crop in a region. Yields vary and there is almost no soil testing. There seems to be an opportunity to improve agricultural practices
Farmers have a choice of where to sell – typically at local traders or at the APMC mandi – and they choose the best option available. However, they tend to pay a 2% "commission" for immediate cash and a 1 to 3% “deduction” called “soodh”. Organizations like Pasidi Panta and CCD had done work on the ground that showed farmers do not get fair weight or appropriate compensation for quality. In other words, there seem to be opportunities to improve their market linkages.
The biggest concern farmers have is the impact of climate. 70% of them have experienced significant crop damage at least once in the past three years – typically excessive rains at the wrong time.