Low incomes coupled with higher consumption needs force small farmers into high-interest debt trap.
A. Amarender Reddy, Principal Scientist (Agricultural Economics) ICAR-Central Research Institute for Dryland Agriculture, Hyderabad.
S.S. Raju, Principal Scientist (Agricultural Economics) ICAR-Central Marine Fisheries Research Institute, Kochi.
Arnab Bose, Assistant Professor, Jindal Global Law School, O.P. Jindal Global University, Sonipat, Haryana, India.
The paper examines farmers’ income, indebtedness and suicides. It concludes that income of farmer is low mainly due to low harvest prices, high cost of inputs and small operational holding size. Low incomes coupled with higher consumption needs force small farmers into high-interest debt trap.
There is a need to increase public investment in farm infrastructure, strengthen direct benefit transfer schemes for purchase of inputs, improve institutional credit delivery mechanisms and widen safety nets in rural areas.
The recent farm policy related to encouraging Farmer Producer Organizations and contract farming could potentially increase small farmers bargaining power and scale economies to utilise market opportunities.
Published in: The Microfinance Review
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