RBI Survey on Farmer’s Share of Consumer Prices (2024)

Context

A recent survey by the Reserve Bank of India (RBI), conducted between May-July 2024, analyzed the share of consumer prices received by farmers for major rabi crops in India.

Farmer’s Share of Consumer Prices

Wheat: Farmers received the highest share, 67%, of the consumer price. This is largely due to government procurement systems like Minimum Support Price (MSP), which gives farmers an assured market for their produce.
Rice: Farmers earned 52% of the consumer price, which has remained consistent in previous surveys, showing stable trends in farmers' earnings for rice.
Share for Perishable Crops (Fruits & Vegetables)

Farmers’ share for fruits and vegetables is lower, ranging between 40-63%, due to higher trader and retailer markups.
These crops are subject to higher supply chain uncertainties because of:

Short shelf-life cycles
Seasonal production
Diverse quality and demand fluctuations
Special logistical requirements

Pulses and Oilseeds

Lentils: Farmers received 66% of the retail price, which is beneficial as lentils are mainly grown by small-holder farmers.
Gram (Chana): Farmers earned 60% of the price.
Rapeseed and Mustard (R&M): Farmers’ share was 52%, consistent with previous estimates.

Factors Influencing the Farmers’ Share

Perishable crops have lower farmer shares compared to non-perishables. This is due to the unorganised supply chain, which compresses farmer profits as multiple intermediaries are involved.
The supply chain dynamics of perishable crops make it difficult to track the flow of products, funds, and information, leading to lower farmer shares and higher markups by traders/retailers.

Fact Box:

Rabi Crops

Rabi crops are grown during the winter season and harvested in spring.
They are typically sown after the monsoon rains have stopped, between mid-November to December, and harvested between April and June.
Water Requirements: Rabi crops require less water compared to Kharif crops and are usually grown with the help of traditional irrigation methods.
Key Rabi Crops: Wheat, Barley (Jav), Rapeseed and Mustard, Gram (Chickpea), Peas (Matar)

Kharif Crops

These crops are sown at the beginning of the monsoon season (around June to July) and harvested at the end of the monsoon season (September to October).
Water Requirements: Kharif crops are rainfed and heavily depend on the monsoon rains for their growth and yield.
Key Kharif Crops:
- Cereals (Paddy, Maize, Millets, etc)
- Oilseeds (Groundnut, Soybean, Sesame, etc)
- Pulses (Blackgram, Greengram, Pigeonpea, Moth bean, Cluster bean, Horsegram, etc)
- Commercial Crops (Cotton, Sugarcane, Spices, Vegetables, and Fruits)

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