Farmers are doing well

by Mahesh Vyas

Labour statistics from CMIE’s Consumer Pyramids Household Survey has shown a large migration of workers towards agriculture in recent years. During fiscal 2021-22, agriculture saw an estimated 4.5 million increase in employment. In the pandemic stricken 2020-21, while total employment fell by 21.7 million, agriculture provided employment to a substantial 3.4 million. In 2019-20 as well agriculture saw an addition of 3.1 million to its count of employed. Over the past three years, therefore, agriculture has added 11 million jobs while the rest of the economy lost 15 million.

This sharp increase in employment in agriculture has generally been explained as a rise in disguised employment. When people fail to find jobs in non-farm sectors they migrate back to their villages where their families are farmers. These migrants join them and claim to be employed in farming. This additional labour does not add much to output and is therefore considered to be mostly disguised unemployment.

This narrative of disguised unemployment needs to be qualified. The agricultural sector has done well during the past three years and therefore, ceteris paribus, it had the ability to absorb additional labour fruitfully. The monsoon has been good in general and crops have done quite well on an aggregate basis. In 2019-20, agriculture grew by 5.5 per cent while the non-agricultural sectors grew by a lower 3.5 per cent. In 2020-21, agriculture grew by 3.3 per cent while the rest of the economy shrunk by 6.3 per cent. In 2021-22, while the rest of the economy recovered from its deep fall, agriculture continued to grow by 3.3 per cent. Agriculture output has had an unflappable record during the worst of times.

Agricultural prices have remained elevated as well. The wholesale price index for primary food articles was 25-30 per cent higher than the overall WPI in the past three years. Farmers have therefore seen the benefits of rising prices for their bumper crops and have also benefitted from favourable terms of trade. It is therefore logical to expect labour to move to agriculture. Agriculture was not just a safe haven, it was also a prosperous one.

While we have admittedly disparagingly called the swelling numbers of farmers as disguised employment they have eloquently expressed their positivity or relative contentment. The index of consumer sentiments for farmers is head and shoulders above the other broad occupation groups.

In March 2022, the index of consumer sentiments for farmers was 18.1 per cent higher than it was a year ago. This is not only much better than the 15.4 per cent increase in the overall index it is also well above the next-best performance, which was a 16.1 per cent increase in the index for business persons. A year ago, in March 2021 when consumer sentiments of all groups were reeling under the effect of the second wave of Covid-19, the index for farmers was also down but it was the least affected.

The index of consumer sentiments for farmers in March 2022 was 21 per cent higher than the overall index of consumer sentiments. It was 25.5 per cent higher than the index for the next-best index which was for business persons. Farmers express better current and prospective sentiments compared to all other broad occupation groups.

In March 2022, 14.9 per cent of farmer-households said that their incomes were better than they were a year ago, 23.2 per cent said their incomes were worse off the rest said it was the same as a year ago. Similar proportions apply to expectations of household incomes a year into the future.

First, this is the best record for farmers since the April 2020 lockdown shock. Second, this is the best performance among all major occupation groups.

It is very likely that farmers would continue to report cheery sentiments in the coming months.

In 2022, India will record the fifth consecutive year of bumper wheat crop. The crop goes into harvest during April-May. Government procurement has continued to increase and so has the minimum support price. The Russia-Ukraine war has raised global prices to a point where they stand at twice their year-ago level. As the war threatens to be prolonged the price is expected to remain elevated. The India Meteorological Department has announced that the 2022 south-west monsoon is expected to be normal at 99 per cent of the long period average. Farmer sentiments have several good reasons to continue to remain upbeat.

A significant sign of rising confidence among farmers regarding the future is their view on purchase of consumer durables. In March 2022, while only 10.5 of all households believed that this was a better time to buy consumer durables than it was a year ago, 15.5 per cent of farmer-households believed that this was a better time to buy consumer durables. In February 2022, only 12.6 per cent households had expressed such a view.

The proportion of farmer households that consider this to be a better time to buy consumer durables compared to a year ago has been rising on a steep gradient since May 2021 when only 2.3 per cent of the households felt that it was a better time to buy consumer durables.

There are good reasons to believe that the rising trend of intentions to buy consumer durables among farmers should continue. But, early data for April seem to indicate a little trouble. The index of consumer sentiments dropped by 7.6 per cent between the week ended March 27 and the latest week that ended on April 17. The rural index dropped by 10.3 per cent. In a couple of weeks we will gain better insights know to what has changed.

CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
7.3 -1.9
Consumer Sentiments Index
Base September-December 2015
69.5 +0.5
Consumer Expectations Index
Base September-December 2015
69.4 +0.4
Current Economic Conditions Index
Base September-December 2015
69.7 +0.7
Quarterly CapEx Aggregates
(Rs.trillion) Jun 21 Sep 21 Dec 21 Mar 22
New projects 2.89 3.14 3.46 4.89
Completed projects 0.73 1.28 2.76 1.05
Stalled projects 0.33 0.28 0.06 0.29
Revived projects 0.14 0.39 2.06 0.28
Implementation stalled projects 0.64 0.25 0.65 0.07
Updated on: 16 May 2022 3:28PM
Quarterly Financials of Listed Companies
(% change) Jun 21 Sep 21 Dec 21 Mar 22
All listed Companies
 Income 42.3 27.5 23.5 19.8
 Expenses 41.9 26.7 21.7 17.4
 Net profit 139.8 55.1 31.9 45.7
 PAT margin (%) 9.0 9.6 9.0 11.4
 Count of Cos. 4,556 4,677 4,690 905
Non-financial Companies
 Income 61.0 35.7 29.3 27.6
 Expenses 62.6 36.0 29.0 27.9
 Net profit 192.7 59.7 18.3 25.7
 PAT margin (%) 8.4 8.8 7.5 10.3
 Net fixed assets 4.9 -2.1
 Current assets 10.8 19.0
 Current liabilities 0.8 12.5
 Borrowings 12.1 7.1
 Reserves & surplus 12.4 9.5
 Count of Cos. 3,330 3,382 3,402 637
Numbers are net of P&E
Updated on: 16 May 2022 3:28PM
Annual Financials of All Companies
(% change) FY20 FY21 FY22
All Companies
 Income 0.5 -0.9 16.1
 Expenses 0.3 -3.3 16.7
 Net profit -4.9 72.5 24.3
 PAT margin (%) 2.0 4.5 12.3
 Assets 8.9 9.6 3.3
 Net worth 4.6 11.5 5.2
 RONW (%) 3.4 7.0 12.4
 Count of Cos. 32,202 29,546 46
Non-financial Companies
 Income -1.3 -2.0 16.2
 Expenses -1.0 -4.1 17.4
 Net profit -20.8 63.1 20.8
 PAT margin (%) 2.2 4.2 11.1
 Net fixed assets 11.2 1.3 8.5
 Net worth 2.2 10.4 8.3
 RONW (%) 4.7 8.0 15.8
 Debt / Equity (times) 1.2 1.0 0.1
 Interest cover (times) 1.9 2.5 26.6
 Net working capital cycle (days) 81 84 38
 Count of Cos. 25,551 23,301 36
Numbers are net of P&E
Updated on: 12 May 2022 7:22AM