Context

The National Bank for Agriculture and Rural Development (Nabard) is planning to formulate a Farmer Distress Index (FDI) to track, identify and support “needy and distressed farmers.”

About Farmer Distress Index

• Rather than giving out a distress package to all producers as is the present practise, financial institutions as well as the government can agree on an adequate support package based on the severity of distress.
• This index will not be consistent across the country since it will fluctuate based on the degree of stress in each location.
• The governments, the financial industry, and insurance firms will benefit from this index.
• The amount of devastation to their produce usually measures a farmer’s plight, but this excludes far too many struggling farmers in other parts of the country.
• According to the NABARD study, this farmer distress index can incorporate high-frequency information about key agricultural parameters such as monsoon rains deviations, excessive precipitation, drought and dry seasons, temperature and soil moisture discrepancies, produce of major crops in the district, fraction of area under irrigated agriculture, depth of groundwater, unexpected frost, and promotional opportunities available to the producer, which may include the portions of wheat, paddy, chana, tur, groundnut and soybean.
• Weather data collected from remote sensing, autonomous weather stations, mobile phones, and artificial intelligence can all aid in locating vulnerable populations for creating beneficiary list.

Methodology to track distress

• The first step will be to look for incidence of farmers distress like localised cases of issues with debt repayment, death by suicide, pest attacks, drought, floods, migration, among others. 
• We will collect contacts of marginal and small farmers or tenant farmers from the area to conduct telephonic interviews. These interviews will include 21 standardized questions aimed at gauging early signs of distress.
• The answers will be mapped against seven indicators:
• Exposure to droughts, floods, crop failure due to pest attacks, livestock deaths
• Debt
• Adaptive capacity of farmer and local government through different schemes
• Land holding and irrigation facilities.
• Sensitivity, mitigation and adaptation strategies like growing of contingency crops if main crop fails.
• Triggers for immediate distress like health-related expenditure.
• Socio-psychological factors and impacts. 

Significance

• Policymakers as well as the governments may utilise this index to plan and build a timely and focused approach to assisting distressed producers.
• Support might take the form of outright grants, loan modification, and/or a total debt discharge, depending on the type and degree of the difficulty.
• We could formulate individual farmer assistance based on the district index as well as the individual producer distress, which can be measured by factors such as the irrigation status of their land, revenue from agricultural production, district average yield, and the average selling price in APMC marketplaces of the district compared to the state average selling price.

Main causes of farmers’ distress include

• Poor policy and planning
• Declining average size of farm holdings
• Dependence on rainfall and climate
• Collapsing farm prices
• Lack of easy credit and insurance
• Lack of mechanization and technology
• Crop losses due to pests and diseases

Impacts 

• Reduced income and increased poverty
• Suicides and distress
• Disinterest and migration
• Food insecurity and malnutrition

Way forward

• Strengthening the institutional framework for agricultural development, such as improving the functioning of Agricultural Produce Market Committees (APMCs), establishing farmer producer organizations (FPOs), enhancing the role of cooperatives, etc.
• Promoting sustainable and climate-resilient agriculture, such as adopting organic farming, agroforestry, integrated pest management, etc., to reduce input costs, conserve natural resources, enhance soil health and biodiversity, etc.
• Enhancing access to information and technology, such as using digital platforms, mobile applications, satellite imagery, etc., to provide timely and accurate information on weather, markets, prices, inputs, etc., to farmers.

FAQs about Farmer Distress Index

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