How agriculture loan support farmers in increasing their income

In the last blog, we wrote about the ways in which farmers can improve their agricultural practices. Now, we will look at ways in which farmers can use agricultural loans to boost their income.

As per public domain statistics, close to 60% of the Indian population depends on agriculture for their income, however, the sector contributes only less than 18% to India’s GDP. Why is this so?

The answer to this is not straightforward. There are a variety of factors that make farming less remunerative and non-productive for many people. More than 85% of farmers in India are small farmers having less than 2 hectares of land to work on and only contribute 51% to the overall agricultural production. 70% of these small farmers choose to grow high-value crops. They do not want to take any chances for obvious reasons. A survey conducted by NABARD has indicated that farmers earn just 8,931 per month. It is barely enough to meet household expenses and continue farming.

Apart from natural calamities, there are other factors like fair market conditions, presence of middlemen, weak bargaining power, pest attacks, high transaction costs, restrictive storage facilities, limited knowledge, access to best-farming technology solutions, etc. that prevent farmers from getting the best price for their produce.

Ways to boost farmer income

Integrated farming system model

In an integrated farming system model, farmers can integrate agriculture with poultry, livestock, fishing in the same place to generate additional income that can help them sustain themselves throughout the year. Excreta of the livestock can be used as manure to enrich the soil, while residual water would be useful for irrigation. Such kind of farming ensures optimal utilization of resources while saving on irrigation and other costs. Excess crop yield could also be used for animal food and save on additional expenses.

Grow high yielding forage like grass, grain, legumes, and tree fodder. Conduct proper research and grow forage that can flourish with minimal rainfall. Integrated farming is sustainable, profitable plus it enables you to recycle resources and help save money on fertilizers, pesticides, etc. Moreover, the animal waste can be used to generate biogas. The benefits are endless.

Hybrid seeds

The Indian seed market is expected to grow at a CAGR rate of 6.8% between 2020-2025. Right now, hybrid seeds are just being used for cotton, sunflower, selected cereals and corn. Lack of literacy and awareness is the reason many farmers don’t opt for hybrid seeds. With hybrid seeds, farmers do not have to worry about crop-related diseases or damages caused due to insects, etc. as such seeds are resistant to them.

As compared to conventional seeds, hybrid ones offer better performance. Apart from being disease resistant, hybrid seeds are drought resistant, provide high yields and highly adaptive to change in climatic conditions. They might be slightly more expensive than conventional seeds, but the investment is worth it. Agricultural loans for hybrid seeds can help farmers increase their production and prevent loss because of disease or pests.

Switch to cash crops

Cash crops are an excellent way to generate additional income for farmers. Along with growing crops for the next season, an extra row could be added (for cash crops) to supplement the farmer’s income. The cash crops depend on the season.

Winter Crops – Wheat, Barley, Mustard, And Peas

Summer Crops – Pumpkin, Watermelon, Bitter Gourd, Peas, Cucumber

Monsoon Crops – Rice, Jowar, Bajra, Legumes, Soybean, Bajra

Instead of reserving an entire land for just one crop, it makes sense to reserve a strip of land for particular produce. This will prevent loss of soil nutrients or soil degradation and also make some extra money for farmers. Depending on the revenue farmers wish to make, they can allot land towards cash crops accordingly. The techniques to grow these cash crops differ from farmer to farmer, but the principal objective is to generate more income. Loans for these cash crops can help make farmers more money or make up for losses that occurred in the past season.

Irrigation

India has approximately 140 million hectares of agricultural land out of which 48.8% is irrigated, but 51.2% of land still depends on rainfall. As freshwater usage in agriculture accounts for more than 80% of the overall usage of water in India, judicious use of water in agriculture is very much required. The use of Drip-irrigation in agriculture is the need of an hour. Drip irrigation not only saves water but also supports increasing the crop production & quality of crops. Various support being provided by the Government of India in terms of subsidy disbursals for increasing the adoption of micro-irrigation. Moreover, finance for drip irrigation solutions can be availed through financial institutions also.

Renewable energy

Farmers in India rely on pumps for irrigating their lands. Very few farmers use solar or turbine energy to operate such pumps used in agricultural fields. Most of them use diesel or other fossil fuels to run them. Agriculture consumes approximately 23% of the installed power in India. Due to the lack of awareness, modernization and hesitancy to bear the initial cost, it deters farmers from taking advantage of solar energy, turbine energy and other forms of renewable energy.

With the sole aim of providing financial assistance and water security to farmers, the Indian government has launched many schemes to promote solar energy. Through such schemes, the government expects to add to the tune of 27,250 MW of combined solar capacities by the end of 2022.

By taking advantage of such schemes, Indian farmers can enjoy a stable source of income for many years and they can even earn revenue from barren land. Even with fertile lands, the solar plants will be installed at a certain height, without affecting the crops. Not only this, but solar power can also meet energy requirements for other aspects of farming like lighting houses, etc.

Farm management software

Agriculture is not an easy profession in India because of the unpredictability associated with it. Droughts, excessive rainfall, storms, demand-supply mismatch, price variations, supply chain constraints, etc. make the agri-business challenging for farmers. However, with a calculated approach, the detrimental effects of the above factors can be minimized to a certain extent.

A farm management solution allows the farmers to adopt a methodical approach towards food production. It is more sustainable, scalable, and helps farmers in increasing productivity. Farm management software enables efficient decision-making by providing timely information to them – how much to invest and where to invest your resources. Moreover, it guides the farmers on how to plan their activities, track real-time progress and make the right decisions in tricky situations. Risk management is a skill that farmers should have, and farm management software can make them aware of such risks and then suggest timely solutions to counter them.

To achieve the best return on investments, farmers must understand the current trends and what end consumers want. An efficient farm management software will provide them with valuable inputs to adapt to such situations and plan activities like pest control, sowing of seeds, irrigation & fertigation. There is various farm management software available that can make information about the farms available on farmer’s phone.  With all the required intel at the fingertips, farmers can decide how to execute crop rotation, fertigation and calculate the cost of production, overheads, unforeseen expenses plus helping them fulfill their responsibility towards the environment by growing responsibly.

Less use of pesticides, chemicals will promote sustainable farming, resulting in savings and a cleaner environment. Do not think of investment in farm management solutions are unnecessary. If farmers are thinking of postponing it, they should consider the benefit of rich dividends in the long run because of the farm management solution.

Conclusion

Agricultural loans play a prominent role in giving farmers the push towards adopting better agricultural technology solutions to practice farming effectively & efficiently making it profitable. Every agricultural loan is for a specific purpose and choosing them wisely is the key.

Loans can help farmers run their agricultural business smoothly during tough times, boost crop productivity and expand their business operations. Therefore, choose the right kind of loan, that fulfills their business needs are paramount.