How much of food spending reaches farmers?, Pg13

Key Highlights:

• A study estimated the share of a consumer's food rupee that reaches Indian farmers using the "Food Dollar series" technique.
• In 2023-24, farmers received 57.8% of the rupee spent on food consumed at home.
• For food consumed away from home, farmers received only 8.4% of the consumer's rupee in the same period.
• India's farm share for at-home food expenditure is significantly higher than the global average of 27% (2005-15).
• The farm share for at-home food has increased from 51.8% in 2011-12, while for food away from home, it has declined from approximately 10% in the 2010s.

Farmer's Share.jpg

Detailed Insights:

• The "Food Dollar series" technique utilizes supply-use tables to trace economic linkages and transactions between sectors.
• The lower farm share for food consumed away from home is attributed to longer supply chains and value absorption by restaurants and services.
• India's farm share for food away from home is also higher compared to countries like the United States, where it is just 4%.
• Indian households predominantly purchase unprocessed or minimally processed, perishable, high-value food items.
• The domestic food processing industry is largely unorganized, low-margin, and focused on milling, which limits off-farm value addition.
• Eating out accounts for an estimated 13% of total food consumption in India, which is lower than in Western countries.
• A lower farm share does not always equate to lower net returns for farmers, as exemplified by gherkins compared to tomatoes.
• High farm share also does not guarantee farmer profitability due to increasing input costs, as experienced by Amul dairy farmers.
• Recommendations include farmer ownership in downstream food, beverages, and logistics enterprises to capture more value.
• Expanding farmer participation in post-harvest activities is crucial for creating future jobs and better incomes in the sector.

Key Concepts Involved:

• Food Dollar series: An economic technique used to trace how much of a consumer's spending on food accrues to the farm sector.
• Supply-use tables: Statistical tables that map the linkages and transactions between different sectors within an economy.
• Post-harvest activities: Processes and operations that occur after harvesting crops, including cleaning, sorting, processing, packaging, storage, and transportation.