How much of food spending reaches farmers?, Pg13

New study reveals Indian farmers receive 57.8% of at-home food spending, significantly higher than global averages, but less from food consumed away from home.

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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

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.
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