Farmers’ Welfare Index (FWI)

Are you interested in investing in business anywhere in the world? Are you in dilemma in selecting a country to invest? No need to worry. You have many financial firms, consultants who can help, you also have indices like FDI Confidence index that rank the countries in the order of attractiveness of FDI.

Do you want to know the country where people live happily? You have Happiness Index to help you. Similarly, you have many indices like HDI index that rank the countries on human development, GHI that rank on hungry index. We can get some indices on most of the parameters we like.

However, one may be shocked to know that we don’t have any indices to measure the welfare of farmers’ on whom we are dependent for our basic need for survival. I consider the welfare of farmers as most important in the country like India where 60% of our population is directly dependent on agriculture. The welfare of the farmers has trickle down effect which has impact on majority of population and many other sectors. The improvement in farmers’ condition will naturally result in improvement in indices like HDI and GHI apart from solving the problems of food security. Hence, I consider the welfare of farmers’ as most important parameter.

In the absence of any indicator to measure the farmers’ welfare an attempt has been made to develop a suitable index. The index can be termed as “Farmers’ Welfare Index” (FWI) and the following components can be considered to calculate the index.

The components considered can be broadly classified into:
1. Domestic support
2. Terms of Trade and
3. Infrastructure

Domestic Support:
Support to the farmers by state and central governments in the form of price support; subsidies on inputs like fertilizers, pesticides, seeds and machinery and insurance policies for crops and livestock are important domestic forms of support which have impact on the welfare of farmers. Hence, these factors are considered to calculate the domestic support.

Terms of Trade:
Economic welfare of farmers is ultimately depending on terms of trade. If the market price for the produce is low even the bumper harvest will not make any significant change to farmers’ economic condition. Similarly, all the input prices (land, labor, fertilizers, water, pesticides, etc) and its variation among seasons are to be considered to arrive at the total cost of production which have implications on profit.
In the era of globalization, the factors of WTO agreements like export duty or concessions, import duty and market access has to be considered which have direct impact on farmers’ income.

Infrastructure:
The infrastructure facilities play important role in marketing of agricultural produce especially fruits and vegetables which are highly perishable. Market yards, their density, facilities at the yards, transportation facilities to markets, market information system are important facilities which influence the marketing of produce. The infrastructure facilities for inputs like fertilizers, pesticides, seeds are also to be considered for the index to be comprehensive. The extension services which create awareness about technology, production practices, market service and information are also considered under this component.
Sustainability of resources like soil and water are important which affect the future production and thus the welfare of farmers. Hence, the condition of resources like soil and water are considered to calculate the index.

The index can be calculated for each crop or a region to enable the policy makers to initiate specific policies or programmes for a crop/region. The aggregate index can also be developed at state and national level.

(This is in the initial stage and the suggestions or comments are welcome).