USA is commercially strong country the people of USA are very hard working .

While cultivating or planting crops they

use the most advanced tools and machines the farmers in USA are very rich and literate people of USA don't
consider farming a thing of embarrassment or insult . If u visit USA the lands where crops are cultivated are very big .
While in India lands are very small . It is due to rule that from the fathers property each son will get one part .so if
father has big land and it is divided between 4 sons then automatically the land will be small . if the first son is goi ng
to set up a factory in his land then other 3 brother will have while farming.
In India farming is considered a think of embarrassment . From a many years infact today also people think that the
farmers are illiterate and poor. When we think about farmer a thin man holding a spade in the field and then digging it
if this the image of farmer in India how can we think going to better country
categories list . farmers will not provide us with food how can we alive....!!
US farms raise crops/livestock for cash or profit with typically 1000-1500 acres a farm, even on small family owned ones the
acres can range from 300-900 acres, which still yields more than plenty.

In India 99% of farms are much smaller, and only raise enough crops to supply themselves with the occasional extra, most of the
work is done with outdated machines, or by hand.


Farming in US and India The ground reality on subsidies
Harish Damodaran
A comparison of farm production costs in India with those in the US reveals that the Indian farmer is
clearly cost-competitive relative to his American counterpart in virtually every item. How do Indian
farmers produce crops at a lower cost, despite their yields being nowhere near American or European
levels? Harish Damodaran finds out.

IT IS common knowledge that rich countries heavily subsidise their farmers. In 2003, the Total
Support Estimate (TSE) to agriculture in OECD countries was provisionally placed at $349.81 billion,
the bulk of which was accounted for by the European Union ($137 billion), the United States ($94
billion) and Japan ($56 billion).
While the volume of subsidy almost $1 billion a day is a subject of general consternation,
including among Western NGOs and bleeding-heart liberals, a less focussed aspect though is what
does all this translate to in concrete, crop-specific terms for farmers in developing countries. To what
extent do these subsidies enable European or American growers to cultivate crops at a higher cost and
yet effectively compete with farmers in India or Brazil?
For an answer, one needs to first get a picture of relative production costs. How much does it cost an
Indian farmer to produce a kilogram (kg) of, say, wheat and what is the corresponding figure for the
EU or the US?
This article attempts such an exercise, comparing production costs in India vis--vis those in the US
for different crops. The key reference source here is the annual production costs and returns estimates
of the US Department of Agriculture (USDA) for various farm commodities, based on actual costs
incurred by US producers. For India, the Minimum Support Prices (MSP) fixed by the Government has
been taken as a proxy for production cost.
The USDA data gives production costs in terms of dollars per acre along with crop yields per acre,
expressed in either bushels or hundredweight (cwt). While the production costs per acre estimates are
for 2002 the latest year for which data is available yields have been averaged over a five-year
period (1998-2002) to eliminate one-time distortions.
Further, to facilitate comparison with Indians costs, necessary quantity and exchange rate conversions
have been made to arrive at the corresponding rupee-per-kg figures.
Take wheat, for instance, where the US production cost per acre in 2002 was $175.63, or Rs 8,079 at
Rs 46-to-a-dollar, with the corresponding average per acre yield being 36 bushels (980 kg). The cost
of producing one kg of wheat in the US, therefore, was about Rs 8.25 per kg, which is much more
than the MSP of Rs 6.30 per kg fixed by the Indian Government for the 2003-04 crop.
The Table provides similar information for rice (paddy), corn (maize), sorghum (jowar), soyabean,
cotton (lint) and peanut (groundnut-in-shell). In all these field crops (barring corn), the production
costs in the US are uniformly higher than the corresponding MSPs declared in India.
The situation is no different for livestock products like milk. The average production cost of milk in the
US in 2002 was $18.76 per cwt, or Rs 19.02 per kg. There is no MSP for milk in India. But going by
prices paid by cooperative dairies here (Rs 11-12 per kg), the cost can be assumed to be around that
level.
Clearly, then, Indian farmers are cost-competitive relative to their American counterparts in virtually
every farm product.
This is notwithstanding per hectare yields in the US averaging about 7.8 tonnes for paddy, 8.6 tonnes
for corn, 2.8 tonnes for sorghum, 2.6 tonnes for peanut, 2.8 tonnes for soybean and 647 kg for cotton
lint, against the corresponding Indian levels of 3 tonnes, 1.8 tonnes, 0.8 tonnes, one tonne, 1.1 tonne
and 220 kg, respectively.
An average US cow yields over 9,000 kg of milk in a year which, again, is thrice what crossbreeds
here typically produce. Only in wheat are average US yields, at 2.4 tonnes per hectare, lower than the
2.7 tonnes of India.
How do Indian farmers produce crops at a lower cost, despite their yields being nowhere near
American or European levels? The main reason for this is the capital-intensive nature of agriculture in
the West. The USDA's production cost estimates cover both `operating costs' as well as `ownership
costs'.
The former includes cash expenses incurred on seeds, fertilisers, chemicals, fuel, custom operations,
purchased water, repairs, hired labour and interest on operating inputs.
Ownership costs mainly comprise the costs of maintaining the capital stock used in production,
including asset depreciation and interest (capital recovery), taxes and insurance.
They also cover the opportunity cost of family labour and owned land, which is basically the rental or
wage income that farmers forego by deploying their land and labour to cultivate wheat or rice.
It can be seen that the share of ownership cost in total production cost ranges from 40 per cent for
cotton to 69 per cent for soyabean, indicative of how capital-intensive American agricultural
operations are, and the additional costs they impose on the farmer. Incidentally, the MSPs fixed for
various crops in India supposedly take into account rather exceed both `C2' and `C3' costs, as
computed by the Commission for Agricultural Costs and Prices (CACP).
The `C2' costs encompass "all actual expenses in cash and kind incurred in production by actual
owner plus rent paid for leased land plus imputed value of family labour plus interest on value of
owned capital assets (excluding land) plus rental value of owned land (net of land revenue)". The `C3'
costs equal `C2' costs plus 10 per cent to provide for "managerial remuneration to the farmer".
But either way, capital costs form an insignificant portion of total costs borne by the Indian farmer and
many of these notional expenses do not even explicitly figure in his cost calculus. He will produce
crops as long as his operational (cash) costs are met, in contrast to the US farmer, who seeks a return
on total capital employed, both current and accumulated.
The interesting bit about the American farm economy, however, relates not to its capital intensity and
resulting high cost structure.
What sets apart US agriculture from European or Japanese farming is its apparent deference to free
trade and the immutable laws of supply and demand. Indeed, prices of agricultural commodities in the
US are largely market-determined.
Farm-gate prices of most crops (see column 5 of the Table) not only do not cover production costs,
but they are even below the corresponding ruling MSPs in India.
Unlike in India, where state agencies buy grains or oilseeds at the notified MSPs, the US Government
does not intervene directly in agricultural trade, which is left entirely to private players and `market
forces'.
But this does not mean that the farmer is not guaranteed a price that effectively covers his costs. On
the contrary, in the US, the Secretary of Agriculture is required by law to provide income and price
support for 20 specified crops, including wheat, rice, corn, sorghum, barley, oats, cotton, milk,
peanuts, sugar, tobacco, soyabean and other oilseeds.
There is no such legislative binding on the Government in India to ensure farmers obtain the MSPs
declared for various crops. Only in sugarcane is there a statutory minimum price that mills are legally
obliged to pay under the Sugarcane Control Order.
As a result, Governmental procurement is mostly an ad hoc exercise, which is, of course, a function of
the political clout wielded by individual producer lobbies.
In the US, the new Farm Security and Rural Investment Act, 2002 even establishes `target prices' for
each crop that farmers are entitled to receive.
For the 2004-07 period and at Rs 46-to-the-dollar, these work out to (on per kg basis) Rs 6.63 for
wheat, Rs 10.65 for paddy, Rs 4.76 for corn, Rs 4.65 for sorghum, Rs 9.80 for soyabean, Rs 73.42 for
cotton and Rs 22.77 for groundnut.
The target prices are way above the farm-gate prices that farmers get at the point of sale. Moreover,
they cover a substantial part of production costs, making agricultural operations viable on the whole.
The target prices also exceed the MSPs that the `rich' farmers of Punjab and Haryana obtain for the
paddy and wheat they sell to the Food Corporation of India (FCI).
The key difference, though, lies in the mechanism by which the Government enables farmers to
recover production costs.
In the US, the Government simply forks out the difference between the target price and the farm-gate
price through direct and `counter-cyclical' payments.
These are over and above crop disaster payments, deficiency payments, market loss payments and
assorted other payments towards pest and disease control, conservation programmes, etc.
But importantly, all these payments are `decoupled' and made outside the marketplace. The
Government does not seek to influence farm-gate prices, which are plain supply-and-demand-
determined.
The decoupled payments mechanism works perfectly well in the US because there are hardly 2.3
million farms there, compared to India's estimated 120 million operational holdings. The sheer number
of farming households to be covered makes direct payments impossible in the Indian context.
The Government, therefore, if it wants to guarantee remunerative prices to farmers, has no choice but
to `distort' the market by directly engaging in agricultural trade.