Impact of Post liberalization policies
We have shifted millions of subsistence farmers from food
crops to cash crops in the name of classic World Bank and IMF philosophy of
export dollar and hard currency. Earlier farmers were at least growing
something they could consume; today they are growing cash crops which have no
internal market. Example: Vanilla. The biggest consumer of vanilla in the world
is USA. We have less than 1% vanilla consumption but we grow lot of it. The
little farmers are under the volatility of global price for agro commodities,
which is controlled by half a dozen firms. Coffee is controlled by 4 majors at
world level and we grow coffee.
We don’t see much farmer’s suicides in Bihar, Jharkhand and
West Bengal because they are more or less practicing subsistence farming and
less commercial crops.
Many times it’s been seen that, when agricultural supply or
production is very high in India, the import of same commodity is done because
of various constrains like agreements which have been entered by GoI with other
countries.
Subsidies of USA and EU like in the area of cotton have
devastated the price of Indian farmers, who were reasonably prosperous just a
decade ago. Indian farmers are not competitive enough with USA farmers because
of the pressure of WTO (World Trade Organization) on minimization and
elimination of government subsidies in agricultural sector.
Our government policy to raise minimum support prices of
cereals, pulses and coarse grains up to 150% of the cost of production may be
dragged to WTO for allegedly breaching its farm subsidy entitlements and
distorting the global market. According to WTO, Agreement on agriculture,
developing countries are entitled to product specific subsidy only up to 10%
value of the product.
Very recently in early 2019, FMCG giant Pepsico had sued
some Indian farmers for alleged patent infringement for cultivating a variety
of potato called FC5. Pepsico sought more than 10 million rupees from each
farmer. The government reportedly held, out of the court settlement talks with
company, which eventually announced the withdrawal of cases.
Lack of insurance coverage for agriculture
Only 4% of our agriculture is covered by insurance.
According to P. Sainath, only banks and insurance corporations have benefited
from the Pradhan Mantri Fasal Bima Yojana. While the farmer contributes
1.5% - 2% of the risk cover, the state and central governments contribute 8 %
each. In Parbhani district of Maharashtra, which saw major crop losses, the pay
outs in two major circles were as low as Rs.540, Rs.40 and so on. After an
agitation, some farmers got Rs. 20,000.The insurance company made Rs.173 crore
as profit from the district, paying out far less than the premium collected
from the three parties.
The Comptroller and Auditors General report has come down
heavily on the scheme saying that the government has no data base and it is dependent
on banks and insurers and private corporations for data. This is unbelievable
scope for scam. Secondly, many of the banks are also insurance companies. They
also coerce the farmers into taking insurance policy while applying a loan.
Feminization of agriculture and its issues
When most of the men run to cities in search of jobs, women
are doing agriculture.
Report by Oxfarm India says that, women are responsible for
about 60% - 80% of food production and 90% of dairy production. Agricultural
census 2010 - 2011 outlines the fact that, out of estimated 118.7 million
cultivators, around 30% were female. In spite of such contribution, the rights
of the women farmers have been neglected for long.
Only around 14% of the women have ownership rights over
the land on which they cultivate. In the case of husband’s death, the land
does not pass on to the hands of women easily. Normally it’s divided between
the sons. As most of the formal financial institutions use land as collateral
for providing agricultural credit, the scope of women farmers getting formal
credit is restricted. With less access to resources and credit, the decision
making power in most cases go to men. This could be one reason why women
farmers are less visible in farmer’s organisation and protests.
There is an increased work burden on women farmers. Most
often, they are engaged in the labour intensive task in agriculture, as most of
the existing machines are not women friendly. Yet, the compensation level of
women farmers is lesser than that of their male counterparts.
Impact of Interstate water dispute
Farmers belonging to states that share a river basins
especially the lower ripen states are affected by interstate water disputes.
For instance, the delta farmers of Thanjavur district in TN are affected by
Cauvery water dispute between TN and Karnataka.
Impact of demonetization
Though disputed by GoI, demonetization has disrupted the
supply chain system in the agriculture sector. Most of the trading in our
markets still happens in cash. Most trades in the mandis deal in cash.
Demonetization happened at a time when the kharif harvest was still in the
market.
Inadequate storage facilities
The marketing infrastructure is inadequate, especially for
small producers who lack the capacity to store their produce. Post-harvest
losses in fruits and vegetables are 40% - 42% because of lack of cold storage
facility. India has mere 5,386 stand-alone cold storages, having a total
capacity of 23.6 million MT for 200 MT of food grain production. Inability of
poor farmer to wait for a long time after harvesting compels them to sell
his/her produce at a throw away price.
Inadequate transport
Lack of cheap and efficient means of transportation affects
the last mile connectivity from the farm to the market. Most of the roads
become useless in rainy seasons, forcing the farmer to sell their produce at
the local market for cheap price.
Inadequate storage facility and transport facilities make
the farmer to “sell at an unfavourable place, at an unfavourable time and at
an unfavourable price”.
Poor agricultural marketing facility
Over dependency of farmers upon the local traders and
middlemen leads to selling their produce at a throw away price. Farmers sell
their products to money lenders from whom they usually borrow money. Farmers
from low caste and indigenous sector who often lack the market knowledge are
the most affected.
No fixed returns and revenues
Indian farmers are exposed to the risk of volatility in the
market prices.
In case of poor monsoon, due to low supply, the prices may
be higher, but return for the farmer will not increase because the production
of farmer itself is affected in the 1st place. In case of good monsoon, there
may be good harvest and increased production, but due to excessive supply the
farmer can only fetch fewer prices.
Over the years production of food grain has increased, which
helped in keeping food inflation in check, but farmers have not benefited. Farmers
don’t do well even when agriculture does well. So the entire pressure is
transmitted to farmer. UNCTAD (United Nations Conference on Trade and
Development) in its report says, in 20 years, the output price of agriculture
anywhere in the world has remained static, but input prices are soaring.
Farmers have no role in the market. Farmers do not have the
kind of lobby the industries and corporates have. The middlemen used to block
the benefit of price rise of agricultural commodities to the real producers by
resorting to hoarding and storage.
No doubt government announces MSP for various crops but they
are too little to do away the farm distress. Due to dominance of large traders
in APMC (Agricultural produce market committee), the small and marginal farmers
have to sell their product through auctions in regulated markets controlled by
cartels of licensed traders, whose licenses give them oligopolistic market
power. Thus, the real benefit of MSP is skimmed off by the large traders.
For a long time there was no MSP for pulses. We keep on
procuring rice, which is getting rotten away in FCI storehouses while the
pulses prices are going down. The largest price increase has been announced in
the case of coarse cereals like jowar, bajra and ragi which account for less
than 5% of the kharif food grain production.
Distress due to loans
The data shows that 95% of farmers are indebted. NCRB Data
of 2015 shows that, 2,474 out of 3,000 farmer’s suicides are victims of unpaid
loans.
Mix of all these problems has led to a large unrest in the
farming community which has manifested into various farmers protest. New Delhi
witnessed a new awakening of the farmer community when they marched demanding a
joint session of Parliament to discuss the agrarian crisis.
Impact of agrarian crisis
The agrarian crisis has gone far beyond the agrarian. It’s a
social crisis with people leaving agriculture and not getting absorbed anywhere
else. It’s a civilizational crisis now, a crisis of humanity.
Farmers are also consumers, if the agrarian crisis continues
to persist it will affect the overall growth of an economy. It was said that 4%
growth in farming sector is required for the economy to grow well. The big
tragedy of agriculture in our country is that, it has never grown by more than
3.2% per annum. East Asia had experienced 6% per annum during the period of
1950 – 1980.
Majority of rural youth migrate to urban areas, where they
work mostly as informal worker. If the investment in agriculture decreases,
productivity decreases. Investment in agriculture has impact not only on the
income of farmers but also on the food security of the nation. There is a
direct link between growing agrarian crisis and the deteriorating PDS (Public
Distribution System) scheme.
A nation burrowing under hunger, hangs democracy.
Internal security problems get compounded with the emergence of a sense of food
insecurity. Due to food scarcity in Mizo hills in 1950’s and 60’s Mizo National
Famine Front was formed. Over the years it dropped its 1st F and became Mizo
National Front which initially demanded a separate state within India and later
a separate State outside India.
The way forward
Shifting our farm policy from loan waiver to structural
reform
India’s Farm policy is retrospective and just revolves
around the loan waiver. Loan waiver means, the debt repayment liability of farmers
will be transferred from the shoulders of farmers to government. In case of
write off of a loan, the debt repayment liability of farmer will be struck off
from the balance sheet of the bank.
One of the contributing factor for farmers suicides is
distress in agriculture sector and more over if government can write off the
loans which are taken by big industries, why not, the same principles be
applied to agriculture? Are some rational behind loan waivers.
We have to understand that, the long term solution to the
agriculture can be provided only by structural reforms of which loan waiver is
definitely not part of.
Following are the shortcomings of loan waivers.
1. Domino effect of loan waiver
Our approach of handling farmer’s indebtedness and farmer
suicides has been appeasement politics. Most of the times, the loan waiver are
used as bargaining chip during election. It’s like give me your vote I will
waive off your loan. This doesn’t argue well with the idea of democracy.
2. Moral hazard argument
All the farmers are not covered under loan waiver. The
government will waive off only the institutional source of borrowing but most
of the small and marginal farmers take loan from informal sources. For
instance, 2008 UPA loan waiver (The largest in independent India’s history)
dealt with bad debts. But, 90% of the debt owed by farmers is to private
lenders. Hence the waiver policy mostly went to well off farmer, rather than
reaching the real needy borrowers.
Non serious farmer who had used the loan money for
non-agricultural purpose will wait for the announcement of elections and his
loan is generally waived off. Genuine farmer who had repaid the loan may feel
betrayed by the situation in the political economy and may start defaulting on
his next loan. This will lead to higher NPA from the agricultural sector. It has been found that, post 2008 loan
waiver, on an average; the farmer will be defaulting 12 months prior to the
announcement of the election.
3. Implementation concerns
CAG report of 2013 on 2008 loan waiver says that, there were
commission and omission errors. Around 13.5% of the accounts looked into by
this report were eligible for loan waiver but haven’t receive it. On the other
hand 8.5% of the accounts were ineligible for loan waiver, yet had received it.
4. Economic concerns
To pay for the loans which were borrowed by the farmers, the
state and central governments usually issue bond to raise money to repay loans
to banks. Example: UP government issued Kisan
Rahat bonds. These borrowings increase our fiscal deficit. For instance,
for 2008 loan waiver government picked up a bill of Rs. 65,000 crore,
equivalent to 1.3% of India’s GDP at that time.
Loan waivers will not allow disguisedly unemployed
agricultural labour to shift from agriculture sector to other sectors. It may
also lead to inflationary trend in the market.
The loan waiver is a tool, but not transformation. They
are mechanism but not a solution. They are relief but not an answer says P.
Sainath. World Bank in its 2012 report says that, no doubt loan waiver will
reduce the distress on agricultural households but it doesn’t lead to capital
formation or investment into agriculture.
Rather than loan waiver we may try out Direct Benefit
Transfer (DBT). This will push small and marginal farmers to take loan from
formal sources.
Shifting the extra labour force from agriculture sector
to non-agriculture sector
The transition out of agriculture should not happen out of
distress rather it should be because non agriculture employment is growing
faster. The extra labour force in agriculture should be properly skilled to
take advantage of the opportunities offered by growing non-agricultural job
market.
Increasing the returns of the farmers
Our policies should not just focus on farm income; rather
it should also focus on farmer’s income. Without bringing down the
production cost, there’s no hope. For that, you need to remove corporate
control over inputs and adopt agro-ecological methods. Reducing input cost is
very critical for increasing the returns. Our PM’s promise to work towards
doubling the farmer’s income by 2022 is a welcome sign.
Improving the access to credit
The provision of credit can be made available through micro
finance institutions of NABARD through collateral free loans to farmers in
general and woman farmers in particular. Informal lending should be regulated.
Greater access to credit at low interest rate will certainly bring down the
input cost where by increasing the profitability margin.
Crop diversification
Non crop agriculture and livestock agriculture constitute
about 30% of agriculture. According to CSO, 4 Lakh 90 thousand crore rupees
worth milk was produced in 2014-15, across all states of the country. This for
the 1st time the value of milk has exceeded the total value of food grains.
India is a lacto vegetarian country. Animal husbandry
has to be promoted because they are more durable and involves less risk, which
ensures regular income to farmer. M.S.Swaminathan Committee of agriculture and
allied sector indicated the need for diversion of agriculture from crop based
activity to non-crop based one. It had pressed for including tree farming, agro
forestry, dairy and fisheries.
Agriculture livestock and marketing (promotion and
facilitation) act 2017 which takes marketing reforms a few steps forward is
a welcoming sign.
Climate resilient agriculture
We have to prepare for climate resilient agriculture. Why
Punjab is growing rice? It’s an arid area; it should not be allowed to grow
rice. National action plan on climate change should give greater focus
on agriculture sector along with other sectors.
Zero budget natural farming
Zero budget natural farming is a low cost farming method by
application of nature’s principles and using locally available material.
Dispersal of clay seed balls is a feature of zero budget natural farming. In
the recent 2019 union budget, the government has given emphasis towards
adoption of zero budget natural farming.
Cooperative farming
Yes, fragmentation of land has taken place. But, it is not
such a challenge as countries like Israel, Japan and Korea have farmed very
small piece of land very productively. We have not adopted to land fragmentation;
we have not developed technologies for smaller land holdings. Tractors are
still gigantic mammoths. Either we must adapt to fragmentation or should have a
policy to consolidate landholding. Cooperative farming, in which farmers pool
their resources and share their profit, could be a solution for fragmentation
of land. For instance, Amul Dairy Cooperatives is an outstanding example
of the success of cooperative farming. Recent success stories in the Kudumbashree
programme in Kerala and The Society for Elimination of Rural Poverty in
Andhra are some other examples.
Community owned mechanizations
Farmers could be allowed to rent expensive machines held
commonly rather than individuals owning tractors and expensive machines.
Tractor bankruptcy is one of the fastest ways to farmer’s bankruptcy. Punjab
is referred as the grave yard of all mechanization. The statistics of
2012-13 indicates that there is one tractor for every 8.71 hectare of net
cultivated land in Punjab as compared to national average of one tractor for
every 62 hectare.
Bio and organic fertilizers
Fertilizer subsidy has been the bane of Indian agriculture.
We have to make changes in fertilizer subsidy policy and decentralize it.
Apart from bulk of chemical fertilizers, there are several options where
farmers themselves should be subsidized for producing bio fertilizers for
themselves and for their community. We have to make it possible for communes,
groups, cooperatives, individual farmers to avail of subsidy to produce range a
fertilizers fulfilling different local soil needs.
Soil health cards are very important because in this
country fertilizer has been over subsidized.
Do we want a chemical soaked, corporate driven agriculture,
or a community controlled ecological agriculture? It is up to us to decide what
we want.
Efficient use of scarce resources
The problems of rain fed agriculture will not be solved just
by interlinking of rivers. It has to be done through rain water conservation by
augmenting the whole older system of tanks and ponds. Drip irrigation and
sprinklers should be encouraged through increasing subsidies.
A centrally sponsored scheme called Pradhan Mantri Krishi
Sinchayee Yojana is a progressive step in right direction. The objectives
of this scheme are
- To expand the cultivable area under assured irrigation (Har
Khet ko pani).
- To improve on farm water use efficiency to reduce wastage of
water.
- To enhance the adoption of precision irrigation and other
water saving technologies (More crop per drop)
- To ensure recharge of aquifers and introduce sustainable
water conservation practices by exploring the feasibility of reusing treated
municipal based water for peri-urban agriculture.
Crop Insurance
Though crop insurance schemes like PMFBY (Pradhan Mantri
Fasal Bima Yojana) covers crop failures, there is a need for broad coverage of
natural calamities as farmers are frequently affected by drought, flood,
cyclones, storms, hails, etc…
Training and skill development
SHG’s and cooperative societies are imparting skills to
farmers. FPO (Farmer producer organizations) can further help in this regard.
CSR (Corporate social responsibility), particularly in capacity building and
skill development could be helpful. Krishi
Vigyan Kendras in every district can educate and train farmers about
innovative technology because it provides grass root approach. Example:
Precision farming techniques like SRI (Systematic Rice Intensification)
The government flagship programs like Rashtriya Krishi
vikas yojana had to include women centric strategies and dedicated
expenditure for improving the skill of woman farmers. We need to have gender
friendly tools and machines for various farm operations. Incentives must be
provided to manufactures to produce gender friendly tools.
Research and development
In the long run, productivity enhancement requires research
towards the discovery of robust seed varieties and other inputs, appropriate
crops and input usage for soil type and effective extension practice.
Better post-harvest management
Public Private Partnership (PPP) in creating market yards
and storages should be fast tracked.
It is important to free agricultural market from the
clusters oligopoly of large traders. E-NAM or National Agricultural Market,
an online trading platform for agricultural commodities in India is an
important step in this direction.
APMC (Agricultural produce market committee) Act 2003, which
introduced all round marketing reform, should be implemented effectively and
genuinely. FPO (Farmer producer
organizations) could be empowered as a parallel to APMC (Agricultural produce
market committee). A tough warning should be sent to hoarders of strict action
under Essential Commodities Act and the prevention of Black Marketing
& Maintenance of Supplies of Essential Commodities Act. Dismantling
intermediaries is very important to ensure food security and better returns for
farmers.
Efficient agricultural export policy, policy of integrated
pest management and implementation of M.S. Swaminathan committee
recommendations are other ways through which the objective of doubling the
farmer’s income by 2022 can be achieved.
India has been a big want to be nation. A want to be nation
must build on its own strength, which in our case is agriculture. We have
climatic diversity; we are a country that can grow 2 to 3 crops in a year,
unlike USA or Europe which can grow only 1 crop a year. USA and EU which are
the largest industrial economies are also the largest agricultural producers.
So we can’t have one at the cost of another. We have to focus on 2nd green
revolution or evergreen revolution which covers more crops in a wide area
with organic manure, irrigation all over India and inclusive of small and
marginal farmers as well, in a sustained manner.
Agrarian crisis is not a measure of how much production
we have lost, rather it’s a measure of how much humanity we have lost.
Let’s make sure that the nurturers of the nation, the farmers are nurtured
properly. There are no magic bullets to address the concerns of the farmers but
greater empathy is a start.
