Indian Agrarian Crisis now moved to

Farmer-the most endangered species

At the margin of economic boom

Posted by Ramoo on February 23, 2007…

Rasheeda Bhagat

There is a growing chorus against the viability of Indian agriculture. A checklist of concerns and a wish-list for Budget 2007…

The tottering Mulayam Singh government in Uttar Pradesh faced another blow last week as 35-year-old Maniram, a farmer from Mahoba district, tried to immolate himself even as the UP Chief Minister was thundering at a rally in Mahoba: “Not a single farmer has committed suicide in UP during my regime and those making such claims are Opposition-sponsored agents. Farmer suicides are taking place only in Congress-ruled states like Maharashtra and Andhra Pradesh.”

Maniram sustained over 50 per cent burn injuries and was in a serious condition. He was protesting the district administration’s “callous approach” in compensating him for the death of his animal. According to his neighbours, Maniram was in dire straits as he had already sold his land to pay back agricultural loans.

Add to this the continuing suicides in the Vidharba region and the agrarian crisis is getting worse as we are on the eve of another Budget.

Shabby governance, outdated or non-existent land records, lack of effective marketing mechanisms or value addition to their produce, bribes and corruption in accessing government subsidies or credit earmarked for them at low interest rates, and inability to access latest technology or agricultural practices have all contributed to making agriculture unviable in India. “In this backdrop, it is no surprise that the small and marginal farmers and wage labourers are increasingly at the margins of an otherwise growing economy. But they constitute the vast majority of India, and status quo cannot be sustained for long,” says Jayaprakash Narayan, National Coordinator of the Hyderabad-based Loksatta, which he prefers to call a `movement’ rather than an NGO.

On the threshold of yet another Budget, the bright intelligent faces of young men from Tamil Nadu one had met at the Infosys campus in Bangalore last year come to mind. Many of them were the children of farmers from Tamil Nadu, none of them wanted to follow the family profession and all of them were thrilled that children from medium-sized farm families were finally going to benefit from India’s booming IT sector. Their one-line answer to the shift from agriculture. “Agriculture in India is not viable.”

So what makes agriculture unviable in India? And what kind of intervention is required to make it viable? What would be a farmer’s wish-list if he could reach his voice to the Finance Minister?

Analysing the various factors responsible for the farmer’s dire plight, increasing numbers opting for suicide and high distress levels among farmers, particularly small farmers and tribals who cultivated their land, Narayan blames the ineffectiveness of our extension machinery; “most farmers are not able to gain from modern technologies for want of knowledge and poor availability of inputs.” He also blames wild price fluctuations adding uncertainty and gives the examples of tomato and onion prices that oscillate dramatically in the 1:30 ratio range. “No farmer can withstand such vagaries when the margin of survival is thin. Even non-perishable commodities like cotton witness wide price range, and farmers have no staying powers or storage facilities to wait for better prices. Industrial lobbies force government to lower tariffs, and OECD (Organisation for Economic Co-operation and Development) farmers often have a price advantage thanks to huge subsidies,” he says.

Also, lack of effective marketing mechanisms, “except in Punjab and Haryana where Sir Choutu Ram’s Mandi Act created vibrant markets” and failure to create a linkage with retail chains have put producers at the mercy of middlemen. “You only have to see the fruit and vegetable markets to understand the plight of the farmers, and even small traders,” he adds.

K. Bhanumathi, Director of the Visakhapatnam-based NGO Samata that works for the rights of tribals in Andhra Pradesh, is sceptical about government schemes coming to the rescue of small farmers and tribals, whose land is consistently being taken away from them on one pretext or the other. “Even the Andhra Budget says it has allocated a large sum for agriculture; but the details tell you that the money is mainly for big dams and big irrigation projects and not for small farmers.”

She accuses the government of taking away land from farmers. “Under the land bank system the banjar (infertile or waste) land that was originally allotted to landless labourers is now being taken away from them for irrigation projects. What is effectively happening is that land is being taken away from one set of farmers/tribals and given to another set that is agitating for land. Empty promises are being made but we find that no real rehabilitation is taking place.”

She adds that any Budget scheme that seeks to help the small farmers should ensure that the land they already have stays with them, and they are given access to water and power at affordable rates.

Bhanumathi doesn’t agree that we Indians are paying too little for our food. “On the contrary prices of all commodities have gone up but the tragedy is that the farmers are not getting more money. The cost of their inputs — water, power, etc — has gone up; so what the government needs to do is ensure that there is more efficient distribution of water and power.”

Echoing Narayan’s thoughts P. Arunachalam, a sugarcane farmer, who also grows some paddy in Cuddalore district of Tamil Nadu, says the fluctuating prices of grains hit farmers badly. “The price of paddy is very low during the harvest season and the increase goes up to Rs 200 per quintal. But how many farmers have storage facilities to wait for better prices? Farmers should be given godown facilities at affordable prices. For those who produce perishables such as vegetables or red chillies and tamarind should be given cold-storage godowns.”

With “agriculture being a gamble against the monsoons”, crops should be completely insured and the farmer’s entire family should be given medical insurance, he suggests.

Credit availability

Coming to accessing credit, Narayan says 60 per cent of Indian farmers have no access to credit from commercial and cooperative banks and borrow at 36-100 per cent. “Costs of private education and hospitalisation add to the burden. The cheap credit offered by government can at best reach the formal credit sector. Even there, given the corrupt and incompetent delivery system, there are too many leakages. In any case, government’s capacity to expand interest subsidies is limited, given the fiscal imbalances. There is no substitute to revitalisation of cooperative credit sector. Evidence shows that in most rural areas, the savings are higher than the credit disbursal. Despite adversity, rural people are naturally thrifty. We need to build a strong and viable credit system that can reach all rural families, backed by effective land records management,” he says.

K. Raghunandan, President, Sugar Division of EID Parry, adds that aggressive canvassing by moneylenders and bondage, along with “hassle-free availability of loan from them at much higher rates of interest” was pushing the Indian farmer into a deeper hole. “Add to this exploitation by moneylenders, local customs and celebrations exhausting working capital, and loan waiver schemes by state governments affecting his credit eligibility, most farmers fail to get new crop loans in time.”

He adds that banks give loans to crops like sugarcane as the recovery is assured with the support from the factory with which the farmers are associated. For other crops banks are hesitant to extend loans to farmers who are unable to repay them, as the price of their produce does not match the cost of production. Also, the labour component of farm produce has gone up from 11 to 25 per cent with migration of labour to urban centres.

Budget wish-list

On his wish-list from the Budget for the agri sector, Narayan says, “Only a combination of daring and innovative strategies, and restructuring of rural economy will rejuvenate rural India.” The Vaidyanathan Committee recommendation to revitalise the cooperative sector should be implemented, but a second dose of debt relief similar to the 1989 Charan Singh scheme is not an option. “Ensure that coops are fully member-controlled, well managed, and financially viable in order to expand their reach and re-deploy rural savings in rural economy,” is his suggestion.

Boosting storage, marketing, and agro-processing through infrastructure, equity and technology support, and member-controlled markets is critical, he adds. For commodities like cotton that get huge subsidies in OECD countries, import tariffs should be raised to protect Indian farmers. “The largest number of suicides are by cotton farmers across the country, and unfair competition from abroad is at the heart of this crisis. Also, a massive boost to healthcare and agriculture will significantly reduce the burden on rural population. Again, altered incentives and accountability are the keys to outcomes. Mere allocations and pious platitudes are not sufficient.”

Economic hubs should be created within rural hinterland, but “with a judicious combination of infrastructure, incentives and market mechanisms. Every family aspires for an urban house site whose value is likely to escalate significantly. This should be leveraged to promote these economic hubs, and encourage skill promotion and orderly migration to neighbouring small towns.”

On what corporates that are directly engaged in acquiring farm produce can do to help farmers, Raghunandan says, “We have an agri crisis because research findings or even inputs like seeds, fertilisers, pesticides, do not reach farmers in time. Add to this the vagaries of the monsoon and lack of irrigation facilities, no assured market for end-products, exploitation by middleman and rising cost of inputs.” Also, monoculture and non-application of organic content led to soil depletion and reduced yield.

Indian corporates, he says, can help by ensuring supply of farm inputs like fertilisers, pesticides and good quality seeds at reasonable cost; reducing the lab-to-land time, providing a one-stop-shop service concept, helping in the introduction of more organic farming and better storage facilities, investing in building food processing industry so that farmers can get remunerative prices through value-added products, developing field instruments to suit Indian field condition particularly for small farm holdings, coordinating with research institutes to improve services at rural level and also playing the role of marketing agencies to export agricultural products.

Land acquisition for SEZs

Narayan says the abdication of government in key social sectors and the appalling failure in education and healthcare impose a disproportionate burden on poor and rural population. “Low literacy and poor health diminish productivity. Access to even indifferent quality private services costs a great deal, and impoverishes farmers and agricultural labourers,” he says.

When it comes to land acquisition and SEZs he feels we have to create equity in land for the small farmer. “Certainly we need to industrialise, or build projects. But the land loser cannot be asked to pay the whole price for economic growth.” He suggests 20-30 per cent more land than required should be acquired and extra land, after development, should be re-allotted to the land losers; this in addition to the compensation at the time of acquirement. Rural people should also be empowered with skills to make them productive workers in non-farm sector, with credit and infrastructural support to help the transition from agriculture to industrial economy,” he adds.


EID Parry’s Raghunandan has these suggestions to help farmers:

Fix responsibility and accountability for extension workers, reward and award system needs to improve.

Reduce gap between lab and land.

Arrange easy availability of inputs in time.

Ensure remunerative price for end product.

Introduce strong and robust crop insurance scheme.

Like other countries give subsidy for agriculture.

Open more farmer training centres in villages.

Direct procurement of end product at field level.

Innovate and identify micro mechanisation suited to rural conditions.

Strengthen existing cooperative system for input service and procurement work.

Improve education and healthcare facilities in rural areas.

Provide water for dry tract and avoid water wastage to sea, improve storage.

Protect agricultural workers by effecting minimum wage rule.

Need-based and result-oriented research.

Mandatory and increased agri-business micro-credit by all lending institutions.

Doorstep services to genuine agri entrepreneurs.

Tax relief and incentive scheme to agri-oriented industry at rural level.

Change present government agricultural procurement systems.

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