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It’s high time farm pricing got a booster dose

Posted by Ramoo on September 26, 2008

Amrita ChaudhryPosted: Sep 26, 2008 at 0110 hrs IST

Ludhiana, September 25 With theWorld Bank giving a call to shift focus on agriculture to tackle food crisis, data gleaned from Punjab’s villages only add to its urgency.

The national census for the year 1991 showed Punjab as having 11 lakh farming families. Of these, 45 per cent were small or marginal farmers who owned fields measuring less than five acres. This figure in the next census in 2001 slid to 9.7 lakh and the percentage of small farmers to 30 per cent.

In other words, 30,000 farmers on an average quit agriculture each year. The primary reason for this has been the decline in profitability of crops, particularly paddy and wheat—a phenomenon that agricultural experts are trying to tackle along with suicides by farmers. For example, take the case of Gurdip Singh, a small farmer from village Mehla Kalan. Gurdip, who owns two acres of land, says, “I can just manage to raise food grains for my domestic use from these two acres.”

The situation of Avtar Singh, a farmer with 20 acres of land in Alamgir village, is no different. “My inputs costs over the years have skyrocketed while the prices of crops haven’t risen. And what we all forget is that farmer too is a consumer. I have to pay the college fees for my two children, which runs into lakhs per annum. Then there are the medical costs of my family.”

To drive home his point, Avtar Singh says, “A couple of years ago, one of my kidneys was damaged in an accident. I could not afford treatment. I know there will be a day when all my 20 acres will be lost in medical treatment.”

R S Sidhu, head, Department of Economics, Punjab Agricultural University, agrees as he explains, “The data speak so. The best period for agriculture in the recent past was between 1990 and 2000, more precisely till 1995. While the crisis in agriculture began around 1995, it was nationwide then. Now, however, Punjab alone is suffering. Our calculations have shown that while input costs have gone up dramatically, the rise in Minimum Statutory Price (MSP) of crops is very slow and this has resulted in reducing of profit margins for the farmers.

Sidhu adds, “Since 2001-2007 the input costs have risen by 8-9 per cent while the MSP growth has been hovering around 2 per cent. The wheat MSP announced this year (Rs 1,000 per quintal) had brought a relief for farmers and when the picture was easing out the latest news of Rs 850 as MSP for paddy this year is like a bolt from the blue.”

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‘Farmers worse off than lowest-paid babus’

Posted by Ramoo on August 20, 2008

CIFA representation to Prime Minister on Farmers income

Surinder Sud in New Delhi August 18, 2008 08:33 IST

The apex body for farmers’ organisations has stated in a representation to the government that even big farmers were worse off than the lowest-paid government employees. It has charged the government with discrimination against farmers vis-�-vis workers from other sectors.

While the government has taken no more than four months to implement the Sixth Pay Commission report, even going beyond the recommendations, there has been little action on the report of the National Commission on Farmers headed by Dr MS Swaminathan even after 22 months. This commission had suggested measures to ensure that the net take-home income of the farmers was comparable with that of civil servants.

This has been stated in the representation submitted by the Consortium of Indian Farmers Associations to Prime Minister Manmohan Singh. It has quoted from the report of the Arjun Sengupta Commission on unorganised sector workers and some studies by the Planning Commission and other organisations to support its contentions.

The Arjun Sengupta report had said that the average monthly income per household from cultivation was Rs 1,578 a month for small farmers and Rs 8,321 for big farmers in 2003. In comparison, the lowest-paid government employee got the pay and perks exceeding Rs 10,000 a month.

The Planning Commission studies have shown that the income ratio for agricultural workers and non-agricultural workers has deteriorated steadily from 1:1.8 in 1950-51 to 1:2.8 in the period 1978-79 to 1983-84 and further to a whopping 1:5.2 in 1998-99 to 2003-04.

The CIFA memorandum, signed by its general secretary Chengal Reddy, has also referred to a study conducted by the Hyderabad-based NG Ranga Agricultural University to point out that a farmer needed to cultivate 15 to 20 acres (6 to 8 hectares) of dry land to earn an income of Rs 4,000 (equivalent to that of a peon) in Telengana and Rayalseema in Andhra Pradesh.

In the coastal areas of the state, the farmers needed to cultivate paddy on at least 10 acres (4 hectares) to earn the same level of income. The average farm holding in India is less than 2 hectares.

For the plight of the rural people, Reddy has blamed the apathy of the government towards the farmers, as reflected in the fixation of low minimum support prices for crops. He has cited the report of the Parliamentary Standing Committee on Agriculture (report No 41 dated 22 July, 2008) to substantiate this plea.

The report had stated that the prices of agricultural produce received by the farmers were lower than the market prices and were often less than the cost of cultivation. The committee had favoured fixation of remunerative prices for the farm produce.

The Swaminathan Commission had recommended that the MSP should be at least 50 per cent more than the weighted average cost of production. While some relatively less consequential and peripheral suggestions of this commission have been included by the government in its national policy on agriculture, the key recommendations have so far been ignored.

The CIFA has also pointed out that the marginal farmers usually turn landless labourers and the small farmers become marginal farmers during their own lifetime. This amounted virtually to their demotion. The government employees, on the other hand, have been assured at least three promotions during their service.

“Wide, unacceptable disparities in farm and non-farm incomes have occurred mainly because the agriculture produce is underpriced for decades and the surplus amount is transferred to organised sector workers including the government employees, whose productivity does not increase even nominally with successive pay raises,” the representation has maintained.

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Farmers vs peons

Posted by Ramoo on August 20, 2008

Business Standard / New Delhi August 20, 2008, 5:48 IST

By pointing out that the overwhelming majority of farmers are economically worse off than the lowest-paid government employee, the apex body of farmers’ organisations has not unveiled any secret. This has been well known for some time. And although the spate of suicides by farmers in recent years has not usually been by the poorest among them, the severe problems faced by farmers have come into focus. The service done by the Confederation of the Indian Farmers Associations (Cifa) is to dig out some intriguing evidence from reports of various committees and commissions, in order to make its point. Cifa has simultaneously sought to highlight the steadily growing gap between income levels in the agricultural and non-agricultural sectors. This is a matter of special concern, especially considering that the proportion of the population depending on agriculture for subsistence is still more than 50 per cent, while the share of agriculture in GDP has dropped to 18 per cent. By definition, the average income in the non-farm sector will be nearly five times what it is in agriculture. Indeed, Cifa quotes studies done in the Planning Commission to show that the ratio is 1:5.2 — whereas a quarter-century ago it was 1:2.8.

Cifa has alluded to the findings of the Arjun Sengupta commission on unorganised workers to affirm that the earnings of even the bigger farmers compare rather poorly with those at the lowest rungs of the government system. The average monthly income per household from cultivation was reckoned by the commission at a paltry Rs 1,578 for small farmers and Rs 8,321 for the big farmers. By way of comparison, the lowest-paid government employee now gets Rs 10,000 a month. It is an easy point to make after this that while the government has taken no more than four months to implement the 6th pay commission report, and in fact improved on the commission’s recommendations, little action has resulted from the report of the National Commission on farmers, headed by M S Swaminathan, in 22 months.

The important issue is what keeps farm incomes low, and what needs to be done about it. The answer, however, is not what the Swaminathan commission suggested, namely to raise the government’s minimum support prices (MSP) by at least 50 per cent more than the weighted average cost of production. This is a solution that will add to food costs, and cause inflation. It could even result in an increase in the general incidence of poverty, because the primary link to poverty is food prices. Rather, the solution lies in bringing about a structural transformation in the economy, achieving significant productivity gains on the farm and simultaneously reducing the number of people who live off agriculture. That means creating more non-agricultural jobs, which in turn means achieving rapid growth in the sectors and activities that generate the maximum number of entry-level jobs. One obvious answer that this points to is labour-intensive manufacture of simple products, as the Chinese have shown. But this requires a change in the country’s labour laws, which the country’s politicians will not allow. If legislators could see the link between labour laws and the existence of rural poverty, perhaps their attitudes might change.

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