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India wants removal of non-tariff barrier in agriculture

Posted by Ramoo on April 2, 2007



GENEVA: India has joined the chorus in criticising the EU’s non-tariff barriers (NTBs) and SPS issues, and market access in agriculture at the WTO Trade Policy Review of the EC.
According to the WTO Secretariat report the EC’s agriculture policies were a matter of concern with its protection by a complex tariff structure, high tariffs, tariff quotas of which some were not filled, and high levels of domestic support and export subsidies.
In its intervention India informed the WTO of its steady, significant intensification of strategic partners dialogue and of a proposed agreement on trade and investment between India and the EU. The negotiations of which could commence shortly and “open vast opportunities for businesses on both sides.”
The EC is one of the largest sources of FDI from India. It is not only India’s largest trading partner, it accounts for almost a quarter of India’s exports and imports. In 2005 India-Europe trade was around 40 billion euros, EU’s exports to India grew by 23.8%, and EU imports from India by 16.2% as compared to 2004.
India stated that it has submitted written questions to the EC for clarification on some of its trade policies, however mentioned that Indian agriculture exporters continue to suffer on account of NTBs and SPS issues.
It pointed out that in market access several instances had been brought to the Indian government’s notice by Indian exporters of meat and meat products, marine products, milk products, egg products, Basmati, mushrooms, refrigerators, lack of intra EU harmonisation of standards, which impede exports from India to the EC.
India stated that it seeks dismantling of these non-tariff barriers to enable it increase access to the European markets for Indian exporters. India also focused on the EC restrictive policy on Services which it urged to take urgent stops to address.
India stated that despite its advantage of young population, complemented by a vast network of academic infrastructure and educated, English-speaking talent, India’s opportunities with the EC in trade services sector are hindered by issues relating to Mode 4, the imposition of unclear ENTs, domestic regulations, territorial requirement to set up business, residence requirements, and discriminatory tax treatment.

Posted in Economix, Globalisation, Marketing reforms, Policy issues | Leave a Comment »

National farm strategy to be presented to NDC soon

Posted by Ramoo on March 28, 2007

Special Correspondent
The document would cover all aspects of agriculture and give a road map

Corporate sector could provide technology, extension advice, marketing, logistics’ Sector urged to institute scholarships for rural students

CHENNAI: A national agricultural strategy is likely to be presented before the National Development Council, which is to meet in two months, Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, said here on Tuesday.
Pointing out that a committee headed by the Union Agriculture Minister had been set up, Mr. Ahluwalia told a seminar organised by the Madras Management Association (MMA) that sub-groups comprising Chief Ministers were holding discussions. The proposed strategy document would cover all aspects of agriculture and give a road map for the farm sector.
Speaking on the corporate sector’s role in rural development, the Deputy Chairman said while the Central and State Governments had a critical role to play in the areas of irrigation and roads in rural areas, the corporate sector could take care of technology, extension advice, marketing and logistics.
On the possible impact of global warming in the country’s agriculture in future, he called for the development of varieties in crops resistant to climate change. The public sector should engage itself in the basic research while the corporate sector could devote itself to making different varieties commercially attractive and building on the basic research.
Water management
Arguing that issues concerning water management were more important than the energy crisis, he said some parts of the country were already in water stress conditions. Though water was the most scarce commodity, people expected to get water free unlike in the case of energy.
Calling for efficient water use among the people generally and among farmers particularly, Mr. Ahluwalia said that even within the existing seeds and water availability, it was possible to achieve 40 per cent to 80 per cent increase in the agricultural yield through improved cultivation practices.
On the free electricity scheme for farmers and the consequent adverse impact on groundwater and water resources, he acknowledged that it introduced distortions into the system but there were political constraints (in lifting the scheme). Pointing out that electricity was massively subsidised in general, he said “there are better ways of subsidising farmers than what we have been doing.”
As for the entry of big players in retail trade and the likely impact on small traders, he said that it would be a good idea to introduce modern retail trade if farmers were to be given a fair deal. “Nowhere in the world has small retailing disappeared. But, nowhere in the world has modern retailing not come in.”
Inaugurating the seminar, K. Ashok Vardhan Shetty, State Rural Development Secretary said the corporate sector could play a vital role in the areas of training, marketing and communication strategies, targeting the rural sector.
He urged the corporate sector to institute a large number of scholarships and endowments for rural students.
Jayshree Venkataraman, MMA vice-president, said a concerted effort towards establishing cottage industries appropriate to natural resources and raw materials available locally might help to retain migration to cities.
© Copyright 2000 – 2006 The Hindu

Posted in Farmers Suicides, Marketing reforms, Policy issues, Second Green Revolution | 1 Comment »

Replace input subsidy for farmer with direct payments

Posted by Ramoo on March 27, 2007

M Rajivlochan

Finance minister P Chidambaram expressed some doubts in his Budget speech about the large subsidy the government sets aside each year in the name of the farmer. Yet, he went on to offer Rs 22,452 crore to the fertiliser industry in the hope that those good souls would pass on this money to needy farmers. The Fertiliser Association of India, the pressure group of fertiliser producers of India, how ever, threw a fit, demanding that it be given Rs 48,000 crore this year. 
   Total subsidy in the name of the farmer is considerable. It is given out to a wide variety of organisations concerned with chemicals, fertilisers, irrigation and power. A quick look at the Budget does not provide an idea of the magnitude of the subsidy. The subsidy bill has increased from about Rs 500 crore 25 years ago to over Rs 40,000 crore now.
   There has been repeated criticism of the subsidies on offer in the name of farmers. It is said they are wasteful and go mostly to the rich farmer. The question often asked has been: Does the benefit reach the farmer at all? But a more pertinent question could be: Are the subsidies even designed to reach the cultivator, assuming leakages are zero? The answer is no.
   In the name of subsidising the poor farmer, the government offers free lunches to industry. There are three assumptions implicit in the present policy: organisations which receive government subsidy pass on the benefits they receive to the farmer; that the government rather than farmer knows best on what items the agriculturist should spend and therefore will subsidise only such items; and it is an impossible task, given our present administrative structure, to provide direct cash subsidies to nearly 12 crore cultivators. None of these assumptions is borne out by ground reality.
   Electricity boards argue that the subsidy given to them is to ensure that the farmer pays only a fraction, if at all, of what other consumers pay. However, this grant assumes that the service is actually reaching the farmer. A brief visit to almost any rural area will show that pumps get energised only for a fraction of the time. In some farmer suicide cases reported from Maharashtra, families of the victims said that the farmer was in despair because of the failure of the electricity board to supply him with power. So much is made of the muchreviled promise by various governments to provide farmers with free or cheap electricity that we seldom bother to see whether the farmer
is getting any electricity at all. Is it possible that the farmers, like all of us, would be willing to pay for their power if the government were to supply it reliably?
   The government in its Big Brother role is assumed to know what to subsidise. Most Indian farmers practise dryland farming. Some 60 per cent of our cultivated area does not have irrigation facilities; subsidies on irrigation and power are meaningless here. Should they continue?
   If subsidies are to lower cost of cultivation, then the NSSO survey of 2003, which shows that the cost of cultivation exceeds agricultural income in much of the country, amply demonstrates that the present complicated method of indirect subsidy is a conspicuous failure. Would it not be better to allow the Indian farmer to decide what he wishes to spend on by simply giving him the money directly? The idea that the farmer might spend his money on drink and drugs is baseless. Providing direct subsidy is a difficult but not impossible task, in terms of funds and implementation machinery. 
   If all farmers in India who own land up to four hectares or 10 acres (and this figure comes to 91 per cent of all farmers in India in the light of data provided by the Indian agriculture census of 1995-96) were to be given a flat subsidy of Rs 5,000 per hectare, it would still come to about Rs 49,000 crore, which is not much more than the present level of subsidy.
   The sum would be less than 10 per cent of Indian agricultural GDP and far less than what many other countries do for their farmers. Compare this with the subsidy of $58,885 million that Japan provided to its agriculture in 1999. This amounted to 2.82 per cent of its GDP and 65 per cent of its AGDP. During the same period the US provided $54,009 million, which was 1.32 per cent of its GDP and 24 per cent of its AGDP.
   It is assumed that the Indian government is incapable of distributing this money to the farmer. If the government were to ask one to repose faith in a babu, one would hesitate. But actually in this day and age, the task of distributing money is easily done by routing the money directly to the farmers’ bank account, which the government already does for most transactions with farmers.
   The government already has an extensive system of land records at the village level, so that it is possible to know who sowed what crop in which field and in how much area. So, it should not be difficult to implement direct subsidies.
The writer teaches history at Panjab University, Chandigarh.

Posted in Marketing reforms, Opinion pieces, Policy issues | Leave a Comment »

Resoulutions passed in 35th National Convention of Bharat Krishak Samaj

Posted by Ramoo on March 14, 2007…
The 35th National Convention of Bharat Krishak Samaj was held at Erode (Tamilnadu) from 17th to 18th February, 2007. The following resolutions have been passed:
Minimum Support Price

The minimum support prices (MSPs) of different crops estimated by the Commission for Agricultural Costs & Prices (CACP) and subsequently endorsed by the government are low and not remunerative. There is a need for up-gradation of the methods for estimation of real cost of production and arriving at the real remunerative prices. The process should be transparent and open to farmers.
Scrap SEZs, promote AEZs

Government should scrap all Special Economic Zones set-up on farmlands acquired from farmers against a mere compensation. SEZs should not be promoted; as such policy tends to usurp fertile farmlands leading to food security problems. Rather Government should promote and encourage Agri Export Zones (AEZs), which is aimed at integrated rural development.
Seed Bill-2004

If the government wants to re-introduce the “Seed Bill-2004”, it should incorporate the all recommendations of the Parliamentary Standing Committee on Agriculture, because seed is the basic need for food security which should not be surrendered to corporates & MNCs at any cost. Further there is no need for any new act for regulating the seed sector. The Plant Varieties Protection & Farmers Rights (PVP&FR) Act is sufficient to regulate the seed sector and should be the only law in the country. The PVP&FR Act should be further amended to provide greater protection to farmers’ rights. The PVP&FR Act is already TRIPS consistent and there is no need for a patent regime on micro-organisms, genes and other life forms.
Agricultural Credit

Rate of interest on all agricultural credit should be brought down to 4% and made uniformally applicable in every State. The loans to farmers should be waved off subsequent on crop failure.
Impact of WTO

Unfortunately Indian agriculture has been dragged into the ambit of the WTO and we have given market access for some agro produces at a time when the developed counties have distorted global prices by their huge support to their farm sector. In this situation Indian farmers cannot compete with the farmers in the developed world. Both EU and US have protected their markets through high tariff barriers and non-tariff barriers. The US through its recent Farm Bill 2007 has increased direct payments to farmers by 10% over the previous years. It has increased direct payments by $ 5.5 billion.
Unethical manipulations and distortions by developed countries in Agreement on Agriculture (A.O.A) and unequal globalisation have negatively impacted Indian agriculture. Government should work out strategy to rectify the inequalities and try to restore the legitimate demands of India pertaining to phasing out of all types of subsidies and support by developed countries, reduction of import tariff, rationalisation of trade imbalances, enhanced market access for India.
Special Product & Special Safeguard Mechanism

As the developed countries have not fulfilled their commitments in the agreement on agriculture for reducing their subsidies and support to the farm sector, India should not open up its markets. For Indian farmers every crop is a Special Product and not a matter for negotiation. If the government wants to save agriculture from any consequent disaster, it should fight for recognition of every crop as Special Product at the WTO and seek for effective application of special safeguard mechanism. If this is not possible then India should ask for restoration of the right to impose quantitative restrictions (QRs) on imports.

Technology Mission on Oil Seeds & Pulses

The Technology Mission on Oil Seeds & Pulses should be revived and reactivated on war-footing because Oil Seeds & Pulses are the vital pillars of National Economy.

Immediate Ban on all GM Crops

Worldwide there are reports of farmers being put to heavy losses on account of cultivation of GM crops. There is a conspiracy being hatched against farmers in the name of increasing production for food security by forcibly introducing genetically modified (GM) crops. India should learn lessons from the failure of GM crops across the world. Recently the US court has called for a review of the approvals of GM crops in that country.
The failure of Bt Cotton, financially crippling thousands of Cotton growers, impelling a large number of them unable to repay the debt to commit suicides by the farming community is a National shame. The Government should put immediate ban on commercial cultivation and trials of all GM crops in the country, because GM crops will cause health & environmental hazards and destruction of bio-diversity.
Marketing of Agro-produce

The free entry of corporates and multinationals in agriculture marketing has raised new problems. They purchase produce from farmers slightly higher than the MSP to capture the market and dismantle the government’s procurement system. Subsequently they hoard the stock, manipulate the market prices and sell at high prices. This is the major cause for the present rise in prices of essential commodities. The manipulations in the futures market is another cause for price rise. Thus the present rise in prices benefits only traders and corporates. Government should immediately ban futures trading on agriculture commodities and restrict direct entry of corporates and multinationals in agricultural marketing.
Imports of Agro-produce

With a view to contain rising prices, the government is encouraging import of agro produces. This measure will be detrimental to farmers’ interest in the long run and destroy country’s food security. Imports of agro commodities should not be encouraged when they are available in plenty in the country.
Food Standard & Safety Act

With a view to destroy the traditional food habits and culture and to encourage the processed junk food of the MNCs and discourage consumption of fresh food, the Food Standard & Safety Act has been brought in. This Act should be immediately repealed.

The government does not give any direct subsidy to farmers. Whatever minimum subsidy the government intends to give for agriculture should be given directly to farmers.

Irrigation facilities

The Government should plan the policies to recharge the level of ground water. The irrigation projects and schemes to be made on priorities and the funds allotted to state Govt’s should not be diverted to other heads. Irrigation projects and linking of rivers should not be done at a cost to the ecology. The projects displaced persons should be compensated in full.
Because the water is the lifeline of agriculture, therefore, it should be saved. The farmers should use the sprinkler and drip irrigation system for irrigation to save the water. The Government should give 50% subsidy on it directly to farmers. The Government should also ensure availability of electricity for agricultural purposes at concessional rates. Exempt Agro Machines, Tools, Equipments etc., from Excise & Vat.
Utility items like tractor, agricultural equipments & machinaries, drip and sprinkler irrigation installations, fertilizers, seeds and agro-chemicals should be kept out from the ambit of excise and vat. Also, the subsidy on them should be enhanced and given directly to the farmers.

Export of Organic Foods

There is an increasing demand and unlimited scope for the export of organic food across the world and Indian farmers are missing this opportunity. The Government should bear the cost of certification of organic produces, which is presently high, and beyond the reach of farmers. The National Horticultural Board & APEDA should bear this responsibility immediately. The Government should also give adequate level of subsidies for cultivation of organic produce and for encouraging their exports.

Testing Laboratories

Well equipped soil, fertilizer, agro-chemicals and seeds Testing Laboratories should be established in every District Headquarter of the Country for the benefit of the farmers.
Promotion of Agro based Industrial Units
Sustenance is just not possible from ever increasing fragmentation of family farms. The Government therefore, should come-up with need based and area specific comprehensive blue print on agro based small and cottage industrial units in the villages and provide adequate incentive and financial assistance to the enterprising public of the rural belt.

Agricultural Insurance

Agri-insurance schemes must be made very responsive and its scope should be enlarged and widened to cover all sorts of calamities and the losses inflicted on the farmers should be adequately compensated. The assessment of losses should be done at village level as a unit in consultation with local farmers. Crop insurance programme should cover all crops in all areas of the country.

Employment Generation in Rural Belt

To generate employment opportunities in the rural belt, the Government should provide ready financial and infrastructural assistance to the farmers for dairy farming, animal husbandry, fisheries, poultry and bee keeping etc.

Agricultural Research

The cost of production has increased phenomenally due to the introduction of capital-intensive unsustainable agriculture. The use of costly chemicals has not only degraded the soil health and factor productivity.
Requisites of Indian agriculture and needs of the peasantry must be given top priority in the formulation of R/D policies. The Government should refrain from thrusting alien technologies on the farming community. Agri scientists should study traditional farming system and upgrade them, if necessary for implementation in farmers field. All farm policies and researches should be done in consultation with local farmers of the area.
Farmers’ representation

We demand that the Central and the State Governments should co-opt farmer leaders in all decision making bodies related to agriculture so as to make the policies more realistic, effective and action-oriented.
US-India Knowledge Initiative Agreement on Agriculture

Indo-US Knowledge Initiative Agreement on Agriculture should be immediately scraped as this treaty is designed to surrender country’s food security and research to US Government and US based multinationals.

Posted in Debt burden, Displacement, Economix, Farmers Suicides, Marketing reforms, Policy issues, Second Green Revolution, SEZs | 1 Comment »

Budget 2007 is an exit budget for farmers, says Devinder Sharma

Posted by Ramoo on March 9, 2007

Express News Service

Ludhiana, March 7: Well-known activist, and Director, Forum for Biotechnology and Food Security, New Delhi says the Budget is an exit-budget for farmers. “This budget does not want the farmers who earn their livelihood. This budget wants them to give up agriculture,” said Dr Sharma, who was in PAU today to deliver a lecture. “The intention of the government help the farmer can be gauged from the fact that farmer suicides continue despite the so called futuristic budgets,” he said.

Ridiculing Dr Manmohan Singh announcement of a grant for Vidharbha and subsequent claim that the impact of it would be visible in six months at farmer suicide ridden land, Dr Sharma said the impact was visible, as the rate of suicide rate has gone up from one in every eight hours to one in every four hours.

Dr Sharma said, “Farmers need credits and need income, too, and for that we need to work towards making agriculture sustainable. But the mindset of our policy maker has changed from that of sustainable agriculture to commercial agriculture. Our finance minister says that and more clearly does out agriculture minister who candidly says there is no place for small farmers

Posted in Debt burden, Economix, Farmers Suicides, Marketing reforms, Policy issues, Second Green Revolution | Leave a Comment »

Neoliberalism and the Ideology of the cancer cell: Growth for the sake of profit

Posted by Ramoo on March 6, 2007


“As Dr. Muhammad Yunus, the Nobel laureate, said, “Faster growth rate is essential for faster reduction in poverty. There is no other trick to it.” So said India’s minister of finance, P. Chidambaram in his budget speech. Drawing on his words must have seemed a politically correct thing to do. Mr. Chidambaram might want to add another quote to his cupboard. This one from the late Edward Abbey, environmental activist and writer. “Growth for growth’s sake is the ideology of the cancer cell.” Few things grow as relentlessly as that cell does, with such fatal results. As the cancer of neo-liberalism claims an ever-higher toll, its greatest theologians now include standard disclaimers in their chant. Growth has to be “inclusive” and “sustainable.” Even the World Bank and the International Monetary Fund have learned these escape clauses. In any case, growth in India this past decade has been neither. The appalling distress in the countryside is just one measure of this. Election after election also rubs it in. Especially that of 2004, which brought the United Progressive Alliance to power.

Even going by the government’s economic survey, by its own other data, agriculture is choking. Per capita growth has been negative. Farm incomes have taken a beating. Thousands of farmers commit suicide each year. The government has long known there is a frightful crisis, one driven by human agency, by state policy. Yet, for all the noise, Central plan outlay on agriculture as a share of GDP sees no increase worth the name. Nor is there anything that touches the acute farm distress on the ground. In that the trend of falling state investment in sector after sector continues, this budget does not break with neo-liberalism. It just dolls it up.

One of the most important steps the UPA took in 2004 was to assign the National Commission on Farmers the grim task of studying this crisis. The work of the NCF caught the imagination of farmers nationwide. In Vidharbha or in Andhra Pradesh, farmers when they speak at all of `relief packages’ do so with scorn. What they do demand is action on the NCF’s findings. It is hard to find to find a single one of its many vital proposals addressed in this budget.

There are no steps towards a Price Stabilization Fund. None at all towards debt relief, let alone a waiver. Nothing has happened that will make input costs cheaper. Racketeering on that front is not only left alone, it can dash on regardless. The ‘huge’ boost for rural credit does not touch the high interest rates, which are such a major source of the trouble. And government knows very well that small and marginal farmers have gained almost nothing from its earlier `expansion’ of credit. No incentives for food crops in crisis regions. No action, to cite just one problem, to prevent the dumping of American cotton subsidized by billions of dollars and devastating prices here and around the world. (In just marketing year 2001-02, as an official report shows us, U.S. raw cotton exports to India had tripled to more than a million bales.)

There is no move to use valid tools like raising duties to halt a process that is literally killing Indian farmers. Import duty on cotton remains at a low 10 per cent. Indeed, the lowering of other duties in many cases will hit other sectors of Indian agriculture too. Not just cotton. If this is a pro-farmer budget, it’s scary to think of what an anti-farmer one would look like. As always, the standards of judging the deal given to poor Indians differ totally from those used to measure what a `sulking India Inc.,’ gets. The big boys shouldn’t be too disheartened, though. Business as usual will resume after a pause for the Uttar Pradesh elections.

Even as the budget is hailed as `pro-farmer,’ there comes the embarrassment to the Centre from a Congress-led State. Responding to a PIL on farm suicides, the Maharashtra government tries telling the Supreme Court that the Center’s dragging its feet over funds for Vidharbha was a big factor in the problem. True, it backs off pleading an error when this is highlighted in the press. But it gives you a picture of how bad things are.

Many have shown that some of the `higher allocations’ of the budget are negative when adjusted for inflation. The Left, for instance, points out that spending on the government’s flagship employment programs is up by 7 per cent. Which amounts to stagnation, given inflation levels. The increase in outlays on food subsidies, at 6.2 per cent, means a cut in real terms.

There is also a rather clumsy dodge on the National Rural Employment Guarantee Scheme. To begin with, it was given Rs.11,300 crore [one crore = ten million] when it needed much more. And that was for 200 districts. Now it is to be “expanded” to 330 districts. But the outlay goes up by just Rs.700 crore. So the number of districts covered goes up 40 per cent. The money goes up six per cent.

The `huge’ hike in outlays for health still does not bring us to even the modest 2-3 per cent of GDP level promised in 2004. View education outlays as share of GDP and you see how far behind we still are. In the end, though, it’s not just about sector to sector funding. It’s the whole direction. And in that very little has changed. India is still on a path damaging and dangerous to the poor.

Big media, though, now view the Finance Minister with a `how-could-you’ air of injured innocence. He actually had to face some questions on television. He was questioned. But from a point of view which, at most other times, he would have been happy with. That is, the liberalization and `reforms process’ from a corporate outlook. (India Shining has been back for a while, jostling for space with India Rising and India Poised. But that’s another story.)

Mr. Chidambaram accused one interviewer of being obsessed “with the corporate sector.” That was code for `wait till after the State elections.’ (“Our program continues after a small non-commercial break.”) He even tried to explain that a “thrust” on agriculture in fact favored Indian industry. And he had a real point there. But I doubt it went home. The debate amongst the elite is still in terms of a `let down.’ A `setback in the pace of reforms.’ For the media, this is India with a shining black eye.

And so we have a budget that gives `top priority’ to agriculture. And eight more farmers have taken their own lives in Vidharbha. This is now a region where farmers killing themselves are directly addressing the Prime Minister or Chief Minister in their suicide notes. After the Prime Minister’s Independence Day Speech in 2006, you might have expected something different. That was a rare occasion. Dr. Singh spoke clearly of the state of our farmers. Even more rare for an I-Day speech, he singled out Vidharbha for special mention. And he clearly acknowledged a major crisis was on in agrarian India. Not a trace of that sentiment can be found in the philosophy or the numbers of this budget.

Nor is there even a sense that much has been learned from the polls in Punjab and Uttarakhand. There is even some bravado about how the Congress has fared better in rural Punjab. The price rise, among other things, was and is a major issue. But the government’s response to it is at most levels tokenism. Not a lesson has been learned by this government. Like others before it, it imagines it will make a few `course corrections’ just before the polls. It has forgotten the reasons for its win in 2004. Nor does it want to see just how awful the crisis in the countryside is.

We are now at that mid-way mark where, historically, the Congress revives the Bharatiya Janata Party. A party gasping for breath after 2004 regains its oxygen. The Congress is hard at work on this in Maharashtra, too. The government’s terrible power cuts have a clear regional, urban, and class bias. Talleyrand is said to have remarked of the Bourbon monarchs of France after their restoration that they had learned nothing and forgotten nothing. The UPA has gone one better. It has learned nothing and forgotten everything.

P. Sainath is the rural affairs editor of The Hindu (where this piece initially ran) and the author of Everybody Loves a Good Drought. He can be reached at:

Posted in Andhra Pradesh, Economix, Farmers Suicides, Globalisation, Maharashtra, Marketing reforms, Opinion pieces, Policies, Policy issues, Vidharba Crisis | Leave a Comment »

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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Posted in Debt burden, Economix, Farmers Suicides, Marketing reforms, Policy issues | Leave a Comment »

Agriculture marketing a high priority

Posted by Ramoo on February 1, 2007…

Why then governments allow farmers suicides even now?

There were two farmers suicides in the month of July. The two were in Karnataka. One in Tumkur district and another in Gulbarga district. The Tumkur farmers committed suicide by hanging himself in his field and the causes are the same ones known to the Prime Minister and Sonia Gandhi! So, too we hope the Gulbarga farmer. one of the many who flock the command area around the Upper Krishna Project in the district to cultivate high value crops like chillies and cotton.
We hope we need not go into the details of the losses made by the AP farmers cultivating chillies. But for those who sit cosy in Delhi bungalows and plush government offices, here are a brief indication what was lost. On average, chilli growers suffered losses ranging from Rs.1 lakh to Rs.3 lakhs on cultivation on 10 acres of land. The suicide farmer, Edukondalu, had taken up chilli cultivation on 10 acres in Ganwar in Jewargi (the state CM. Dharam Singh’s constituency) taluk he incurred a loss of Rs.2 lakhs because of the fall in prices. Many farmers families had deserted their camps and moved to AP because of the heavy crop losses. Thankfully, the newspaper report goes into some detail and how even the fertilise soil of the UKP command area, a” a goldminde” for AP farmers had led to the tragedy. Tragedy to many farming families. Some farmers have reported they have lost at the rate Rs.5 lakhs each. While the high value varieties of chillies, Bayadgi variety, fetched Rs.7,000 a quintal. Suddenly fell to Rs.2,000. The other Guntur variety, fell from Rs.2,500 to just Rs. 1,000.

“Even farmers who had taken up cultivation of cotton had burnt their fingers because the failure of BT cotton and other varieties also failed this season. “While leaving their camps, the AP farmers left behind dumps of chilli in their fields, worth several lakhs of rupees, which was rotting as they could not get the remunerative price for their produce. “There was a chain reaction. Farmers could not pay their lease rent for their fields or the wages for farm labour.

On the very same day of this news item, alongside was another news item. Policemen were on rounds (we don’t know whether there was any lathi charges or not) when the Agriculture Produce Market Committee Act of 2003 was amend and the traders, farmers, marketing yard personnel were staged a bandh. Why? The APMC Act amendment is seen as the government giving in to the MNCs in retail and wholesale trade and that would hit the farmers to get the best prices for their produce.
We do not know the details or the intricacies of the APMC Act. What we know for sure is that the farmers are facing the distress sales of chillies, not only in the one place we have detailed but also in other century old chillies market in Karnataka and elsewhere.

Mr.Deve Gowda, the former PM, is heading a highly strong pro-farmers party and also holding a critical role in ensuring the coalition government hangs on! Gowda also could give some shock to the UPA government in Delhi, if he chooses to do so!

There is a feeling among the farmers of the Karnataka state that Gowda could do much in pursing lot of pro-farmers policies in Delhi. But sop far there is no indication. Rather he seems to be having his own priorities. As an experienced politician he might have his own reasons why he interferes in the Bangalore Metro rail project, why he doesn’t in the farmers issues. Luckily, the Karnataka Dy. CM, Mr.Siddaramaiah, who comes from a predominately small farmers, sheep farming community, has been doing some really genuine radical changes. The crop loans interest rate had been brought down to 6 per cent. Why the PM thinks it fit to ask other state governments to do the same for crop loans?

The irony is there was this news item on the same day. That was about the “second” meeting of the “task force on rural development”. The way the newspapers report this meeting suggests as if it is a UN general assembly meeting! It was a routine bureaucratic exercise considering the “presentations’ by ministries and the ,as usual, P.Chidamabaram’s interventions! All the task force was to discuss was to allot funds for rural roads and rural electrification and additional irrigation.

This is no meeting where the PM should waste his precious time. Rural infrastructure is very important. In fact, we feel, this one-year government which didn’t do much in one year, can do nothing but only concentrate on “infrastructure” alone! Please do what the predecessor government did for National High Ways. Dr.Singh will be remembered only for such initiatives. Not for his silent, all pure all correct conduct of day to day existence!

What rural infrastructure is critical? It is IT connectivity. So, expand broadband connectivity. Set targets. Build rural godowns that will store farmers produce. Cold storages that would preserve perishables for some months. If info-kiosks are installed, farmers can access latest information and also know when to move their crops and where. There must be a price stabilisation funds for ensuring stabilising the prices of sensitive crops like chillies and vegetables and fruits.

MNCs are not evils. Not any more in farming. But there is a need to define what MNCs can and cant do in rural areas. Contract farming is an inevitable current need. Not MNCs, even state level agencies, private sector would come in, as textile mills in Coimbatore are doing in cotton cultivation on contract farming. There are now any number of small scale initiatives by farmers themselves, in contract farming projects, for a number of crops. What New Delhi does not know or what it does not care to know is the fact that banks are terribly ignorant. Why, we know many PSU banks are openly hostile to farmers! The Nabard and banks officials are so ignorant they do not know the latest developments, be it agri information or use of Internet information or an open mind. In India’s biggest bank, there are 5 layers of bureaucracy in the zonal office. Their branch manager takes up a project. After making farmers spend money, time over two months, the zonal office ignoramuses talk through their hats!

Farmers distress comes in plain government indifference. See UPA’s promises not being kept! Banks are not willing to give agri credit! There are market failures! Then, there is a blacout of this rural reality in New Delhi!

Whom to blame? Taking their lives is the only left out choice for farmers who are forced to the wall!

Posted in Economix, Farmers Suicides, Karnataka, Marketing reforms | Leave a Comment »