Distress of bumper harvests

article

Increase in farm output has not ensured decent livelihood for farmers in the country

Bhavdeep Kang

Bhavdeep Kang

The author is a senior journalist with 35 years of experience in working with major newspapers and magazines. She is now an independent writer and author.

Farm-fresh potatoes, tomatoes, brinjals and onions, piled up on roadsides. At a haat, the colourful veggies would be a consumer’s delight. But in the wake of a bumper harvest, the produce is left to rot by farmers, because it isn’t worth their while to haul it to the market. At 20 paise a kilo for potatoes, or Re 1 for tomatoes and onions – a fraction of the production cost – there’s no point in going to the mandi.

Far from doubling their incomes, farmers in many parts of the country - Uttar Pradesh, Karnataka, Gujarat, Maharashtra, Odisha, Jharkhand, Madhya Pradesh, Chhattisgarh - were not been able to recover costs of production in 2017. It was the same story in 2016. And in the preceding years.

Farmers, who hunger-proof the country, are hungry for a better deal. Since the dawn of agriculture, they have been at the mercy of Mother Nature. Now, they are equally vulnerable to the vagaries of the market and the whims of myopic policy-makers. The conundrum of India’s agricultural sector is this: despite massive farm and food subsidies, ie, on input and output, why is agrarian distress deepening and why have farmers’ suicides become a silent epidemic?

Every cultivator, agricultural expert (scientist/economist/activist) and politician knows what needs to be done to rescue India’s farm sector and no one doubts the government’s sincerity of purpose in trying to come to grips with the agrarian crisis. Diagnosis is not the problem. The trouble is a lack of consensus on how to treat the ailing food economy. Should power and fertiliser subsidies to the farm sector continue? Should the needs of farmers be prioritised over those of industry? Should GM food crops be introduced? Should the public distribution system be dismantled and replaced with food coupons? Should export curbs on agricultural commodities be removed? Should state governments encourage farmers by adding a bonus to the minimum support price (MSP) of agricultural produce? Should the approach to agriculture be technology-driven or knowledge-driven? Should farm credit be restructured to keep non-farmers out of its ambit? Should export and import curbs be imposed? Is food sovereignty as important as food security? And so on. Ideally, policy should be as dynamic as agriculture. Alas, the bureaucracy functions as if Mother Nature must adapt to policy rather than the other way around.

Magnitude of the problem

Numbers cannot adequately describe the agrarian crisis, but they do highlight its magnitude. Estimates of average monthly farm income range from Rs 1,600 (Economic Survey, Vol 2, 2016-17) to Rs 6,426.00 (National Sample Survey, 2012-13, 70th round). Likewise, estimates of indebtedness of rural households vary from 35 per cent to 52 per cent. Compare that with the minimum salary of a central government employee after the 7th pay commission: Rs 18,000, which may well be revised to Rs 21,000.00 in the near future!

In other words, it’s far more rewarding to be a peon in the ministry of agriculture than an agriculturist. Recently, 12,543 people – including engineers and MBAs – applied for a peon’s job in the Rajasthan assembly secretariat. This incessant pampering of government employees has had its political fallout, as we recently observed in Gujarat. The Patels, who are among the better-off agriculturists, are nonetheless keen on a fair share of lucrative government jobs. After all, farming is back-breaking work, as compared to that of even a Class IV employee. Denied a decent income, farmers can either quit farming or take to the streets. Given the absence of jobs in the non-farm sector, they have no option but to take the latter course. All through 2017, that’s what they did. Farmers’ agitations broke out spontaneously in Madhya Pradesh (resulting in five deaths), Gujarat, Maharashtra, Odisha, Rajasthan and other states. Most were related to low prices of agricultural produce and high incidence of debt.

Problems of plenty

Farmers are caught between a rock and a hard place. Bumper harvests can be as big a disaster as failed crops. Cultivators live in hope of that rare combination of circumstances – a good crop and high market prices. Even then, they must be nimble-footed and well-informed in terms of market intelligence, if they are to take advantage of favourable conditions. Government experts have reiterated the aims of farm policy so often that they have become shibboleths: crop diversification, drought-proofing, value addition, agro-processing, post-harvest infrastructure, food management chains, etc. The Niti Aayog recently came up with a plan to double farmers’ incomes, as Prime Minister Modi had promised in 2014. Four ideas were presented, none of them new: first, higher prices for produce by reforming markets; second, increasing productivity; third, reforming agricultural land policy; fourth, crop insurance.

The first has to do with marketing, ie, ensuring remunerative prices for agricultural produce. This can best be done by bringing traders and farmers face-to-face, so that intermediaries are eliminated and the best possible price is obtained - a simple demand and supply market mechanism. But that’s not how it works. Silly laws, ostensibly to protect the farmer from intermediaries, are in force in many states, whereby the farmer must perforce go to mandis run by agricultural produce marketing committees (APMCs). This results in what the Economic Survey terms “monopolistic and uncompetitive practices in the inter-state trading of agricultural products”. Why not amend or roll back APMC acts to allow the farmers access to a wider market? Granted, agriculture is a state subject, but with most of India now under NDA rule, there can be no excuse for persistence of these laws, other than vested interests patronised by politicians.

Even then, eliminating intermediaries is easier said than done, as they are the main source of non-institutional credit. They thrive and often have first right over farm produce because successive governments have failed to ensure credit flow to genuine farmers. Studies have shown that a huge chunk of farm credit actually goes to manufacturers of agricultural inputs or is otherwise diverted. Fixing a floor rate for procurement of agricultural produce – minimum support price or MSP – is a time-honoured mechanism for ensuring that farmers do not sell at a loss. It was meant to be a supportive measure, not the default price. But open market prices are so low that the government is forced to step in and make procurements in excess of buffer stock requirements. Also, it predisposes the farmer to focus on crops which enjoy high MSPs. This distorts cropping patterns.

A “price deficiency payment”, whereby the gap between market price and MSP would be met by the government, would certainly eliminate the need for excess procurement – but then, each and every farmer in the country would have to benefit from the payment.

While this is a good idea, the methodology of fixing MSPs – the job of the Commission for Agricultural Costs and Prices – may need to be revisited. Farmers are constantly agitating for upward revision of MSPs, pointing out that input costs are increasing at a faster rate than MSPs, because not all inputs are subsidised. Labour charges, for example, spiralled after the national rural employment guarantee programme came into force. The nutrient-based subsidy regime pushed up the cost of some fertilizers. On the other hand, farmers are also consumers and high MSPs may inflate food costs.

Inter-state trade barriers

The eNAM or online national agriculture market – a direct farmer-to-trader connect - has not taken off, partly because interstate trade barriers have yet to be eliminated. Agricultural states such as Punjab and Andhra continue to impose excessive levies. There are other drawbacks as well. Experts had warned that if fruits and vegetables were not included in the eNAM, prices would continue to fluctuate wildly and they have been proved right.

They had also pointed out that small farmers, who have small quantities to sell, would be left out of eNAM unless aggregators were put in place. Further, small farmers need cash on the barrelhead and cannot afford to wait for payments. Also, the eNAM also relies on the infrastructure of existing mandis, which is inadequate. The second suggestion is to improve per hectare yields. A laudable objective, but one that is currently dependent on availability of water and capital-intensive technologies. It is often lamented that the subsidy-driven approach has squeezed public investment in agriculture and hence the desired improvements in irrigation, seeds and technology have not materialized. An alternate perspective is that the subsidies and investment are mis-directed. Instead of big dams and river linking, which involves huge capital investment, massive collateral damage and social costs, water conservation at farm and village-level and revival of water bodies might yield more enduring results. In any case, most of the investment in irrigation in recent years has been private, that is, tube-wells. The result has been a precipitous drop in water tables across the country. With the north running short of water, the green revolution has been shifted to the east and thus, yields have improved. In terms of seeds, farmers’ varieties have given way almost entirely to hybrids and in the case of cotton, to genetically modified seeds. As for technology, governments have been highly selective, preferring to promote dubious methods like GM crops and agro-chemicals rather than SRI (System of Rice Intensification) and other eco-friendly means of enhancing productivity. This is puzzling, because it is now generally accepted that the use of green revolution technologies causes environmental havoc, loss of soil fertility, water stress and drop in yields over the long term.

Not a single expert has so far been able to explain the rationale behind GM seeds, yet they remain the focus of R& D in agriculture and are cited by economists as the great white hope of farmers. Similarly, scientists can reel off any number of eco-friendly alternatives to pesticides, but these cannot be found outside the campus of an agricultural university. Policy conflicts sometimes border on the absurd. Take farm mechanisation. On the one hand, slaughter of cattle is prohibited. On the other, bulls have been systematically displaced by tractors, rendering them jobless! Likewise, non-milch cows are now ‘useless’, because nitrogenous fertilisers are promoted over farmyard manure. So, what does the farmer do with cattle he cannot afford to feed? The issue of fragmentation of land holdings, which has rendered the bulk of farms economically unviable, is sought to be addressed through land leasing. Fair enough, a bunch of farmers can get together and lease their land to a corporate farm. But fear of alienation from land may be a strong deterrent and anyway, they must be offered alternative employment. Also, large corporate farms may result in food monopolies, such as ‘Big Food’ in the US, where vertically and horizontally integrated food chains have ousted all but the biggest players.

The final point, crop insurance, is the saddest aspect of the agriculture story. On paper, no crop insurance scheme could be better than the Pradhan Mantri Fasal Bima Yojana, because it offers coverage right down to the farm level. But on the ground, it has gone the way of other publicly administered risk-proofing schemes. Far from deploying digital technology to make the process transparent, state governments, banks and insurers have yet to furnish basic data on farmers. The lack of coverage renders the farmer vulnerable to weather and often pushes him deep into debt, which drives suicides and demands for loan waivers. Yet, national politics revolves around agriculture. Agriculture supports the largest chunk of India’s population and is thus a focus area for most politicians. Every incumbent government prays for a good monsoon, so that agricultural growth figures can boost the overall economic picture.

The growth rate of agriculture hovered around 1.5 per cent in 2012-13, picked up to 5.6 per cent in 2013-14, contracted by -0.2 per cent in 2014-15, improved to 0.7 per cent in 2015-16 and surged to 4.9 per cent in 2016-17. The monsoon, obviously, play a critical role in growth figures. Even if they drop to, say, 3.5 per cent this year, the NDA’s prospects in 2019 will brighten. In what could well be Finance minister Arun Jaitley’s last budget (unless the Election Commission of India decides otherwise), the farm sector’s concerns will hopefully be addressed on an

urgent basis.

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