No transition to sustainable food systems possible without a living income for farmers

Pic courtesy: Indian Express

In the run-up to the UN Food Systems Summit aimed at achieving more sustainable, equitable and resilient food systems, the UN Secretary General, Antonio Guterres, said: “A well-functioning food system can help prevent conflict, protect the environment and provide health and livelihoods for all.”  

“In food, there is hope.” 

Laudable words, indeed. As the world faces a growing risk of food shortages due to climate change, with several studies warning of the dismal scenario ahead when production of staple crops is expected to contract by almost a third by 2050 in case temperature rise continues unabated, transforming the global food systems to meet the future needs of the people, so as to attain health and nutritional security for one and all, is certainly a timely initiative. More so at a time when increasing desertification, loss of biodiversity, air and water pollution and the devastation intensive farming practices have wrought to soil health and environment had set the alarm bells ringing for long. 

Coming at a time when growing corporate control over agriculture has pushed small farmers to the margins, with monocultures leading to destruction of natural resources, only time will tell whether partnerships between different stake-holders and the commitments from national governments really help to radically transform the existing highly unsustainable food systems. This becomes more difficult to achieve given that high levels of income insecurity is either leading indebted farmers to take the fatal route or abandon agriculture to move to the cities, and those who are left on the farm seem to be somehow surviving against all odds. 

While there is no denying that food provides hope, as the UN Chief said, but unfortunately the people who produce food do not see any hope. 

“Every genuine farmer is now struck unfairly on a treadmill with accumulating debts to meet unless he goes bankrupt, commits suicide or finds another source of income,” a British farmer had summed up the plight of the agrarian community. A banner put up recently by dairy farmers in Northern Ireland loudly announcing -- We can’t afford to feed you anymore – is a telling sign of the crisis that dairy farming are faced with. With prices remaining more or less static for eight years in a row, dairy farmers are unable to recover the cost of production. 

For the same reason, 93 per cent of the dairy farms have closed down since the 1970s in America. Not only dairy farmers, small farmers have also quit agriculture in large numbers. With median incomes in the negative for almost a decade now, and saddled with a huge bankruptcy, farmers have been forced out, hastening the decline of rural America. Mary Rieckmanns is one such farmer, whose family has been raising cows in Wisconsin for generations. “I sometimes feel they are trying to wipe us off the map,” she told the TIME magazine. 

In early March this year, French farmers had hung suicide dolls on trees outside Parliament drawing attention to the economic hardship they were faced with. In neighbouring Germany, farmers too have been protesting, expressing their anger by driving tractors to the cities. In most other European countries, farmers have time and again demonstrated against the sliding farm gate prices, which have rendered farming unprofitable. “What is point to being in debt all the time, and toiling for no reason? We are sacrificed, so the consumer is always happy with low prices,” Dominique Metenier, a French farmer had lamented. 

Concentration of power in the hands of a few multinational companies has resulted in unfair trade practices hitting livelihoods of millions of small farmers and workers in Latin American and African countries. Take the case of chocolate, which is a dominant player in the $210 billion global confectionary industry. While the industry rakes in huge profits, hundreds of thousands of cocoa producers in Africa live on meagre incomes. With child labour rampant in the cocoa plantations, a study has shown that the average income for a large percentage of small cocoa farmers is less than the retail price of a chocolate bar. 

In case of banana, the most eaten fruit in Europe and North America, for growers in Ecuador, Colombia, Costa Rica and Dominican Republic, from where the fruit is largely imported, their earning is anything between 5 to 9 per cent of the end consumer price. The situation is no better for coffee growers, where a majority of the growers live on less than the extreme international poverty line of $1.9 per day. 

To draw attention to the deplorable economic conditions that growers were living with, the World Coffee Growers Forum had roped in the well-known economist Jeffrey Sachs who has proposed a global fund of $ 10 billion a year to help pull out growers from the clutches of extreme poverty. 

In India, which has the largest population engaged in agriculture globally, for almost ten months now tens of thousands of farmers have been protesting at the borders of New Delhi. While the protesting farmers are calling for a repeal of the three farm laws that the government had brought in September last year, which facilitate the entry of free markets in agriculture, farmers are also demanding a law that provides a guaranteed price. Meanwhile, the latest report of the Situational Assessment Survey of Agricultural Households 2018-19, an extensive and elaborate nation-wide survey, shows that the farm incomes have been steadily on a decline. Increasingly, non-farm income occupies a bigger share of the average farm incomes, with earning from crop cultivation alone dropping to a paltry Rs 27 (US$ 0.37) a day. 

What emerges clear is that farming is no longer a viable livelihood. While farmers grow food for the world, they themselves live in hunger. To expect the same beleaguered global farming community, already reeling under indebtedness, suicides and exploited ruthlessly by the markets, to be the strong pillar buttressing the proposed transition towards a sustainable food system will remain a dream. The entire global focus therefore must be to first come up with structural transformation required to provide farmers with an assured and guaranteed income. 

Or else, we’ll continue hoping against hope. #

Source: No sustainable world without a living income for farmers. Sept 22, 2021. Fairfood.nl https://fairfood.nl/en/resources/un-food-systems-summit-no-sustainable-world-without-a-living-income-for-farmers/?fbclid=IwAR0G-iOvRueKOUCx8Gc_vbXDTG1tohRvXsHhci3EFC_rEkrLZkBTLlSbsmE

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The demand for minimum assured price has global implications

A minimum assured  price is the determining factor. 

Addressing the Oxford Real Farming Conference last week, I said that the iconic farmers’ movement in India will have tremendous global implications. If the Indian farmers succeed in making Minimum Support Price (MSP) a legal right, it will cause major disruptions in international trade with focus shifting from trade competitiveness to first ensuring that livelihoods of farmers – the primary producer – everywhere in the world become economically viable and sustainable.  

At the same time, instead of leaving farmers to face the vagaries of markets, which has pushed farmers globally in a debt trap, the demand for ensuring that no trading takes place below the MSP not only provides farmers with a safety net but will gradually become an economic design for the rest of the world to emulate. Across the globe, farmers continue to suffer the consequences of keeping farm gate prices artificially low so as to keep the economic reforms viable. An economically worked out minimum assured price is what would make farming a viable proposition. 

At a time when the world is increasingly looking towards ‘growth without economic growth’ the time has come to make farmers an equal partner in growth. This can only happen when a price assurance is given to farmers. 

Take the case of coffee. While the global coffee market was estimated at $ 102.5 billion in 2019, growers have only received a small fraction of the price – not more than 1 per cent – of the end price a consumer pays. While coffee roasters and retailers rake in huge profits, a majority of the 12.5 million coffee growers somehow survive below the extreme poverty line of $1.90 a day. Although there are several proposals for responsible marketing initiatives, including setting up of a Global Coffee Fund, probably the best way forward would be to provide an MSP to coffee growers.

Given the fact that even the multinational giant Nestle has expressed helplessness, providing an assured price to coffee growers in an otherwise exploitative global value chain is actually what should constitute responsible marketing. This holds true for other agricultural commodities as well. The implications of the Indian farmers protest therefore are far reaching. 

Writing in these columns, this writer had earlier explained how more than 90 per cent of the cocoa farmers were living in extreme poverty, receiving only $ 1.30 as the average daily income. Like the coffee growers, cocoa farmers’ share of income in the end consumer price is hardly a fraction of the enormous profits the chocolate manufacturers make. Just because these farmers are poor no one has actually bothered till recently to look at their plight, to know how markets have destroyed millions of farm livelihoods.  

Coming back to the disruptions expected in international trade, and contrary to the protesting farmers demand, pressure continues to be built on India in the World Trade Organisation (WTO) to dismantle the Farm Support Programme, which means curtailing the MSP for wheat and rice to keep it within the prescribed limit of 10 per cent for product-specific support under the Aggregate Measure of Support (AMS). According to the US, India has for a number of years exceeded its 10 per cent support limit, and is actually under-reporting the extent of support. While India has contested these claims, it does explain why India is reluctant to commit on the farmers demand for extending the MSP delivery for 23 crops for which the prices are announced every year.  

The US and its allies have time and again said that the MSP regime in India disrupts domestic and global prices. Strangely, while the US points to Indian support to farmers as a hurdle in global trade, the product-specific subsidies being provided by the US, Canada and European Union actually distorts trade and makes agricultural exports from the developed countries appear globally competitive. In reality, it is the huge agricultural support that these countries provide for commercially important farm commodities that lowers the international prices. As a result of which the MSP being given to wheat and paddy farmers in India looks to be higher. Let us not forget, these subsidies are in addition to the $ 246 billion of farm subsidies the OECD provided in 2018.  

According to a joint paper some years back by India and China before the WTO, the three big layers -- the US, EU and Canada -- provide for 90 per cent of the product-specific support for agricultural commodities thereby grossly distorting global prices. The total farm support these countries provide – exceeding the 5 per cent AMS limit for rich countries – is to the tune of $ 160 billion. In many cases, this support is twice the total value of the crop produced (215 per cent for wool; 141 per cent for mohair by the US; and in the EU by 120 per cent for white sugar and 155 per cent for tobacco). This huge subsidy support depresses global prices. 

As if this is not enough, the Organisation for Economic Cooperation and Development (OECD) comes out with another shocker. Even against these depressed international prices, the prices Indian farmers get are still 13 per cent less. 

Developing country farmers therefore have in reality been silently bearing the true cost of such enormous market price distortions. The export competitiveness that we see is built on the massive subsidy support these countries provide to agriculture, year after year. The time to end these price distortions has come. Protesting farmers have now provided policy makers a direction to rethink and redesign economic policies to usher in sabka saath sabka vishwas by revisiting farm policies, to draw from inherent strengths rather than borrow failed policies from abroad.  

Farmers demand for making MSP a benchmark for domestic and international trade is expected to result in severe disruptions in international trade, and will also result in betterment of a large section of country’s population. What the protesting farmers are standing for holds the key to future growth, and provides a road map for bridging the huge income disparity the world has failed to address. 

Farmers agitation will impact global trade. The Tribune. Jan 16, 2021

https://www.tribuneindia.com/news/comment/farmers-agitation-will-impact-global-trade-199058?fbclid=IwAR23Os3eT4Lmg_579aFkuXzwc9I1r6b69exfYL5vnrPSD87uoFEkag2-eTw

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Providing An Assured Monthly Income is the First Step Towards Addressing Agrarian Crisis

A decade after Avtar Singh committed suicide unable to bear the pressure to repay farm loan; his two sons took the same fatal route. Roop Singh, 40, and his younger brother Basant Singh, 32, jumped into the Bhakra canal in Punjab. They were residents of Patiala district in Punjab.

Two generations of the family were consumed by the scourge of mounting farm debt. While the two sons ended their lives in November 2017, their father had died some 10 years earlier, in 2008. Both the brothers together owned 2.5 acres of land and were cultivating another 30 acres on contract. But unable to generate any profits, the outstanding debt continued to swell. After all, how long can a farmer be expected to draw credit from multiple sources to repay the initial loan amount. The vicious cycle of mounting indebtedness eventually takes its toll.

There is hardly a day when reports of farmers committing suicide do not appear in Punjab newspapers. Punjab, the country’s food bowl, is no exception; the serial death dance across the country shows no signs of abating. The tragedy that struck these farming families symbolises the
agony that the entire farming community is living with. There is hardly a day when farm suicides are not reported from one part of the country or other. In the past 21 years, more than 3.20-lakh farmers have committed suicide; every 41 minute a farmer ending his life somewhere in the country. Those who have refrained from taking the extreme step are no better. They continue to somehow survive, living in acute distress, and hoping against hope. Several studies have shown that almost 58 to 62
per cent farmers sleep empty stomach.

Farmers are in reality the victims of an economic design. A recent report by CRISIL points to the denial of a rightful income as the major reason behind the agrarian crisis sweeping through the country. “While the average annual growth in Minimum Support Price (MSP) was 19.3 per cent between 2009 and 2013, it was only 3.6 per cent between 2014 and 2017,” the report states. This minimal increase in the MSP does not even correspond to the annual rise in DA for the government
employees. In order to keep food inflation under control, successive governments have denied farmers their rightful income. The entire burden of keeping food prices low has been very conveniently passed on to farmers. In other words, it is the farmers who are bearing the entire
cost of subsidising the consumers. Farmers are being deliberately paid less, kept impoverished. Still, what farmers don’t realise is that every time they take to cultivation, they actually cultivate losses.

The Commission for Agricultural Cost and prices (CACP) computes the net returns. Let’s try to see whether the net returns have increased. In Maharashtra, which has been faced with massive silent protests by Marathas, and which I believe is the primary reason for the discontent, the net return per hectare for paddy is Rs 966, which means if worked on a monthly basis it will come to less than Rs 300 a month. For Ragi, Maharashtra farmers actually incur a loss of Rs 10,674 per hectare; for Moong (minus Rs 5,873); for urd (minus Rs 6,663). Even for cotton, the net return is only Rs 2,949 per hectare. Considering that cotton is sown in June and its harvesting begins in October, with the
pickings going on to November, December or even January, the average income per month from cultivating cotton comes to a paltry Rs 700 per hectare. 

Viewed from the national level, the net returns for crops like paddy, sugarcane, maize, and cotton have actually declined in the past three years. For most of the dryland crops, the returns are in the negative. If the farmer is destined to harvest losses, I wonder what kind of technological and financial support can bail them out. Giving them more credit, even if it comes from institutional agencies/banks, has only pushed them further into a debt trap. As a former Prime Minister Chaudhury Charan Singh had once remarked: A farmer is born in debt and dies in debt.

The mandate for CACP, which works out the MSP for various crops, is not only to provide an assured price to farmers but also to ensure that it does not lead to inflationary pressures. The prices therefore are deliberately kept low, and in many cases are actually less than even the cost of production that the farmers have to entail. This economic design is not in any way peculiar to India, it is global. As John F Kennedy had once remarked: “Farmer is the only man in our economy who buys everything at retail, sells everything at wholesale and pays for freight both ways.” But what is not being realised is that farmers in US/Europe are being paid massive subsidies, including Direct Income Support. In
India, farmers only receive input subsidies which actually benefit the manufacturers.

The entire burden of keeping food prices low has been very conveniently passed on to farmers. In other words, it is the farmers who are bearing the entire cost of subsidising the consumers. While farmers were denied their rightful income, huge salary jumps were provided to other sections of the society. From a monthly salary of Rs 90 per month in 1970, the salary of school teachers for instance jumped by 280 to 320 times by the year 2015, a period of 45 years. In the same period, salary of
government employees went up by 120 to 150 times; and that of college professors by 150 to 170 times. Wheat price for farmers on the other hand has increased by a paltry 19 times in the same period.

Farm incomes remain almost frozen or bare enough to cover only the cost of production. Keeping food prices low is also in consonance with the dominant economic thinking aimed at drastically reducing the work force in agriculture.

This is what the World Bank had desired way back in 1996. It had expected 400 million people to be moved out from the rural to the urban areas in India by the years 2015. Since every World Bank loan comes with roughly 140 to 150 condionalities, each loan re-emphasised the urgency to move farmers out of agriculture. Former Prime Minister Manmohan Singh had time and again expressed the need to shift 70 per cent farmers. Former RBI Governor Raghuram Rajan used to say that the biggest reforms would be when farmers are moved out of agriculture, to meet the ever-growing demand of cheaper labour for the infrastructure industry. The National Skill Development Council already has spelled out plans to bring down the population in farming from the existing 52 per cent to 38 percent by 2022. For all practical purposes, debt and farming have now become synonym.

Seventy years after Independence, and 55 years after the Green Revolution was launched, economic freedom continues to elude farmers. Economic Survey 2016 made it abundantly clear. Accordingly,
the average income of a farming family in 17 States of India does not exceed Rs 20,000 a year. In other words, farming families in roughly half the country are surviving on less than Rs 1,700 a month. Knowing that it is not possible to rear a cow in the same amount, I shudder to think how
these families survive year after year. 

It is generally believed that expanding irrigation and raising crop productivity is the way to enhance farmers’ income. If irrigation and high productivity alone could raise farmers’ income I see no reason why Punjab, the food bowl of the country, has lately turned into a suicide hotspot. Punjab has 98 per cent cultivable area under assured irrigation and the crop productivity matches with the best in the world. With 45 quintals per hectare productivity of wheat and 60 quintals/hectare for rice, Punjab tops the global chart. And yet, Punjab is witness to a spate of suicides every week. Policy planners have refrained from looking beyond raising crop productivity as the answer to the worsening agrarian
crisis.

I am of the firm opinion that a tinkering here and there is not going to address the agrarian crisis. It needs a holistic approach, a paradigm shift in economic thinking. To begin with, the effort should be to make farming economically viable. After all, everything boils down to how much net income a farmer gets in his hand at the end. Therefore, three steps that immediately need to be considered are:

1) The Commission for Agricultural Costs and Prices, which works out the MSP for crops, should be directed to factor in 4 allowances in the MSP being paid to farmers – House allowance, Medical allowance, Educational allowance and Travel allowance. So far, the MSP only covers the cost of production. Compare with the government employees who get a total of 108 allowances.

2) Since MSP benefits only 6 per cent farmers, it needs to be understood that the demand for providing 50 per cent profit over MSP will benefit only these 6 per cent farmers. For the remaining 94 per cent farmers, who are dependent on the exploitative markets, the need is to redesign the CACP into a Commission for Farmers Income and Welfare, with the mandate to provide a minimum assured monthly income package of Rs 18,000 to a farmer’s family. 

3) Public sector investments must come in urgently for constructing APMC mandis, and also for storage godowns. At present, there are only 7,700 APMC mandis. What India needs is to set up 42,000 mandis for every 5 kms radius. And like in Brazil, where it is mandatory for a market
yard to procure anything a farmer brings, APMC mandis should be quipped to do the same. #

The article was first published in the State of India's Environment 2018. 
https://www.downtoearth.org.in/blog/agriculture/it-s-time-we-shift-farmers-economic-burden-62229?fbclid=IwAR11LZLo9TYdHKTpljocjIHGxougPjmkf0HRWlBNGE4HU-rrC029mKRV37g

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