What India is doing today to Agriculture was done by the West with disastrous consequences

Around the mid-1980s, my interest grew in the extent of subsidies rich developed countries were giving to the agriculture sector. If farmers in rich countries were allegedly doing so well, why did these governments, all champions of the free market, have to provide subsidies to their farmers? Generally speaking, no political regime wants to subsidise Agriculture; they would rather put all the eggs in the corporate basket.

Then during my travels to the USA and Europe, especially the countryside, I witnessed the devastation market-oriented agriculture had done to rural communities in America, Canada, and in Europe. We are constantly told in India that developed countries are so prosperous and their farmers are in such good shape that we need to copy the same model. In reality I found that whatever remains of the American agriculture today is entirely due to the massive subsidies the government provides.

When WTO came into existence, I was commissioned by British journal The Ecologist to do a column on how the WTO regime would benefit Indian farmers. In that column I compared Indian farmers to a European cow, comparing the subsidies that a European cow received vis a vis an Indian farmer’s income. It became a major talking point among the economists and the UN Human Development Report by the UN and the World Development Report by the World Bank both mentioned dairy subsidiaries in comparison to developing world.

Agriculture is being sacrificed to serve the economic interests of the corporate sector; it happened in America, it happened in Europe and now it is happening in India. But this model has not worked anywhere, not in America, not in Europe or in Canada and Australia. For us in India the sensible thing would be to create our own model rather than copy from the rich countries depending upon our needs and circumstances. Even the global community is today looking towards India for new ideas.

Dominant economic thinking is that we have to reduce the size of the population dependent on agriculture to achieve higher growth. when I visit foreign universities, economists endlessly argue that there is no other way than this. One of our former RBI Governors in fact went on record to say that the biggest reform in India would be when we can move people away from agriculture to urban areas, which need cheap labour.

If we take this migration of people to the cities as employment generation – creating an army of dihadi mazdoor - there is something fundamentally wrong with our economic thinking. There are lessons from the lockdown last year, when we saw the plight of migrant workers, as hundred million walked back long distances to their villages. I call these migrant workers ‘agricultural refugees’. They were pushed to the cities because the economic paradigm created by the dominant thinking has made rural areas economically unviable.

In America , 1.5 percent or so of the population depends on agriculture, agriculture by this warped definition should have been a lucrative profession. But it is not. Agriculture in American is facing a severe crisis, with farmers saddled with a bankruptcy of $425 billion as of July 2020. The idea that fewer people engaging in agriculture will ensure prosperity has clearly outlived its utility and it is time for economists to stop flogging this dead horse.

There is another flawed argument that larger the land holding size, the better the bargaining power. The average land holding size in the US is 440 acres while 86 percent of Indian farmers have land holdings of less than 5 acres. It is therefore argued that we need aggregators and contract farming, which would enhance bargaining power of farmers and there will be price discovery. My question is why did this then not happen in America? Or Or in France where the average land holding size is 135 acres? Or Canada where it is 3000 acres; or in Australia where it is a staggering 10,800 acres?

When Ronald Reagan was encouraging big corporates to replace the allegedly inefficient small farmers, the world did initially go into surplus food production, prices fell and consumers were happy . But a country where over 50 percent of the population are involved in agriculture, we do not have to follow what America did but go by what Gandhiji said, production by the masses, not production for the masses. In fact, that is what PM Modi also envisages, Sabka Saath Sabka Vikas.

As I have said before, economists have to be held accountable for the crisis the agriculture sector the world over is facing. They have misled us to believe that this model of economic growth works. They need to go beyond Economic theory and look at the ground realities. The reverse migration we saw in India should be a lesson for them to go into reverse economic thinking. Rather than pushing people to the urban areas, the challenge is how to make rural areas economically viable and profitable.

***

Indian farmers are still on the streets. Their agitation is far from over and the whole world is eagerly observing how it shapes up. The movement has moved out from the Delhi border to various parts of the country as farmers have started going to villages, holding maha-panchayats and taking their message to more and more people. This is possibly the greatest mass movement of our times.

Just two years back, the chief economist of the US Department of Agriculture admitted that since the 1960s, American farm income has seen a steep decline if you adjust for inflation. Whereas in India we are told that free market agriculture model would make farm income go up. I fail to understand why that did not happen in first world countries after they opened up?

Bedabrata mentions in his Times of India that the price American farmers get for wheat today is less than what they used to get during the American civil war. In Canada the wheat price in 1867 when adjusted for inflation was $30 per bushel. 150 years later, in 2017 the price had come down to $5 per bushel. This is what free markets have done to agriculture.

In the US, 40% of average farm income actually comes from subsidies. It clearly demolishes the argument that markets lead to price discovery. A study of cotton in America shows that around 2005 there were 20,000 cotton growers. American farmers were getting a subsidy of 4.7 billion dollars in 2005 to produce a crop which was sold at 3.9 billion dollars. It depressed global cotton prices. Farmers in Africa and India were priced out.

We were led to believe that our farmers were inefficient and unproductive; but in reality, Indian farmers were priced out because of subsidies that American farmers received from their government. On top of it, America provided an additional subsidy of 180 million dollars to the textile industry to buy the subsidized cotton. Still Brazil continues to heavily subsidize cotton growers.

According to the Centre for WTO Studies, New Delhi, America provides a subsidy of 85 lakh rupees to each cotton grower every year while in India the subsidy a cotton grower gets is Rs. 1500.

Situation is not much different in Europe. Despite the massive subsidies for the agriculture sector, every minute one farmer is quitting agriculture. EU provides a subsidy support of 100 billion Euros every year. Imagine if this subsidy is withdrawn, what would happen to the farmers in EU? Even in France, the top most agriculture producer in EU, recently farmers hung dozens of suicide dolls from trees in front of Parliament to highlight their plight.

So why do we want to borrow this failed model? It’s a question I have been repeatedly asking.

Sonny Perdue, Donald Trump’s Agriculture Secretary had said, “In America the big gets bigger, the small go out.” To illustrate in 1970s there were more than 6 lakh dairy farms in America. 93 percent of American dairy farms have closed down. Does that mean milk production has come down? No. On the contrary it has gone up, which drove the prices down and dairy farmers committed suicide. Today there is so much surplus milk with mega dairy farms, each with 7000 to 15000 cows that America is trying to find a market for its surplus milk; and that’s why the US is pushing India for market access in dairy.India is the largest producer of milk in the world and yet we are under pressure to open up our markets to dairy companies for milk..

Even for India, the Director General of International Food Policy Research Institute, Washington DC, comes up with similar advice, “Move up or move out.”

Bedabrata mentioned about the nexus between political power and big corporates in America. In fact there is another player - the economists. The mainline economists all over the world speak the language of capitalist power , a language that has failed to enhance farmers’ income anywhere in the world.

Agrarian crisis is so severe in America that one of the farmers called me up the other day asking what is happening in India. As I explained the situation he said, “We know that living in debt is living in hell. We are very happy that Indian farmers are standing up and fighting our battle.” Another farmer in France said that agriculture is being sacrificed to keep consumers happy. Not only in France or US, the crisis of farm debts is the same everywhere. It is actually caused by the denial of rightful income to farmers which is the biggest issue globally farmers are facing.

Prior to the Indian farm protests in hundreds of tractors had marched into Washington DC in Feb 1979 asking for guaranteed price. . They camped for 4-5 weeks but they could not get what they wanted. Jimmy Carter, then American President could not meet farmers demand. If he had not failed, American agriculture would have been a global model for economic viability of the farmers.

What farmers need everywhere today is a guaranteed price for their produce which alone can pull them out of the prevalent crisis. Markets would automatically adjust to it. Don’t forget when the debate about minimum wages had started, corporates had objected saying this would upset their balance sheet but eventually they had to provide minimum wages and adjust their business plans accordingly. If there can be minimum wages for workers, it is time we provide minimum support price (MSP) to the farmers as a matter of right.

Let us look at the confectionary industry with a turnover of $212 billion. Chocolate is a major component. Guess what the average income of a cocoa farmer is, it is Rs 100 per day, less than the price of a standard chocolate bar. Coffee industry is no better. There are around 50-60 lakh coffee bean farmers across the globe and 80 percent of them earn less than $1.9 per day, which the World Bank defines as acute poverty line imagine if these farmers had received a minimum support price all these years rather than being left to face the brutalities of the market.

Source: Lessons for Indian Agriculture. National Herald. April 17, 2021. https://www.nationalheraldindia.com/india/why-should-india-follow-an-agricultural-model-that-has-failed-in-the-developed-world?fbclid=IwAR1HyZFqUbmx02dpM3NO56tcVGmi60Z2smQryqLTowhP5uRGDfFEMh6dm94

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The solutions to the continuing distress in agriculture lie outside the crop fields, in economics --A brief interview

A brief interview in Kannada. I am sharing the English version. This interview was conducted by Nagesh Kn for One World Kannada. 

1. What is the approximate loss incurred by Indian farmers in this Lock down? volume of Agriculture produce and the cost of it...

A: A farmers from Kerala wrote. He said he has unsold stock of 49 drums of latex (approximately 10,000 kg) valued at Rs 3.25 lakh. His question is what should he do with this produce that is going waste. This is not an exceptional case. We have already read reports of farmers spilling milk on the streets, poultry birds being buried alive, flowers being re-ploughed, fish rotting in the markets, and agitated farmers throwing away vegetables before cattle and with prices of almost all crops crashing in the market because of supply chain constraints have regularly poured in. Several estimates have put the losses suffered by vegetable growers alone at Rs 25,000-crore; dairy farmers at Rs 10,000-crores; poultry loss at Rs 20,000-crores, sugarcane arrears at Rs 18,000-crore besides there were huge losses suffered by flower growers, plantation crop, fruit growers and a massive hit suffered by fishermen. In other words, across the country, farmers have suffered a huge loss. Even now farmers continue to incur losses. It will take some time to compute the total loss that farmers have suffered.  

2. What in your opinion is the best possible solution to be given to farming sector by respective govt's and Center in the present crisis?

A: In these extraordinary times when the lockdown severely restricted economic activity, it is only agriculture which served as a lifeline. Agriculture, in true sense, reinforced its image as the mainstay of the Indian economy. With urban demand collapsing, with hotels, restaurants and dhabas closed for almost 50 days now, agriculture took the brunt of the lockdown, and still continued to keep the supplies moving. At this difficult time, farmers needed immediate relief. They needed direct income support, more cash in their hands. My proposal therefore is to provide a direct income transfer of Rs 10,000 per farmer, including the tenant farmers, without disturbing the PM-Kisan scheme allocations. In addition, considering the enormous difficulties farmers faced at the time of wheat harvest and procurement, they need to be given a bonus of Rs 100 per quintal over and above the minimum support price (MSP) for wheat procurement. In addition, for a year at least they should not be hauled up for any default on bank loans, and the interest rate on bank loans be written off for the same period of one year. Considering that several lakh migrant workers have returned to their villages, agriculture needs to be strengthened so as to absorb the additional workforce. While the additional financial allocation of Rs 40,000-crore is welcome, but I think there is also an urgent need to extend the minimum guaranteed employment period to 200 days. 

3. Do you endorse the opinion of few organic farming promoters " People lost resistance to diseases and lost immunity due to the food they eat grown using chemicals (pesticides, fungicides, weedicides  etc)

A: While the Finance Minister has also announced Rs 10,000-crore fund for formulation of micro-food enterprises -- mostly for nutritional foods, organic foods, health and wellness and also building cluster approaches for makhana in Bihar, Kesar in Kashmir, Ragi in Karnataka and some others, the realisation that healthy, nutritious organic foods builds natural immunity and provides resistance against diseases is being articulated for quite some time. Intensive farming techniques have pulled down the nutritious contents, including minerals and vitamins, from the foods we normally eat. When we breed crop varieties for still higher productivity, we underplay a harsh reality -- yield is inversely proportionate to plant nutrition. In addition, by adding chemicals and hormones, we actually produce foods which are nutritionally hollow. It is therefore an appropriate time to re-imagine the food system, to pause and reflect whether the food we eat is primarily responsible for weakening our immune system against the diseases. The Coronavirus epidemic has given a knock at the proper time, now whether we hear the loud knock and make radical changes in the way we grow food, and the diets we consume, is something that depends on us. Instead of blaming the governments and policy makers, it is high time we as consumers raise our voice. 

4. When we talk about crisis we have three things Pre Corona Agri crisis, Corona time agri crisis and Post corona agri crisis ? What governments need to do to bring hope in farming sector, instead of keeping agriculture sector deliberately impoverished (your most frequent statement)

A: Whether before the coronavirus pandemic struck or after the lockdown eases, the stark reality that has emerged is that agriculture has been a victim of policies that have primarily kept farming impoverished. The basic objective of keeping farmers deprived of their rightful income was to create enabling conditions for the rural poor to migrate to the cities, which were needing cheaper labour. Estimates show that some 14-crore people work as urorganised workers in the cities, and I have always referred to them as Agricultural Refugees. These are the people who were in reality pushed out of the villages in the past few decades. By denying them their rightful income, they were left with little choice but to migrate to the cities looking for menial jobs. 

When do I mean by saying denying them their rightful income? Well, to illustrate, an OECD-ICRIER study shows that in the 17-year period, between 2000 and 2017, India farmers incurred a loss of Rs 45-lakh crores. Imagine the magnitude of loss the farmers were inflicted with. This was an extraordinary crisis, but the nation didn't even blink an eye. Imagine of the farmers had earned Rs 45-lakh crore more in 17 years (or Rs 2.64 lakh crore ever year), I am sure the number of people who migrated would have been far far less. The reverse migration that we now see actually provides us a visual of the agricultural refugees, who came to the cities looking for better options, now returning back after being disowned by the urban class. The long traumatised walk these millions have taken back to their villages clearly shows that the immediate need is to rebuild the village economy, make agriculture economically viable, which is only possible if we provide farmers with the rightful income. It is therefore high time to overhaul the economic design that pushed the poor from the villages to the cities, and instead replace it with an economic system that make farming viable, restores the lost pride in agriculture, and turn agriculture into the mainstay of the economy. 

This is possible only if you, my dear reader, wakes up to accept this harsh reality. Unless you too raise your voice, ask for policy course correction, and use social media to build up the voice of the voiceless, I don't think this can we done. Your silence is no longer a virtue, but a reflection of your failure to stand up and be counted. 

  

5. Whats your advise to farmers?  for self sustainable farming and life?

A: To my fellow farmers, my advise is to stop being greedy. In the race to achieve higher production, you have been misled to believe that higher the productivity, higher would be your income. You know very well that the chemical fertiliser you use or the pesticides you spray are harmful for the environment. You know that despite investing heavily in intensive farming techniques your incomes have fallen. A majority of farmers live in debt, and I know living in debt all through your life is hell. With every passing year, you are being pushed deeper and deeper into a debt trap. farm suicide rate constinues to be soaring, and you know of many farmers in your own neighbourhood who have ended their life unable to carry the burden of debt anymore. Take the case of Punjab. It has 98 per cent area under assured irrigation, which means every crop filed is irrigated. It has the highest productivity of cereal crops -- wheat, rice and maize -- in the world. every State is trying to emulate the example of Punjab. But what is little known is that Punjab, despite the bountiful harvests, has turned into a hotbed of farmer suicides. Between 2000 and 2015, the total number of suicides by farmers and farm workers stood at 16,600. 

It is time you learnt your lessons. Don't be in a mad race to compete with your neighbouring farmer who uses excessive doses of fertiliser and pesticides. Move away from these chemicals. Produce food safely, which can be consumed safely. And in addition, shift your focus to know how you have been deprived of your rightful income over he past few decades. Educate yourself, and also educate your fellow farmers. Your focus should shift to getting the right price for your produce, which means getting the rightful income. You may have heard me before giving an example of how the basic salary of government employees has gone by 120 to 150 times in the 45 years period, between 1970 and 2015. The basic salary of college teachers and professors has gone up by 150 to 170 times in the same period. But the wheat MSP in the same 45 years period has been increased by only 19 times. I am sure you will agree that if the basic salary of the government employees and college/university professors has gone in the same proportion many of them would have quit their jobs, and many would have committed suicide. What you need to learn now is that the distress you face is not because you don't know how to do farming but how your income was deliberately kept low to provide cheaper food for the consumers.

The solutions to the continuing distress in agriculture lie outside the crop fields, in economics.  #

ಕೃಷಿ ಬಿಕ್ಕಟ್ಟಿಗೆ ಪರಿಹಾರ ರೈತರ ಹೊಲದಲ್ಲಿಲ್ಲ, ಬದಲಿಗೆ... OneWorld Kannada. May 18, 

https://kannada.oneindia.com/agriculture/devinder-sharma-on-how-to-handle-agriculture-crisis-192276.html?utm_source=article&utm_medium=tweet-button&utm_campaign=article-tweet

READ MORE - The solutions to the continuing distress in agriculture lie outside the crop fields, in economics --A brief interview

Why do economists frown at farm loan waivers but keep quiet when massive corporate bad loans are written off?

If bad loans of indebted farmers had been waived perhaps they would have escaped committing  suicide. 

This picture is of a congregation of farm widows in Punjab

No sooner did the Maharashtra Chief Minister Uddhav Thackeray announce a farm loan waiver that is expected to cost anything between Rs 45,000 to Rs 51,000-crore, mainline economists have warned of the rising NPAs of the banks and the strain it causes to the already precarious fiscal position of the State governments.

But strangely, the same questions were not raised when almost a month back, in early December, the Minister of State for Finance Anurag Thakur had in a written reply in Parliament, stated that public and private sector banks have written-off Rs 80,893-crore during April-September 2019 period. According to news reports, when asked who the beneficiaries were, the minister replied: “As borrowers of loan write-offs continue to be liable for repayment and the process of recovery of dues from the borrowers in written-off loan amounts continues, write-off does not benefit the borrower.”

It is true that write-offs are not exactly waivers since it only means that the bad loans are shifted from the bank books to another ledger while the recovery process continues. But the write-offs certainly do benefit borrowers. Let’s be clear, it is not as if the entire bad debt is recovered by banks. The percentage of bad assets that the banks are finally able to recover is far too low. As per the RBI, the rate of recovery of bad loans had come down from 18.4 per cent in the financial year 2014, to a low of 12.4 per cent by March 2015. It further declined to 10.3 per cent in the financial year ending March 2016. To illustrate, out of an outstanding amount of Rs 221,400-crores of bad loans in 2016, only Rs 22,800-crore could be recovered. It will be interesting to know what happened to the remaining Rs 198,600-crore.

Although under the Insolvency & Bankruptcy Code (IBC) 2016, the recovery of bad loans has shown a marked improvement – from 49.6 per cent in 2017-18 it has trailed to 42.5 per cent in 2018-19 – a total of Rs 70,819-crore was recovered against a pending amount of R 1.66-lakh crore for 1,135 cases admitted before National Company Law Tribunal (NCLT) for insolvency resolutions in 2018-19. Add to this recoveries made through other routes like Lok Adalats, Debt Recovery Tribunals and SARFAESI Act, the scheduled commercial banks managed to recover only Rs 1.26 lakh crore from a total outstanding of Rs 8.15-lakh crore in 2018-19, which shows to be only 15.5 per cent. With the actual recovery being dismal, it is the banks which end up taking the hit. No wonder, the government had two years back announced a bank recapitalisation programme of Rs 2.11- lakh crore to bailout banks, followed by another Rs 70,000-crore in 2019.

Against these corporate write-offs, farm loan waivers in the past six years total to Rs 2.85 lakh crores (adding the proposed Rs 45,000-crores waiver in Maharashtra). Compare this with just 354 liquidation cases pending for 2020. According to a news report, the claims for liquidation in respect of these companies stand at a staggering Rs 3.55-lakh crores. As per the data available with Insolvency and Bankruptcy Board of India only 4 per cent of this will be realised, which means only Rs 15,165-crore. Banks are staring at zero realisations in many of the insolvency cases pending.

While the bank write-offs affect a limited number of borrowers, a significant number of them being wilful defaulters, Maharashtra’s farm loan waivers are expected to benefit 44-lakh small and marginal farmers. Drawing from the experience of Punjab, Maharashtra has decided to waive bad farm loans up to an outstanding of Rs 2-lakh for each farmer. The problem with the Punjab farm loan waiver scheme is that only outstanding loans up to an exact Rs 2-lakh are waived, which means if the outstanding bank amount exceeds Rs 2-lakh even by Rs 500 the farmer will not get the waiver. This has led to a lot of resentment among Punjab farmers. I only hope Maharashtra is not following the Punjab example in letter and spirit.  

Coming at a time when a continuing drought was followed by heavy rains, a phenomenon termed as ‘wet drought’, standing crops in 70 lakh hectares are feared destroyed in Maharashtra. According to revenue estimates, almost 85 per cent of the kharif crops in Marathwada region were destroyed. While more than 1-crore farmers were affected from the incessant post-monsoon rains, the State had assessed the crop loss to be more than Rs 5,000-crore. Officials say Rs 6,552-crore has so far been distributed as crop loss compensation.

With farm distress continuing over decades, Maharashtra has turned into a hotbed of farmer suicides. In November 2019, a record 300 farmers had reportedly committed suicide. In the 6-year period between 2013 and 2018, an RTI response showed 15,356 farmers had committed suicide. It is generally agreed that the distress is primarily because farmers have continuously been denied their rightful income. An OECD-ICRIER study shows, between 2000 and 2016, Indian farmers lost Rs 45-lakh crore for not being paid the right price. In the past seven years, as per Niti Aayog calculations, growth in real farm incomes had remained at ‘near zero’. In such a depressing farm scenario, farm debt has continued to multiply. Farm loan waivers therefore provide an immediate relief. #  

Maharashtra farm loan waiver justified. Deccan Herald. Jan 10, 2020
https://www.deccanherald.com/opinion/in-perspective/maha-farm-loan-waiver-justified-793003.html?fbclid=IwAR0PWj9nAgIvBaYmOavApo5dki8rxd5drGspux37gTS7hVwarl1ZV9OyEjM

READ MORE - Why do economists frown at farm loan waivers but keep quiet when massive corporate bad loans are written off?

Low farm incomes is killing agriculture

French farmers drove to Paris to protest low farm incomes -- Al Jazeera photo

A New York farmer, who also works as a lawyer, tweeted this the other day: “Headed home, I tried to work in the law office today, but my head is full of the disasters I am seeing on the dairy farms and in rural areas. Even long time farmers in my area are trying to sell land to save the rest of the farm. Where is this headed? I don't know.” Well, if such a deepening farm crisis should dominate one of the most productive agricultural systems in the world, it’s time to pause and rethink.

The question that needs to be asked is whether the US agricultural policy is deliberately aimed at decimating the farm sector? And in that sense whether Indian agriculture too is intentionally (or unintentionally) moving in that direction? To say that the landholdings in India are too small to be economically viable is understandable but why is that even in the United States, where the average farm size is 444 acres, small family farms should be on way out? Why is that in Australia, where the average farm size is 4,331 hectares, should agriculture become unviable? Going by the economy of scale there seems to be no plausible reason why farmers in America and for that matter in Australia should be quitting farming. If small holdings are unviable how come even large holdings are becoming uneconomical, unless of course policy makers refuse to admit that farmers everywhere in the world, not only in India, are being denied real time prices, depriving them of their rightful income.   

First of all, let’s be clear. The US has always been for pushing small farmers out of agriculture. Look at it, even at a time when US agriculture is passing through turbulent times, the American Agriculture Secretary Sonny Perdue unabashedly acknowledges: “In America, the big get bigger and the small go out.” This echoes what a former US Agriculture Secretary Earl Butz, who served under President Richard Nixon and Gerald Ford, had famously said: “Get big or get out.” This was followed by a cleverly drafted narrative of “feeding the world”, pushing farmers to produce large surpluses that actually dipped prices. Such a deliberate policy has left US small farmers struggling. Many of them are going out of business and quitting agriculture in desperation.

The policy to get big serves as an invitation for an increasing corporate control over agriculture, which is also becoming an unwritten policy for the developing world to follow. In addition, whether it is the World Trade Organisation (WTO) or the Regional Comprehensive Economic Partnership (RCEP) treaty, trade policies have been very conveniently tweaked to provide an enabling environment for big agribusiness giants to step in. As competitiveness became the market mantra, developing as well as least developing countries are being increasingly forced to open up for cheaper agricultural products, thereby displacing millions of small farmers in the bargain.

To illustrate, the biggest dairy farm in China is spread over 22,500,000 acres, an area equal to that of Portugal. According to worldatlas.com, this farm houses around 100,000 cows. The second biggest dairy farm, spread over 11,000,000 acres, is also in China. The remaining eight of the top ten big dairy farms are situated in Australia, which despite the size are under stress. No wonder, the push for seeking an unfettered access into India through the regional mega RCEP treaty, which India has for the time rightly decided to stay out. Considering that 10 million people are involved in dairying in India, imagine the destruction of livelihoods from cheaper dairy imports from Australia, New Zealand and China.     

Returning back to agriculture, rural America, like rural India, is faced with a severe agrarian crisis. Like in India, where the average income of farming families in 17 states, which is roughly half the country, stands at a paltry Rs 20,000 a year, the US agriculture is not doing good either. More than half of US farmers have a negative income. According to the American Farm Bureau Federation, 91 percent farmers and farm workers face distress. Besides affecting their mental health, the severity of the crisis is such that 87 percent farmers fear they will have to abandon farming. Accordingly, farm debt in 2019 is expected to soar to $ 416 billion, the highest since 1980. For several decades, farm gate prices have remained frozen when adjusted for inflation. Prevailing onion prices for instance are no different from the prices farmers received 30 years back. Corn prices have remained static for almost five decades.

If such a worsening farm crisis is happening in a country which applies state-of-the-art technology in agriculture, and is often projected as an example to be followed by the rest of the world, isn’t it time to re-evaluate how inappropriate is the argument for pushing in more sophisticated technology (often unwanted) in Indian agriculture? No one is against technology but it has to be relevant depending on the needs, and not pushed to simply benefit commercial interests. If in a country which is completely high-tech in agriculture, the suicides rate in rural areas is 45 per cent higher than in urban areas isn’t it time to redesign Indian agriculture, focusing more on sustaining small farms thereby reducing the rural urban migration? Shouldn’t the Ministry of Agriculture and Farmers Welfare therefore embark on a fresh strategy to bring in policies tuned in more to domestic needs that make farming environmentally sustainable and economically viable?

An OECD-ICRIER study has shown that Indian farmers have been suffering a loss of 14 per cent every year in farm incomes for almost two decades, between 2000-01 and 2016-17.  This has largely benefitted the consumers who paid 25 per cent less for all agricultural commodities every year. In other words, it is the farmers who have been subsidising the country all these years. An outcome of the global economic design which aims to deliberately keep farm prices low, farmers’ anger is brewing across the world. As farm protests spill on the streets in Germany, Holland, Canada, America and India, the reason for growing farm anger was best summed up by Ian McLachlan, President of the National Farmers Federation of Australia, who had sometimes back while addressing a farmers rally said: “We’re sick and tired of subsidising the rest of Australia.” #

Farm tech bring pushed to benefit Corporates. The Tribune. Nov 30, 2019.

https://www.tribuneindia.com/news/comment/farm-tech-being-pushed-to-benefit-corporates/868064.html?fbclid=IwAR3e6Ls_oaq6g7yTEGt-IE743yundSpXjnVqPgJKeW56lZDboZz4krPlhxo

READ MORE - Low farm incomes is killing agriculture

Rs 1,700 not enough to even feed a cow, how can a farmer-family survive on it? -- An interview

With the rising input costs and failure to get a suitable price for the crops, about 50% of farmers are resolving to drop farming. The country is witnessing a drastic fall in the agriculture development rate. Excerpts from the conversation between country's renowned food and export policy expert Devinder Sharma and deputy news editor Gaon Connection, Arvind Shukla concerning agriculture and the farmer crisis.

Be it India or the US, which is the root cause of agriculture and farmers crisis? 

While understanding the worldwide agricultural crisis one can easily discern a fact that everywhere the governments have knowingly kept the farmers at a disadvantage in terms of their income. Farmers did not get a fair price for their crops. This only caused the current crisis.In order to understand the situation, we will have to know about the economic design and cycles of India and other countries. We may compare the agriculture in the 1960s and present times in the US to find that the real income of the farmers has gone down. This is admitted by the Chief Economic Advisor of the US Agricultural Department. In 2018, the average income of the US farmers has fallen not for the first time, but for the sixth year in a row. This is the state of the US which we look up to in matters of technological advancements and policies. India too suffers from a similar crisis. Our governments have deliberately kept farmers away from better incomes to discourage agriculture because it is believed that economic transformation would only be realized upon agriculture's fall. Economists of India and elsewhere are of the opinion that people be pulled to the cities to provide cheaper labour for the industries. Industries require cheap raw materials in order to thrive. This is why the agriculture crisis is existent. The Indian Economic Survey 2016 informs that in 17 states or we can say half of India, farmer family's average annual income is Rs 20,000 which is Rs1,700 per month. Such an amount cannot even support a cow's upkeep. Now imagine how would a farmer family be managing on such a pittance?

A large portion of Indian population is directly engaged with agriculture. Is such a sizeable population then constantly being overlooked? 

The NITI Aayog had, in one of its reports, mentioned that for the past two years the farmers' real income rise was zero. In the five years prior to this, the real income of the farmer families had only increased by a mere half per cent. I know the exact figure to be 0.44%. Let us go back a little further in the past. A research revealed that for the period 1985-2005, the farm-get price (the price which a farmer receives) remained frozen. Keeping in mind the inflation, one would notice that the price which farmers got in 2005 was the same as that in 1995, rising input costs notwithstanding. It means that for over 20 years the prices remained constant. We can understand better with the help of another report. As per a report of Organization for Economic Co-ordination and Indian Council for Research on International Economic Relations (OECD-ICRIER), the farmers suffered a loss of Rs 45 lakh crore during the period 2000-2017 due to not getting a fair price for their produce. So, you can well understand the agriculture crisis where the farmer is made to survive on the same income for the past 40 years. Had the same happened to any of us, we would have long committed suicide or left the business for good. There is a need to view this crisis in terms of income versus expenditure.But instead, such a scenario was created that farming isn't economically viable because of poor yield to the farmer. This notion is false. 

But isn't it generally said that the farmers are disappointed over poor yield? 

I agree that many crops fall short at the national level, but even more important is to know what will be done of a better yield. Is it to be found dumped by the farmers on the roads due to lack of fair pricing or resulting in farmers' suicide? This means that the problems lies elsewhere and we are looking for it somewhere else. Take for example the situation in Punjab. With 98% of the area in Punjab well irrigated, there would hardly be a single field without access to water. Punjab leads the world in paddy and wheat crops output. Better irrigation, better crop output and still Punjab shocks the world by the frequent cases of farmers' suicides. In the past 10 years, more than 10 thousand farmers have ended their lives in Punjab. This shows amply that the crisis is not due to lack of irrigation or production because even in the regions having an abundance of both farmers are still resorting to suicides. Somewhere the policymakers, governments and politicians will have to really look and think what is actually wrong and find means to resolve it. It should not be that for an Indian problem we look into Europe and the US for finding the solution. Many times, we have taken the wrong lessons from foreign nations and have paid dearly for it. So, I say that we should seriously deliberate to find a localized solution. 

A big concern for the farmers is their input cost. The government now talks of zero budget natural farming. Tell us more about it. 

I believe that the term 'zero- budget' has sent across the message that we need not invest anything during farming and that the farmers needn't put in much. If the policymakers believe that a decrease in the cost of production will translate into an increase in the income then such a formula of zero budget is problematic. India has had a long tradition of natural methods and low-cost production. Even you at some point been asked what is in a name. Once I was told by the famous writer Khushwant Singh that his record-breaking novel was rejected by over 20 publishers before he renamed it as Train to Pakistan. Zero budget, therefore, seems an obvious escapist move to absolve a government of its responsibility. The RBI date for the period 2011-2016-17 reveals that the total agricultural investment in the country was a mere 0.4% of the GDP while the sector supports 50% of the population. It means that one isn't inclined to invest for 50%. So, following the 0.4% investment, the zero-budget formula of the NITI Aayog seems but natural. I believe zero-budget farming technique to be sound, it just needs the addition of agro-ecological or needs to be kept nature and environment-friendly. Many people in India have worked on natural farming—Narayan Reddy in Karnataka, Bhaskar Salve in Gujarat and Naamalvar in Tamil Nadu had taught people to cultivate without pesticides. With these three long gone, there are still many who are dedicated to promoting natural farming at their own level. Farming should involve minimum external input, whatever is available in fields or home must be used for farming. Finance Minister, Nirmala Sitaramanan had begun a new chapter by mentioning it (zero budget farming). This needed to be vocalized because the world has finally understood that it is better to keep harmful pesticides at bay. India started a dialogue when such issues are already taken up in the US and Europe. 

Does it mean that the developed nations are considering a revisioning of existing agricultural practices? 

A few days ago, there came up a report of a commission in Britain (food farming and countryside commission) advocating several major changes. The report warned that the path of intensive farming that we currently follow is not correct. People's health has suffered, the soil has suffered, input costs have risen, environment adversely affected, water drained out and even climatic changes have all been attributed to the intensive farming system which called for intensive use of fertilizers and pesticides. They say that Britain must undergo a transitional period towards agroecological systems by adopting nature-based farming.If Britain thinks on these lines that this is the right opportunity for India as we had adopted their modern farming practices and methods before. So, if they are changing so we must. All nature-based processes are beneficial. Whether organic farming or zero-budget natural farming or home therapy or bio-dynamics—we must promote and adopt them judiciously. Some process would more effective in Punjab than Karnataka, a technique used successfully in Rajasthan may not be as effective in Kerala. Therefore, varied techniques must be brought into use. We would have to show the farmers the way to resolve their woes. Pesticides anyway are poisons and their use in any crop is bound to have its ill-effects.#

Published: Sept 14, 2019

Link: https://www.gaonconnection.com/read/devinder-sharma-shares-his-views-on-the-plight-of-farmers-in-india-their-low-incomes-and-zero-budget-farming--46233  

READ MORE - Rs 1,700 not enough to even feed a cow, how can a farmer-family survive on it? -- An interview

Minimum Support Price for farmers can be raised three times.

Pic courtesy: Hindustan Times

Finally, the government has admitted in Parliament that it is not possible to double farm income by 2022. Replying to a question by Samajwadi party leader Ram Gopal Verma in Rajya Sabha, the Minister of State for Agriculture Purshottam Rupala, categorically stated: “We agree with Ram Gopalji’s query that it is not possible to double farm incomes with the current growth rate in agriculture sector. “

With a growth rate in agriculture hovering at less than 4 per cent annually, the minister agreed it wasn’t possible to double farmers’ income in the stipulated period. The Dalwai committee on Doubling Farmers Income (DFI), set up in April 2016, had projected a farmer income growth rate of 10.4 per cent to achieve this, and many economists say this would require a very high economic growth rate.  Knowing this may sound too ambitious, I am glad the minister has finally put a lid on a promise that wasn’t so easily workable. He agrees to follow other approaches, including enhancing non-farm income.   

This should hopefully put an end to endless series of seminars, conferences and workshops on Doubling Farmers Income that are being held in universities, institutes, colleges and by civil society organisations for over two years now knowing very well that it wasn’t possible to do so. At a time when real growth in farm incomes had remained ‘near zero’ in the past two years, and prior to that the Niti Aayog had estimated real farm incomes to be growing at less than half a percent every year during the five year period 2011-12 to 2015-16, not many talked of the radical structural transformation that agriculture is crying for. Instead the emphasis remained on following upgradation and refinement of available approaches by focusing on schemes like soil health cards, neem coated urea, Fasal Bima Yojna, National Agricultural Markets (e-NAM), more crop per drop etc., which are important but surely not enough for doubling farm incomes. What is needed is direct income support, which is a better way of income augmentation.  

Although the government has set up an Empowered Committee for implementation and monitoring of the recommendation of the DFI Committee report, submitted in Sept 2018, the acknowledgement that doubling farmer income in the next two years is not possible, it will certainly help in initiating long-term reforms that the sector is in dire need of, and where the focus needs to shift to. The first and foremost is the need to boost public sector investment in agriculture. The continuing bias against agriculture becomes apparent when one looks at the Reserve Bank of India statistics, which tells us that the public sector investment in agriculture had remained close to 0.4 per cent of the GDP between 2011-12 and 2016-17. Considering that nearly half the population is dependent on agriculture, this speaks volumes of the deliberate neglect of farming.

I don’t think any economist can vouch for a miracle in agriculture without adequate investments flowing in. Not even half a per cent of the GDP is being invested in agriculture year after year, primarily because the dominant economic thinking does not consider agriculture to be an economic activity. The entire effort therefore has been to move people out of agriculture rather than to focus on making farming a viable and sustainable enterprise. This has to change, and an indication to this came from the BJP manifesto which promised an investment of Rs 25-lakh crore in agriculture. But the Budget 2019-20 makes a provision for Rs 1,30,485-crores for agriculture, including Rs 75,000-crore allocated for the remaining three instalments of PM-Kisan scheme. Besides direct income support, agricultural market infrastructure (including warehouses and godowns) needs appropriate budgetary allocations along with investments for village link roads connecting villages with new upcoming APMC mandis.

Interestingly, while agricultural scientists and economists normally shy away from spelling out the radical reforms agriculture needs for enhancing real farm incomes as well as to restore the lost pride in farming, the Punjab and Haryana High Court has in a judgement said the Minimum Support Price (MSP) for agriculture should be three times the cost of production to save farmers from distress. “Though the MSP is being announced since 1965, but the stark reality is that it has not boosted the income of farmers to bring them out of abject poverty. Time has come when MSP be given legal force by granting legal rights to the farmers to get fair value for their crops.” The direction to provide a legal status to MSP by bringing in an appropriate legislation came from a division bench of Justices Rajiv Sharma and H S Sidhu who also spelled out a series of reforms measures, including removing middlemen, setting up warehouses, weather-based crop insurance, using internet technology, debt servicing, farmer suicides and so on that agriculture requires.

Earlier, the Commission for Agricultural Costs and Prices (CACP) had also called for making MSP a legal entitlement. It had specifically highlighted how farmers in remote parts do not have access to regulated APMC markets and therefore have to sell their produce in the local haats much below the MSP. In the past two years, farmers had reportedly sold pulses, oilseeds and coarse cereals at prices ruling 20 to 30 per cent lower. Even in the case of wheat and rice, the two crops that are procured, farmers are unable to realise the minimum price except at places where a robust procurement system prevails. Low prices of wheat and paddy in Bihar for instance forces many unscrupulous traders to transport the produce to Punjab and Haryana to get a higher MSP. 

Making MSP a legal instrument instils not only confidence among farmers, but will also assured minimum price to farmers thereby enhancing farm incomes, reducing debt, and minimising farm distress. In addition, raising MSP to three times the average weighted cost of production, including imputed rent and interest on owned land and capital, is certainly a very valid recommendation. This alone has the potential to bring about a remarkable turnaround in the performance of agriculture. It is doable, and my suggestion is to have two price bands – one at which the procurements are made at MSP, and the second be the actual price that the farmer has to be paid. Considering that all farmers are now linked with Jan Dhan bank accounts, the gap between the two bands can be directly transferred to the farmer’s bank account.

Such a delivery system will ensure that food inflation remains in control, and at the same time farmers get the legitimate price they are entitled to but have been deprived of all these years. Of the Rs 25-lakh crore investment promised in the BJP manifesto, even if Rs 5-lakh crore are disbursed as enhanced price to farmers routed through the flagship PM-Kisan scheme, the face of Indian agriculture will change forever, for the better.

The time has come to emerge out of the continued obsession with growth figures in agriculture. It is time now to invest in human resource, which is the biggest strength of Indian agriculture. More investments in raising real farm incomes, more of farmers’ money will automatically be invested in improving farm techniques. Furthermore, higher the farm incomes, higher will be the rural demand generated, thereby speeding the wheels of industrial development. At a time when the country is passing through a slowdown, creating more demand remains the biggest challenge, which can only come from agriculture. Investing in agriculture therefore is the surest way to bailout the economy. This is the way to Sabka Saath, Sabka Vikas.# 

READ MORE - Minimum Support Price for farmers can be raised three times.

How agriculture has been kept impoverished.

Soon after the Economic Survey 2016 brought out a startling fact – that the average farm income in 17 States of India, which means roughly half the country, was less than Rs 20,000 a year, a newspaper reported of the ongoing squabble between officers of the Supreme Court and the defence services over washing allowance they get as part of the income package. The defence service employees were reportedly questioning why the officers in Supreme Court were getting a higher washing allowance of Rs 21,000, while the entitlement of armed forces officers stood a little less at Rs 20,000.

That makes me wonder: don’t farmers have clothes to wash?

If the average income of a farm family in half the country equals just one of the 108 allowances (in total, for all the services put together) that the government employees get as part of the 7^thPay Commission, the prevailing income disparity becomes too gnawing. More so when a careful perusal of the NSSO (National Sample Survey Office) data that the Economic Survey 2016 had quoted shows how glaring is the income divide. The NSSO had deviated from the usual practice of computing farm incomes on the basis of what the farmer sold in the market to actually for the first time work out farm income on the basis of marketable surplus a farmer sold in the mandi and adding to it what he saved for his family consumption, which means it is the average of the total value of farm output in roughly half the country.

The shocking details of almost non-existent farm incomes that the Economic Survey 2016 provided failed to evoke any outrage. Perhaps it was because Prime Minister Narendra Modi had at the same time promised to double farmers income by 2022 thereby overshadowing the income reality. On various media channels, I often happened to be the only panellist citing the farm income statistics to drive home the point how income inequality was woven in the predominantly market driven economic structure. That an average farm income of Rs 20,000 a year would translate into less than Rs 1,700 a month, rarely drew an outpouring of anger at the way farming was being deliberately kept impoverished. This is further substantiated by the latest agricultural growth estimates of the Central Statistics Office showing the nominal gross value added (GVA) in agriculture in October-December 2018, to have dropped to its lowest in 14 years, clearly showing how the farm incomes have further plummeted. It failed to shake up the nations conscious. Even if the nationalism debate had not kept the nation preoccupied, I doubt if the drastic slump in farm incomes would have evoked a swift policy response. Instead, the plight and systematic decimation of agriculture over the years has for all practical purposes been taken for granted.

A study by the Organisation for Economic Cooperation and Development (OECD) in collaboration with the Indian Council for Research on International Economic Relations (ICRIER) has computed the total loss farmers have suffered, between 2000-1 and 2016-17, from being denied the rightful price at a staggering Rs 45-lakh crore. Add to it the findings of Niti Aayog which estimates that in the five year period, between 2011-12 and 2015-16, real farm incomes have increased by less than half a percent every year, 0.44 per cent to be exact, the farm distress is compete. It further admitted that the near-zero income of farmers in the last two years (after 2016) has forced the government to launch a direct income support scheme (PM-Kisan) which makes a provision for directly transferring Rs 6,000 every year to the bank accounts of small farmers.

With agriculture in such a dismal state, it is futile to expect the non-farm sector to be performing well. Latest study shows that rural non-farm wages in the past five years too have dipped to its lowest. A CMIE study said of the 56.6-lakh job losses encountered in past 12 months, almost 82 per cent or 46-lakh are from rural areas. Rural India had somehow survived the unprecedented distress conditions, and this is nothing short of a miracle. Any other business with such explicit huge losses written all over would have collapsed by now, and in fact disappeared from the economic horizon.

Not only in the past 20 years, agriculture had remained at the receiving end even prior to that. According to an UNCTAD study, global farm gate prices when adjusted for inflation had remained almost static in the 20 year period, between 1985 and 2005. In other words, farm incomes have remained frozen for almost four decades. In such a dismal scenario, I shudder to think how farming families had been surviving all these years. Just to illustrate, an American farmer, Mike Callicrate, says that the price at which his father sold corn some 44 years back, on Dec 2, 1974, was $3.58 per bushel (equal to 25.40kg). In January 2018, he sold corn at $ 3.56, down two cents from what he earned 44 years ago. Overproduction had pushed down the farm gate prices as a result of which farmers were perpetually in debt. Take the case of milk. What the farmers realise in Europe is only 19 pence for a litre of milk, which has led to closing down of a large number of small dairy farms. “To be born in debt, and live all through in debt, is like virtually living in a hell,” remarked Declercq Gilbert, a 93-year-old farmer in Leshonnelles village about 15 kms from Mons near Brussels, when I met him last year.

Indian agriculture too had slogged with farm incomes remaining almost frozen. To get an idea as to how farm incomes had remained subdued in the past five decades, I had worked out the growth in Minimum Support Price (MSP) vis a vis the basic salaries for various section of employees. This will give us a clear idea as to how farmers have been denied their rightful price all these years. In 1970, the MSP for wheat was Rs 76 per quintal. Forty-five years later, in 2015, the MSP for wheat was Rs 1,450 per quintal, an increase of 19 times. For the same period, I examined the increase in basic salary plus DA (not adding other allowances) for different sections of employees. For government employees, the increase was 120 to 150 times; for college/university lecturer/professors it was 150 to 170 times and for school teachers the increase was 280 to 320 times. If only the wheat MSP was raised in the same proportion, which means if it had gone up let’s say 100 times in the 45 years period, farmers should have received at least Rs 7,600 per quintal. What they actually got was an MSP of Rs 1,450 per quintal in 2015. In other words, it is the farmers who are bearing the cost of subsidising the consumers. The entire burden of keeping food prices low has been very conveniently passed on to farmers.

Farmers dumping tomato, potato and onion on the streets have been a frequent phenomenon. For the past three years, numerous news reports point to farmers being denied the appropriate price in the mandis, often the drop in prices ranging between 25 to 40 per cent on an average. Using the latest CACP cost of production statistics for rabi and kharif seasons and comparing this with the average income per crop as worked out by the Dalwai Committee on doubling farmers income, Down to Earth magazine (Feb 16-28, 2019) has presented a damning analysis. Accordingly, against the production cost of Rs 32,644 per hectare for wheat, the income realised by farmer is only Rs 7,639, leaving a shortfall of Rs 25,005 per hectare. In case of paddy, the gap is Rs 36,410 per hectare; for maize, the loss a farmer incurs per hectare is Rs 33, 686; and for arharit is Rs 26,480 per hectare. 

Although only 6 per cent farmers as per the high-level Shanta Kumar committee gets the benefit of MSP, the fact remains that the announcement of MSP neither helps in setting a floor price nor does it guarantee an assured price for farmers. This is primarily because 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. Macro-economic policy therefore has a lot to do with the prevailing farm crisis. The prices have been deliberately kept low, and in most cases is actually less than even the cost of production that the farmers have to entail. The overwhelming tragedy is that when farmers cultivate crops, what they don’t realise is they are in reality cultivating losses. Whatever be the crop and the technology applied, the fact is that the match is invariably fixed against farmers.

The MSP the government announces actually includes out of pocket expenses incurred by farmers in crop cultivation (A2 cost) plus the cost of hiring farm labour (FL), including family labour, a farmer employs. In addition to this cost, which is labelled as A2+FL, the government claims the MSP being announced since the beginning of the kharif season last year contains 50 per cent profit. Although the government claims it has honoured the recommendation of Swaminathan Commission which had suggested 50 per cent profit over the comprehensive cost, but the new formula falls short of what was in reality recommended. Nor has the government been able to ensure that procurement is made at the MSP it has announced. Several farmer leaders have questioned the government claims, and the trade data showing the shortfall in prices paid to farmers in various mandis is routinely shared on social media.

It is the methodology of working out the cost of production that has somehow gone unquestioned. Although an elaborate system exists for collating statistics pertaining to cost of production, crop cutting experiments to work out the production achieved and so on, the costing falls acutely short of the way prices of agribusiness/industrial goods are worked out. While the employees get 108 allowances in addition to basic pay plus DA, and the cost of processed foods includes administrative cost, and marketing cost plus profit as it may deem fit, when was the last time we heard of farmers getting at least four allowances -- house rent allowance, travel allowance, health allowance and educational allowance for their children included in the final price? And why not, after all a farmer too has to look after his family. He too has to support his children’s education, take care of his family’s medical expenses and so. Worked out on per hectare basis, these allowances can be easily included in the MSP calculations or can be paid directly into their bank accounts.  

Denying farmers their right income (what to talk of additional emoluments) too comes with a heavy social cost, which often gets clubbed under mounting indebtedness. Take the case of a 22-year-old graduate student, Gopal Babarao Rathod, son of a small farmer from Yavatmal in Maharashtra, who committed suicide two years back. Explaining how the rural youth, like their lucky counterparts in the cities, too carry an aspiration, he wrote in asuicide note: “A teacher’s son can easily afford to pay a fee of Rs 1-lakh to become an engineer but tell me how a farmer’s son can afford so much fees?” He then went on to say: “why is it that the salaried employees get dearness allowance (DA) without even asking for it whereas farmers are denied adequate compensation for their produce?”

As per the National Crime Record Bureau, between 1995 and 2015, a total of 3,18, 528 farmers have committed suicide. Mounting indebtedness is the primary reason for the serial death dance that continues with impunity. Since the annual farm suicide statistics does not give a favourable picture of the country’s economy, the government has not released the suicide data after 2016.

All this adds to visible disruptions in social fabric. “No girl wants to marry a farmer. Young farmers are leaving farming and going to Pune and Mumbai to work as taxi and rickshaw drivers. They say that if not money, they will at least get a bride in the city,” Mohan Patil from Satara in Maharashtra told a newspaper. There are over 3,000 young men struggling to get married in Ahmednagar district alone says an article in Business Line, quoting a study. This is true of Haryana, Punjab, Uttar Pradesh, Madhya Pradesh, Chhattisgarh and many other states. Even in the prosperous apple belt of Himachal Pradesh, not many girls are willing to settle down in the villages. Low income levels and the harsh working conditions are cited as the main reason for girls unwilling to settle in rural areas. Not only in India have young farmers found it difficult to get a bride, it is not so easy even in Europe, England, Canada, Australia, and United States. Aimed at finding a suitable match for the young people in farming, a very popular French TV programme called ‘Love in the field’ has been running successfully for several years now. Enquiries revealed that similar TV shows are also being aired in England and Canada. 

As the policy emphasis remained essentially on increasing crop productivity primarily to ensure that availability of food remains comfortable, farm income never received the kind of thrust it deserved.  The decline in farm incomes is an outcome of an economic design that has been followed. As I said earlier, agriculture had been deliberately kept impoverished to keep economic reforms alive. More recently, Raghuram Rajan has said that the biggest reforms would be when we are able to move people out of agriculture, to migrate to cities which need cheap labour. Even the new Chief Economic Advisor has called for more investments in industry so as to pull the youth from agriculture. If agriculture has to be treated as a source of cheap labour in the cities, it speaks of the flawed economic thinking that has led successive governments to dismantle the strong foundations that sustained millions of rural livelihoods.

This is exactly what the World Bank had directed India way back in 1996. It had wanted India to move 400 million people from the rural to the urban areas in the next 20 years, by 2015. These are “agricultural refugees” swarming into the cities looking for menial jobs. It is primarily for this reason that over the years, in addition to more or less static farm incomes, public sector investments in agriculture were also kept deplorably low, hovering between 0.3 to 0.5 per cent of the GDP during the period 2011 to 2017. The total investments, both public and private, have also been declining steadily – from 3.1 per cent of GDP in 2011-12 to 2.2 per cent in 2016-17. Compare this with the tax concessions being given to industry, which measures 5 per cent of GDP. The best way to kill agriculture therefore is to starve agriculture, which employs 50 per cent of the country’s population, of public sector investments. #

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Strengthen Public Procurement System

At a time when MSP benefits only 6 percent farmers and the remaining 94 per cent farmers are in any case dependent on exploitative markets, the focus has to be on strengthening the public procurement system. Besides making MSP more realistic, covering all aspects of cost calculations, the emphasis has also to be on ensuring that whatever surplus farmers bring to the markets is purchased at the official price announced. Although the government did announce assured procurement under PM-ASHAA but failed to ensure its implementation.

But there are two problems the government is encountering. First, the World Trade Organisation (WTO) is keeping a close watch on the increase in MSP prices, which are classified as farm subsidies in the international trade parlance. US, EU, Canada, South Africa, Pakistan besides others have repeatedly questioned MSP on wheat, rice and pulses saying that the prices have breached the permissible de-minimissupport limit allowed to developing countries. India is expected to keep MSP within the prescribed 10 per cent limit of the total value of a particular crop. This acts as a strong deterrent to raise MSP as per the farmers demand and not face the ire of WTO.

Not only WTO, there is strong lobby within the country that advocates dismantling the APMC mandisso as to enable farmers to realise price discovery. The underlying objective is to allow private terminals to take over instead, laying the foundation for corporate farming. Already several states have suitably amended the APMC Act removing fruits, vegetables and livestock products from the mandi operations. But this has neither helped farmers realise a better price for their produce nor reduced the arrival of fruits and vegetables into the regulated markets. In fact, Bihar had revoked APMC Act way back in 2006 with the objective of attracting private sector investments in market operations. Nothing like this happened, and even now truckloads of paddy and wheat are routinely brought and sold illegally in Punjab and Haryana mandis.  

Instead of dismantling APMC mandis, the policy emphasis should be on expanding the existing network of mandis. There are nearly 7,600 APMC markets operating at present and if a mandi has to be provided in 5 kms radius, India will need 42,000 mandis. Public sector investment must be directed towards strengthening the mandinetwork. If India can provide Rs 6.9 lakh crore for building highways I see no reason why at least Rs 1-lakh crore out of it cannot be diverted for public sector agricultural market infrastructure.

The reason is simple. Unless there exists adequate market infrastructure, no meaningful reforms are possible in agriculture. While it is generally agreed that APMC mandishave become a den of corruption with strong cartels of middlemen operating, the answer does not lie in throwing the baby with the bathwater. APMC is crying for a change, and the introduction of electronic operations (in eNAM markets) has certainly helped. But a lot more needs to be done if genuine improvement is required. Merely replacing the public sector with the private companies will defeat the very purpose. Let me make it clear, nowhere in the world, and that includes the US /EU, have the private markets helped farmers with a better price. Even the value chains, which are getting into academic fashion, have failed to prop up farm incomes. #

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Agriculture Too Needs Policy Support 

Moving from ‘price policy’ to ‘income policy’ the government has brought in an element of fresh air into public policy. While doubling farm incomes by 2022 remains more less a slogan, Telengana’s ‘Rythu Bandhu Pthakam’ scheme under which farmers were initially paid a sum of Rs 8,000 per year per acre (with no upper cap), followed by KALIA scheme launched by Odisha, and since then some variants brought in by Jharkhand, West Bengal, Karnataka and more recently in Andhra Pradesh have heralded a direct income support programme for small and marginal farmers. The Union government too has chipped in with its PM-Kisan programme, which entails providing Rs 6.000 per year, in three instalments, for small farmers with landholding less than 2 hectares. While the first instalment of Rs 2,000 has already been paid to a large number of farmers, the government said it would need an additional Rs 75,000-cr every year to fund this scheme.

Whether it is because of political compulsions or driven by the dire need to augment farmers income, the introduction of a direct income measure for farmers is indeed a significant step. Even though the amount allocated is meagre, I am sure it will be enhanced substantially in the years to come. The nation must stand with farmers at these difficult times. Direct income support has to be followed with a more elaborate nation-wide programme to provide an assured income to farmers. At least a minimum of Rs 18,000 per month per farm family, linked to crop production, geographical location and inflation, must be ensured. The idea is not to issue a salary cheque every month but to work out a mechanism that guarantees an assured income package. For this, the Commission for Agricultural Costs and Prices (CACP) needs to be renamed as a Commission for Farmers Income and Welfare, with the term of references changing suitably. 

Compared to an average domestic support of $60,586 per farmer in US; $ 10149 in Japan; $ 16562 in Canada; EU $ 6,762; China $ 863; and $ 345 in Brazil, an Indian farmer barely gets a support of $ 227, which is primarily by way of indirect subsidies. On the contrary, compared with the massive subsidies doled out to the industry, referred to as ‘incentive for growth’, farm subsidies appear rather miniscule. In addition to the huge industrial subsidies, economic stimulus packages, and the corporate NPA write-off every year, the government has recently ensured 7,000 steps, big or small, for ease of doing business.

When will agriculture receive such a policy impetus? #

Give farmers a fair deal. The tribune. April 1, 2019

https://www.tribuneindia.com/news/in-focus/give-farmers-a-fair-deal/751342.html?fbclid=IwAR2rfas5hL4ONOGMMoy3Xkj1DeveAwtJN84QzGZHdoDU8gteyK-OX6Hq1io

READ MORE - How agriculture has been kept impoverished.