* Banana is the cheapest fruit available. It also happens to be the most eaten fruit in Europe and North America. Largely being traded, most banana imports come into Europe from Ecuador, Colombia, Costa Rica and Dominican Republic. Looking at the so-called efficiency of the value chains that operate, all that the growers earn is anything between 5 to 9 per cent of the end consumer price.
* Coffee is the world’s largest traded commodity providing livelihood to at least 60 million people in more than a dozen countries. But every time you drink a cup of coffee, don’t forget the coffee bean grower gets only a few pence of the price you paid. In India, for the Rs 250 you pay for a cup of coffee in any of the trendy kiosks, farmer gets only Rs 1.
Strange, isn’t it? For agricultural commodities that are traded globally, and result in massive profits for every player in the agri or food value chain, it is invariably the primary producer – a farmer – who gets to bear the brunt. With a meager share in the end consumer price, they are left with little or no money to sustain their families. Eventually, most farmers end up either committing suicide or abandon farming to move to the cities looking for a menial job.
This is happening at a time when food value chains are expected to increase competitive performance, and in turn make it profitable for all the collaborators down the line. Makes sense, isn’t it? But then how come while each of the participants in the value chain, and that includes transporter, processor, retailers to name a few ends up raking huge profits from the business enterprise, it is invariably the primary producer who is left pauperized?
To begin with, let’s first try to know what a food value chain means. According to the website of the Ministry of Agriculture, Food and Rural Affairs of the province of Ontario in Canada, ‘a value chain can be defined as a strategic partnership among inter-dependent businesses that collaborate to progressively create value for the final consumer resulting in a collective competitive advantage’. By linking production, processing and marketing activities, the value chains end up ensuring that each of the participant gains economically.
I am no expert in value chains, more specifically the food value chains. My interest in the role value chains play to link the primary producer with market demands actually arose from curiosity. Every time farm gate prices came down, take the example of wheat price, it is hailed as a sign of efficiency. But every time the price of value added product from wheat goes up, bread is an example, no one would like to call it a sign of inefficiency. It is taken as a natural progression, an outcome of an economic design that thrives essentially on increasing demand, and thereby consumption, to achieve economic growth.
The wheat example I gave above needs a bit of explanation. Sometimes back I read an interesting analysis by a Canadian author and critic Darrin Qualman. Interestingly, he explains that while the price of wheat in Canada (adjusted for inflation) has come down drastically over a period of150 years, from $ 30 per bushel in 1867 to $ 5 per bushel in 2017, the retail price of 60 loaves that are produced from a bushel of grain actually increased by $ 50 in past four decades, between 1975 and 2015. The question he asks is something to really ponder over. Why is efficiency measured only in terms of reducing the price of wheat for the farmers?
Take another example of the banana value chain. A study by BASIC and the Make Fruit Fair campaign of Banana Link tells us that hypermarkets and supermarkets are the two dominant players in the value chain, walking away with 35 per cent and 33 per cent of the food sale in Europe. But if we look at the various stages of production and distribution, the most strenuous role is played by the banana growers who toil hard for about 9 months in a year. And yet, in the end, the growers get a price that is not even enough to cover the cost of production. If that is the way we measure efficiency of a value chain, isn’t it time for disruption?
I can go on and on with examples that illustrate how farmers have been ruthlessly exploited over the period by the so-called efficient food value chains. With concentration of power in the hands of big agribusiness companies, the little margins that farmers were earlier getting is being further squeezed by the big players. Regretting the trend, the US National Farmers Union states that four largest meatpackers control 55 per cent of poultry, 66 per cent of pork, and 85 per cent of beef processing. “These corporations dominate what is grown and how it’s produced, all while paying farmers as little as possible.”
The US Department of Agriculture’s food dollar series makes it explicitly clear. In 2016, the Economic Research Service of USDA showed that farmer’s share in the end consumer price, measured in terms of a dollar worth of food purchase, averages 14 cents. This was the lowest since 1993 when the series began. With such low incomes, it is quite obvious that farming becomes economically unviable, forcing farmers to quit in large numbers. That is exactly what happened in America, and that’s the trend that is being followed globally. Nevertheless, what becomes abundantly clear is that at the very foundation of the agrarian crisis that prevails in America, and also for that matter what has brought tens of thousands of farmers protesting at the borders of New Delhi for over ten months now, is the devastation wrought by the exploitative food value chains.
There is nothing sacrosanct about the way agri value chains are designed. Business and management schools, nationally and internationally, must acknowledge that food vale chains need an overhaul. It calls for disruptions on a big scale. Let us not shirk away from that responsibility. The value chains need to be made more responsible towards the primary producer, the very foundation on which the chains operate. That is why the demand for a guaranteed farm price is so crucial to sustain farm livelihoods. The food value chains should be left to adjust accordingly. #
In an address to Congress, US President Joe Biden stated: “Trickle down economics has never worked. And it’s time to grow the economy from the bottom and the middle out.” This is probably the first time any US President has acknowledged the failure of a dominant economic thinking that is ostensibly behind much of the socio-economic crisis the world is faced with.
Trickle down is surely an outdated economic concept. So much so, that it should have been erased from the economic thought process by now. And yet, it continues to be part of the economic curriculum and whether we like it or not helps formulate the global economic policies thereby acerbating inequality, and continuing to keep the world in grip of poverty and hunger.
Whether the US President’s acknowledgement will bring about a change in the way the World Bank/IMF as well as the credit rating agencies have been promoting policies that hinges on to the failed trickle down theory, only time will tell. But let us hope economic institutes, including business and management schools, initiate a debate on how to shift to more realistic policies that “grow the economy from the bottom and middle out” as Joe Biden had envisioned.
Similarly, there are several other economic concepts and hypothesis that should have been discarded by now. After all, economics is a progressive science and it should move with changing times, improving on ideas with new learning’s. Holding on to outdated ideas, and teaching young students the same outgrown concepts leads to building up a generation of economists whose economic orientation leaves much to be desired.
This becomes more relevant in the context of the ongoing debate on the three central farm laws. The predominant economic thinking that free markets leads to better price discovery for farmers, given the supply demand equilibrium, has actually failed to translate into higher incomes for small farmers across the globe. To be told that less the population in farming, the higher will be the farm incomes; and bigger the land holdings the higher will be the bargaining power thereby enhancing farm incomes, too has failed.
While economists refuse to acknowledge that these hypotheses are perhaps outdated and need to be discarded, the same is being reiterated as the possible way to double farm incomes in India. Given that roughly 50 per cent of the workforce, directly or indirectly, is engaged in agriculture in India, it is amusing to read a report that says policy makers believe that increasing the rate of farm migration from the existing 1.81 per cent to 2.4 per cent per year in India will automatically lead to higher farm incomes. If this was indeed true, I wonder why the same economic thought has failed to hold true for farmers in the developed countries.
As I have often said, in the United States, farming population has come down to 1.5 per cent, and the average farm size has increased to over 440 acres. Still, farm incomes are on a steep decline. This defies the economic theories that we were made to believe. Just to give you an idea, the wheat price farmers get is much less than what they were getting 150 years back at the time of the American Civil War. More recently, while the median farm income has remained negative for some years, farmers were saddled with a bankruptcy of $425 billion in July 2020. Let me reiterate, the rate of farm suicides in America is 45 per cent higher in rural areas compared to urban centres. If the markets were so good, there is no reason why agricultural subsidies should in reality substantiate farm incomes to the tune of 40 per cent.
In neighbouring Canada, where the farming population has shrunk to about 1.7 per cent, and the farm size has grown enormously, farmers are indebted to the tune of roughly $102 billion. Clearly shows that the popular economic understanding that farm incomes go up when the population in farming drops, and as the farm size grows, has not worked here either.
This is not only true for North America. Europe is no better. In Sweden, since 1990, the numbers of farms have declined by 30 per cent. While the farm size increased, the number of farmers has come down to less than 2 per cent. Despite the dominant economic thinking envisaging higher farm incomes when the proportion of farm population drops, farm incomes too have slumped there. According to the 2018 Common Agriculture Policy (CAP) Strategic Plan of the European Commission, 54 per cent of the average farm income in Sweden is made up by subsidy support. With a direct income support, which is double than what an average European Union farmer receives, Swedish farmers are able to supplement farm incomes reaching some level of parity.
The same holds true for France, Germany, Denmark, Belgium, Ireland, Spain and UK to name a few of the EU’s major agricultural players. Europe provides a farm subsidy support of $ 100 billion, and yet farm protests against falling incomes are only increasing.
That free markets have failed to prop up farm incomes in the rich developed countries clearly shows that something is fundamentally wrong in our economic thinking and approach. We can argue about the virtues of markets till the cows come home, but the fact remains that market principles we learnt in our economic courses have failed to translate into higher farm incomes, the only visible beneficiary being the agribusiness companies. How will the same market principles work for small farmers in India, constituting 86 per cent of the farming population, remain a dilemma?
This calls for an economic rethinking. To make farming a viable proposition, perhaps US President Joe Biden needs to include farm income parity or guaranteed farm incomes as the guiding principle for boosting ‘the economy from the bottom and middle’. #
Inflatable suicide dolls hung on trees outside the French Parliament by farmers.
Pic courtesy -- TRT World
It’s difficult to imagine. At a time when free markets are generally believed to provide farmers with a higher price thereby enhancing farm incomes, the farm gate price for wheat in Canada happens to be much lower in 2017 than what it was 150 years back in 1867. This is not only true for Canada. Even in the US, as per media reports, farmers say the price they receive for wheat is much lower than what was prevalent at the time the four year American Civil War ended in 1865.
So what happened to markets? After all, wheat is a staple food and its demand, considering the population boom the world has witnessed in the past 150 years, has grown exponentially over the centuries. According to the UN Food and Agricultural Organisation (FAO), wheat production forecast is pegged at 780 million tonnes in 2020-21, an increase of 7.5 million tonnes this year. Given the food insecurity the world is faced with, FAO considers the cereal production estimates (including that for wheat) to be positive.
Now before you wonder how this could be possible, given the fact that economic curriculum in colleges and universities teaches us that markets provide the rightful price, take a look at an analysis by the US National Farmer Unions (NFU) which explains how the continuously declining peanut prices since 1965 had pushed three out of four peanut farmers out of business in America, and that too at a time when peanut consumption was on the rise. Defying the supply demand logic, the peanut prices slumped from $1 per pound in 1965 to less than $0.25 per pound in 2020, a drop of more than 75 per cent. And if you are still thinking it probably happened because of surplus production, a Washington Post report tells us how just three companies, controlling the entire peanut market, had actually fixed the purchase price. After a lawsuit filed by 12,000 peanut growers, these companies finally agreed to pay $103 million in compensation for deliberately keeping the prices low.
Peanut is no exception. This kind of match fixing has been going on for decades. Whether in America, Europe or India, what the farmers need to understand is that the match is already fixed. It is not without any reason that market prices, when adjusted for inflation, have remained frozen or have been on a decline over the years.
Coming back to the issue of wheat prices, a Canadian author, critic and writer, Darrin Qualman, has in an insightful series of blog posts explained how the prices have been on a steep decline since 1867. Adjusted for inflation, the price of wheat per bushel (27 kgs) was close to $30 in 1867. Like on a ski slope, the average price had continuously been on the downward slide ever since. With global emphasis shifting to agricultural exports in the mid-1980s, the prices began to slump further. In 2017, the wheat price collapsed to a little over $ 5 per bushel. The price a Canadian wheat farmer sold his wheat for in 2017 was less by $25 per bushel than what his great grandfather sold it for 150 years back.
No wonder, while small farmers abandoned agriculture in large numbers, the average size of a Canadian farm has grown to 3,000 acres with the big farms several times larger. While the number of farmers declined drastically, the economic argument in support of market reforms claiming that farm incomes go up when the number of farmers recedes too has turned out to be untrue. America has lost more than 5 million farms in the in less than 100 years, and Australia has lost 25 per cent of its farms between 1980 and 2002. Economists will say this is a healthy development, and will make farming profitable. But surprisingly, the speed at which farmers across the globe have got out of agriculture hasn’t increased farm incomes but on the contrary it has only worsened the agrarian crisis.
This is the same flawed argument that Niti Aayog too is promoting, saying that farm incomes will double when the number of people on the farm comes down. If this be true, I don’t understand why in Canada, for instance, the farm debt should be exceeding $102 billion, more than double than what it was in 2000. In US, where hardly 1.5 per cent of the population remains in agriculture, farm debt has multiplied to a staggering $ 425 billion in 2020. In France, with only 7 per cent workforce employed in agriculture, more than 44 per cent farmers carry a debt burden of Euro 400,000 and 25 per cent farmers earn less than Euro 350 per month, less than the poverty line.
While farmers have been denied the rightful price, the consumer prices have been on the rise. In another blog, Darrin Qualman explains that while the price of a bushel of wheat in Canada and US has remained static since 1975, the retail price of loaves of bread produced from each bushelin the US had increased by $ 50 on an average, from $25 in 1975 to a little over $75 in 2015. The same holds true for other food products as well. How can efficiency be only measured in terms of reducing farm gate prices whereas the food processing and retail giants continue to increase prices, walking away with a larger share of the end consumer price? If the markets were efficient, why the food processing and retail giants continue to thrive in inefficiency?
There is nothing sacrosanct about markets. To believe that markets provide farmers with a higher price is an outdated economic thinking (and education). Markets have historically failed to prop up farm incomes anywhere in the world, a fact that economists failed to acknowledge. Demanding no trading to be allowed below the MSP, protesting farmers are actually seeking a historic correction in economic policy and thinking. This holds the future for a reverberating agriculture, and a new economic design that provides for Sabka Saath, Sabka Vikas. #
Markets have failed to prop up farm incomes.The Tribune. Mar 19, 2021 https://www.tribuneindia.com/news/comment/markets-have-failed-to-prop-up-farm-incomes-227289?fbclid=IwAR0IiGibi8oR20ULhS4y6KWFNsV99V2-H2t7uxnesiQefqKuMFOce7eOuZc
Devinder Sharma, a distinguished food and trade policy analyst has been a voice to listen to during the farmers’ agitation as he eloquently opens up numerous threads of discussion on the complicated story of Indian agriculture. It is a saga that many of us in urban India do not understand or even care about as it does not directly affect our livelihoods and our lifestyle. Trained as an agricultural scientist, he began as a journalist with the Indian Express. He quit journalism to research issues close to his heart. Some of them were on sustainable agriculture, biodiversity, intellectual property rights, food security and poverty, biotechnology and hunger, and the implications of the free trade paradigm for developing countries. In a candid interview with The Leaflet’s Editor-in-Chief RAMESH MENON, he says that it is high time we looked at the travails of 600 million people who are involved with farming with more understanding and empathy. The following are excerpts from the conversation.
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You have been travelling to the sites where farmers are agitating. What is the sense you got?
The first thing is that the impression that many have created saying that the farmers have been misled into agitating is absolutely not true. Farmers know why they are battling a severe winter in the open. They just feel that with the new farm laws that have been passed, they need to be heard. The pain they have been living with needs to be appreciated. They have suffered long enough. This protest is an outcome of the compounded anger built over years. What the farmers are now looking for is an assured income by way of an assured price.
Farmers understand not only these laws but also the political economy behind them. That the farmers can decipher the laws and understand the intricacies has come as a surprise for the policymakers.
What is really striking is their amazing resolve of returning home only after the laws are repealed. They have repeatedly said: Bill wapsi, ghar wapsi. They have come with their families, they have dug in and said they will stay here as long as the government wants them to. They have come with bags and baggage, food supplies, tents and warm clothing.
Farmers understand not only these laws but also the political economy behind them. That the farmers can decipher the laws and understand the intricacies has come as a surprise for the policymakers.
At Singhur and Ghazipur borders, I noticed there were so many women and teenagers among the protesting farmers. There were very elderly farmers in their eighties and seventies with their grandchildren. I have never seen any protest like this anywhere in the world.
The resilience of the farmers is amazing. Each one is doing something there for each other. The bonhomie and spirit to call attention to the problems in agriculture are striking.
What you are saying is what Punjabi culture stands for. Just read any of the Punjabi scriptures. It is all about sharing and caring. It is not surprising to those who have seen Punjabis how they live their lives.
Punjab’s culture is agriculture. This is what most of us have not understood. Look at the protest sites. They are so supportive and helpful to each other. There are men and women cooking for thousands, they have even set up a library for those who want to read, there are scores of volunteers cleaning up, organising the protest, distributing blankets and clothes and doing everything to keep the protest going. Even those who are coming for the protest from the villages do not come empty-handed. They bring something to distribute as they know what the suffering is all about. Punjabis all over the world are supporting the protest.
We probably missed reading their inherent strength. Nobody believed that a protest could carry on like this for so long.
Source: The Quint
Government spokespersons have been saying that it is only the farmers from Punjab and Haryana who are protesting.
What is wrong with Punjab and Haryana farmers protesting? These farmers know that the Minimum Support Price (MSP) will ultimately go away and the mandis will become redundant. In any case, to say that rich farmers from Punjab are protesting is also wrong.
Farm households in Punjab carry a debt of Rs 1–lakh crore. A house to house survey by three public sector universities – Punjab Agriculture University, Ludhiana; Punjabi University, Patiala and Guru Nanak Dev University, Amritsar – had shown that between 2000 and 2015 more than 16,600 farmers and farm workers had committed suicide. Every third farmer in Punjab is below the poverty line. Therefore to say this is a protest by rich farmers is awfully wrong.
To the question of why farmers in other parts of the country are not protesting, the answer is that majority of India’s farmers have never received MSP. Only 6% of farmers get MSP in India, and the remaining 94% are dependent on markets. These farmers do not even know what they have been missing all these years.
Even Sharad Pawar had acknowledged this when as agriculture minister, he had told parliament that 71 percent of Indian farmers do not know what is MSP, they don’t understand the concept behind MSP.
Now, farmers are slowly getting aware.
What are the implications of this agitation?
It has an impact not just on India but has tremendous international implications. Once Indian farmers provide a model, the rest of the world also would like to follow that. Therefore it has huge implications.
Farmers in the United States and Europe are also facing a severe agrarian crisis. They are being driven out of agriculture despite getting huge subsidies. This is happening in rich countries that had adopted market-oriented agricultural reforms some six to seven decades back. Europe provides 100 billion dollars in subsidies out of which 50 percent goes as direct income support. Despite this, one farmer quits agriculture every minute in Europe. In the US, since the seventies, 93 percent of the dairy farms have closed down. But milk production has gone up as the corporates have got into dairying and set up mega-dairy farms.
But after the UK dismantled the Milk Marketing Board, which regulated prices, prices crashed. Today, there are just about 8,000 dairy farms left. Dairy farmers are struggling to cover up their cost of production. What does this tell you? It tells you that market-oriented agriculture invariably comes at the cost of small farmers.
The crisis has been there for several years. I remember a tragic farm suicide in America, I can’t ever forget that. About 13 years ago, one dairy farmer first shot each of his 51 cows and then he shot himself. This shows the distress that prevailed.
If markets are so good why would the US provide 62,000 dollars as a subsidy to farmers? Why should Europe provide such huge subsidies? Take the case of the dairy sector in the United Kingdom. In the nineties, there were about 32,000 dairy farms in the UK. But after the UK dismantled the Milk Marketing Board, which regulated prices, prices crashed. Today, there are just about 8,000 dairy farms left. Dairy farmers are struggling to cover up their cost of production. What does this tell you? It tells you that market-oriented agriculture invariably comes at the cost of small farmers. Remember, when Richard Nixon was the US President, and this was in the early seventies, his agriculture secretary had said: “Get big or get out.”
Even the Director-General of Washington DC-based International Food Policy Research Institute has suggested that India should follow a policy of: “Move up or move out.”
But the bigger question is if we move a large section of small farmers out of agriculture what do we do with 50 percent of our population engaged in agriculture where 86 percent of our farmers own less than five acres? Why do we have to abandon them and not instead make agriculture sustainable? Why are we copying failed policies from the west?
At a time when we have jobless growth, why do we want jobless agriculture? Why do we entrust corporate to produce food when our farmers are capable of doing it?
You mean to say market-oriented agriculture has failed to prop up farm incomes.
Well, policymakers are saying that these reforms will help increase farm incomes. It will increase the bargaining power of small farmers, and thereby help enhance their incomes. But a study by the London School of Economics has shown that similar reforms in Kenya, where farmers have small holdings, have failed and pushed farmers deeper into crisis.
I remember a report of the United Nations Conference on Trade and Development (UNCTAD) which had concluded that between the mid-eighties and mid-2000, a period of 20 years, the output price globally had remained static if you adjust for inflation. Rich countries compensated farmers with subsidies. Poor countries had no money for subsidies.
Because the intelligentsia, the academia and the media failed to stand for farmers, they realise they have to stand for themselves.
Another study by the Organisation for Economic Co-operation and Development (OECD) along with ICRIER had estimated that said that between 2000 and 2016-17, Indian farmers lost Rs. 45 lakh crores. That meant it every year farmers lost approximately Rs 2.64 lakh crore. was lost! It happened at a time when 94% of farmers were dependent on markets.
Globally too farmers have suffered the markets. Farmers all over the world are hurt by the volatility of the market.
Take for instance the coffee industry. It has a turnover of 102 billion dollars. There are around 50 to 60 million coffee farmers in the world. For the last 13 years, the prices of coffee beans have been depressed. As a result, a majority of these coffee farmers have an income level of less than 1.9 dollars a day which falls within the acute poverty line according to the United Nations.
Look at cocoa. The confectionery industry is worth 210 million dollars. The cocoa farmers get only 1.3 dollars a day which is less than the price of an average chocolate bar that you buy. This is at a time when bulk of cocoa and coffee were traded on the commodity exchanges. Imagine if these farmers had MSP. Wouldn’t their livelihoods would have been much better?
Alright. But what are the agitating Indian farmers so angry about?
Farmers are angry over the neglect and injustice they have faced over the past few decades. They fear that these farm laws have been designed for the corporate, not for farmers. The compound anger of all these years is perhaps what is coming out.
Look at their plight. There are reports every now and then of farmers throwing tomato, potato and onions on the streets. See what they get for their produce. In Madhya Pradesh, farmers got one rupee for a kilo of bhindi while in the urban market it was selling for Rs. 40 a kilo. Look at the brutality of the markets.
We should we aiming at reforms that provide more income in the hands of small farmers, making agriculture sustainable and economically-viable thereby achieving the Prime Minister’s vision of Sabka Saath Sabka Vikas.
Economic Survey 2016 told us that the average income of a farming family in 17 states of India is only Rs. 20,000 a year, which means less than Rs. 1,700 a month. Have we ever pondered how are these farming families surviving? Hasn’t society at large failed to stand up for the farmers? Did we ever call for economic justice for farmers?
Because the intelligentsia, the academia and the media failed to stand for farmers, they realise they have to stand for themselves. After all, farmers also have families to look after. They have to take care of the education and health expenses of their family. They also want to live a better life.
All that the Farmers are essentially asking for is an assured price for their crops. They want MSP as a legal right for 23 crops for which MSP is announced every year. Farmers too need an economically viable system to survive.
What kind of reforms do you envisage?
Instead of borrowing from abroad, our emphasis should be on creating our own models, banking on our own strengths, our own needs and requirements. We should we aiming at reforms that provide more income in the hands of small farmers, making agriculture sustainable and economically-viable thereby achieving the Prime Minister’s vision of Sabka Saath Sabka Vikas.
First, make MSP a legal right for farmers. The delivery of MSP has remained confined to primarily two crops – wheat and paddy – and that too predominantly in Punjab and Haryana, where farm incomes are relatively higher than the rest of the country. It is time to extend this to the entire country, and to all the 23 crops for which MSP is announced every year. This means basically upping the benchmark prices to ensure that no trading takes place below MSP. This means the private trade too will need to make purchases at MSP or above. It does not mean that the government will have to procure everything.
Secondly, to ensure smooth marketing, the network of APMC regulated markets needs to be expanded to reach every nook and crook. Against the 7,000-odd PMC mandis that exist today, we need a network of 42,000 APMC mandis if a mandi has to be provided in a radius of five kms. We also know that there are problems with the working of APMC mandis. The mandi structure needs to be reformed, not thrown away. Regulated markets are absolutely essential for price discovery.
And finally, we need an alternative system that can provide more money in the hands of farmers. In America, as per the US Department of Agriculture, farmers share in every food dollar a consumer spends is only 8 percent. Why emulate a system that aggravates agrarian distress? What we need is to learn from our own Amul dairy cooperative design that provides at least 70 percent share of the end consumer price to farmers. We need to launch a nationwide programme to replicate the Amul model to vegetables, fruits and pulses.
There is excitement in the air. Soon after the three ordinances were announced in what the Agriculture Minister Narendra Singh Tomar termed as a “historic day for agriculture” a section of the mainline media was filled with a sense of elation. Now farmers can finally breathe, screamed a headline. Hailing the long-pending agrarian reforms, another newspaper blared out that the freedom to farmer to sell to anyone, anywhere, has finally freed them from the clutches of mandis.
There is a sense of jubilation over the Central Government’s decision to finally bite the bullet, free farmers from the grasp of middlemen, who as most of the city bred believe have willy-nilly been short changing the farmers. The dhoti-kurtaclad trader, not very literate, but a very smart player in his day-to-day dealings, has often been portrayed as a side villain in Bollywood films. Not only films, even the textbooks have painted him as a villain of the growth story. This is the image that has stayed with us. It remains embedded in our thinking.
Call him Arhtiya, Sahukar or a middleman; he is often dressed up in a dhoti-kurta or a kurta-pyajama. He also at times doubles up as a moneylender. Although the Webster dictionary describes middleman as a dealer between the producer and the consumer, the average perception is in the negative, painting him more like an evil character. This is far from true. Perhaps a closer to an objective definition has been offered by an Agritech consultant and blogger Venky Ramachandran: “Middlemen offer hyper-local infrastructure to farmers to help them avail timely credit and inputs based on their contextual relationship-driven understanding of farmers’ cropping cycles.”In fact, the relationship goes much beyond providing credit and inputs but also extends to procuring the marketable surplus, and often comes as a much needed respite at times of family emergencies.
Nevertheless, while the educated despise the traditionally dressed middleman, they have no such qualms about a middleman who comes dressed in a tie and suit. What has the dress sense to do with the liking and disliking for the role a middleman plays is something for the psychologists to find out, but perhaps showing contempt for the local arhtiya comes in handy to replace the existing breed. Many glib talkers, highly educated, who write or call to seek advice on how they intend to bridge the gap between a farmer and consumer by squeezing out the middleman never return back when told what they plan to do is nothing different.
To illustrate, a Start-Up using digital technology to market agri-inputs is for all practical purposes a middleman. The fact that they use technology and often have app based technological solutions, but in the end they may be a little different from a retailer, but are primarily trying to sell agri-inputs to farmers at a commission. Most of those who use the weather-based advisory to market specific pesticides and fertilisers to meet the timely needs are no different. In any case, whatever algorithms the Start-Ups may be using, and this can be true for big retailers or small enterprises, in the end the effort is to reduce the margins and increase profits.
Then there is this category of Start-Ups whose claim to fame is to serve as an intermediary in the “farm to fork” supply chains. Most of them work in the vegetable and horticulture supply chains, with direct delivery of fresh fruits and vegetables to consumers. At best these intermediaries can be called as the new battery of middlemen, replacing the humble street vendor and the neighbourhood retail vegetable shopwala. Only time will tell how much benefit farmers receive by way of higher prices that Farmer Producer Organisations (FPOs) promise, and whether they will be able to ensure Minimum Support Price (MSP) to farmers. We know of two FPOs in Maharashtra, which purchased gram from farmers at MSP, and have run into losses.
While there is no denying that the objective behind setting up Start-Ups and FPOs is laudable, claiming to bring in new technology in agriculture, the challenge remains on how to provide a higher price. Take the case of moong. The MSP for moong for the 2020-21 marketing season is Rs 7,196 per quintal. The average market price in Madhya Pradesh markets have hovered around Rs 4,000 to Rs 4,500 per quintal. Any price above Rs 4,500 will be called a higher price. But will the new battery of middlemen be able to ensure that moong farmers are paid as per the MSP? If not, then why blame the arhtiyasitting in the mandi.
The excitement over the freedom to sell to anyone, anywhere, also seems to be over hyped. If MSP is coming in the way of a better price discovery, the 70th Round of National Sample Survey Office (NSSO) had shown that between July 2012 and June 2013, majority of crop harvests, except for sugarcane, was sold to local private trader and a small proportion to the government agency/cooperative. For instance, 79 per cent of moong in the rabi 2013 marketing season was sold to private traders, 18 per cent in the mandi, and only 3 per cent to government agency. Similarly for paddy, 64 per cent was sold to private traders, and only 17 per cent in the mandi, and 6 per cent to government agency. Did the private trade generally offer them higher price? No.
If bulk of marketing was happening with private trade and that too outside the mandi, as the NSSO report shows, it means the freedom to sell to anyone, anywhere, already existed. In any case, as I have repeatedly said, only 6 per cent farmers get the benefit of MSP, the remaining 94 per cent remain dependent on markets. The question therefore is not whether a farmer sells to the arhtiya or to the new battery of middlemen, that’s not true freedom. The biggest ticket reforms would be when farmers get the freedom to sell to anyone, anywhere, at a price not below MSP. #
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 anddhabasclosed 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 formakhanain Bihar,Kesarin Kashmir,Ragiin 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,
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.
