Farm production has jumped multi-fold since independence. However, its benefits have hardly reached the India’s largest community, The Farmers. Since 1995, the distress has forced more than 300,000 farmers to commit suicide across the country. Mohd Mustaquim digs out what went wrong from policymaking to plans implementation and is farmers’ plight a result of collective misdeeds of our policymakers?
Vishal Namdev Pawar, 38, a farmer of Yavatmal district in Maharashtra committed suicide on December 17, 2015, leaving a note mentioning the burden of crop failure. His last wish was a loan waiver from the government. Just a day before, on December 16, the State Chief Minister Devendra Fadnavis, refusing the loan waiver, announced a package of Rs 10,512 crore for the farmers.
Pawar might not be satisfied with the package as the deep-rooted corruption at the grassroots level has been playing a major role in siphoning off public funds. During January to October 2015, around 2,600 farmers committed suicide in Maharashtra alone due to several reasons like crop failure, failing to repay loans and dependency on trader-centric market forces. The menace of suicides has taken lives of more than 3,00,000 farmers in India since 1995.
In 2013-14, according to the Parliamentary Standing Committee on Agriculture’s (PSC-Agriculture) figures, the average annual income of farmers were Rs 74,380 per annum while they had a loan of Rs 47,000 from banks and Rs 12,130 from local moneylenders. It leaves only Rs 15,250 with the farmers which they pay in the form of interest of their loans. In this scenario, the plight of farmers can be understood easily. They are on zero.
It has been a big question for decades that what went wrong with the India’s largest community, who grows food for the country, that is pushed to the distress. According to the figures of PSC-Agriculture, among the people practicing agriculture in 1951, 71.09 percent were farmers and 28.91 percent were farm labourers. By 2011, the percentage of farmers dropped sharply to 45.1 percent as 26 percent of them lost their lands which forced them to be farm labourers.
Though foodgrain productivity jumped many folds since independence – from 51 MT in 1947-48 to over 260 MT in 2013-14 – in which Green Revolution played a major role, however, its benefits hardly reached to the farmers.
By and large, agricultural policies, their implementation, deep-rooted corruption on service delivery, no effective contingency plan for bad weather, poor farm credit system, lack of crop insurance, high input cost, lesser market access, traders dominated markets, lack of warehousing and storage facilities, minimum support price system, among various reasons have played crucial role in pushing agriculture into distress.
In the first five-year plan, agriculture was the top priority. Later, the sector fell down to the third position in the priority list after heavy industries and small and cottage scale industries. “We need to take the agriculture sector on the top priority. In the 11th five year plan, 2.85 percent of budget was allocated to agriculture, animal husbandry, fisheries and other allied sectors. It was increased to 3.38 percent in the 12th five year plan. But, it is still unsatisfactory, says veteran agriculturist and Member of Parliament, Lok Sabha, Hukmdev Narayan Yadav. A Bhartiya Janata Party MP, Yadav is also the Chairperson of Parliamentary Standing Committee on Agriculture.
As per the Reserve Bank of India guidelines, all public and private sector banks, including foreign banks operating in India with at least 20 branches have to finance at least 18 percent of their Adjusted Net Bank Credit (ANBC) to agriculture sector. It is classified that within the 18 percent, banks have to finance at least 8 percent to the small and marginal farmers.
Agriculture which comes under priority lending comprises of direct financing to farmers for various farm activities; agriculture infrastructure ranging from warehousing, market yards, soil conservation and watershed development among other infrastructure and ancillary activities which include Primary Agricultural Credit Societies (PACS), Farmers’ Service Societies, among others.
The recovery of agriculture financing has been a challenging task for the banks. Thus, bankers consider agriculture financing a bad debt. Besides, 8 percent mandatory lending to the small and marginal farmers, which has also seen drawbacks in its implementation, the rest of the money goes to the agriculture infrastructure service providers and ancillary activities. In a major policy decision, the RBI amended its guidelines on April 23, 2015 and included food processing industry as ancillary activity which has given the bankers more options to divert the funds meant for agriculture, to the industry.
This would make the farmers more vulnerable in getting loans from the banks. Thus, the agriculturalists have a different opinion. Krishan Bir Chaudhary, President- Bharatiya Krishak Samaj thinks it as a method of diverting farmers’ funds to the industry. The farmer leader says, “The funds meant for farmers are already taken away by the cold chains, warehousing and ancillary activities. Now, food processing sector has also been part of this 18 percent agriculture lending which will create more problems for the farmers. Thus, there should be a separate classification for the agro-industries and infrastructure.”
About lacking of bankers’ financing expertise in agriculture, Rajesh Srivastava, Chairman and Managing Director, Rabo Equity Advisors, says, “Around 40-45 percent of landholding in India is rainfed. It increases agriculture’s dependency on monsoon. If there’s a bad monsoon, it may be the reason of crop failure in some parts of the country. Then, it is not feasible for a farmer to repay the loan. So, banks need to develop specific expertise for lending to farmers.”
Minimum Support Price
Minimum Support Price (MSP) for agriculture produces is recommended by the Commission for Agricultural Costs & Prices (CACP), Ministry of Agriculture. However, as per the recommendations, the final MSP is approved and fixed by Cabinet Committee on Economic Affairs (CCEA) of the government.
Some sections blame the MSP system for the farmers’ plight. Going by the figures, they have concrete reason to question the system. For example, MSP of A grade paddy was increased from previous year’s Rs 1,400 per quintal to Rs 1,450 in 2015-16, a rise of only 3.5 percent in a time when agriculture cost has shot up. It makes the agriculture practices unsustainable.
The retail prices of pulses have sweated consumers this year. The retail price of Tur dal had reached a record high of Rs 200 per kg. For this, MSP also seems discouraging for farmers to grow pulses. The MSP of Tur dal was recommended by CACP from previous year’s Rs 4,350 to Rs 4,425 in 2015-16, hike of 1.72 percent. Finally, CCEA added Rs 200 as bonus which increased the MSP to Rs 4,625, a hike of 5.17 percent. However, it is still insufficient to continue with growing pulses, especially when the deficient monsoon has already hit the Kharif season.
According to Yadav, the entire process of CACP is wrong. The agricultural cost and prices are assessed in the absence of farmer representatives. He says, “The prices of industrial produce are decided by the manufacturers while in deciding prices of agriculture produce, the farmers have no say.”
He insists on the formulation of National Pricing Assessment Corporation which should assess the prices. After assessing the cost, there should be 50 percent profit to the farmers. While assessing the cost, many basics are left out. A crop takes four to five months from land preparation to harvesting. For this, the farmers with their family members have to be engaged 24×7 with crop. Their manual labour is not considered while assessing the cost. This is one of the biggest reasons that the farmers who grow food are facing biggest food insecurity.
Going one step further, the farmer leader, Chaudhary wants the CACP and Small Farmers’ Agribusiness Consortium (SFAC) to be dissolved and formulation of National Farmers Income Commission in which all crops, including fruits and vegetables, milk and animals are incorporated.
On the need of dissolving of SFAC, he says, “I am a founder member of SFAC. It was formed on the name of small farmers but does any small farmer get any profit from it? It gets funds on the name of small farmers which goes to the agro- industry.”
“India has various agro-climatic zones and production cost of the same crop varies in different zones. So how would you assess the same cost of production for the entire country?” he points out. There should be a mechanism of assessing cost and pricing separately in every agro-climatic zones, Chaudhary suggests.
While assessing the cost of production and fixing prices, the organisation whichever does this needs to incorporate assessing the crop loss, crop insurance policy and monitoring the natural resources.
According to the Government of India figures, 64.77 percent farmers are having lesser than one hectare of landholding. They are defined as marginal farmers. The 18.52 percent of farmers are having one to two hectares of landholding, defined as small farmers. Further, their landholding is not consolidated at one place. This does not allow them to apply mechanisation, irrigation facilities or other technological advancements which increase their cost of production and decrease income.
More than 60 percent of landholding in India is still rainfed which does not have any irrigation facility. It is not feasible for a small farmer to have irrigation pump in his one acre of land. The policymakers will have to think on it. Either there have to be State borings with pucca channels so that farmers can get water as per the requirement of their crops. It would put a check on crop failure, even in the case of deficient rainfall. For irrigation, the farmer leader Chaudhary commends Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) if it is implemented successfully.
There have been frequent droughts in recent years which caused crop failures in some parts of the country. If irrigation infrastructure was developed, the farmers could have been saved from distress.
Thinking of using a tractor in one acre of land is not scientific for a farmer. “We need to customise the mechanisation according to small landholding. Power tillers can be a good solution for them, says the parliamentarian.
In future trading, earlier small traders were involved who were doing small hoarding. Now, the big traders have jumped into the future trading who do big scale hoarding.They buy agriculture produce on minimum prices, even below the MSP sometimes, do big scale hoarding. It also increases up the prices before reaching consumers. Onion, pulses and mustard oil are the biggest example of it. So, the experts seek to scrap the provision of future trading. “Due to future trading, the big traders are looting the farmers as well as consumers,” Chaudhary points out.
Green Revolution played major role in making the country self-sufficient in food. However, the non scientific model of applying chemical fertilisers has deteriorated soil health, in some parts it has infertile the land. Further, it has polluted the groundwater and environment. Before using chemical fertilisers, farmers should have been trained on the requirement of soil and crop. It has started affecting the farm productivity and human health.
“Due to faulty chemical model, people are dying of cancer and kids are facing allergic cases. It is the sole reason behind immune diseases and pneumonitis disorders. Which chemical will be applied where, farmers are doing it in total ignorance,” Chaudhary says.
Though the Government has launched a Soil Health Card scheme, but 1,000 soil testing laboratories are insufficient, most of them are ineffective. Hence, the basic infrastructure of laboratories needs to be strengthened. They need to be able to recommend fertilisers as per the requirement of soil and crops.
Primary Agricultural Credit Societies (PACS)
Due to the lack of procurement and market access, sometimes farmers get forced to sell their produce even below MSP. In some parts of the country PACS are made capable to create warehousing infrastructure. However, PACS which were supposed to provide solutions to the farmers, corruption is rotting them deeply.
According to a progressive farmer, Jitendra Kumar from Darbhanga district of Bihar, despite Rs 1,400 per quintal MSP fixed by the government, last year PACS bought paddy from farmers at Rs 1,000 per quintal and sold at Rs 1,600.
The governments provide various types of farm subsidies through PACS, ranging from diesel, mechanisation, fertilisers and seeds. In some areas, the benefits reach to the farmers, while in some areas they just do mockery of them.
A farmer from Purnea district of Bihar, Virendra Yadav, says PACS here does not buy farm produce. In diesel subsidy, they charge a certain commission. Last year, they provided subsidised substandard fertilisers, but even before delivery, they charged a commission.
Animal husbandry is an integral part of agriculture. It is the booster for rural economy. Cattle are the source of milk, a cash product and their dung is very much needed for making organic fertilisers. To make agriculture sustainable and keep the organic carbon of soil balanced, there should be balanced use of organic fertilisers with chemicals.
However, the number of cattle has fallen down drastically. In 1951, there were 430 cows and 120 buffaloes with 1,000 people. In 2007, the number fell to 170 and 90 respectively. This is a matter of national concern.
Rather than focussing on foreign breeds, the indigenous breeds of cows need to be developed. The foreign breeds are fine for the big dairies, but not fit for the small farmers. They need expensive food and health treatments and pucca stables. A farmer who is living in a mud house, how could he afford such expense for his cows?
Due to the loss making job, youth is now hesitating to practice agriculture. It forces them to migration. To make the sector remunerative, the rural youth and kids of farmers can be imparted training of running food processing units in the villages. It would put a check on distress sale of farm produce and also generate employment in the rural areas.
Agri experts say that farmers should be given all technical, financial and marketing assistance. For this, we should promote self-help-groups in the villages. It will boost the rural economy.
Though the farmers are the producers, but they do not have any say or control on trading of their commodities. Second thing it that they are also the biggest consumers of all kinds of food products, consumer goods, FMCG products, housing materials and clothing. As much they get money and becomes prosper, their buying power gets strengthened and they would spend on the market. This money would go to the production of goods and it will generate employment. If this cycle runs, the country would go on the path of economic development.
Agriculture is a State subject, the Central government only provides funds for various scheme while implementation can only be done by the State governments. Thus, eliminating all kinds of corruption in service delivery, the States need to make their machinery effective so that the farmers get the benefits and the sector can grow.
The government policies, poor implementation of schemes, middlemen and lack of will power have collectively made agriculture a loss making job. Farmers are doing farming only because they do not have any other option for their livelihood.