Decoding Farm Sector - How Much Agitation Is Justified

Since formative stage of my life I have experienced & am informed that India’s economy is largely dependent on Agriculture and interestingly till today about 77% of rural households depend upon agriculture(the Hindu Business line) for their livelihood and 52% of Indian population is engaged in Agricultural activities, whereas the contribution of Agriculture has declined from 34% in 1983-84 to 16% in 2018-19 at the same time the agricultural sectors contribution to employment has declined from 81% in 1983 to 58% in 2018.

Despite being heavily dependent on agricultural income and involvement of a large population in agriculture & allied agricultural activities, India could not become a lead agro commodities producing nation of the world, having a meagre $3.5 billion of agricultural exports in 2020(IBEF). Till now Indian agricultural largely remains in news for bad reasons like farmers suicide, poor income etc., although our honourable Prime Minister started Kisan Channel on DD Network, still the overall awareness of urban population about agriculture remains very low. Each and every election since 1990 echoed the populist demand for farm loan waivers etc. without considering the harm it caused to overall economy as well as whole agricultural ecosystem of India.  

If we take a deep dive to the Indian farming & farm sector structure I find following about these,

Farming structure 

• Insignificant intervention and adoption of scientific ways of farming
• Monsoon oriented farming resulting in uncertain & poor yields and impact of El Nino and La Nina
• Poor Logistic to farming products and farm to fork management 
• Wastage of perishable farm yields due to lack of cold chain

Farmers Structure

• Big Farmers – owns & cultivates more than 2 hectare lands
• Small Framers – Cultivates between 1-2 hectare of lands
• Marginal Farmers – either works share croppers or owns & cultivates less than 1 hectare land
• Farm labours – Who doesn’t own land but work as labourer in the farm land against money & farm yields

Since independence various interventions had been attempted by successive governments to improve to the plight of farmers & better yields. During the short tenure of Prime Minister Late Lalbahadur Shastri, India first time acclaimed pride by becoming a self-reliant country in yielding core crops. During 1966 , India started witnessing upsurge in agriculture yields as Green revolution stared spreading its foot prints under famous scientist MS Swaminathan but by the 1990s it lost its steam as no further interventions were made to make farmers self-reliant & farming a rewarding profession.

From 1990s, the successive governments, instead of resolving the core issues of farming, paid much attention on populist measures like Loan waivers schemes, subsidy etc., which also did adversely impacted the health of Nationalised banks. While the governments, both Central & State took these populist measures to improve the plights of farmers, the suicide rate of farmers kept increasing. Between 1997 to 2005, the farmer’s suicide rate was 4.55% per 10 lac population whereas due to another reasons the suicide rate 10.6% for rest of the population. (The Journal of Development Studies by Gruère, G. & Sengupta, D)

During the period from 1995 to 2005 the farmers committed suicide in a large no & following data reflects the same (Source NCRB India)

Interestingly the Green Revolution covered largely 3 states Punjab, Haryana & Western UP & in these states the Farmers suicide were the lowest, however states like Maharashtra, Karnataka, Andhra & MP top the tally .

From the beginning of 1990’s a new trend of waiving farmer’s loan started by the Socialist governments. It was a hybrid schemes sometimes announced by centre & sometimes announced by State Govt’s.

In 2008 a package of 52,000 Cr. was introduced as Farm loan waiver by Govt. of India, however it could not improve the plight of farmers as we see the suicide rate in 3 successive year & it remained almost same

The above data is evident that these farm loan waivers schemes could not improve the plight of farmers. Now the valid question arises why these Farm loan waiver schemes could not work?

Farm loans are taken largely by the big & small farmers, who deploy either marginal farmers or land labours on their field. So basically they are money holding persons who invest their money in the farms & work on the Industry module. Get the Capital in terms loans & in the event of any adversities they claim the Loan waivers. However the Marginal Farmers normally take loans from the private money lenders & there is no formal mechanism to capture this loan & none of the waivers schemes in fact helped those farmers & larger population who commit suicide come from this pool only. More over wealthy farmers (large & small) finds a way out to make additional money through the leakages in the process. A report of Tribune, mentions that Punjab Farmers are depositing their income to other banks to avoid payment of their loans & thus defaults. The Condition of farm labourers so far not much got attention. The labourers from Bihar , UP , Odisha migrates to the researcher state likes Punjab, Haryana , Western UP & work as labourers , where they work on meagre income from Rs.160 to 350 per day. Demystifying MSP

The idea for Minimum Support Price (MSP) is to give guaranteed price & assured market to farmers. The MSP is given Food Grains, Oil Seeds, Cotton, Sugarcane, Jute & Tobacco . Pls be noted that the MSP is not given on Vegetable Products.

The Zone wise Production of MSP supported agricultural product

Interesting to note that states which are topping in MSP supported agricultural products are not sharing the lion share of MSP. A data of 2017-18 shows following 

Inference

1.  The agricultural policy inherited from Britishers & vigorously pursued over the period of time has not helped either farmers or Farm yield

2.  There is a huge difference in MSP beneficiary states & MSP supported farm product producers states

3.  In the MSP only few farm products are included causing much distress to other farmers viz Vegetable producers etc

Way Forward

In order to improve the situation & revolutionised farm sector we need to have some radical thinking. The New Farm Laws which has now been brought is very much radical in approach. The effectiveness of this can only be judged how it’s going to be implemented. Unfortunately without going in to merits of this Bills & finding the ways & means to make it more effective, a section of people trying to paint it bad & favored the old regime.

Some points to ponder

1.  Old regime of Agri Sector - It is evident that past policies & measures have neither helped the farmers nor improved the farming yields as currently India’s farm yields are nowhere matching with global benchmarks ( Rice Yield in India is 2191kg/hectare against global benchmark of 3026 & similarly wheat yield is 2750 kg/hectare whereas global yields are 3289 kg/hectare)

2.  Privatization vs Protection - The arguments against privatization in farming does not hold valid in current state of affairs. Normally the political parties try to paint a bad pictures about privatization, but matter of fact is that currently the share of employment in the country of private sector is~ 60% & contribution in GDP is ~33%. Private organizations work more efficiently & innovatively in reducing cost & optimizing profit. Linkages of farming sector with private sector is going to do the revolutionary changes in the sector

3.  Farm Subsidy – Either MSP or waiver schemes have not made any significant improvement. Neither this has checked suicide of farmers nor it has improved the overall condition of farmers.

Recommendations

1.  Introduce a strong regulatory mechanism to prevent the exploitations of farmers & end users. A Central & state Tribunal may be put into force

2.  Emphasis on improving the income of farmer & instead doling out subsidy to make farmers self-reliant

3.  Regulation of prices from Farm to Fork

4.  Improving logistic for an efficient supply of farm produce to end consumers thus reducing wastage & spillage

5.  Large scale introduction of scientific ways of farming including skill development of farmers for better adoption of Agri. Practices in line with the new normal of Climate Change