Financial Daily from THE HINDU group of publications
Tuesday, Feb 10, 2004
Agri-Biz & Commodities - Insight
From Green to Grey Revolution
Agricultural reforms that are being introduced in the name of increasing food production and minimising the price risks that the farmers continue to be faced with, are actually aimed at destroying the production capacity of the farm lands and would lead to further marginalisation of the farming communities. Encouraging contract farming, futures trading in agriculture commodities, land leasing, forming land-sharing companies, allotment of homestead-cum-garden plots, direct procurement of farm commodities, and setting up special purchase centres will drive out a majority of the 600 million farmers out of subsistence agriculture.
The increased migration from the rural areas to urban centres will upset all the shocking calculations made so far. In 1995, the World Bank had estimated that the number of people migrating from the rural to the urban centres in India by 2010 would be equal to twice the combined population of the UK, France and Germany. With the outlines of the Second Green Revolution that were unfurled recently, New Delhi seems determined to compound the socio-economic chaos. The migration from the rural areas is sure to multiply several times in the years to come, thereby creating an unprecedented political crisis.
In a country where 80 per cent of the farmers own less than two hectares of land, and only 5 per cent farmers have more than 4 hectare, the biggest challenge is to ensure how agriculture can be made more attractive for these small and marginal farmers. At the same time, the Green Revolution areas, comprising Punjab, Haryana, western Uttar Pradesh, parts of Andhra Pradesh, Tamil Nadu and Karnataka, agriculture face a severe crisis in sustainability from the second-generation environmental impacts. Intensive farming has destroyed the ability of the lands to produce enough food, and the mining of ground water has pushed the water table to a precarious level. The Green Revolution has already turned sour.
As a result, Punjab and Haryana are fast heading towards desertification a process that leads to the inability of the land to sustain the production levels achieved at the height of the Green Revolution era.
Although the land holding size is diminishing, the answer does not lie in allowing the private companies to move in by way of contract farming. Private companies enter agriculture with the specific objective of garnering more profits from the same piece of land. If the global experience is any indication, these companies bank upon still more intensive farming practices, drain the soil of nutrients and suck out groundwater in a couple of years, and render the fertile land almost barren after four-five years. The once fertile and verdant landscape will fast turn grey. These companies would then hand over the barren and unproductive land to the farmers who leased them, and move to another fertile piece of land.
Groundwater depletion should be an essential parameter for any meaningful agriculture reforms. Unfortunately, at a time when excessive drawal of underground water has already become a major political issue, the cropping pattern continues to play havoc with the irrigation potential. The lessons from the other contract farming models should be too apparent. Rose cultivation that was introduced in Karnataka a few years back, required 212 inches of groundwater consumption in every hectare. Contract farming will, therefore, further exploit whatever remains of the groundwater resources.
Legal recognition of land leasing is, therefore, no protection to farmers. Once the productive capacity of the land has been destroyed what can the farmer be expected to reap thereafter. Knowing this, the Government is talking of homestead-cum-garden plots for those who lease out their land. The objective is simple: To pacify those who question the impact of contract farming on household food security.
The Agriculture Minister, Mr Rajnath Singh, on the other hand, appears unaware of the basic objective behind encouraging contract farming. He says that these companies will only be there to help the farmers in marketing. What, probably, he does not know is that no where in the world are private companies involved with contract farming just to help the farmers find a marketing outlet.
Punjab and Andhra Pradesh's foray with contract farming, therefore, is a misplaced adventure. It is actually accentuating the sustainability crisis on the farm front by destroying whatever remains of the farmland's productive capacity with more intensive and destructive farming systems. The resulting monoculture also destroys the agriculture biodiversity of the region, thereby hitting sustainability parameters. In simple words, contract farming is the modern version of the `slash and burn' agriculture (jhum cultivation) that the tribals followed in the North-East. Tribals were doing it for environmental reason, whereas the private industries are forcing this on farmers for commercial motive alone. Already contract farming has done irreparable damage to agriculture in the Philippines, Zimbabwe, Argentina and Mexico.
Allowing direct procurement of farm commodities, setting up special markets for the private companies to mop up the produce, and to set up land share companies, are all directed at the uncontrolled entry of the multinational corporations in the farm sector. Coupled with the introduction of the genetically-modified crops, and the unlimited credit support for the agribusiness companies, the focus is to strengthen the ability of the companies to take over the food chain. Significantly, the State governments have opposed the agriculture reforms, terming them as a recipe for the entry of multinational corporations in agriculture. Two years ago, the State governments had opposed the Government's plan to decentralise the food procurement system, terming it as an effort to dismantle the procurement structure.
Agribusiness companies in reality hate farmers. Nowhere in the world have they worked in tandem with farmers. Even in North America and Europe, agribusiness companies have pushed farmers out of agriculture. As a result, only 9,00,000 farming families are left on the farm in the US. In 15 countries of the European Union, the number of farmers has come down to 7 million. The underlying message is clear: Farmers should get out of agriculture. In India, the same prescription will lead to an unforeseen catastrophe.
To expect farmers to collectively mobilise the land resources to facilitate access to modern technology and professional management in the farm sector a concept being floated in the name of land sharing companies too is aimed at private control of the farmland. In India, except for a handful of such cases, farmers do not have the ability to pool land resources unless backed by a private company. In other words, land-sharing is an euphemism for contract farming. All such experiments would be forcing the farmers to shift from staples to cash crops, such as cut flowers, tomato, strawberries, and melons which do not meet the food security needs at the macro level. At the same time, the intensive nature of cash crop cultivation, requiring more external inputs, would do more damage to the environment.
The flawed understanding of the harsh ground realities makes the policy-makers think that private companies can provide the much-needed impetus for increasing food production. If the private companies could do the job, there would have been no need for a Green Revolution. If they could provide the farmers with income support and an assured market, there was no need to set up the Commission on Agricultural Costs and Prices (CACP) to work out the production cost for farmers, or the Food Corporation of India (FCI), to mop up the food surplus. It is well-known that private trade has historically been exploiting farmers at the time of harvest by giving them low prices. Unless a change of mind has taken place silently, private trade cannot be expected to rescue the farming community. Their lobbying for the dismantling of the procurement system, therefore, is too obvious.
The inefficiency in the food procurement system is not the fault of farmers. The Government's inability to extend the purchase centres to areas beyond Punjab and Haryana, is again not the fault of farmers. Instead of coming to the rescue of farmers by setting up purchase centres in other parts of the country, the Governments' intention of dismantling the food procurement system is a recipe for disaster. Farmers are being forced to face not only the vagaries of the monsoon but also the cruelty of markets. Already, a majority of those who opted out of the food procurement system and went in for cash crop, have been forced to either commit suicide or resort to sale of body organs. Their numbers will only swell in the years to come. And like Andhra Pradesh and Karnataka, which are planning to send a team of psychiatrists to consul the farmers, the Ministry of Agriculture would do well to set up plant clinics, staffed with psychiatrists and not agricultural scientists, throughout the country.
In a country where only 43 per cent of the rural households have electricity, and where the average land holding size is too low, to expect the genuine farmers to indulge in future trading is a clever ploy to lure the poor farmers away from the state support. In a country where a majority of the farmers (about 60 per cent) depend on the private money-lenders for credit requirement, and where the majority cannot identify the spurious pesticides from the genuine ones, expecting them to indulge in future trading is a wild imagination. Like the `farmers' who shifted to the cultivation of cut flowers for exports, we will see a new breed of educated traders take over the reins. It remains a fact that a majority of those who ventured into cut flower farming were not farmers but businessmen. The National Multi-Commodity Exchange (NMCE) that has been set up in New Delhi recently, and claims to have a cumulative turnover of Rs 40,000 crore by November 25, 2003, so far has only 214 traders participating in its network covering 48 locations. Farmers are conspicuously absent from future trading.
Futures trading or no trading, farmers are in any case gradually abandoning agriculture in search of menial jobs in the urban centres. Agriculture has not only become unremunerative but also unproductive. The process towards corporate control of agriculture will destroy the ability of the land to sustain the crop harvests. Crop diversification from staple foods to cash crops is not only environmentally unsound practice but also economically suicidal. This is exactly what the World Bank has been advocating for over a decade now. Consequently, the new agricultural reforms on the anvil will push more and more farmers to the cities. Migration from rural to urban centres is turning into a continuous stream. They end up as rickshaw pullers or daily wage labourers.
In reality, farmers are no longer the country's heroes. They have turned into a burden. The market savvy elite is finding it difficult to carry the burden, and is finding ways and means to dump them.
(The author is a New Delhi-based food and trade policy analyst.)
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