Business Daily from THE HINDU group of publications
Wednesday, Aug 02, 2006
Agri-Biz & Commodities - Insight
Agrarian distress Time for a holistic policy response
Ploughing an increasingly difficult furrow. - Satish. H
The recent visit of the Prime Minister, Dr Manmohan Singh, to Vidarbha in Maharashtra, in the wake of large-scale suicides by debt-ridden farmers, represents a belated recognition at the highest level that the country is facing a major agrarian crisis. For farmer suicides are not confined to Maharashtra. According to official statistics, nearly 9,000 farmers committed suicide between 2001 and 2006 in Andhra Pradesh, Karnataka, Kerala and Maharashtra.
Maharashtra witnessed a four-fold increase in farmer suicides, from 1,083 in 1995 to 4,147 in 2004. The situation has worsened over the past two years and there has been a big jump in the number of suicides. Even after the Prime Minister announced a package of Rs 3,750 crore for the six worst-affected districts of Vidarbha, including waiver of interest overdue on farm loans till June 30 and Rs 50 lakh as immediate relief for each of the six districts, the suicides have continued.
The Vidarbha crisis has been brewing since 1994-95 and was allowed to fester for over a decade by the government in the State even when the causes were well documented by several experts. The major cause of the large-scale suicides is the failure of the policy-makers to extricate the farmers of the region from the `cotton trap' even after a prolonged period of rising input costs, recurring crop failures and unremunerative prices for the produce.
The collapse of the State procurement federation, reduced support prices and non-payment of farmers' dues, growing dependence of the cotton growers on usurious moneylenders and dishonest traders pushed many of the farmers to end their lives. The decision of the State government to bring down the support price for cotton to Rs 1,700 per quintal from Rs 2,700 last season added to the woes of farmers already reeling under growing debt burden.
The drastic cut in the support price was despite the poll promise by the Congress-NCP coalition in 2004 to keep it at Rs 2,700 a quintal. Unfortunately, there is no mention in the package announced by the Prime Minister, either about the support price or about the `price stabilisation fund' recommended by the National Commission on Farmers to protect the farmers against price shocks.
A panel headed by Dr M. S. Swaminathan, Chairman of the National Commission on Food, Agriculture and Nutrition Security, submitted a 46-page policy paper in May after a tour of Vidarbha along with agriculture officials from the Centre. The panel identified five causes for the suicides:
(i) Unfinished business of land reforms; (ii) poor quality and quantity of water for irrigation; (iii) technology fatigue; (iv) inaccessibility and inability to ensure institutional credit on time and as required by the farmers; and (v) lack of opportunities for assured and remunerative marketing.
A national problem
Unfortunately, the agrarian distress is not confined to a few States but it has become a national problem. Even Punjab, Haryana, Tamil Nadu and Kerala have been witnessing a festering agrarian crisis though the instances of farmer suicides in these States are very few.
According to the 2003 Situation Assessment Survey of Farmers by the National Sample Survey Organisation (NSSO), half the farmers in the country were indebted and much of the indebtedness was due to agricultural expenses; the inequality of income between the rural and urban households, and between the cultivators and non-cultivators was growing; the monthly per capita consumer expenditure of about three-fourths of the farmers was less than Rs 615.
Even Punjab, which reaped maximum benefits of the Green Revolution of the 1980s, is facing a grave agrarian crisis. It is ironic that the Punjab farmer today leads the country in rural indebtedness. According to the NSSO survey, each Punjab farmer has a debt of Rs 41,576 against the national average of Rs 12,505. There have also been some instances of suicides by farmers in the State.
The National Agricultural Policy (2000) had stated that farming had become a relatively unremunerative profession due to a generally unfavourable price regime and low value addition, causing abandoning of farming and increasing migration to the urban areas. The situation is likely to be exacerbated further in the wake of agricultural trade being integrated in the global system, unless immediate corrective measures are taken.
The reasons for the decline of agriculture in the country have been well documented by experts. Post reform, the country's agriculture sector has suffered because of major distortions in government policies, declining public investment in the sector and environmental degradation. There is a growing perception that input subsidies are crowding out public investment in agriculture. In particular, the sector suffered a major setback on account of decline in investment in land and water.
Soon after the Prime Minister announced a relief package for farmers in suicide-affected districts of Vidarbha on July 1, the Union Agriculture Minister, Mr Sharad Pawar said in Mumbai that there was a pressing need for the Centre to change its policies on agriculture and on farmers. He pointed out that in the Union Budget only 0.35 per cent was allocated for irrigation and 2.5 per cent for farming related occupations. He also admitted that 60 per cent of farmers did not get the benefit of various government schemes and finances.
A number of studies have shown that poverty and distress in India are concentrated in the dry land areas. The worst affected are the marginal and small farmers and landless labourers as they bear the brunt of the non-availability of water and its associated yield uncertainty. These groups have become more vulnerable because of lack of employment opportunities outside the farm sector, lack of irrigation facilities and opportunities for risk diversion.
Against this backdrop, providing a new deal to agriculture assumes a new urgency not only to make it a profitable activity to provide the much needed relief to farmers and a large section of the rural poor, but also to give a boost to the economy through backward and forward linkages of agriculture with the rest of the economy.
To achieve this objective, urgent measures are needed to find ways and means of stepping up public investment in agriculture, particularly on irrigation facilities. The progress of completing ongoing irrigation schemes has been quite disappointing.
To overcome the resource constraint, the Prime Minister, Dr Manmohan Singh has rightly stressed the need to explore the scope of converging resources to be allocated under `Bharat Nirman' and the National Employment Guarantee Scheme to boost the asset base of agriculture sector. The challenge here is identifying asset-creating projects and implementing them speedily.
Far-reaching changes are also needed in the land use pattern, water management, reclamation of wasteland and selection of crops to suit the environmental needs and much greater accent on agricultural research. There is also an urgent need to reduce the dependence on external inputs and greater reliance on organic farming in order to make farming systems sustainable.
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