Govern­ment the Cul­prit

Flawed cotton pol­icy to blame for Vi­darbha woes

India Today - - COVER STORY - by Dhi­raj Nayyar

Rahul Gandhi has a straight­for­ward ex­pla­na­tion for why farm­ers in Vi­darbha com­mit sui­cide. Speak­ing on the per­ils of glob­al­i­sa­tion on Oc­to­ber 18, he said, “The farmer in Vi­darbha drinks pes­ti­cide as global cotton prices tum­ble.” The eco­nomics be­hind the sui­cides of cotton farm­ers in Ma­ha­rash­tra is more com­plex.

Con­trary to Rahul’s claim, it is the Govern­ment which has done more to de­press the prices of cotton than the in­ter­na­tional mar­ket has. The Govern­ment has im­posed nu­mer­ous re­stric­tions on the ex­port of cotton since April 2010. That has led to a de­cline in the do­mes­tic price that farm­ers get. “Due to the ban on cotton exports from In­dia, prices in In­dia are 20 per cent less than in­ter­na­tional prices,” says Ajay Vir Jakhar, chair­man of Bharat Kr­ishak Sa­maj, a non-par­ti­san farm­ers’ group.

The prob­lems for cotton farm­ers run deeper. The use of ge­net­i­cally mod­i­fied Bt cotton has been at the cen­tre of con­tro­versy, with ac­tivists blam­ing it for the plight of farm­ers. Ev­i­dence sug­gests that Bt cotton has been good for farm­ers. A po­si­tion pa­per pub­lished by the Foun­da­tion for Biotech­nol­ogy Aware­ness and Ed­u­ca­tion, an NGO, quotes five independent aca­demic stud­ies con­ducted af­ter the launch of Bt cotton in 2002, that say that Bt cotton has in­creased yields in In­dia by 30.9 per cent to 63 per cent. The in­crease in profit to farm­ers, ac­cord­ing to these stud­ies, has ranged from 50 to 110 per cent over non-bt cotton. Says Yogin­der Alagh, noted agri­cul­tural econ­o­mist and a former Union min­is­ter for sci­ence and tech­nol­ogy, “There is over­whelm­ing ev­i­dence that the yields from Bt cotton are much higher.” By the Govern­ment’s es­ti­mates, 95 per cent of cotton farm­ing in In­dia now uses ge­net­i­cally mod­i­fied Bt seeds.

The prob­lem for farm­ers arises when there is crop fail­ure. Bt cotton is im­mune to pests but not to drought. In case the crop fails, debt ac­quired from the higher cost of Bt seeds be­comes a real prob­lem. “It is ad­mit­tedly a high-risk busi­ness,” Alagh con­cedes, but is quick to add that fail­ure is rare, only 1 in a 1,000 cases. Says Jakhar, “The real prob­lem is ac­cess to cheap credit in rain-fed re­gions like Vi­darbha where va­garies of weather can af­fect crop out­put.” In nor­mal course, farm­ers are en­ti­tled to a con­ces­sional fi­nan­cial bailout from the lo­cal ad­min­is­tra­tion or pub­lic sec­tor banks. They don’t al­ways get it. “The ad­min­is­tra­tion will only help if the farmer was us­ing a seed ap­proved by the Govern­ment. A lot of farm­ers use un­ap­proved seeds,” says Alagh. By his es­ti­mate, there are 20 large firms and any­where be­tween 200-300 small firms which sell Bt seeds. Most small firms aren’t Govern­ment ap­proved but sell seeds cheap. Banks are usu­ally re­luc­tant to lend to in­debted farm­ers be­cause they lack col­lat­eral. That sends farm­ers into the clutches of money­len­ders who charge be­tween 25 and 40 per cent in­ter­est in­stead of the 7-9 per cent charged by banks. It isn’t Bt cotton that has failed farm­ers. It is the fail­ure of back-up sys­tems that has.


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