Government the Culprit
Flawed cotton policy to blame for Vidarbha woes
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.
ANTI-BT COTTON ACTIVISTS SAY SEEDS ARE EXPENSIVE AND FARMERS NEED TO BUY EVERY SEASON. BUT EXPERTS ARGUE THAT CROP FAILURE IS RARE.