Can Modi Lead In­dia’s Farm­ers Out of Their Maze?

The Economic Times - - Pure Politics -

A train car­ry­ing 2.5 mil­lion litres of wa­ter has just pulled into parched Latur in Ma­ha­rash­tra. This is not the first time Latur has been vis­ited by calamity. Twenty-three years ago 7,928 peo­ple died in the dev­as­tat­ing mag­ni­tude 6.4 Latur earth­quake. To­day the suf­fer­ing is wider. In nearby Beed district, des­per­ate farm­ers crowd into an emer­gency camp stocked with fod­der and wa­ter for dy­ing cat­tle. The cen­tral govern­ment tells the Supreme Court that at least 330 mil­lion In­di­ans, a quar­ter of the pop­u­la­tion, are af­fected by drought. Ma­ha­rash­tra im­poses a five-year ban on new sugar mills. Dur­ing 2014, a to­tal of 2,568 farm­ers com­mit­ted sui­cide in Ma­ha­rash­tra, half the na­tional to­tal of 5,650.

Why is Ma­ha­rash­tra in such a mess? Three-quar­ters of farm­land in the western state is un-ir­ri­gated and rain-fed; nearly 79% of its farm­ers are small or mar­ginal and eke out a liv­ing on parcels of two hectares or less. Ma­ha­rash­tra is the country’s sec­ond-high­est sug­ar­cane grower; yet, its pro­duc­tiv­ity is only the seventh-high­est in In­dia (66.35 tonnes per hectare in 2012/13 com­pared with 105 t/ha in West Ben­gal). It is a sim­i­lar story for cot­ton, de­spite the fa­mous black cot­ton soil of the Dec­can Plateau. In 2014/15 area un­der cot­ton cul­ti­va­tion in Ma­ha­rash­tra rose to 4.19 mil­lion hectares from 4.16m a year ear­lier, but out­put dropped 25% to 6.6 mil­lion tonnes; in fact, Ma­ha­rash­tra has the low­est pro­duc­tiv­ity per hectare among ten cot­ton-grow­ing states (368.80 kg/ha in 2013/14 com­pared with 758.08 kg/ha in Gu­jarat). Both cot­ton and sug­ar­cane are very wa­ter-in­ten­sive.

I wrote in my last col­umn about the abysmal state of agri­cul­ture in In­dia. There is no doubt at all that vote-bank ma­nip­u­la­tion, cor­rup­tion and the cal­lous in­dif­fer­ence of gen- er­a­tions of politi­cians have se­verely crip­pled the farm sec­tor. Ma­ha­rash­tra is the prize ex­hibit. “Ma­ha­rash­tra re­quires very deep thought,” In­dia’s most fa­mous agri­cul­tural sci­en­tist Dr MS Swami­nathan told me. He said a state com­mis­sion ought to be set up to in­ves­ti­gate wa­ter, soil, cli­matic con­di­tions and the best crop­ping pat-

THE LOOP­HOLES

terns. In fact, Swami­nathan au­thored a two-vol­ume 2002 re­port on rev­o­lu­tion­is­ing agri­cul­ture in Ma­ha­rash­tra. Seven­teen days af­ter he pre­sented his re­port, the state’s chief min­is­ter Vi­las­rao Desh­mukh was forced to re­sign be­cause of in­ter­nal strife in the Congress party. His suc­ces­sor Sushilku­mar Shinde buried the Swami­nathan re­port. “Usu­ally they go by the po­lit­i­cal in­ter­ests at a par­tic­u­lar point of time,” the ex­ceed­ingly po­lite 90-year-old Swami­nathan said from his Chen­nai of­fice. “I would like to up­date it.”

The ever-op­ti­mistic Swami­nathan, whose name is syn­ony­mous with In­dia’s Green Rev­o­lu­tion, chaired a big­ger blue-rib­bon Na­tional Com­mis­sion on Farm­ers (NCF) dur­ing the United Pro­gres­sive Al­liance regime. Iron­i­cally, dur­ing the ten years of the UPA govern­ment (200414) Maratha strong­man Sharad Pawar, who built his power and fame on the back of his sugar em­pire, was the country’s agri­cul­ture min­is­ter. In­cred­i­bly, Swami­nathan’s five re­ports be­tween 2004 and 2006 were also left to gather dust by Pawar.

“We are a country with grain moun­tains and hun­gry mil­lions,” Swami­nathan said. “Our record in over­com­ing hunger and mal­nu­tri­tion is very poor.” The NCF re­port pointed to the Euro­pean Union to ar­gue strongly for a com­mon agri­cul­tural mar­ket in In­dia. This is much eas­ier said than done.

The In­dian farmer who tills his small hold­ing is hostage to the crooked mid­dle­man in a mar­ket frag­mented into nearly 30,000 man­dis. More than 7,500 of them are Agri­cul­tural Pro­duce Mar­ket Com­mit­tees (APMCs) reg­u­lated by each state un­der its own leg­is­la­tion. The APMCs are sup­posed to buy and sell food­grains. At the same time, the govern­ment’s Min­i­mum Sup­port Prices (MSPs) have worked only for rice and wheat in just five states – not for pulses, five mil­lion tonnes of which were im­ported in the year end­ing March 31. Govern­ment pro­cure­ment has led to cor­rup­tion, leak­ages and out­right theft. Ear­lier this week five mil­lion tonnes of wheat were re­ported to have gone miss­ing from Pun­jab govern­ment ware­houses. Poorly stored and al­lowed to moul­der, wheat is pur­chased as food­grain and sold as feed­grain – good only for live­stock.

In­stead, if the govern­ment got out of the busi­ness of buy­ing and stor­ing food­grain, things would im­prove dra­mat­i­cally. For in­stance, the MSP for arhar dal is Rs 4,435 per quin­tal (100 kg). If the mar­ket price is only Rs 3,500/quin­tal, the govern­ment could trans­fer the dif­fer­ence, Rs 935, to the farmer’s Jan Dhan Yo­jana bank ac­count (215 mil­lion of them have been opened so far) through a di­rect ben­e­fit trans­fer (DBT). The farmer could then still sell his pro­duce at the open mar­ket price and not slide into debt. The farmer cares about price pro­tec­tion; he doesn’t care who he sells to. But is this hap­pen­ing? No.

On April 14, Prime Min­is­ter Naren­dra Modi spoke to an au­di­ence con­sist­ing largely of farm­ers about his govern­ment’s newly launched Na­tional Agri­cul­tural Mar­ket. Modi, a tire­less evan­ge­list for ev­ery eco­nomic step his govern­ment takes, is prob­a­bly the first prime min­is­ter to speak so feel­ingly and for so long about the need for farm­ers to lift them­selves out of poor crop prices and penury, and adopt smarter new ways of grow­ing and sell­ing their pro­duce.

While ex­tolling the virtues of eNAM, Modi said farm­ers must recog­nise that over-ir­ri­ga­tion does not yield bet­ter crops. He urged sug­ar­cane farm­ers to switch to sprin­kler or drip ir­ri­ga­tion: it would even raise the sugar con­tent in their cane. He said his mis­sion was ‘per drop, more crop’. “Through eNAM, I say with full faith, my farmer will now de­cide where his crop will sell, when it will sell, and at what price,” he said.

Fi­nally, we are be­gin­ning to see echoes of the Swami­nathan rec­om­men­da­tions, but this is only a first step: so far eNAM links only 21 man­dis from eight states. It hopes to go to 200 in five months and 585 by March 2018. That’s less than a tenth of ex­ist­ing APMCs.

The good news is that there is al­ready a work­ing model in Kar­nataka, and a bi­par­ti­san one, too, prov­ing that eco­nom­ics can trump pol­i­tics.

Back in 2011/12, when Kar­nataka was ruled by Modi’s Bharatiya Janata Party (BJP), the state govern­ment teamed up with NCDEX (Na­tional Com­mod­ity and De­riv­a­tives Ex­change) to set up the Rashtriya e-Mar­ket Ser­vices Pvt Ltd. Over the past four years, their joint ven­ture has cre­ated a United Mar­ket Plat­form (UMP) con­nect­ing 105 of Kar­nataka’s 157 APMCs.

What did Kar­nataka do right? First, it adopted the model APMC Act to bring in uni­for­mity; ear­lier each APMC had its own rules. Sec­ond, the mar­ket uni­fi­ca­tion was launched by the BJP and car­ried for­ward by Kar­nataka’s cur­rent Congress govern­ment, so there was po­lit­i­cal con­sen­sus. Third, ex­ist­ing APMCs were roped in to cre­ate liq­uid­ity. Fourth, a sin­gle state-wide trader’s li­cence was cre­ated: ear­lier a trader needed a li­cence for each of Kar­nataka’s 157 man­dis. Fifth, e-per­mits now make it easy to move goods within the state and elim­i­nate ha­rass­ment be­tween man­dis.

The re­sult? Bet­ter pric­ing for the farm­ers has nearly dou­bled the value of pro­duce traded through the UMP to nearly Rs 12,600 crore in 2015/16. Vol­umes trans­acted have leaped seven-fold. Traders from other states are sign­ing on to the UMP. Govern­ment rev­enue has shot up be­cause there is no leak­age; every­thing is elec­tronic. In turn, money is be­ing ploughed back into grad­ing and as­say­ing of farm pro­duce, which leads to more re­li­able price fix­a­tion. En­cour­aged by Kar­nataka’s suc­cess, Gu­jarat and Andhra Pradesh have also joined hands with NCDEX. So there is a glim­mer of a way out of the farm maze. Me­te­o­rol­o­gists pre­dict In­dia might en­joy a nor­mal mon­soon this year. Busi­ness­men hope more rain means more consumer de­mand. The cen­tral bank gov­er­nor says he might trim in­ter­est rates fur­ther if the rain­fall is good. For now, farm­ers in Neemuch in Mad­hya Pradesh get 30 paise a kilo­gram for their onions. I pay Rs 30 a kilo­gram at my doorstep – one hundred times more. There’s a long way to go be­tween farm and fork.

MODI MAGIC Modi speaks about the need of farm­ers and adopt smarter new ways of grow­ing and sell­ing

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