WHY AGRI­CUL­TURE NO LONGER PAYS FOR IN­DIA’S STRUG­GLING FARM­ERS

Drought and soar­ing fuel prices have driven thou­sands to protest. Re­becca Bund­hun re­ports from Mum­bai

The National - News - - BUSINESS IN DEPTH -

Farm­ers in their thou­sands from across In­dia marched to­wards New Delhi in a protest this month.

Some of them made the jour­ney rid­ing their trac­tors, while oth­ers went on foot, as part of a march that be­gan about 200 kilo­me­tres away in Harid­war. The farm­ers’ protests were met by wa­ter can­nons and tear gas at the bor­der be­tween Delhi and Ut­tar Pradesh, where they were stopped by po­lice.

Their list of de­mands was long, in­clud­ing un­con­di­tional waivers on their loans, higher prices for crops and cheaper fuel and elec­tric­ity bills. In re­sponse, the Naren­dra Modi govern­ment agreed to look at many of their de­mands, and raised the min­i­mum sup­port price for cer­tain crops – the rate at which the govern­ment buys crops from farm­ers, to pro­tect pro­duc­ers from sharp falls in prices.

With In­dia head­ing to­wards a gen­eral election next year, due by May, farm­ers’ prob­lems are be­com­ing a po­lit­i­cal is­sue, given the num­ber of their votes.

But farm­ers and an­a­lysts say many of the is­sues re­main un­re­solved, as farm­ers con­tinue to face fi­nan­cial chal­lenges while they grap­ple with higher costs and try to turn a profit. Soar­ing fuel and fer­tiliser costs are adding to their woes.

“Ev­ery­thing boils down to fi­nance and eco­nom­ics,” says Ravi Chan­dran, a third-gen­er­a­tion farmer based in the state of Tamil Nadu in south In­dia. “The in­come gen­er­ated from farm­ing is not ad­e­quate enough to take care of even our ba­sic needs.”

In­dia’s agri­cul­ture sec­tor makes up 16 per cent of the coun­try’s econ­omy while ac­count­ing for 49 per cent of em­ploy­ment, ac­cord­ing to In­dia’s Eco­nomic Sur­vey, a govern­ment doc­u­ment. Most of In­dia’s 1.3 bil­lion pop­u­la­tion live in ru­ral ar­eas.

But many farm­ers in In­dia are sad­dled with debts that they are un­able to re­pay, lead­ing to ris­ing num­bers of them com­mit­ting sui­cide in re­cent years.

The ob­sta­cles only seem to be mount­ing. Fuel prices have soared to record highs in In­dia, with diesel prices ris­ing about 25 per cent this year. This has been driven by higher crude prices and the weak ru­pee, which has tum­bled to record lows, mak­ing oil im­ports more ex­pen­sive. It has been dif­fi­cult for farm­ers to get de­cent prices for their crops amid high out­put. This comes along­side other deep-rooted chal­lenges.

“On ac­count of mul­ti­ple fac­tors, farm­ers con­tinue to strug­gle,” says Ab­hishek Bansal, the chair­man of ABans Group of Com­pa­nies, a fi­nan­cial ser­vices com­pany in Mum­bai. “These in­clude small land hold­ings, lack of or­gan­ised credit, ex­ploita­tion by mid­dle­men and over-de­pen­dence on the mon­soons.”

He says the ma­jor­ity of land hold­ings of farm­ers in In­dia are small plots, which are “un­vi­able” and “de­prive the farm­ing sec­tor of the nu­mer­ous ben­e­fits of large-scale farm­ing ”. It is par­tic­u­larly chal­leng­ing for these small-scale farm­ers to man­age ris­ing costs.

There are other el­e­ments that are adding to the pres­sure on Mr Modi’s govern­ment, which came to power in 2014, partly helped by farm­ers’ votes, and has made an am­bi­tious prom­ise of dou­bling farm­ers’ in­comes by 2022.

The mon­soon is an­other un­cer­tainty farm­ers face ev­ery year, with their crop pro­duc­tion heav­ily de­pen­dent on the rains. The south-west mon­soon – last­ing from June to Septem­ber – ac­counts for 70 per cent of In­dia’s an­nual rain­fall.

Al­though the over­all amount of rain­fall in the coun­try was con­sid­ered “nor­mal” this year, 21 per cent of In­dia was left mod­er­ately to ex­tremely dry, ac­cord­ing to the In­dia Me­te­o­ro­log­i­cal Depart­ment, which is lead­ing to con­cerns about drought.

“There are some spoil­ers. Rain­fall distri­bu­tion has been patchy and farmer in­comes are down,” says Dhar­makirti Joshi, the chief econ­o­mist at Crisil, a rat­ings and re­search com­pany in Mum­bai, which is part of Stan­dard & Poor’s.

Prakash Samb­haji Alinje, who owns farm­land in Nashik in the state of Ma­ha­rash­tra, western In­dia, where he grows crops in­clud­ing rice and wheat, thinks the rain­fall has been ad­e­quate this year but that, in gen­eral, wa­ter is ma­jor area of con­cern.

“In­creas­ing com­pe­ti­tion for wa­ter be­tween in­dus­try, do­mes­tic use, and agri­cul­ture has been an­other ma­jor draw­back for the farm­ers,” he says.

His main wor­ries at the mo­ment are ris­ing costs and the fact that even if crop pro­duc­tion is good, it can be dif­fi­cult to sell pro­duce and get the right price.

“We are strained to use the large amounts of costlier fer­tilis­ers and pes­ti­cides for higher yield, but some­times the seed does not give the claimed yield and run into eco­nomic trou­ble,” says Mr Alinje.

“The lack of a proper mar­ket­ing chan­nel and with no cen­tral or for­mal sys­tem to sell their goods or com­pare prices, means farm­ers can’t get the best prices for their pro­duce, which makes it ben­e­fi­cial for the greedy mid­dle­man and ul­ti­mately re­stricts our in­come”.

Al­though the govern­ment has in­tro­duced min­i­mum sup­port prices for some crops, this does not ap­ply to all crops and, in re­al­ity, this ini­tia­tive has short­com­ings, in­dus­try in­sid­ers say.

“The whole is­sue around farm­ers is a vi­cious cir­cle,” says Pankaj Agar­wal, the co-founder and man­ag­ing di­rec­tor of Just Or­ganik, an or­ganic prod­ucts com­pany. “Farm­ers get into the chal­lenge of ar­rang­ing for the in­puts for their agri­cul­ture, then get­ting the crop yield, and try­ing to sell.

“The govern­ment has started in­creas­ing the min­i­mum sup­port price for farm­ers, but most of the time these farm­ers are still forced to sell their food at a nom­i­nal price be­cause they are in the dire need of the cash to pay off their debts that they have taken to buy the in­puts to pro­duce the crop,” Mr Agar­wal says.

Some state gov­ern­ments, such as Ma­ha­rash­tra, also re­sorted to loan waivers over the past cou­ple of years, which is re­garded as a pop­ulist move to try to win votes, and a costly one given the bur­den it places on state funds.

The op­po­si­tion Congress party is also play­ing this card. With state elec­tions com­ing up in Mad­hya Pradesh, the party’s pres­i­dent Rahul Gandhi has promised to waive farm­ers’ debts if Congress is voted into power in the state.

These funds could be much bet­ter spent on ed­u­cat­ing farm­ers as a longer-term so­lu­tion, says Mr Alinje.

“If the farm­ers are made fa­mil­iar with the ba­sic prin­ci­ples of agron­omy or the pre­vail­ing mar­ket we can see some good re­sults,” he says.

Su­man Chowd­hury, the rat­ings pres­i­dent at Acuite Rat­ings and Re­search in Mum­bai says it is not sur­pris­ing that agri­cul­ture is con­tribut­ing a de­clin­ing share of GDP in In­dia, as the ser­vices and in­dus­try sec­tors con­tinue to grow at a much faster pace.

“As a coun­try de­vel­ops and goes on from a de­vel­op­ing to a devel­oped econ­omy, we will see a lower share of agri­cul­ture,” he says. But he adds: “I wouldn’t say that there’s a cri­sis at this mo­ment”.

What is needed to help agri­cul­ture is im­proved in­fra­struc­ture and a ro­bust na­tional pric­ing sys­tem so farm­ers can de­mand bet­ter rates for their crops, he says.

The fact that farm­ers’ strug­gles are in­creas­ingly be­com­ing a po­lit­i­cal is­sue is only dis­tract­ing au­thor­i­ties from ad­dress­ing the is­sue prop­erly, some of those af­fected ar­gue.

“When there is a prob­lem, there should be a so­lu­tion,” Mr Chan­dran says.

“In­stead of in­dulging in blame games, the pol­i­cy­mak­ers must crit­i­cally eval­u­ate the un­der­ly­ing prob­lem. No one should politi­cise farm­ers’ is­sues.”

But he adds that the fi­nan­cial trou­bles of farm­ers in In­dia are such that he sees no easy so­lu­tion in the rapidly mod­ernising coun­try.

“Tech­nol­ogy, mar­ket fa­cil­i­ties, fi­nan­cial sup­port, sub­si­dies and in­cen­tives, in­sur­ance, though play­ing a cru­cial role, the prob­lem is more than what meets the eye,” he says.

“The sit­u­a­tion will de­te­ri­o­rate fur­ther if the core is­sue of farm­ing is at­tended to im­me­di­ately.”

EPA

Po­lice re­sponded with wa­ter can­non and tear gas bom­bard­ments when thou­sands of farm­ers march­ing in protest ar­rived in New Delhi this month

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