Who wants to help the farmer?

          There is an inherent irony in the loan waiver package for small farmers in the country. Most of the small farmers are essentially foodgrain producers who are systemically taxed by denying them open market prices for their produce. This policy of taxation, a legacy of a closed economy, continues unquestioned even today. The recent wheat imports are a case in point.
The government first banned wheat exports to keep the domestic prices well below the prevailing international prices, and then to augment its stock for the public distribution system (PDS), it has imported wheat at nearly double the price of what it offers to the wheat growers in the country. Farmers thus took a double hit: first through the export ban and then through state-sponsored dumping. Producers of no other commodity in the country have faced such ill treatment.
The problem is systemic and two aspects of the PDS are responsible for this. First, the necessity of large-scale procurement of grains by the state makes anti-farmer policies inevitable. The enormous inefficiencies in the operation of the Food Corporation of India (FCI) compel the government to suppress domestic prices so that FCI’s procurement cost is affordable. Government does it through a ban on exports or state-sponsored dumping. 

  Milind Murugkar Tags : Posted: Fri Mar 21 2008, 23:28 hrs

               The current rate of agricultural productivity growth is lagging the world's expanding demands, according to a new report released today at the 2010 World Food Prize Symposium in Des Moines, Iowa. The Global Harvest Initiative's 2010 GAP Report, developed with the Farm Foundation and USDA's Economic Research Service (ERS), quantifies for the first time the difference between the current rate of global agricultural productivity growth and the pace required to meet future needs.
                Doubling agricultural output to meet global demand by 2050 will require an annual average growth of at least 1.75% in total factor productivity or TFP, says Neil Conklin, president of the Farm Foundation and author of the report. Total factor productivity is the increase in output per unit of total resources employed in production. Between 2000 and 2007, ERS estimates global ag TFP growth averaged 1.4% per year.

Rod Swoboda 

Published: Oct 13, 2010

          Making institutional finance available to every farmer is another important solution to save to the farmers from debt traps of money lenders. Where institutional finance is available, it should be made easily accessible to the poorest farmers. This calls for removing of elaborate formalities and procedures for obtaining the loans. A poor farmer would be unable to understand the complexities of procedures, he needs a simple solution for his financial needs. Effective monitoring of the disbursed funds is also required because in many cases, the poor farmer is used as a front-end while in fact the benefit of the loan is availed by a bigger land owner. In addition, monitoring is also needed to ensure that the farmers are using the funds for the right purposes.

          The dependency of agriculture on nature should be reduced. This calls for effective management of water during seasons of good monsoons. Prevention of crop failure should be the primary aim of the Government. In most cases, it is not the lack of water but the lack of proper management on the government's part that causes water shortage. A simple example for this is the recent case of the farmers in the Penna delta of Nellore District of Andhra Pradesh. Inspite of the availability of ample water for a second crop, the Government decided against permitting the second crop, in view of proposed repairs and upgradation to the reservoirs. The proposal would result in draining of precious water into the sea which could be used to the benefit of the farmers. It was only after several agitations by the farmers' organizations that the Government relented and allowed the second crop. Water management should be made more effective through inter- state co-operation on water resources, where surplus water from perennial rivers can be diverted to those regions facing drought, as it is always seen in India, where in state there is severe drought, another state has to face worst floods, such regional imbalances can be managed by effective utilization of water resources throughout the country.

             Repeated crop failures, debt hassles, lack of alternative sources of income, absence of institutional finance have left the farmers with no other solution other than ending their lives. Another disturbing trend has been observed where farmers commit suicide in order to avail relief and benefits announced by the government to support the families of the farmers who have died. This is true in the case of several farmers in Andhra Pradesh who committed suicide so that their families could atleast benefit from the Government's relief programmes.

              Agriculture works out profitably where the size of the land is medium to large to benefit from the economies of large scale production. The fact is that majority of the farmers in India own as little as 2 acres of land, cultivation on such small sized lands is not feasible, in many cases, the farmers are not even the owners of the land, which makes profitable cultivation impossible because a significant portion of the earnings go towards the payment of lease for the land. At times, even the middle to large land owners are faced with the difficulties of the vast majority of farmers, however, they are able to atleast realize their investment for each crop.

                 The farmers normally resort to borrowing from money lenders, in the absence of institutionalized finance. Where institutional finance is available, the ordinary farmer does not have a chance of availing it because of the "procedures" involved in disbursing the finance. The institutional finance, where available is mostly availed by the medium or large land owners, the small farmers do not even have the awareness of the existence of such facilities. The money lender is the only source of finance to the farmers. Should the crops fail, the farmers fall into a debt trap and crop failures piled up over the years give them no other option other than ending their lives. The input - output ratio, in terms of money invested in agriculture is very meager, primarily because of raising cost of inputs and insufficient support prices from the government.

             India has witnessed a spate of droughts over the last decade. The worst affected being the farmers of Rayalaseema districts in Andhra Pradesh, it is the cotton farmers in the state of Maharashtra. Nature has repeatedly failed the farmers of these states and owing to lack of facilities to save their crops, these farmers have no means to face the adversities of crop failures. If the farmers are at the mercy of monsoons for timely water for their crops, they are at the mercy of the government for alternative irrigation facilities. The Government cannot be trusted to always act in the interest of the farmers.

                  To understand this, one must analyse the agricultural set up in India. Indian agriculture is predominantly dependant on nature. Irrigation facilities that are currently available, do not cover the entire cultivable land. Any failure of nature, directly affects the fortunes of the farmers. Secondly, Indian agriculture is largely an unorganized sector, there is no systematic planning in cultivation, farmers work on lands of uneconomical sizes, institutional finances are not available and minimum purchase prices of the government do not in reality reach the poorest farmer. Added to this, the cost of agricultural inputs have been steadily rising over the years, farmers' margins of profits have been narrowing because the price rise in inputs is not complemented by an increase in the purchase price of the agricultural produce. Even today, in several parts of the country, agriculture is a seasonal occupation. In many districts, farmers get only one crop per year and for the remaining part of the year, they find it difficult to make both ends meet.

              The farmers normally resort to borrowing from money lenders, in the absence of institutionalized finance. Where institutional finance is available, the ordinary farmer does not have a chance of availing it because of the "procedures" involved in disbursing the finance. The institutional finance, where available is mostly availed by the medium or large land owners, the small farmers do not even have the awareness of the existence of such facilities. The money lender is the only source of finance to the farmers. Should the crops fail, the farmers fall into a debt trap and crop failures piled up over the years give them no other option other than ending their lives. The input - output ratio, in terms of money invested in agriculture is very meager, primarily because of raising cost of inputs and insufficient support prices from the government.

                Agriculture has always been celebrated as the primary sector in India. India is an agrarian economy, which means, Agriculture is the pre-dominant sector of the Indian economy. True to this, even to this day, inspite of the Indian economy opening out to the world and globalization, close to 70% of the population still depends on agriculture for its livelihood. The secondary and tertiary sectors in India are growing at rapid rates, still a vast majority of Indians continue to depend on agriculture. Every plan for the growth of the Indian economy aims at agricultural development, which is justified because to achieve the growth rates that the economy aims at, it is important to first address the growth rate of the major sector of the economy. Since the first Five year plan, India's focus has been on agriculture and after 50 years of Five year plans, where does Indian agriculture stand? 
            Thanks to the Green Revolution, India is now self-sufficient in food production, gone are the days when India had to import even food grains for daily consumption. Indian agriculture has been making technological advancement as well. Today, a visit to the villages will reveal that more and more farmers are adopting mechanization for their farming, there is an overall improvement in the agricultural trends in India.