Agriculture, Economy

What’s wrong with the agriculture sector?

The farmer is really angry, or rather sad. And that is the case for decades now. 100,000 taking their lives, gives a sense of the misery millions are facing. A lot is being discussed as to how it can be addressed. I am no expert, but I do think some of the areas can be focused on priority:

1. Marginalization of farmers – while the economy has moved to 65% to service sector, this has benefitted only the English speaking, primarily urban population. The loss is magnified in BIMARU states, where Hindi is the language people speaks, but local job creation is minimal. This has resulted in the fragmentation of the land parcels, making mechanization a challenge.

2. Over the years the cooperative movement, which was especially strong in many states has weakened. As the leaders like Sharad Joshi died, there place has been taken by the politicians who wanted to destroy the collective bargaining power. An example – Sugar lobby in Maharashtra.

3. The fertilizer subsidy has been lopsided, so is the insecticides / pesticide. This has led to contamination of top soil with Nitrogen, bringing down the productivity. The issue with Endosulfan is a well-known case.

Also, this led to one size fits all in the application because of price arbitrage, which has affected ecological balance.

4. Only 30% of India gets perennial water as well irrigation – making farmers treacherously dependent on monsoon (the shifting monsoon due to global warming in another challenge).

Given the individual nature of the beneficiaries with low bargaining power, remoteness of the activity, lack of well-defined success metrics, and its dependence on a host of other factors like monsoon, it has become an intractable issue. There are estimates that almost 10 million tube/ deep/ bore wells are either defunct or non-existent. Add to this the canals, land acquisition, other modes of irrigation, prioritization and allocations. The issue just multiplies.

5. Subsidized electricity, with low quality of power is another dimension. One part is only the rich can afford this, and there is rampant pilferage towards domestic and commercial purposes. But the more long term impact is on the water table.

As the power is free and uneven, the farmers just leave the pumps on through the night – with disastrous impact on the level. In certain places, it has reached 1000 feet or more, with unknown content like arsenic or heavy metal being pumped out.

6. The procurement remains as area of grave inefficiency. It has many parts:
a. The Minimum Support Price (MSP) – this at many times has not kept pace with the inflation, and more often than not below the market price. Also MSP for too many of the produce and overall create distortion in crop pattern.
b. The stranglehold of Agricultural Produce Market Committee (APMC) is not reducing, giving the farmer very few options of reaching the market. There are initiatives like e-NAM has so been ineffective.
Example – a coconut which costs INR 2 in Mandya is selling at INR 25 in Bangalore, the middlemen takes the cake.

7. Credit for the farmer at affordable rate is distant dream. Just when microfinance was taking roots, either the promoters became too greedy or politicians found a loophole for populism. There had been some changes with likes of Jan Dhan, but the local moneylenders still rules the roost with the convenience and clout.

Loans are usually taken by the relatively well-off farmers, who then join ranks with the poor farmers for a waiver. This is lose lose for all.

8. While agriculture contributes less than 30% of the GDP, more than 60% of the population are still dependent on that. Add to this the perennial uncertainty – and farmers become a great bogey for all political discounts. So we see things like tax waivers, loan waivers, unreal MSP, subsidies in abandon – in anticipation of the votes. But who really benefits beyond the hyperbole? Not the poor farmer.

This possibly is a very small subset of the challenges the farm sector faces. The poor farmer who provides food for us is today (and yesterday and tomorrow) is a harassed person, with no control on their destiny. So time to time they protest, we all sing paeans. The age old photograph of the poor farmer holding the plough, with the famished family generates a lot of sympathy. But what we need rational empathy, and coordinated plans to address the issues.

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