Don't debase Agrarian Crisis to a tale of Blind men describing an Elephant
MAY 01, 2015
By Naresh Minocha, Our Consulting Editor
"BLIND men feeling an elephant." This pithy comment by renowned agricultural expert, Dr. M.S. Swaminathan, about UPA Government's initiatives to handle agrarian crisis in April 2009 rings in the truth about the current political sympathy war for farmers.
Releasing a book titled Agrarian Crisis in India, Dr. Swaminathan also reportedly dubbed electoral promises for farmers such as cheap loans and food security law as "piecemeal measures, not amounting to holistic and thoughtful policy."
The entire political class should reflect on this sage observation instead of shedding crocodile tears over agrarian crisis, which is of their own making and which is expected to worsen over the long run.
The foremost cause for agrarian crisis is unremitting fragmentation of farm lands and shrinking size of average farm due to population explosion, an issue which has become virtually a taboo for the Politician-NGO-Media-Judiciary combine that sets the national agenda. It prefers to beat about the bush to avoid taking on the majority that seems to have eternal faith in unchecked procreation.
The number of operational holdings has been increasing in tandem with unsustainable growth in population since the Independence. The number of holdings has almost doubled to 137.75 million 2010-11 from 71.0 million in 1970-71, the year when the first agriculture census was conducted.
The average size of holdings has been on the decline during this period. The size of an average farm has shrunk to 1.16 hectares in 2010-11 from 2.28 hectares in 1970-71.The operated area has decreased to 159.18 million hectares from 162.1 million hectares during the same period due to urbanization, industrialization and other factors.
"If this trend continues, the average size of holding in India would be mere 0.68 ha in 2020, and would be further reduced to a low of 0.32 ha in 2030. This is a very complex and serious problem, when share of agriculture in gross domestic product is declining, average size of landholding is contracting (also fragmenting), and number of operational holdings are increasing," cautioned Indian Council of Agricultural Research (ICAR) in its 'Vision 2030.'
Released in January 2011, the Vision document stated: "Declining size of landholdings without any alternative income augmenting opportunity is resulting in fall in farm income, causing agrarian distress. A large number of smallholders have to move to post harvest and non-farm activities to augment their income. The research focus should be to evolve technologies and management options to suit needs of smallholders' agriculture, and also to involve them in agri-supply chain through institutional innovations."
A World Bank study titled 'Republic of India-Accelerating Agricultural Productivity Growth' has also voiced concern over the adverse impact of shrinking size of farms and the resulting impact on viability of farming business.
The Study, released in May 2014, noted: "The findings on land fragmentation and the association of profitability with farm size ultimately suggest that some small farms may be getting too small to remain efficient or viable, despite the technical relationship between farm size and yield."
The study has mooted a new set of land reforms including land leasing to pave the way for consolidation of holdings without the risk of marginal farmers losing their land.
Instead of creating fuss over social impact assessment (SIA) of land acquisitions, the Opposition parties should pitch for SIA of population explosion and its impact on fragmentation of land holdings.
An average agricultural family currently barely manages to make its both ends meet. It relies on loans to meet capital costs and expenditure on medical and social developments such as marriages. And this has not happened overnight under Modi Government, which no doubt needs to be hauled up for its failure to honour electoral promises made to farmers. More of this later.
The current phase of farmers' suicides is also not due to fear-psychosis on land ordinance whipped by the opposition parties and other vested interests.
The alarming statistics released by National Sample Survey Office (NSSO) in December 2014 on this count should have subdued Rahul Gandhi. He is simply fishing for opportunism after a sabbatical, an euphemism for the great escape from harsh political reality. Had he and other Modi critics done their home work, they would have agreed to participate in a serious discourse on agrarian challenges to suggest the way forward.
According to The Situation Assessment Survey of Agricultural Households was conducted in NSS 70th round, average monthly income including non-farming earnings per agricultural household during the agricultural year July 2012-June 2013 (when UPA was at the helm) aggregated to an estimated Rs.6426. This is the half the salary which a private car driver gets in Delhi! The household income was marginally higher than the average monthly consumption expenditure of Rs.6223/household.
As much as 52 percent of the agricultural households were indebted. The average amount of outstanding loan per agricultural household was Rs.47000. The inability to cope with indebtedness heightens farm distress.
The subject of farm indebtedness and related issue of risk-mitigating measures including crop and cattle insurance have been discussed since the Independence. Several committees have given recommendations but the Governments of all political hues have ducked their responsibility to address the issues comprehensively.
It is here pertinent to confine the discourse to recommendations of two committees constituted by the UPA Government. These would hopefully serve as refresher for Mr. Gandhi. It should also serve as a reminder for Prime Minister Mr. Narendra Modi under whose chairmanship a working group constituted by National Development Council submitted an exhaustive report on rainfed farming in 2006.
In January 2008, an independent expert panel constituted by National Bank for Agriculture and Rural Development (NABARD) recommended short-term as well as medium-term initiatives in report captioned 'Action Plan to Address Agrarian Distress in India'.
The Panel stated: Agrarian distress is a manifestation of multiple causes and substantial change is needed to address it in a meaningful way. The Panel's analysis offers solutions on four broad themes identified as (1) Financial Management; (2) Risk Mitigation; (3) Social Support Mechanisms; (4) Farm Practices.
In the action, plan, the panel recommended swapping of informal loans with agricultural loans to be arranged from banks. It did this after factoring in studies that show that in most suicide cases, about 75% of the indebtedness of the family was to informal lenders.
Similarly, this recommendation was articulated earlier by another panel that submitted its report to Finance Ministry in July 2007. Referred to as Radhakrishna expert group (REG), it recommended setting up of 'Money Lenders Debt Redemption Fund'(MLDRF) as a one-time measure for providing long-term loans by banks to farmers to enable them to repay their debts to the moneylenders.
Did Mr. Gandhi ask the UPA Government to explain its refusal to constitute MLDRF?
He should read the reply to a question raised in Lok Sabha on the subject on 30th July 2010. As put by the answer, "The Fund has not been created by the Government. However, Government is conscious of the dimensions of the problem and is sensitive to the difficulties of the farming community, especially the small and marginal farmers. In view of this Government announced the Agricultural Debt Waiver & Debt Relief (ADWDR) Scheme, 2008 to waive off the entire 'eligible amount' in the case of small or marginal farmers."
It is here pertinent to quote Nabard panel to remind political class that populist measures can't overcome agrarian crisis. The panel stated: "Subsidies which address the pressure points of agrarian distress through safety nets and support systems are more encouraging and less costly than direct doles and write offs."
The two most crucial safety net and support systems are: crop and cattle insurance and a market system that ensures purchase of farm produce at remunerative prices.
A majority of growers is at present out of the ambit of crop insurance. A lot has been said and written about them by different expert committees. Modi Government must act on the relevant recommendations. It should provide for universal insurance for all major crops. The premium might be shared in the ratio of 70% by the Centre, 25% by the States and 5% by the growers.
The States should, in fact, accept larger responsibility for alleviating agrarian distress as agriculture, water, market and land are State subjects under the Constitution. The States thus must immediately accept the concept of single pan-India market for unhindered movement of food especially perishables. They must undertake agricultural market reforms including adoption and full-scale implementation of model Agricultural Produce Marketing Committee (APMC) Act.
They should facilitate setting up of primary markets as per the norms recommended by National Farmers Commission within strict timeframe.
These steps should be accompanied by promotion of marketing cooperatives on the lines of Amul, Mother Dairy and its subsidiary Safal to prevent distress sale of vegetables and fruits by the farmers.
BJP Government should also not backtrack or go slow on its electoral promises, two of which require elaboration. BJP in its Manifesto for Lok Sabha polls issued during April 2014 had promised setting up of price stabilization fund (PSF) for food items and ensuring a minimum of 50% profits over the cost of production.
In the regular budget for 2014-15, BJP-led NDA Government articulated PSF proposal by stating that it would manage volatility in prices of agricultural commodities.
This is now turning out to be a pilot-scale, half-hearted move with decision to restrict PSF initially to only onions and potatoes. According to the operational guidelines for PSF released by Agriculture Ministry in March 2015, PSF scheme would be implemented initially for two years beginning 2015-16 with a corpus of Rs 500 crore. This is a peanut compared to challenge of avoiding distress sale as well as profiteering by the marketers across the agricultural value chain.
The objectives of PSF are: 1) To promote direct purchase from farmers /farmers' association at farm gate/ Mandi. 2) To maintain a strategic buffer stock that would discourage hoarding and unscrupulous speculation. 3) To protect consumers by supplying such commodities at reasonable prices through calibrated release of stock.
As for the second promise of ensuring 50% profit over crop production cost, Modi Government seems to have taken a U-turn, if reply to a parliament query is taken as the decisive indicator.
Answering a question in Rajya Sabha on 20th March 2015, the Minister of State for Agriculture, Mohanbhai Kundaria said: "National Commission on Farmers (NCF) headed by Dr. M.S. Swaminathan had recommended that the MSP should be at least 50% more than the weighted average cost of production. This recommendation, however, has not been accepted by the Government because MSP is recommended by CACP based on objective criteria, considering variety of relevant factors and prescribing an increase of at least 50% of cost may distort the market."
We can discuss many other factors that are contributing to agrarian crisis. Suffice it here to call for a clinical approach to analyzing them and preparing a comprehensive package to resolve the problems faced by the farmers. Time is now for all leaders to agree on a road-map for farm renaissance and to stop flaunting either ignorance or half-knowledge through high-decibel rhetoric on TV channels.