Mar 26, 2013

Do tractors play a role in aggravating farm crisis?



Big and attractive tractors are increasingly in demand in Punjab. In this picture a farmer is looking at tractors lined up for sale. 
(Pic courtesy: www.frontlineonnet.com)

Every Monday, second hand tractors start arriving early in Kotkapura grain market in Punjab. By around noon, the grain market turns into a tractor mart. A large number of tractors, of different make and size, are available for a bargain. Many of these are procured by middlemen who market these second-hand tractors in Uttar Pradesh, Rajasthan and Bihar.  You may be thinking that most Punjab farmers are now fed up of tractors and that is why they are keen to dispose these four-wheelers.  No, the reality is that most of those who come to sell have actually acquired a new tractor, much bigger in size, and of course flashier. 

For several decades now, tractor has been a status symbol for Punjab farmers. Unless they own a tractor, irrespective of the fact whether they need it or not, they don’t feel they too have arrived. With over 5 lakh tractors existing in Punjab, once the status symbol has now turned into a symbol of suicide. But still farmers have not given up of tractors. Like the neo-rich in the cities, farmers too have developed a fetish for latest brands. Not many regret the big wheels. The craze for big machines has in fact grown.  

Not everyone of course does it as a style statement. While a large number buy tractors as a necessity, there are some small farmers who often purchase tractors out of social compulsions as it comes in easy instalments and at affordable low interest rates. They buy tractors, even if costs Rs 5 lakh and more, and sell it in a few weeks and from the money they get they buy a small car to be given as dowry for their daughter’s marriage. Many others of course are lured by the marketing blitz and want to join the ranks of progressive farmers since tractor has been promoted as a symbol of pride.   

A tractor alone is not of much use to a farmer. It is the heavy implements, which comes as attachments that are important. So it is the total package -- implements, along with the tractor – that adds on to the growing indebtedness on the farm. In neighbouring Haryana, the subsidy for land leveller has been increased from Rs 50,000 to Rs 75,000; on multiple crop planter from Rs 10,000 to Rs 20,000; on happy seeder from Rs 25,000 to Rs 50,000; on straw reaper from Rs 40,000 to Rs 60,000 and on zero till machine from Rs 15,000 to Rs 20,000. More the expensive implements, means more indebtedness. But this does not mean I am against mechanisation on the farm. What I am asking is the justification in selling the expensive and sophisticated implements and machines to farmers who are already in economic crisis. 

With every second farm household in Punjab owning a tractor, and considering the average farm size is less than 4 acres, tractors have become uneconomical. But still worse, more than 20,000 tractors are being purchased every year. These new tractors are really big machines, ranging from 60-90 horse power, the kind of huge tractors that were available in erstwhile Soviet Union. Generally, the minimum land area required to ensure a tractor remains economically viable is 10 acres. But over the years, under pressure from the industry, governments have reduced the requirement to just 2 acres. Also, a few years back, P Chidambaram, in his earlier avatar as Finance Minister, had reduced sales and excise duty on tractors by 18 per cent making it more attractive for buyers.

It was sometimes in late 1980s that I had visited Cambodia (it was then called Kampuchea). I was appalled to find huge tractors from Soviet Union being used in the country which was devastated under the Pol Pot regime. Since Kampuchea was only recognised by the Soviet block then, the use of massive tractors in the otherwise small farms was therefore quite understandable. I remember having told the Indian Ambassador that it will be good if India could supply small tractors – in the range of 25 to 35 horse power – to Kampuchea as part of the diplomatic initiative to build goodwill among the Kampuchean farmers.

While Cambodia has meanwhile gone for small tractor, Punjab is going for big wheels on small farms. The arrival of huge tractors in Punjab therefore defies any economic logic. I am told some tractor manufacturers are now planning to bring in tractors with 105 horse power.  And so when you hear the next time a story of growing indebtedness on the farm in the frontline state of Punjab, just be sure a tractor is more often than not, the primary reason. 

The tragedy is that the continuing agrarian crisis in the country, which has taken a heavy human toll with 290,470 deaths reported from suicides in past 15 years, provides a huge market for selling machines. In Punjab, despite heavy mechanisation, two farmers are killing themselves every day. Somehow the feeling is that more machines you sell, more sanity would prevail on the farm. Agriculture is being viewed as a machine-deficit sector, and more the machines sell more will be the reduction in farmer suicides. At least, this is what is visible from the way State Governments are aggressively promoting machines for the trouble-torn farming sector employing 57 per cent of the country's workforce.

Interestingly, the price of tractors has gone up by more than 100 per cent in the past five years. Isn’t it strange that while the market price of cars and two-wheelers has not risen by more than 20 per cent (and that too despite the annual inflation), the price of tractors has been on an unprecedented upswing. In other words, who will ensure that the tractor manufacturers do not end up fleecing the gullible farmers? Moreover, I am surprised that the tractor manufacturers have now roped in the agriculture universities in southern parts of India to market tractors. Some universities have reportedly signed MoUs with tractor manufacturers.

I agree that the farm sector faces a terrible paucity of farm workers. But will aggressive sale of all kinds of implements and huge tractors take out farmers from the crisis? Has it helped Punjab farmers tide over agrarian distress? It hasn’t. So why is it that the State governments are blindly promoting tractors? Why can’t the Punjab and Haryana governments and for that matter other state governments instead urge the formation of cooperative societies which help in leasing farm implements to farmers? Why can’t the governments encourage formation of private companies for custom hiring tractors and farm machinery?

I am not suggesting setting up another State cooperative agency, but am seeking encouragement for social entrepreneurship. It is here that I would like to provide the example of Zamindra Farm Solutions in Fazilka in Punjab. It provides big machines as well as farm implements on lease. Over the years, its membership has grown to over 4,000 farmers. Similarly, I know of several small village cooperatives in Punjab which provide implements for a rent. It is time such initiatives are aggressively promoted and encouraged. It is time to save farmers from getting deeper and deeper into a debt trap. #  

2 comments:

Gopakumar said...

Well said. Indeed, many NGOs that work in agriculture must note the success of Zamindra Farm Solutions and seek to replicate this across the 'tractor bowls' of the country.
In places such as Assam, where small farmers have yet to take recourse to mechanisation, perhaps what is needed is appropriate technology, rather than big machines. A great deal of such work has been done by farmers themselves and by some agri scientists, but can it all be put together by a social entrepreneur?
Gopakumar

astana economic forum said...

Agriculture must be prioritize in different countries. I think this is a great way to solve economic crisis.