Aug 26, 2014

When will Indian agriculture become economically viable?

Speaking after inaugurating the 166-km-long four-lane-road project at Kaithal in Haryana the other day, Prime Minister Narendra Modi promised to turn farming profitable ushering in prosperity for farmers and at the same time result in overflowing foodgrain godowns.

Coming at a time when agriculture continues to reel under a terrible agrarian crisis, when an estimated 60 per cent farmers go to bed hungry, and at a time when close to 10-lakh farmers abandon agriculture and trudge into the cities looking for menial jobs every year, the promise to make farming economically viable is like a blessing from the heavens. For the 600 million farmers, somehow surviving against all odds, there can be nothing more cheerful. But will this really happen? 

Successive governments have only added on to the farm woes by continuous neglect and apathy. Going by the mainline economic prescription of cutting down drastically the population engaged in agriculture to boost economic growth, the policy thrust has been to push farmers out of agriculture. Creating economic despair, and hand over precious natural resources, including fertile land, for non-farming purposes therefore became an easy route. Perhaps the Prime Minister will see through the folly, and reverse the trend to ensure that the benefits of economic growth are judiciously and equitably distributed. India has the ability to chart out an economic development model that does not add to global warming as well as rampant destruction of natural resources.

This is possible if the policy thrust shifts to encourage sustainable agriculture and thereby in the process gainfully employ 600 million people. I don’t understand the economic rationale of displacing farmers from their meager land holding, and forcing them into the cities to work as daily wager workers or drive auto-rickshaws. Displacing people from their stable jobs in agriculture and re-locating them to the cities to work as labourers in infrastructure projects is no job creation. The challenge is to make agriculture more profitable, and ensure that improved skills are provided to farmers. An economically viable agriculture not only boosts economic growth, removes economic disparities, but also ensures food security. Let’s be very clear: a food importing country can never be economically powerful.

It is in this connection that the Prime Minister deserves all the applause for taking a bold stand by not succumbing to international pressure at the World Trade Organisation (WTO). By refusing to sign on the protocol of amendments to the Trade Facilitation Treaty unless a permanent solution to the vexed problem of providing minimum support price to Indian farmers is resolved, Narendra Modi has sent a strong message. After all, if Japan can impose 738 per cent import tariffs on rice and 328 per cent on sugar – so as to protect its domestic farmers and industry, why can’t India stand firm to protect its farmers as well as its hard-earned food self-sufficiency.

This has to be now translated into policies and actions that can revive domestic agriculture. To understand the political implications of neglecting agriculture let’s revert back to the days when Lal Bahadur Shashtri was the Prime Minister. The year was 1965 when India was hit by a devastating drought. India had imported 10 million tonnes of foodgrains under the PL-480 from North America. But later in the year, in an interview with an American journalist Shashtri was asked: “What did he think about the war in Vietnam?” To which Shashtri replied: “It is an act of aggression.” This small sentence annoyed the then US President Lyndon Johnson.

It is very easy to teach a lesson to a hungry nation. US stopped food exports to India under what is called a ‘stop-go’ policy. So much so that at one stage only food stocks for another week was left. This prompted the then Food Minister C Subramaniam to send an SOS to US president requesting him to divert the ships carrying foodgrains to India otherwise millions would die of hunger. The UN FAO had also appealed to the US President. India thus had rightly earned the epitaph as a country living in a ‘ship-to-mouth’ existence.

Mrs Indira Gandhi too had faced the brunt of food diplomacy. Soon after she took over as Prime Minister, at a time when the drought had continued for the 2nd year in 1966, Mrs Gandhi had allowed the import of high-yielding seeds of wheat from Mexico to usher in what is now called as Green Revolution. Agriculture scientist Dr M S Swaminathan, who is hailed as the father of India’s Green Revolution, once told me that the seeds of Green Revolution were actually sown in a car journey that he took with the Prime Minister. During the short car journey Dr Swaminathan recalls Mrs Gandhi had sought a commitment from him if he could provide an assurance that “India will have a surplus of 10 million tonnes or so in a couple of years because I want the bloody Americans off my back.”

Dr Swaminathan made the commitment. The rest is history.

But a couple of decades after India become self-sufficient in foodgrains, a dangerous complacency has set in. In 2013-14, farmers produced a record harvest of 264.4 million tonnes of foodgrains. Production of oilseeds has reached a record high of 34.5 million tonnes, a jump of 4.8 per cent. Maize production increased by 8.52 per cent to reach a level of 24.2 million tones. Pulses production reached an all-time high of 19.6 million tones, an increase of 7.10 per cent over the previous year. Cotton production too touched a record high.

With such record production, the nation should be indebted to its virile and hardworking farmers. But they are not only being ignored, but penalized. Last year, in 2013-14, when farm production recorded a quantum jump, agriculture received 19,307-crore from the annual budget kitty, which is less than 1 per cent of the total budget outlay.  For 60 per cent population less than 1 per cent of is the resource allocation. In 2014-15, only Rs 22,652-crore has been given to agriculture and cooperation departments. In fact, if you look at the 11th Plan period, the total outlay for agriculture was Rs 1-lakh crore. For the 12th Plan period it was raised to Rs 1.5 lakh crore. Now what miracle can you expect when the governments deliberately starve the most efficient sector of the economy, which incidentally is also the biggest employer?

Just before Mr Atal Bihar Vajpayee took over as Prime Minister for the first time, a closed door meeting was held with some economists to work out the economic pathway for the new NDA government. I remember insisting that NDA would never faces anti-incumbency if it devoted 60 per cent of the annual budget to agriculture, which employs 60 per cent population. This was agreed upon, and was also talked about but in reality agriculture did not even receive 6 per cent of the annual budget. Agriculture in reality is faced with negative terms of trade meaning more money is being taken out from the rural economy than what is being invested.

It is primarily for this reason that the average income of a farming family in India, comprising five persons, has been computed to be less than Rs 2,400 a month. This is less than what a household help receives in a city. No amount of efforts to raise productivity or leaving farmers to face the vagaries of the market economy can help farmers realize a better income. Let’s be very clear, neither future trading nor by allowing big retail like Wal-Mart and Tesco to purchase directly from farmers has helped raise farm incomes even in US and European Union. It is direct income support that has made farming a profitable venture in the developed countries.

I am therefore hoping that the Prime Minister too would spearhead an economic renaissance in Indian agriculture. Mr Modi has a number of times talked of raising the procurement prices. But since procurement prices only benefit 30 per cent farmers, any tinkering in the form of ‘cost plus 50 per cent profit’ will only benefit a section of farmers. It is therefore time to set up a National Farmers Income Commission that aims at providing a monthly guaranteed take-home income package to farmers. This must be linked to production and the location of the farm.

If in the past nine years, the government has shelled out Rs 1,100-crore every day as tax concessions to India Inc, totaling Rs 36-lakh crores, which did not result in increased industrial production nor created additional jobs, I see no reason why even a quarter of it cannot be given to farmers. When I say this I am not being against industry, but at the same time I see no economic justification in why industry should be allowed to replace agriculture. It should in fact be supportive of agriculture. India needs agro-based industries.

Imagine a scenario wherein farming becomes a profitable enterprise, as the Prime Minister said, the boost it will give to the Indian economy would be unprecedented. I only hope the Prime Minister lives his dream. #

Source: The Organiser, Aug 24, 2014


Anonymous said...

Freeing the farmer from the "Satanic dependencies" on corporate products like fertilizers, pesticides, tractors and making them switch to and embrace cow-based eco-friendly alternatives which are cheap in cost- will undoubtedly make Indian agriculture self-sufficient, thereby economically profitable and also sustainable. The issue of giving remunerative prices for the produce must also receive serious attention. For achieving all this, a radical overhaul of the current policies that are pushing farmers into the corporate/death trap, must be done, along with proper incentives and NGO help.

Short of this, we will only be deluding ourselves in our claims that we are achieving great progress blinded by the glitter of the industrial glamour which is sucking the rural populace out of their roots to cities to jobs which destroy both the human soul and environment.

"Jai Jawan", "Back to Village" and "Back to cow-based farming" should be the mantra if India is to become a Annapurna plentiful of food, happiness and prosperity.

oneorganic said...

Go for ecofreindly farming, decentralise production of inputs from local resources and no use of chemicals, value additions of every farm produce at farm/village level, avoiding monoculture, reducing area to cash crops specially in rainfed areas, judicious use of water, marketing by farmers and committed extension functionaries etc. are the areas that help in self sustainability of agriculture.STILL it need government support because it is climate dependent enterprise that is inevitable AS till date no machine is able to produce a grain.See more at