Jun 18, 2015

Total Recall: How the match is fixed against Indian farmers

Pic: AFP

After the battering they received from an unexpectedly long spell of unseasonal rains, accompanied by strong winds and hailstorm, Uttar Pradesh farmers have been able to finally harvest their wheat crop. With the crop fields now empty, and with the sowing for the next crop some weeks away, it is time for them to assess the net income, if any.

That the agricultural income has been on a steady decline was never in question. But a detailed look at the net returns from wheat-rice crop rotation from a hectare of land in Uttar Pradesh, as computed by the Commission for Agricultural Costs and Prices (CACP), is not only shocking but unbelievable. As per the latest estimates, the net return from cultivating wheat in Uttar Pradesh has been worked out at Rs 10, 758. Since wheat is a 6-month crop, sown in October and harvested in April, the per month income for a farm family comes to Rs 1,793. 

With Rs 1,793 or let us say Rs 1,800 per month from wheat cultivation I wonder what kind of livelihood security we are talking about when it comes to farmers. The average monthly bill for a mobile phone for most college students anywhere in India would exceed Rs 1,800.

I looked for more details. If the other crop farmer is growing is rice, the average net return for it has been computed at Rs 4,311. Add for rice and wheat, the total that a small farmer from a hectare earns is Rs 15, 669 or Rs 1,306 per month. With such meager incomes I see no reason why a large number of farmers commit suicide at regular intervals. Those who are not so courageous either sell-off their body organs or prefer to abandon farming and migrate to the cities looking for a menial job as a dehari mazdoor (daily wager worker).

Well, many economists will dismiss the UP farmer as being an inefficient grower. I therefore looked at the costs and price calculations for Punjab farmers who are considered to be progressive, using the latest technologies and also bestowed with 99 per cent assured irrigation. The average net returns from a hectare of wheat have been worked out at Rs 18,701. Since Punjab predominantly follows wheat-rice crop rotation it becomes important to look at the annual computation of costs and prices. 

Now, don’t be surprised. The net returns from wheat-rice cropping pattern in Punjab stand at Rs 36,352 or Rs 3,029 per month. I wonder how a farmer in an economically developed state of Punjab manages to survive.

But still, Indian farmers have not failed the nation. Year after year, and despite being at the bottom of the pyramid, they continue to produce a bumper crop. This year too, they had done remarkably well. In the previois Kharif season coinciding with the monsoon months, they produced a bumper crop of basmati rice, cotton followed by potato. While basmati rice production had doubled in Punjab and Haryana, farmer’s expectation of a higher income were razed to the ground with a crash in the global prices of agricultural commodities. Disappointed farmers sold basmati at prices ranging between Rs 1600-2400 per quintal, against a price of Rs 3,261 to Rs 6,085 they got last year.

In cotton too, prices slumped from an average of Rs 4,400 to Rs 5,200 per quintal last year to around Rs 3,000 this year, prompting the government to direct the Cotton Corporation of India to step in to buy at the procurement price of Rs 3,750 per quintal. Let us not forget that the jump in basmati and cotton production happened as farmers had incurred an additional cost on diesel to run tube wells for irrigation. Punjab and Haryana had recorded a 50 per cent shortfall in monsoon.

Later, potato farmers faced a similar glut forcing them to sell at a throwaway price of Rs 2 per kg.

For years I have seen the farmers toil valiantly in the crop fields, often getting up at midnight to irrigate their fields when electricity connection flows to the tube wells, only to face an unforeseen disaster in the form of low prices. The Minimum Support Price (MSP) that farmers get for wheat and rice, which becomes an assured price for their produce, is being deliberately kept low so as to ensure that food inflation remains in check. Farmers are paid a low price also to enable the industry to get cheap raw material. Take for instance the case of cotton. According to a CACP report in the early 1990s, cotton farmers were deliberately paid 20 per cent low price for two decades so as to keep the textile industry economically viable.

This year, procurement prices for wheat and Rice have been raised by a paltry Rs 50 per quintal, which corresponds to an increase of 3.2 per cent. States like Chhattisgarh, Madhya Pradesh and Rajasthan which gave a bonus over and above the MSP have now been debarred from doing so. In fact, the government plans to withdraw MSP in the coming years leaving farmers to face the tyranny of markets.

Compare it with the government employees who have recently been given a second DA installment of 6 per cent at a time when wholesale price index has been officially computed at zero. This step-motherly treatment is the primary reason for the continuing agrarian distress in the country. In other words, farmers are being penalized for keeping food prices low for the indulgent consumers as well as for the industry. I don’t know why farmers alone should bear the burden of keeping the food prices low. After all, they too have to survive.

My colleagues have come out with some startling analysis. They looked at the rise in procurement prices with the rise in incomes of employees in various sectors over a period of 45 years – between 1970 and 2015. In 1970, the wheat procurement price was Rs 76 per quintal. In 2015, wheat procurement was is Rs 1450 per quintal, an increase of about 19 times. In the same period, the average basic salary plus DA of central government employees have risen by 110 to 120 times; of school teachers by 280 to 320 times; of college/university teachers by 150 to 170 times; and of mid to high class corporate sector employees by 350 to 1000 times. In the same period, school fees have increased by 200 to 300 times; medical treatment cost has gone up again by 200 to 300 per cent; and average house rent in cities has risen by 350 times.

This is a telling insight into the deliberate effort over the years to keep the farmers impoverished. But if you think, farmers have suffered unknowingly, you are simply mistaken. Actually, it is part of a global design. The World Bank had directed India way back in 1996 to move 400 million people out of the villages into the cities in the next 20 years, by 2015. Such a massive demographic translocation has also been suggested by academic institutes in the West. For a country to grow economically, the economic prescription is to reduce drastically the dependency on agriculture. Therefore the entire effort is to create such conditions that forces people to abandon farming and migrate to the cities.

To say that agriculture is an economically unviable profession is therefore untrue. If only farmers had received a wheat procurement price of Rs 7,650 per quintal – corresponding to the minimum increase in salaries of central government employees in the same period – agriculture would have been flourishing. India would have witnessed a reverse migration from the cities into the countryside, and farmer’s income would have compared favorably with the best in the industry. This would have provided gainful employment to millions of underemployed and unemployed. For the consumers, food prices could have been subsidized as is done in most of the developed economies.

In the Netherlands, the average farm household income is roughly 265 per cent higher than the average of the country. In US, the average farm household income is about 150 per cent higher than the national average. In India, the average farm family income is the lowest in all categories. It is not because the farmers in those countries are remarkably efficient. They get massive federal support in one form or the other. In India, successive governments have worked to push farmers out of agriculture. If only Prime Minister Narendra Modi was to reverse this trend, it would truly be Sabka Saath, Sabka Vikas. #

*Total Recall: How the match is fixed against Indian farmers. CatchNews. May 27, 2015


अमित/Амит/অমিত/Amit said...

Sir, it should be-- Medical treatment cost has gone up 200-300 'times'... not 'persent'

Mani S said...

Excellent post...let's hope for the best from our PM to reverse the trend.

Rajesh Singh said...

Very good analysis of today's condition of farmers in India. But while compared with other developed country, %age of farmers in total population and previlages to the farmers. No previlages are given to even tax payers.