May 9, 2016

Farmer suicides: Have the economists failed farmers?


Agricultural economists have always been for raising crop productivity to enhance farm incomes. I have seen mainline economists invariably blaming low crop productivity to be the reason behind the continuing agrarian distress. We are often told that in an era of globalization, farmers can only survive if they become globally competitive. Those who are not able to match the higher crop yields in countries like America or China are left with no option but to commit suicide.
For nearly four decades now, I have heard economists repeat the same prescription year after year – use technology to raise productivity, reduce cost of production, go for crop diversification, improve irrigation efficiency – per drop more crop and shift to electronic trading to bypass the hoard of middlemen who squeeze farmers income. Listening to all these suggestions most people genuinely believe that the agrarian crisis is primarily the doing of farmers.
There is no denying that all the suggestions to prop up agriculture are definitely required but that's not the end of it. Keeping them deliberately impoverished by denying them their due return and then expect them to provide us cheaper food year after year and still make a decent living has certainly been too much of an imagination. This is in reality a grave injustice with Indian farmers. And let me make it clear. Farmers in United States/European Union are well off not because of higher productivity but because of huge subsidy, including direct income support, they receive. In the US for instance, as per the Farm Bill 2014, agriculture will get a massive federal support of $ 962 billion in the next ten years.
In the past 20 years, an estimated 3.2 lakh farmers have committed suicide with 42 suicides on an average in a year. Unseasonal rains, hailstorm in the rabi season followed by a drought in the summer months had exacerbated the farm crisis in 2015 as a result of which an unprecedented spurt in farm suicides was witnessed in Uttar Pradesh, Haryana, Madhya Pradesh, Punjab and Maharashtra. Consequently, the annual death rate on the farm in 2015 had gone up to 52.
Punjab is the latest to emerge as a farming graveyard. In 2015, as many as 449 farmers had committed suicide. This year, till March 11, as per information laid in Parliament, 56 farmers had ended their lives in Punjab, which was just a shade less than Maharashtra. Punjab, the food bowl, has now the second highest rate of farmer suicides in the country. If lack of irrigation and low crop productivity is the reason why farmers are being driven to despair than how come a spate of farm suicides should continue to rock a progressive state like Punjab?
This is where the entire prescription being doled out for improving farm incomes goes wrong. Agricultural economists have so far blamed farmers. But I wonder whether it is farmers who have failed or is it agricultural economists who have failed farmers. It is their recommendations/analysis that are eventually taken up by policy makers. Are faulty recommendations responsible for faulty policies? 
In a state which has 98 per cent assured irrigation and where the yields match international standards I see no reason why farmers should be committing suicide. As per the Economic Survey 2016, the per hectare yield of wheat stands at 4,500 kg/hectare which matches the wheat yield in America. In case of paddy, the average yield is 6,000 kg/hectare, quite close to paddy productivity in China. With such high yields and with abundant irrigation why Punjab farmer should be taking to suicide?
If you are still not convinced, here is a study undertaken by Prof H S Shergill of the Institute of Development and Communication, Chandigarh. He has compared Punjab agriculture with developed country agriculture using mechanization, chemical technology, capital intensity and productivity as the matrix. Accordingly, the number of tractors per 1,000 hectares in Punjab stands at 122 compared to 22 in US, 76 in UK and 65 in Germany. As far as fertilizer use is concerned Punjab tops the chart with 449 kg/hectare per year compared to 103 kg in US, 208 kg in UK and 278 kg in Japan. Irrigated area is 98 per cent in Punjab which is much above 11.4 per cent in US, 2.0 per cent in UK, and 35.0 per cent in Japan.
Let’s look at the crop yield now. Punjab has the highest annual per hectare productivity of cereal crops (like wheat, rice and maize) with 7,633 kg. With all the crop matrix in its favour, Punjab leads the productivity chart leaving behind US (7,238 kg), UK (7,008 kg), France (7,460 kg) and 5,920 kg in Japan. If raising productivity is the major factor I see no reason why Punjab farmers should be committing suicide. But the fact that economists don’t want to acknowledge is that it is actually the low price that farmers being deliberately paid that is the primary reason for the terrible agrarian crisis that prevails.
The procurement price of wheat in 1970 was Rs 76/quintal. In 2015, MSP for wheat was fixed at Rs 1,450 per quintal. This is an increase by 19 times over a period of 45 years. Compare this with the increase in incomes of various other sections in the same period. The jump in salaries of government employees (just the basic salary plus DA) in the same period has been 120 to 150 times; the increase in salaries of college/university teachers is 150 to 170 times; of school teachers in the range of 280 to 320 times. So much so, in the 7th Pay Commission, the salary of a chaprasi has been fixed at Rs 18,000 per month.
At a time when the monthly wages of contract labour has been fixed at Rs 10,000, and states like Haryana are contemplating a monthly wage of Rs 9,000 for unemployed youth for putting in 100 hours of work every month, the average monthly income for farmers in Punjab, who are no less efficient and productive than farmers anywhere in the developed world, stands much lower. According to the Commission for Agricultural Costs and Prices (CACP) the net return for wheat and rice in Punjab, the dominating cropping pattern, is about Rs 3,000 per hectare. Therefore the question that needs to be asked is how come with a productivity level higher than in America, income of Punjab farmers is a pittance?
This is in reality not even a living wage. The net return is low because policy makers have intentionally kept the output price low. 
Looking at the salary jumps for other sections of the society, and if I were to go by the minimum yardstick of a 100 times increase in procurement price for the same period, wheat price should be Rs 7,600 per quintal. This is the legitimate price of wheat, which has been denied to farmers. I agree that such a high price for wheat will push food inflation. But then that's not the farmers fault. Why should a farmer be penalised for producing food? Why not procure wheat at Rs 1450/quintal and transfer the remaining Rs 5,500/quintal to his Jan Dhan bank account?
Agricultural economists therefore must acknowledge that the answer lies in correcting the great imbalance in incomes. A parity between farm incomes and incomes of other section of the society has to be maintained. Farmers are dying not because they are in any way less efficient but because they have been denied their legitimate income all these years. 

No comments: