Farmers need assured income to come out of poverty and debt

There is something terribly going wrong with agriculture. While nearly 40,000 farmers in Punjab, Haryana, Himachal Pradesh and Jammu & Kashmir have defaulted on repayment to the State Bank of India alone to the tune of Rs 600-crore, hundreds of farmers in the rice bowl of Andhra Pradesh, comprising the fertile and irrigated East Godawari and West Godwari districts, have refused to cultivate paddy this year declaring a ‘crop holiday’.

What may appear to be two completely disconnected events happening in two different geographical regions of the country are in reality a wake up call. Whether it is the northeast or the more productive northwest regions; whether it is Punjab, Andhra Pradesh, Tamil Nadu or Odisha; agriculture continues to be in the throes of what appears to be a perpetual crisis for survival. What is not realised is that it is actually a crisis of sustainability and economic viability.

It all began from the fertile konaseema region of East Godawari district in Andhra Pradesh where a small farmer Suryabhagwan owning six-acres of land voluntarily announced that he would prefer to work as a ‘coolie’ than to undertake paddy cultivation. Already under heavy debt and knowing that another season of paddy cultivation will only add to his indebtedness, his call for a ‘crop holiday’ soon reverberated. Within a few weeks, the idea of a ‘crop holiday’ in the ongoing kharif season spread like wildfire and more than 1 lakh hectares in the two irrigated districts today lies barren.

Andhra Pradesh is a paddy growing area. While production has been steadily on an upswing over the years, adequate market infrastructure for procurement has not been created. The result is that despite a very high production capacity there is little space for storage. When Chandrababu Naidu was the chief minister, I remember one of his statements asking farmers not to produce more rice in kharif season as he has no place to stock the surplus grain. I am therefore not surprised to learn that from the last rabi season (2010-2011) alone, an estimated 50 lakh tonnes lying with farmers, is still to be purchased.

Much of the unsold stocks of paddy are stored with farmers in the two districts of East Godawari and West Godawari. Suryabhagwan therefore is absolutely right in deciding not to grow another crop of rice in kharif and be saddled with the additional harvest. This brings me to another popular thinking, being promoted by economists, policy makers and the private trade, that the government needs to withdraw from procurement and allow the private players to procure the grains. If the Andhra Pradesh government was to withdraw from paddy procurement, and knowing how private trade exploits the gullible farmers, I wouldn’t be surprised to find more and more seasons of ‘crop holidays’.

Like in Andhra Pradesh, the Ministry of Food and Agriculture announces procurement price for 25 crops every year but effectively procures only wheat and rice. Unlike Punjab and Haryana where the State agencies procure over 90 per cent of the grains flowing into the mandis, the Food Corporation of India has in other States outsourced its procurement operations. Such an arrangement has allowed farmers to be exploited by the private trade, and more often than not it forces them into distress sale. Minimum Support Price (MSP) thereby loses its significance and farming becomes unviable. It is primarily because the farmer is unable to get a remunerative price for his produce that more than 40 per cent of the farmers, as per a NSSO survey, want to quit agriculture if given a choice.

Even in the frontline agricultural states of Punjab and Haryana, where massive quantities of chemical fertilisers, pesticides and ground water are used, farming has become economically unviable. Despite abundant irrigation and subsidised loan to farmers, if nearly 40,000 farmers have defaulted on repayment to just one bank -- State Bank of India – to the tune of Rs 570 crore (HP and J&K have defaulted by Rs 30 crore only), it clearly is an indication that agriculture in the Green Revolution belt has lost its sheen. Farmers in Punjab and Haryana have certainly not opted for a ‘crop holiday’ but by defaulting the banks they too have made a powerful statement. What is still worse is that such an acute economic crisis is happening in a state that has always been considered to be the harbinger of rural prosperity.

Interestingly, the subsidised loan was being provided at an effective rate of 14 per cent despite the rate of interest for agriculture being 7 per cent. The State bank is now holding 400 compromise camps for farmers where a final settlement can be made. I am told the situation in other states is no different. The non-performing assets of the banks from agriculture are piling up. This is happening at a time when a recent NABARD study shows that banks are in reality charging 14 per cent interest (against the subsidised 7 per cent) by clubbing their extraneous expenses also as amount to be recovered from farmers.

The warning is loud and clear. The terrible agrarian crisis sweeping the country is the outcome of a continuous neglect and apathy. Over the years, agriculture has been deliberately pushed the downhill path. While the economic and scientific prescription to bail out the farming community invariably hinges on to providing improved and sophisticated technology, it is the declining incomes that is hitting the farm sector. The tragedy is that instead of providing more incomes into the hands of farmers, what is being offered is more credit which further adds on to farm indebtedness. No wonder, two-third of MNREGA workers are actually land owners. Clearly an indication that small farmers are unable to survive solely on agriculture!

Setting up yet another high-level committee is not the answer. What is needed is to provide farmers with an assured monthly take-home package. At a time when the monthly wages of government employees after the sixth pay commission have gone up by 150 per cent, monthly income of legislators and parliamentarians has risen by 200 to 400 per cent, education and health expenses have gone through the roof, and even the BPL families are getting the benefit of health insurance and PDS, it is only the farming community that has remained at the receiving end. What the farmers need desperately is a Farmers Income Guarantee Act that determines the monthly income package a farm family must receive.