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The difficulty of being a farmer

LiveMint logoLiveMint 27-06-2017 Ram Kaundinya

The Indian farmer has always been like an areca nut in a nutcracker—always under pressure from both the supply and the demand sides. 

There are about 145 million landholdings in the country. With about 92% of them being wholly owned and self-operated, we may assume that we have about 130 million farmers. With more than 40% of our cultivated area of 175 million hectares being irrigated, there is a clear distinction between farmers with irrigation and those with rain-fed acreages. The most disadvantaged are the farmers who own patches of the 20 million hectares of unproductive saline land in the country. While farmers who have access to irrigation are better placed, those who are in rain-fed and drought-prone areas are most vulnerable. They occupy 60% of the cultivated area but contribute only 45% of the total agricultural production. These are the farmers without the financial wherewithal to withstand the vagaries of nature. A single crop failure due to drought, flood or similar reasons can destroy them.

Crop insurance programmes have not been able to recover farmers’ investments in most cases due to lack of accurate farm-level data that can be used to settle claims. Satellite and remote sensing technologies are for the future. 

Farm economics are beholden to the economics of demand and supply. With every recurring phenomenon of high production that is in excess of demand, there is the consequent (and drastic) fall in prices. Planted acreages have little to no connection with projected demand. When a farmer plants a crop, he does not know what the likely market price of his produce will be. The government’s minimum support price (MSP) gives him some direction, but it operates only with some crops. Neither is the government any better at forecasting. In the 2016 kharif season, for example, the government pushed farmers to reduce cotton and plant more pulses. Those who continued growing cotton made good money but the majority who went in for pulses faced excess supply and are dealing with a steep fall in prices.

There is no commodity-based farmers’ organization in the country to address these issues. In other countries, such organizations advise farmers on global projections of demand and supply for specific crops and help in moderating acreages in line with projected demand. Neither are there platforms for farmers to highlight issues to key stakeholders such as policymakers, economists and scientists. Existing farmer organizations are aligned with political or other special interest groups and are neither objective nor scientific in their approach. Hence, the need for the development of a non-partisan platform. 

Another high-input cost today is that of farm labour, itself a much misunderstood and maligned issue. Everyone thinks there is ample farm labour available. But the problem is the availability of labour at the right time and at the right cost. The cost of labour has risen due to social welfare programmes and minimum wage levels. At peak times, like sowing, transplanting, harvesting, etc., it is very difficult to get sufficient farm labour. In the case of cotton, for example, the cost of harvesting has risen to about 10% of the selling price—which is very high. Sensitive crops like fruits, vegetables, etc., which have to be harvested at precise times to maximize the quality of the produce, face the same problems. 

One solution to address this is greater reliance on technology, be it through farm mechanization, the use of weedicides or genetic engineering, that can lower input and time costs. Farmers operating in states with labour shortage use chemical pesticides to control weeds, which is cost- and time-efficient. There is also rapid mechanization of paddy transplantation. Farmers should be encouraged to use such labour-saving options instead of being burdened with the social objective of protecting rural employment and being denied access to new technology. 

The Agricultural Produce Market Committee (APMC) Act prohibits farmers from selling their produce in any mandi other than their designated one. This makes farmers vulnerable to middlemen and vested interests. They are exposed to global prices but are not provided with access to cost-efficient technologies and information systems. This places them at a disadvantage with farmers from other countries. Karnataka has united all mandis in the state on an electronic platform and this has reportedly improved farmers’ selling prices by 38%. This should be replicated nationally. 

The agricultural extension system has collapsed in many parts of the country. The farmer is forced to depend on the advice of agri-input dealers and commercial organizations instead. Some organizations are attempting to use information and communication technology-based methods to give technical advice to farmers. This may prove to be beneficial. The other issue is that banks need to get more generous with credit in rural areas where the stranglehold of private moneylenders continues to wreak havoc. Lack of rural infrastructure, reliable power, cold-storage, roads and transport systems, etc., continue to cripple farm operations and increase costs. 

We need to overhaul our thinking and approach towards addressing farmers’ challenges which are complicated and structural in nature. Waiving farm loans is a lazy option for governments and a costly option for the banking system. Successive governments have chosen this option because they do not have the political will to find better solutions. 

Ram Kaundinya is an expert in agricultural policy, a former CEO of Advanta and former director-general of ABLE-AG.

Comments are welcome at theirview@livemint.com

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