The Indian Economy Blog

December 9, 2005

Standing At The Door

Filed under: Agriculture — Amit Varma @ 11:42 am

Sonia Faleiro writes in her superb article on Vidarbha’s farmers of something an activist there said to her:

Women tell me that each evening, they stand at the door terrified that their husband may not return.

Read the full thing.

Would any of the readers or fellow contributors of this blog like to offer a diagnosis and a prescription for the situation in Vidarbha?

17 Comments »

  1. This article is heart-breaking. However, a lot of broken hearts would think that the solutions to the problems are these -

    a) Government should start paying the right price at the right time
    b) Private money-lenders should be punished
    c) Monsanto is an evil MNC. It screwed the farmers. So kick Monsanto out and abandon GM crops altogether. Also bar entry of foreign entities into agriculture.

    However we should make them realises that the solutions are -

    a) Government has no business(pun intended) buying agricultural produce. It should exit the field and let private players enter the fray.
    b) Money-lenders are not the cause of problems. They are a symptom, much like corruption. Blaming money-lenders for a farmer’s suicide is like blaming flies swarming around a dead body for the death itself.
    c) The rule of law should be implemented properly, especially contract enforcements. Just like other products have guarantees, warranties and service level agreements, so should companies like Monsanto. And if they or their product has reneged on the contract, then they should be punished. This will happen only when there is a proper legal system in place which enforces accountability.

    Comment by Gaurav — December 9, 2005 @ 12:16 pm

  2. One of the biggest problems with cotton is that it’s a ‘full or fail’ crop. It costs so much to produce (in terms of seeds, pesticides, fertilisers, etc) that if your crop fails, you have no chance but to plant it again to recover your investment with the next crop. But if that fails too, you’re in a vicious cycle. This is further complicated by the fact that if you don’t get the timing and quantity of the fertilisers and pesticides exactly right, you’ll ruin the crop.

    Another large problem is that price contracts between end buyers and farmers hardly exist. Neither does co-operative or contract farming. This means that small farmers, who have very little technical knowledge about growing cotton start growing it, usually on a loan. In many cases, the loan is actually given by the guy who sells agrichemicals. The farmer has to repay the loan by pledging his crop to this chap, who will usually charge below market prices.

    This is not a problem where simply pushing the government out of the equation will solve things. This is where a transparent market actually needs to be created- not just for cotton itself, but also for agricultural inputs, knowledge on how to grow it, and working capital to finance it- right now all done by the moneylenders.

    Some options for how to create these markets:

    1. Contract farming of cotton. The cotton processor agrees to buy cotton at a fixed price. The advantage of this is that it locks him in with a particular producer and gives him an incentive to ensure that the farmers are growing the crop properly (no over- or under- application of pesticides, planting at the right time, etc). It’ll probably need a hierarchy, though- co-operatives in between the farmers and the buyers to get economies of scale.
    2. Improve the markets for other agricultural goods. A lot of cotton farmers in Andhra (which has had cotton suicides since 1999) turned to cotton simply because the market for chilli was broken- they could never sell their chilli crop and had to abandon it rotting on the road.

    Comment by Aadisht Khanna — December 9, 2005 @ 1:08 pm

  3. Gaurav, your words ‘Money-lenders are not the cause of problems. They are a symptom’ stunned me. Those exact words went through my mind a couple of days ago as this hullabaloo about moneylenders was going on here in Nagpur.

    Sonia’s article was an excellent piece of work. I just wish Nagpur’s local newspapers would have this quality of journalism. So instead of the regular thrashy press conferences, mutual backscratching amongst corporates, newspaper owners, journalists and the city’s elite, we would have some insight into the plight of the common people of Vidarbha.

    Anyway, I disgress. There are a few solutions that I can think of:

    here are the short term ones:

    1. Bring moneylenders within the ambit of the law instead of arresting them. Enforce strict rules of conduct. Any transgression should invoke harsh penalties, both civil and crimminal. The benefit will be that farmers will not have their sources of credit taken away. A tier system for interest rates could be enforced with land mortgage being neccesary only for low rates of interest while higher rates would require the lender to bear risk. This should help in preventing moneylender malpractices.

    An open market of moneylenders must be established to give more power to the poor farmer. A system where information about moneylenders, the rates of interest that they offer and on what terms should be widely publicised in every village. I wonder how all this can be enforced with the present rotten agricultural administration though. There are other things but won’t get into specifics. You get the general idea.

    2. Education about alternatives. Cotton really is a worthless crop these days. Soyabean seems to be gaining popularity. I can’t claim to know much about farming but it is important that farmers be able to produce whatever else can be sold at better prices if cotton is obviously not feasible. Only then will the government be able to scrap the stupid monopoly cotton purchase scheme.

    3. Competition from banks for moneylenders. ICICI and others seem to be making inroads but they are not doing enough. It will help get money lenders back in line.

    Long term measures:

    1. Irrigation! Of all the coal, manganese and other minerals that the government steals from Vidarbha, little goes back in the way of development money. Thousands of crores seem to go down into nothingness and little progress is made in developing irrigation facilities in Vidarbha. Bureaucracy is piled upon bureaucracy by creating white elephants like the Vidarbha Irrigation Development Corporation which do little except creating senior post for more existing bureaucrats.

    2. Transport: Railway density in Vidarbha is amongst the lowest in the country. This is particularly funny because the central indian region comprising of Vidarbha and Chattisgarh is the most profitable freight traffic areas on Indian Railways. So there is little scope for efficient transportation of goods from the more backward areas. ofcourse, the less said about roads, the better. Transportation also brings better communicationn with cities like Nagpur and Amravati. That means better access to open markets. Not happening.

    The government chose to ignore such matters because few really bothered to shout. Villagers crushed under debt in remote villages are not news. But moneylenders have the money to contribute to political parties. So no one was interested. But with the suicides, the parties smell an oppurtunity to make sensational headlines. which led to Gawande trying to commit suicide in the assembly. Perhaps they should’ve let him.

    Comment by Alok Patel — December 9, 2005 @ 3:33 pm

  4. P. Sainath has written extensively on the Vidarbha crisis for more than an year in The Hindu; Here is his latest piece on this crisis.

    The comments by Gaurav and Aadisht are bang on, I think. But, apart from all this, there is a basic question to be asked: why is the market price of cotton so low? The answer, ofcourse, is that they have been artificially depressed by the humungous subsidies given out by US to its cotton farmers. Should the developing countries succeed in negotiating for the removal of these subsidies, much misery would be alleviated.

    Comment by Venu — December 9, 2005 @ 5:34 pm

  5. Farm subsidies in rich countries is the number 1 problem. Gurcharan das wrote about this. Developed countries lecture others on free markets but when it comes to farm subsidies they don’t walk their talk. I wonder why most of the the leftist types in western socities who protest against globalization — because they think it adversely affects poor in the less developed countries — don’t protest against the farm subsidies. My understanding is that ending these subsidies will have a beneficial impact on many poor and developing countries.

    Comment by sv — December 9, 2005 @ 6:10 pm

  6. Liberals in US do ask for farm subsidies to be changed. The subsidies are actually heavily skewed towards big farmers, so the liberals usually ask for some correction in that.

    With that said, I always wonder why shouldn’t we be happy that US gives away cotton for cheap. If all of the problems of Vidharbha farmers are linked to low cotton prices, is all of the growth in textile industries (in Tirupur etc.) due to the same low prices? I have heard from some people that cotton prices/quality is lower in India than China/Vietnam/Pakistan and that’s why we find it difficult to increase textile exports further. It will be nice if Sonia Faleiro or Sainath connects the boom in textile manufacturing to the low cotton prices.

    I have always thought of the root of this problem as an inability to switch to different crops as and when demand changes. All farmers cultivating cotton/chilli/sugarcane all the time – when they are otherwise not profitable – is not sustainable.

    Comment by Eswaran — December 9, 2005 @ 7:16 pm

  7. Amit,

    That was an excellent and poignant piece by Sonia Faleiro. Their isn’t much difference in how the rest of the nation thinks about “Holy Cows” and “Rustic Farmers”, both are revered, pitied upon, and left to vagaries of the nature at the same time.

    Monsanto is not the problem here, although, seemingly it did push its seed in a haste without adequate technical support. Bt seed or its variants are a success in Gujarat where farmers were more technically adept.

    Farming on less than five acres with family labor and use of minimum irrigation is never going to be successful no matter who the moneylender is or what the government policy is. Farming in states like Punjab is relatively successful because farmers with less than five acres either grow vegetables and other high value crops or they informally lease out their land to other farmers for two to five years. This practice ensures that an average farmer is cultivating at least 20 acres of land for commodity crops like wheat, cotton and rice. This reduces the cost and allows for employment of outside labor.

    In current situation the GOI should focus more on facilitating education and providing enough power and irrigation facilities, rather than focusing on minimum support prices and farm subsidies. Studies indicate subsidy on urea has led to indiscriminate use of urea in northwestern states and now wheat output is stagnating and soil quality is at its lowest.

    I can feel a sense of complacency after the green revolution. Remember, self sufficiency in food was our biggest source of pride until “outsourcing”. There is no quick fix to this problem, a long term approach which should include education, information dissemination (agriculture extension), reform in money lending, reform and transparency in markets and research in agricultural science. All these are long overdue for our “cereal” and “paranthas” and for the well being of farmers.

    Comment by Harpartap Mann — December 9, 2005 @ 7:28 pm

  8. Do you all think then the movement for a separate state of Vidarbha is justified? Will it make any real difference?

    Harpartap,
    Surely you joke that Monsanto is not a problem? Our whole modern agricultural system is based on unsustainable practises of wresting more from the land using a monocultural crop (crop rotation is slightly better). We forget our traditional agricultural practices. People in the US seem to have forgotten the excesses caused by fertilizers which resulted in the Dust Bowl decade. Why oh why do we all forget history’s bitter lessons?

    Peace

    Comment by Amit Kulkarni — December 10, 2005 @ 12:21 am

  9. Dear Amit Kulkarni,

    Crop rotation by definition is not an alternate for monoculture. Monoculture can still be practiced within the crop rotation system. But I take your point and I would argue that expecting Indian farmers to limit themselves to traditional agricultural practices is an injustice to them. In any case popularity of organic foods can push farmers to adopt more sustainable methods but that’s for the market to decide. For now farmers have every right to maximize their production and profit like any other enterprise.

    Monsanto is not the problem at least in this case. Again to repeat what I said in my previous comment, biggest challenges the farmers face are lack of adequate energy, irrigation, education, technical information and quality plant material.

    Comment by Harpartap Mann — December 10, 2005 @ 1:59 am

  10. 1. just because the paedophile didn’t touch your daughter this time around doesn’t mean he isn’t a problem. much as i hate gwb, one should take a lesson out of his evil book – just like he attacked iraq when the real perp was sitting far away in afghanistan, here is a chance for GoI to kick out monsanto even though they might not be directly linked to farmer suicides. I don’t have to tell you the evil that is monsanto – do your own research or call up vandana shiva if you’re too lazy.
    ofcourse that doesn’t mean other MNCs are evil or MNCs mustn’t be allowed to enter agri…just that monsanto is evil & any chance to kick them must be utilised. foreign entity can enter & exit agri or whatever business as long as its name doesn’t rhyme with monsanto.

    2. ignoring the psychology & social aspects & focussing solely on the economics behind farmers commiting suicide is as simplistic as asking for economic incentives to prevent manjunath’s murder. when 30 year old kapaas ki kheti karne walas routinely come on TV & declare “main khudkushi kar loonga”, one has to look deeper instead of just asking for private players to enter the cotton market. what is it that provokes a 30 year old to even entertain the thought of killing himself for some trivial nonsense like kapaas ? why are such pro-suicidal guys given so much air time ?

    3. first world giving farm subsidy is not going to go away for atleast a decade. usa subsidises its farmers simply because it can afford to do so. it is not obliged to care for arbit vidarba farmer. when china stops buying UST bonds, gwb will sit up & think about farm subsidy, but that is so far away…

    4. as long as small farmers (

    Comment by Kya yaar tu bhi — December 10, 2005 @ 4:00 am

  11. contd…

    4. as long as small farmers ( less than 5 acres ) are in the fray these tragedies are bound to happen. one can only hope that the country moves decisively to a manufacturing economy, where a lot of these farmers can be employed as unskilled labor in mills and factories to give predictable secure incomes instead of gambling with high-risk practices like growing kapaas on 5 acres under uncertain market conditions.

    5. yet another example of how destructive transitioning to a service economy without going thru the manufacturing economy phase can be. majority of the nation is unskilled labor practicising highrisk farming, they aren’t going to be able to participate in BPOs & call centers anytime soon. large-acre farming is the impending future & that will drive out majority of these smalltimers. what are they going to do in the absence of mills & factories to hire them ?

    6. once again i’m reminded of RGV, who, speaking of his flop naach, said “i tried to teach ayn rand to municipal school” :)
    phrasing every issue in terms of economic incentives works in places where economics is the major unknown variable as the sociocultural aspects are largely addressed primarily because they are homogenous. even here in the US, with 1 in 3 persons being obese, one thinks twice about phrasing the obesity problem as “what economic incentive can we offer the consumers to get them to stop eating steaks & burgers & feed off of salads ?” junta eats steaks & prime ribs even when it is priced at four times a salad…cultural baggage, food habits, taste…all these social factors invariably triumph the price factor. these vidarba farmers shouldn’t even be farming in the first place, and we seek economic prescriptions for their suicide….ayn rand for municipal school indeed.

    Comment by Kya yaar tu bhi — December 10, 2005 @ 4:02 am

  12. Clearly, alternative market is the only solution to a senario like this. I wonder if formating cooperatives (like Amul etc) would help the cause… ofcourse we still need the cotton to be bought by some one other than the government….

    Comment by sd — December 10, 2005 @ 8:24 am

  13. http://ashish.typepad.com/ashishs_niti/2005/12/govt_policies_a.html

    Comment by Ashish Hanwadikar — December 16, 2005 @ 2:27 pm

  14. Vidarbha whodunit

    Farmers are killing themselves because the government has denied them economic freedom
    But if the crisis is an opportunity to reform agriculture, will Prime Minister Manmohan Singh take it up?

    Trackback by The Indian Economy Blog — July 1, 2006 @ 11:47 pm

  15. Farmers suicide and the deficits of the farm sector are, after all, not a recent eruption, they have been cumulating a while, in fact, since before the UPA government assumed power. Sankarshan Thakur’s piece in Tehelka gives an interesting prespective about why the government has been quick and eager to explain the mechanics of a rising growth rate, it appears lost on why agriculture remains shuttered from the benefits of a galloping economy. Must read…http://www.tehelka.com/story_main18.asp?filename=Ne071506Party_on.asp

    Comment by Nimish — July 8, 2006 @ 5:20 pm

  16. We are all responsible for the fate of all those farmers who killed themselves. We,The enlightened educated people who framed the policies and decided the direction of india agriculture from independance and lead the farmner on a road of no return .

    we addicted him to green revolution.we weaned him away from mixed farm enterprise[farming,dairy,poultry] to mono cropping.We made him to feed his farm with poisonous fertilizers and pesticides.The farm yard manure elixer for soil fertlity has taken a back seat.We failled miserably to educate him on the rational use of agri inputs .We made him to sell his bullocks and go for tractor ploughing.
    Mixed cropping and sustenance agriculture is frowned up on.Commercial crops took a precedence over food crops.
    we do not find suicides in areas where cropping pattern
    is still food orientd and mixed.Example is zahirabad area in medak district of A P where you find traditional farming systems.farmers still maintain draught cattle,keep poultry,grow jowar and red garm in mixed cropping.

    We saw many reports and recommendations of various commitees and task forces .Are these recommendations are getting translated into action plans at field level?If so are they effective ?
    We have examination and scoring systems even for a Kinder garden kid.Do we have a rating/scoring systems for these commitee/task forces postfacto.

    Do any of these commitee/Task forces talked about negative capital flow from agriculture sector to other sectors.How goverment is screwing the farmers and stealing their money through price control mechanisms .

    The administration,politicians,economists,scietists and policy makers are not sensitive to the plight of the farmer.We made a punch bag out of him .

    Comment by K N Rao — December 8, 2006 @ 2:00 pm

  17. [...] links: gaurav sabnis has a few suggestions on the indian economy [...]

    Pingback by entelechy » save our farmers, a plea — January 17, 2008 @ 6:04 am

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