Simi Mehta and Arjun Kumar
Despite the pro-poor and pro-farmer policies of successive Indian governments since independence in 1947, India’s farmers remain the ‘uncared for lot’ — and the situation is becoming increasingly untenable for both the agricultural market and the farmers themselves.
This is more conspicuous of the challenges faced by small and marginal farmers who own and operate 85 per cent of total landholdings, the average size of which is less than one hectare. Most of them depend on borrowing from informal sources of credit like local moneylenders and relatives. Even policies like that of Jan Dhan Yojana, which enables opening of a zero-balance bank account, have not discouraged farmers from borrowing money from informal sources.
When faced with an immediate requirement of cash for sowing seeds, plantation, irrigation, fertilisers and so on, farmers’ access to formal credit is restricted due to their lack of collateral and operational inefficiencies. And for those farmers who do receive formal loans are generally underfinanced — so much so that one or two crop failures or sudden expenses on health or marriage compels them to turn to informal sources. This negative cycle has entrenched the strangleholds of private moneylenders who, through deceitful calculations, charge exorbitant interest rates against the loans.
In June 2017, farmers took to the streets of India in protest, demanding complete loan waivers (due to crop failures over two consecutive drought years) and raising the Minimum Support Price (MSP) for grains and pulses to more than 50 per cent of the cost of production. Repeated price shocks, increasing input costs, and the lack of procurement of agricultural produce at MSP have negatively affected the agricultural activities and families engaged in it, so much that the country has become insensitive to the news of ever increasing suicide rates among farmers’ due to their indebtedness and destitution Even electronic national agriculture market (e-NAM), which aims to give farmers a choice of buyers across the country and better prices, had a very limited impact on ground implementation.
Farmers’ protests and movements have had ripple effects from one state to another, and several state governments have resorted to loan waivers to provide immediate relief. But loan waivers are not sufficient — they do not provide a long-term solution and impede the adequate allocation of commensurate resources for structural and systemic changes for agricultural development. Further, they obfuscate the need to develop the necessary infrastructure, technology and research for the application of real-time data for monitoring and evaluation and evidence based policy making.
While price support for horticulture produce is not feasible due to the perishable nature of produce, the way forward is to ensure vigorous increases in domestic and international investments in food processing industries, expansion of cold storage infrastructure and rural development to increase shelf life. Allowing Walmart-type supermarkets to open in the urban and semi-urban areas of the country would foster the quality and shelf-life of the produce sourced directly from the farmers and minimise food wastage, while simultaneously eschewing the exploitative channel of middlemen and commission agents, who are often exploiting both the farmers and consumers.
Moreover, the major causes of agrarian distress include incomplete land reforms, low quantity and quality of water, lack of technological breakthroughs, poor access to quality institutional credit and meagre opportunities for assured and remunerative marketing, as well as weather and market based risks. One immediate priority is the protection of crops through insurance. The Pradhan Mantri Fasal Bima Yojana, a government-initiated crop insurance policy, is a step in the right direction, yet it faces many unresolved challenges in its reach and execution, such as identifying the crops, sensitisation of the insurance companies to crop failures and so on. Timely disbursal of affordable formal credit and essential inputs like seeds, fertilisers, and water, along with an assurance of procurement at MSP on agricultural produce that is 50 per cent more than their cost of production would be an appreciable policy support that would boost farmer confidence. ‘Per Drop More Crop’ cannot remain a mere slogan if the objective is to revamp the robust agricultural heritage of India.
In addition to the above, policy measures should be implemented to improve irrigation practices, soil carbon sequestration and rainwater harvesting to ensure adequate and timely availability of water for crops. Infrastructure and technology for weather forecasting, agricultural market, plant protection, food processing, crop rotation and land fertility through public and private sector investment also needs urgent upgrading. Finally, it is extremely important to create a modern digital governance framework for hand-holding agriculture like e-NAM, biometric data and use of mobile phones for the propagation of relevant farming information, awareness, support and effective implementation that would invigorate the spirit of innovation among the farmers and substantially reduce the drudgery of the profession.
In short, economically viable and non-populist policies are needed to encourage farmers to farm. It is not in the nations’ interest to have its farming community — who feed India — continue to live in distress. Without urgent policy action, farmers could be forced to continue their protests, and even turn to more drastic measures such as deciding to forego cultivation for a cropping season or taking a ‘farm holiday’. But with the right planning, both India’s farmers and its food consumers can have their interests met, and India can be food and nutrition secure.
This article first appeared on East Asia Forum: How India can tend to its farmers on August 27, 2017.
About the Author
Dr Simi Mehta, CEO & Editorial Director, IMPRI; Fulbright Scholar, Ohio State University, USA.
Dr Arjun Kumar, Director, IMPRI; China-India Visiting Scholars (CIVS) Fellow at Ashoka University