Cover Story

A wake-up call

Print edition : July 07, 2017

Angry chilli farmers ransack an eNAM office at the agricultural market yard in Khammam, Telangana, on April 30. The farmers were offered Rs.2,000-4,000 a quintal this year while they got Rs.12,000 a quintal last year. Photo: G.N. RAO

The Modi government needs to move beyond empty rhetoric and gimmicks to clear policy formulation and implementation to solve the agrarian crisis, which has been brewing for years now.

MORE than anything else, it is the timing of the current, almost nationwide, farmer agitation that is strikingly unique. It has erupted in a year when the farm sector seems to have achieved all the cherished objectives: an above 5 per cent growth rate and record production not only in foodgrains but also in fruits, vegetables and dairy products. It has come at a juncture when the Union government has claimed successful implementation of various schemes for the agriculture sector. But the fact of the matter is that beyond all these seemingly positive factors, there is grave economic distress in the rural areas in general and in the farming community in particular. It is a crisis that marked the advent of economic policies of liberalisation in the farm sector and has persisted right from the early 1990s. This growing distress amidst bombastic growth figures is something that cannot be wished away just by saying “acche din” are here. At many levels, the two principal demands of the agitating farmers—loan waiver and implementation of the M.S. Swaminathan Commission recommendations, which provide for a 50 per cent profit margin on input cost—not only summarise this grave economic distress in rural areas but also point to the probable solution of the problems.

These problems were well identified by the Bharatiya Janata Party (BJP), the principal constituent of the ruling National Democratic Alliance (NDA) at the Centre and the ruling party in the majority of the States. A remunerative price with a 50 per cent profit margin was included in the BJP’s election manifesto in 2014. It said that once in power, the party “will take steps to enhance the profitability in agriculture, by ensuring a minimum of 50 per cent profits over the cost of production, cheaper agriculture inputs and credit; introducing latest technologies for farming and high yielding seeds and linking MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act] to agriculture”. The loan waiver concept was addressed by Prime Minister Narendra Modi himself at various meetings during the election campaign in Uttar Pradesh. It was probably felt, at that time, that the economic plight of farmers after two successive droughts necessitated such a measure. Evidently, both the issues that form the root cause of the current farmer agitation were in the radar of the BJP for a considerable period of time.

But then, having matters in the radar is not enough. The schemes that one devises on the basis of one’s understanding need to generate a sense of benefit in the targeted sections of the population. A closer look at the various schemes announced, sought to be implemented, and celebrated as great success by the Modi government as part of its third anniversary celebrations will highlight this mismatch. This close analysis will also show that what the government has been touting as positive and potentially successful initiatives in agriculture relate, in fact, to problems and liabilities for farmers which can be undone and set right only by the farming community itself in the long run. In all probability, the think tanks guiding the Modi government also know this. That seems to be the major reason why the government is not comfortable with a public debate on these issues and the so-called initiatives relating to them. Antics like the beef ban and the blanket ban on sale of cattle for slaughter that have been propped up need to be seen in the context of this discomfort over focussed discussion. They are diversionary tactics and fairly successful ones at that.

Now, for a closer look at the schemes, starting with crop insurance. At its core, it has nothing to do with increasing farmers’ income but is just a risk coverage for which farmers are paying a premium. It could even be argued that the real beneficiary is the government since the risk of paying compensation in case of crop losses due to drought or flood or other natural calamities has now shifted from the treasury to the insurance companies. The loser is the farmer since he or she has to first cough up a premium in order to be eligible for insurance, whereas earlier he or she was not paying a single penny and the government was doling out compensation from the National Calamity Relief Fund (NCRF). The premium has been cleverly designed in terms of percentage to hoodwink farmers, whereas it should have been fixed on a per-acre basis.

Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), crop insurance is compulsory for farmers availing themselves of loans in notified areas and voluntary for non-loanee farmers. A farmer has to pay 2 per cent of the premium fixed by the insurance company for all the crops grown during the kharif season and 1.5 per cent for rabi crops. However, for horticultural and commercial crops, it is 5 per cent. The remaining amount of the premium is subsidised by both the Centre and the States under a 50:50 plan. Since these are the initial years of implementation, the government exerts tremendous pressure on the insurance companies to make the scheme look successful, though, on the ground, farmers are seeing through all this. The issue-based and focussed farmers’ agitations in Haryana, Uttar Pradesh and Madhya Pradesh against the compulsory deductions of insurance premium from crop loans and the manner in which the Central government was forced to issue directions to the Uttar Pradesh government to exempt sugarcane crop from the PMFBY scheme are instances of farmers seeing through the glitz. Significantly, there is no cap on the maximum amount that insurance companies can quote as premium. If any State is unable to mobilise resources as dictated by the insurance companies, the scheme will come to a standstill.

Statistics jugglery

The government has also been trying to mislead people with statistics jugglery. It claimed that the total number of farmers covered under the scheme for the kharif season alone between 2014 and 2017 was 56.52 per cent more than the number covered between 2011 and 2014. But documentation on the scheme shows clearly that the scheme was implemented only from 2016. The efficacy of the much-advertised insurance scheme can be inferred from the reply of the Minister of State for Agriculture in the Rajya Sabha on April 7 that out of payable claims of Rs.3,47,413.37 lakh, only Rs.69,802.45 lakh had been paid under the PMFBY, while under the Restructured Weather Based Crop Insurance Scheme (RWBCIS), out of payable claims of Rs.79,599.54 lakh, only Rs.1,570.05 lakh had been paid since kharif 2016.

Next comes the achievement of setting up a “national agricultural market” called eNAM. The government claims that more than 400 mandis (markets) have been linked to the portal. The target is to connect 585 mandis with eNAM by March 31, 2018. And what is the objective? To allow farmers the freedom to sell their crops. The government claims that as of May 15, 83.57 lakh tonnes of agricultural produce worth Rs.19,802.98 crore had been transacted through eNAM. The figures look impressive. But the reality is something else. Farmers are yet to be allowed to sell at a different mandi, not even in a neighbouring one, through eNAM. The reason is resistance by commission agents as well as lack of proper infrastructure. Who will guarantee that the produce sold by farmers adhere to basic standards if the trader who wants to buy is located 100 kilometres away?

What is happening now is that the data of business transacted in a mandi are just being uploaded on the eNAM site, showing it as having taken place through the portal. That is precisely the reason why the prices of the same commodities with the same standards are different in two locations even if the distance between them is just 50 km. According to government data, 45,45,850 farmers, 89,934 traders and 46,411 commission agents are registered on the eNAM platform. Recently, the government mooted an idea of not allowing sale of produce priced below the minimum support price (MSP) in eNAM. However, the idea was dropped in the wake of opposition from within, which cited it as interference in free market economy. What the Centre could not do, the Madhya Pradesh government was able to achieve. It announced trading below MSP a crime, following widespread resentment among farmers owing to low crop prices that led to violent protests, but without any administrative backup.

Another scheme that has found prominence in terms of the Modi government’s agriculture initiatives is the soil health card. This scheme, launched in a hurry without any homework being done, has been trumpeted as something that would change “earth into gold”, but the result does not reinforce the claims. The scheme is akin to employing quacks in every village to attend to the medical and health needs of the people without any arrangement for medicines.

The concept is good, but it is a long-term and permanent project which will only start producing results after 20 years if implemented seriously and effectively. The government did not have the equipment to test soil conditions on such a huge scale. Nor were trained technicians available. Moreover, farmers do not know what to do after getting the soil health card. Where do they buy the “medicines” to treat the soil? Who will spend the money? Is there a guarantee from the government that their produce will increase? Unless and until these basic questions are addressed, the soil health card scheme will be an utter failure. Gujarat had apparently achieved 100 per cent coverage under the scheme when Modi was the Chief Minister, but did it make any positive impact on the farm economy? There is no concrete data to prove this. Moreover, the scheme is hardly a novel idea but a continuation of the “apni mitti pahchano” (identify your soil ) scheme set in motion by the United Progressive Alliance (UPA) government.

Another much-advertised scheme is the use of neem-coated urea, which is, again, a continuation of a UPA scheme, and it has nothing to do with productivity at the farm level. Instead, it only checks the industrial use and smuggling of urea to neighbouring countries. The government initiated the “Price stabilisation fund” in the 2014-15 Budget to protect farmers from market volatility, but the allocation of just Rs.500 crore showed a lack of seriousness and understanding of the problem.

Interestingly, the contradictions in agriculture policy formulation are stark and visible. On the one hand, the government has been talking about “doubling farm income by 2022” through integrated farming. It has also identified allied activities to be covered under integrated farming, which include poultry, animal husbandry, fisheries and beekeeping, to name a few. India has been the world’s largest exporter of buffalo meat over the past four years, displacing Brazil from the top. But there have been sustained efforts to derail this sector’s growth, using the political ideology of the ruling party. First came the ban on slaughterhouses in Uttar Pradesh, the largest exporter-State, based on the argument that it needed to be verified whether the slaughterhouses were legal or not. Then came the ban on selling cattle at cattle markets for the purpose of slaughter, and cow vigilantes have made inter-State movement of cows and buffalos literally impossible. On the same basis, the government also discontinued the successful “Kamdhenu scheme” of the previous Akhilesh Yadav-led Samajwadi Party government that had made Uttar Pradesh the top milk producer in the country.

Making dairy farming unsustainable

These stringent rules will render dairy farming uneconomical and unsustainable. The average age of a buffalo or cow is about 16 years, of which three to four years are pre-reproductive and four to five years are post-reproductive. As per the estimates of the Animal Husbandry Department, the average daily cost of feed for a cow or buffalo is Rs.80. Moreover, half of the population of cattle is male, and it is of no use in mechanised agriculture. How can a farmer survive if he or she is asked to rear unproductive cattle and is not allowed to sell them? Selling unproductive cattle for slaughter is an integral part of dairy farming, which makes it commercially viable. The impact is visible now in Haryana and Uttar Pradesh where unproductive animals have become pests destroying crops, and the farmer feels helpless. More importantly, poultry farming and dairy have not been considered agricultural activities and have been brought under the ambit of the Goods and Services Tax.

The export-import policies in agriculture trade, based on knee-jerk reactions, are, again, working against the interest of farmers. The imposition of a minimum export price to protect the interests of consumers, though it was brought in earlier, has resulted in a skewed policy paralysis against farmers’ interests. If Indian agricultural products have a demand outside, any curb at any period will negate the efforts of exporters, who put in a lot of effort to build a market for their products. Thankfully, there has been no export ban on any agricultural commodity during the three years of the NDA government. But, at the same time, there have been no concerted efforts to boost it further and this has resulted in negative growth in export of farm commodities.

The problems in the farm sector are complex, but the solution is simple, and that is bringing about parity of agriculture produce with industrial products and services, the farmer with the economic worker, and farming with other enterprises. The UPA government had formed a panel under the chairmanship of a current member of the NITI Aayog, Prof. Ramesh Chand, who was then Director of the National Institute for Agricultural Economics and Policy, with representatives from the Ministry of Agriculture, the Commission for Agricultural Costs and Prices (CACP), State governments and farmer bodies. It had rightly identified the problem as follows: “Price shocks have become frequent.... The pressure to meet family expenditure, to meet the necessities of modern life, has been forcing farmers to embrace risky ventures by using borrowed funds. Risks unleashed by market forces and price crash in many cases are leading to agrarian distress and sad situations like farmers’ suicides.” The panel had presented recommendations as well, but, like other reports on agriculture, failed to attract the current government’s attention.

The current nationwide farmers’ agitation after a year of record production and 5.2 per cent growth is a wake-up call for politicians and policymakers to initiate a structural reform so as to provide a “minimum income guarantee” to farmers, like the MGNREGA does with labourers. A loan waiver, as many economists and experts argue, can only be a temporary measure but necessary to correct past imbalances. But the future needs remunerative and deficiency pricing. In short, the Modi government needs to move in on the agricultural sector, as in other areas of governance, beyond empty rhetoric towards clear policy formulations and implementation. Cosmetic rechristening and restructuring of programmes of old governments will not help in this suggested policy course correction. The current situation and its political ramifications also ring a warning bell for the BJP as far as the 2019 general elections are concerned. Already, its ally, the Shiv Sena, and the Swabhimani Shetkari Sanghatana, led by Raju Shetti, Member of Parliament, along with large numbers of landowners and farmers, are opposed to the current line followed by the Modi government. It is equally important to recall the finding of the Centre for the Study of Developing Societies (CSDS)-Lok Niti survey that among landowners and farmers in agricultural areas, more than 50 per cent had voted for the NDA in the 2014 Lok Sabha election.

Sudhir Panwar, a professor at Lucknow University, is the president of the Kisan Jagriti Manch, a collective of farmers, activists and academics engaging with agrarian policy issues.

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