A round-up from States

Published : Jan 20, 2001 00:00 IST

The agricultural crisis presents itself to the farmer in the form of a combination of frustrating circumstances, the main feature of which are falling prices and poor procurement by government agencies.


THE recent suicide of a potato farmer of Navalgund in Dharwad district, reportedly owing to the crash in the price of the crop, had Karnataka Chief Minister S.M. Krishna calling for "mid-course corrections" in the WTO regime and demanding a White Paper o n the impact of the WTO on Indian agriculture. Although it might be hard to establish the direct connections between the price of potatoes and the WTO, Krishna's observations were clearly about a larger process unfolding in the countryside, one that has much to do with WTO-dictated policy decisions that threaten a wide range of crops, agricultural growth and rural livelihoods. This appears to be the first official acknowledgement in Karnataka of the crisis facing the agricultural sector.

Paddy procurement in Karnataka has hardly got off the ground. The price of paddy is between Rs.400 and Rs.500 a quintal this year as against Rs.730 to Rs.800 last year. The government has offered a minimum support price (MSP) of between Rs.450 and Rs.680 depending on the grade. Maize prices have fallen from between Rs.750 and Rs.950 (depending on the grade) a quintal last year to between Rs.300 and Rs.350 this year. Jowar, which was selling at Rs.1,200 to Rs. 1,300 a quintal in the last season, has fall en to between Rs.350 and Rs.400. Potato and tomato prices have crashed. Tomato, which sold at around Rs.275 for a 15-kg box a month ago, is now priced at Rs.10. Fifty kg of potato, which cost Rs.350 four months ago, is now selling between Rs.150 and Rs.1 60. Oilseeds prices have seen a dramatic fall as a direct result of imports of palm oil, cotton seed oil and sunflower oil. Arecanut, widely grown in the coastal regions of Karnataka, has seen a steep fall in price after it was put on the open general li cence (OGL) list of imports. A number of these commodities - maize, pulses, oilseeds, coconut and arecanut, for example - are imported at subsidised costs under the OGL. In September 1999, supari in the Mangalore market was selling at Rs.154 a kg. Last S eptember the price fell to Rs.78.

The potato farmer's suicide is perhaps also a comment on the breakdown of institutional safety nets, which in the past have cushioned the impact of agrarian crises. Rural producers can no longer turn to banks and credit societies for credit and procureme nt support; the public distribution system no longer offers food supplies at substantially subsidised prices; and market intervention is only partial. It is the rural producer who has borne the brunt of the new economic dispensation, says D.Veeranna Gowd a, the Manvi taluk president of the Karnataka Prantha Raitha Sangha (KPRS).

Raichur district in northern Karnataka typifies the effects of liberalisation on an agrarian-based economy. Raichur has witnessed a major change in agrarian practices in the last 10 years with a gradual shift from diversified operations in both dry and w et tracts, to single crop - paddy - cultivation. Paddy is now grown on approximately 2.5 lakh acres (1 lakh hectares) in the taluks of Manvi, Raichur, Sindanur and Gangavati under the Tungabhadra Left Bank canal system.

The family of K. Surabai migrated to Kasbe Camp in Raichur taluk with 15 other families from Andhra Pradesh. With the money raised by selling a part of his land in his native village near Rajahmundry, he bought 15 acres at Rs.4,500 an acre. Over the year s, he took on lease another 50 acres (20 hectares). Surabai planted paddy in a portion of the land along with cotton and groundnut. He suffered heavy losses owing to a pest attack that devastated the cotton crop in Raichur in the mid-1990s. Three years a go, his transition from cotton to paddy was complete. When the prices of groundnut and other oilseeds started falling owing to palmolein imports, Surabai phased out groundnut cultivation as well. "There is something wrong with groundnut. Not only have pr ices come down, so have yields. I used to get 30 bags of groundnut per acre 10 years ago (one bag contains 33 kg). Now I get only 10 bags," he said. Having invested in paddy heavily, this year's price collapse has hit him hard. "The price of good quality rice was around Rs.730 a quintal last year. Today I am getting Rs.500 a quintal." Poojari Tippanna of nearby Kallur village also slowly phased out cotton, groundnut, chilli and sunflower crop to concentrate on paddy cultivation. This has cost him dearly this year.

It is not merely the fall in paddy prices that has made paddy cultivation uneconomical. What has compounded the losses is the significant rise in the costs of cultivation over the last two years. "Subsidies on fertilizers have been lifted and diesel pric es have gone up," Veeranna Gowda points out. The prices of pesticides have risen in inverse proportion to their quality. "Government seed distribution centres receive hardly any money and have become almost defunct. Seeds of certified quality are no long er available," he said. He also attributed a fall in productivity to delays in the release of water from the TLC.

The average cost of paddy cultivation per acre in Raichur is in the region of Rs.11,500. With an average yield of 30 bags (22.5 quintals) an acre and a cost of Rs.380 a bag, the average return on an acre of paddy is Rs.11,400, which is a break-even cost. If a farmer is a lessee (40 per cent of the land in the TLC ayacut is under lease) the loss is even greater. A. Basavaraj from Kalmala village, for example, planted paddy on seven acres of leased land. In addition to cultivation costs, he has to pay the annual lease rent of Rs.5,000 an acre. Basavaraj is in debt for between Rs.30,000 and Rs.40,000.

Shivkumar Udasi, a large rice mill owner in Hubli-Dharwad told Frontline: "The fall in paddy prices is because internationally our prices are too high. Also, there have been no exports from India. We just cannot compete with international prices."

The procurement of paddy this year has been tardy. Most peasants take their produce to the rice millers, for they advance loans against the crop. The cultivators believe that the mill owners are responsible for keeping prices down. Procurement centres ar e few and many farmers whom Frontline spoke to were not even aware of where the nearest one was located. "We have to pay the transportation costs to the procurement centre, and they very often reject our paddy on one account or the other," said J. Ambaresha Swamy. "The FCI is not even procuring what is coming to the market," G.C. Byya Reddy, State general secretary of the KPRS, said.

In Bellary, farmers' organisations formed a struggle committee that forced the government to open procurement centres. In Koppal and Raichur, a bandh was called in the last week of November to demand government intervention to hold the price line.

At a convention held on December 30 in Raichur, the KPRS passed a resolution demanding that the government declare a fair MSP for paddy and maize. The procurement price for paddy offered by the FCI is between Rs.450 and Rs.680 a quintal, depending on the grade of rice. The KPRS demanded that this be raised to Rs.750. In the case of maize, it has demanded that the support price be raised from the existing rate of between Rs.360 and Rs.440 a tonne to Rs.550, and for tur from the existing rate of Rs.1,200 to Rs.2,000. The KPRS has planned a two-stage agitation, beginning with dharnas before the Agricultural Produce Marketing Committee markets in January. This will be followed by road blockades and picketing of Central government offices between February 5 and 7, and culminate in a jail bharo programme on February 7.

THE story of arecanut cultivation in India is one that the WTO has been scripting in the last two years. Karnataka and Kerala account for 72 per cent of the total production of 3,13,000 tonnes of areca. There are over six million farmers engaged in areca cultivation, 85 per cent of whom are small and marginal farmers. Campco Ltd, a cooperative of areca farmers, is the largest market player in areca and cocoa. It procures and markets both, and is the largest manufacturer of cocoa products in India. Areca fetched Rs.80 to Rs.90 a tonne in 1998. A failure of the white variety of the crop to the extent of about 40 per cent pushed prices up, and between July and October 1999, prices went up to Rs.140 to Rs.170 a tonne. The forecast for 1999-2000 was excelle nt. It was at this time that areca was moved to the OGL list from the restricted list and licences issued to importers. The cost of imported areca was much less (Indonesian areca was priced at $500 to $600 a tonne and Thai areca between $700 and $750).

"Imports and a good domestic crop in 2000 has pushed the prices of Choll Supari to Rs.65 to Rs.75 a kg," R. Seetharam, managing director of Campco Ltd, told Frontline. On Campco's representation, the Central government increased import duties from 35 per cent to 114 per cent. "Naturally, as a result of all this, areca farmers are facing difficulties. Farming activities are almost at a standstill," Seetharam said.

PERHAPS the most damaging impact of import liberalisation has been on the oilseed industry. Thanks to a series of steps initiated by the Government of India to boost oilseeds production in the mid-1980s, the total production of nine varieties of oilseed more than doubled from 10 million tonnes in 1980 to 21 million tonnes in 1993-94. While edible oil consumption increased from 3.3 million tonnes in 1983-84 to 5.4 million tonnes in 1993-94, imports fell from 1.04 million tonnes in 1985-86 to 0.35 million tonnes in 1994-94. It reached self-sufficiency in edible oils within a span of a decade.

Today that situation stands reversed. India has become the biggest importer of oilseeds in the world. Cheap imported edible oils in the last five years have had a direct impact on oilseed prices, which have registered a sharp fall. The area under oilseed s cultivation has been steadily declining because prices are no longer remunerative. In 1998, groundnut was grown on 6.37 million hectares, sunflower in 0.80 million hectares and soyabean on 6.30 million hectares. The acreage in 1999 was 5.70 million ha, 0.50 million ha and 5.50 million ha respectively.

The death-knell for the oilseeds sector is around the corner, says D.V. Prasad, managing director of the Karnataka Cooperative Oilseeds Growers Federation Ltd. "Sunflower acreage in Karnataka in 2000 is less than half of what it was in 1999. Farmers do n ot find oilseeds remunerative. Also, 60 per cent of the oil extraction units in Karnataka has closed down. There were 115 units operating five years ago. Now there are hardly 10."


A LARGE percentage of Kerala's population depends for its livelihood on cash crops, mainly coconut and rubber. With the inclusion of coconut oil in the Open General Licence (OGL) list and the reduction of import tariffs on edible oil, the prices of cocon ut have fallen sharply, in fact below the minimum support price. Large-scale import of natural rubber last year depressed the market for rubber. All plantation crops in which Kerala has a substantial stake, namely coffee, tea, rubber and cardamom, have n ow to compete with low-cost imports. Liberalisation has made Kerala's economy fragile and vulnerable.

Kerala boasts of a radical Land Reforms Act. Its effects, however, have not been encouraging in respect of agricultural growth. Dramatic social changes, especially among the former land-owning communities, led to the fragmentation of landholdings, making cultivation unprofitable. Several new land owners were forced to seek additional sources of income outside agriculture and as such began to avoid further investment in agriculture. As labour and input costs went up, leaving their land fallow became a pr eferred option for a large number of them. At one time, the Gulf boom pushed up land prices so high that selling agricultural land for real estate development (in a State which has one of the highest population densities in the country) became a favoured option.

Nearly 85 per cent of the total cropped area in the State is used for the cultivation of 11 major crops. The most discernible trend in the past few decades has been the marked shift in the cropping pattern towards relatively less labour-intensive crops. In the past 35 years, in this food-deficient State, which imports a major share of its food requirements from other regions, the area under paddy cultivation has come down from nearly eight lakh hectares to about 3.53 lakh ha (in 1998-99). The total prod uction of rice fell from 14 lakh tonnes to 7.27 lakh tonnes (in 1998-99). However, according to a study, over 60 per cent of the land that went out of paddy cultivation continues to be used for agriculture. Paddy was substituted with coconut, rubber and arecanut or food crops such as banana, tapioca and vegetables.

Coconut has emerged as the most preferred crop, occupying nearly 47 per cent of the net cropped area - even though the debilitating root-wilt disease is rampant in eight of the 14 districts and a mite attack has affected nearly 223.45 lakh coconut palms in 98,400 ha in seven central and southern districts. It is a major source of livelihood for 36 lakh people in the State.

Rubber is cultivated in 4.70 lakh ha, which accounts for 85 per cent of the area under the crop in the country. Production reached its peak (5.59 lakh tonnes in 1998-99), accounting for 92 per cent of the total production in the country. Although rubber is a plantation crop, the majority of rubber farmers in Kerala are small-holders, with the size of 85 per cent of the plantations being below 5 ha. According to the State Planning Board, rubber cultivation offers livelihood security to over 7.5 lakh fami lies in Kerala.

Thus what really broke the confidence of the State's agriculturists is the impact of the liberalisation policies on the cash crops and the dramatic fall in their prices. The price of coconut oil came down from Rs.5,553 a quintal in 1996-97 to Rs.2,500 a quintal in September 2000, as a result of its inclusion in the OGL, and the subsequent reduction in the import tariff on edible oils from 25 per cent to 15 per cent. What followed was a flood of imported edible oils. If the total import of edible oils, i ncluding palmolein, was eight lakh tonnes between April and October 1996, it shot up to 16.7 lakh tonnes during the same period in 1999. The result was a drastic fall in coconut oil prices.

Despite protests, the Union government lowered the import tariff on coconut oil from 50.8 per cent to 45 per cent. This marginal decrease showed that the protests had fallen on deaf ears. The government did, however, increase the import tariff on edible oil, including palmolein, to 70 per cent in November 2000. The support price operations in respect of copra was a failure owing to large-scale arrival of cheap edible oils. It was Rs.3,250 a quintal and the market price was only Rs.1,950 a quintal. Even after procuring 80,000 tonnes of copra, the government could not make any impact on the low open market price of coconut or coconut products. The middlemen and cooperatives were perhaps the only ones to gain.

Similarly, rubber, which fetched an average price of Rs.52 a kg in 1996, sold at Rs.28 by September 2000. As a result of strong protests following large-scale import of natural rubber in the early 1990s, the Centre imposed a ban on its import in February 1999. Despite the ban, 16,436 tonnes of natural rubber was imported in 1999-2000 (according to the Rubber Board's figures), as tyre manufacturers made use of the advanced licence they procured before the enforcement of the ban.

According to the Vice-Chairman of the State Planning Board, Dr. I. S. Gulati, this was a deliberate move by the Centre. It knew what impact the import of 16,436 tonnes of natural rubber would have on prices and the agricultural economy of Kerala, when th e country already had a stock of 1,87,965 tonnes of rubber in 1999-2000. Rubber fetched the highest price for Kerala's nine lakh farmers in 1995, at Rs.70 a kg. Now natural rubber prices hover around Rs.26, nearly Rs.8 below the support price announced b y the government.

The State has also been affected by the fall in tea prices, which has been the result of the inclusion of tea in the list of 100 items for duty-free import as part of the Indo-Sri Lanka Free Trade Agreement (FTA). While even the WTO regime allows member- nations to impose 150 per cent import tariff on tea, the FTA permits Sri Lanka to send 15,000 tonnes of tea to India every year at a mere 7.5 per cent of the import tariff. The tea plantation sector in Kerala, which has the largest number of organised la bour, is facing a crisis.

THE fall in the international prices of (Robusta) coffee and pepper has also affected Kerala farmers, who have a significant stake in these crops. The average productivity of pepper continued to be in the range of a low 275 kg to 300 kg per ha, consideri ng its potential. A systematic rehabilitation programme has been long overdue in major pepper-producing districts like Wayanad and Idukki, where the proportion of old vines is high in the traditional plantations. As in other crop sectors, Kerala has been lagging behind in adding value to its pepper. It did not tap the increasing demand for these value-added products and therefore lost its monopoly in the international market. Pepper prices came down from Rs.22,600 a quintal in 1999 to Rs.12,000 a quinta l in 2000, because of excess supply in the global market and competition from other producers such as Malaysia, Brazil and Vietnam.

Kerala's agricultural base is very strong and the region's natural and economic factors are conducive to high-value agriculture. Yet fragmentation of land holdings, declining profitability of crops, shortage of farm workers, high wages and inadequate inf rastructural facilities and institutional support have slowed down its progress. Moreover, dominance of intermediaries in the market, abnormal increase in land prices and a high rate of conversion of agricultural land for non-agricultural purposes have, over the last three decades, contributed to the crisis in the farm sector. Now, the devastating blow has come from the new economic policies.


WITH an incentive of Rs.40 a quintal of paddy offered by the Tamil Nadu government over and above the FCI's procurement rate, the State offers one of the highest procurement prices in the country. The enhanced price coupled with an efficient procurement mechanism and a bumper harvest, however, failed to make paddy a remunerative crop this year. Prices of this and other commodities, including vegetables, milk, tapioca and sugar, have dropped sharply.

Although the price of rice has crashed in the open market, there is no discernible discontent among farmers. "There is no distress sale of paddy here because the State government is prepared to buy it," said S. Ranganathan, general secretary, Tamil Nadu Cauvery Delta Farmers' Welfare Association.

In the Thanjavur delta, which is a monocrop area, while kuruvai paddy is harvested in September-October, samba and thaladi crops are harvested in January-February. The Tamil Nadu Civil Supplies Corporation has already procured 7.5 lakh tonnes of paddy in this crop year, according to Minister for Food K.N. Nehru. Besides, the government announced that private traders too could procure samba paddy. Nehru said on December 23 that this meant that farmers could sell their paddy to private traders if they off ered a higher price. He pointed out that the government offered to pay Rs.40 a quintal for incidental expenditure instead of the Rs.35 a quintal it offered for samba paddy in 1999.

According to Ranganathan, Rs.40 a quintal was an incentive offered above the procurement price of Rs.540 fixed by the Centre for the fine variety of samba. For the coarse variety, the procurement price is Rs.510 plus Rs.40. Similarly, the State governmen t pays Rs.35 above the Rs.540 fixed by the Centre for a quintal of the fine variety of kuruvai, and Rs.510 plus Rs.35 for the coarse variety. According to Ranganathan, farmers in the neighbouring States are not paid the bonus amount, which is why the pro curement price in Tamil Nadu is the highest.

Despite the incentive, the procurement price does not offset the cost of production. A fine variety of Ponni rice, which sells now at Rs.14.50 to Rs.16 a kg, was Rs.19 a kg when the Dravida Munnetra Kazhagam (DMK) government assumed power. A coarse vari ety of rice sells now at between Rs.10 and Rs.11 a kg, compared to Rs.13 four years ago. The fall in the price of rice is attributed to the bumper harvest. Tamil Nadu has a buffer stock of 7.5 lakh tonnes of paddy, which is a good position. However, ther e is no place for storing the stock. The government has in fact announced that it will procure about 12 lakh tonnes of paddy.

The prices of vegetables too have tumbled in the State. The price of tomatoes has come down to Rs.3 and Rs.4 a kg in the retail market from Rs.8 and Rs.10. A bumper harvest was recorded at Thalaivasal, Mecheri and other places near Salem.

There is discontent among sugarcane growers over the fact that only four out of the 19 sugarmills in the public and private sectors in Tamil Nadu paid them the advisory price of Rs.740 a tonne. While the Centre has fixed a statutory minimum price of Rs.5 61 a tonne, the State advisory price is Rs.740. In fact, the private sector mills reportedly do not pay even Rs.561. They pay Rs.540.

Dairy farmers are unhappy because the milk unions owe them about Rs.100 crores. They complain that they have not been paid for the milk purchased for 15 to 20 weeks. Besides, they are paid only six weeks after the milk is bought. Besides the procurement price, fixed two years ago at Rs.8.00/Rs.8.15 a litre, has not seen any increase.

The normal production of kuruvai paddy is around seven lakh tonnes a year, thaladi five lakh tonnes, and samba 8.5 lakh tonnes. Farmers retained about 25 per cent of the samba paddy for their personal consumption and for use as seed. The government has c ommitted itself to procuring 12 lakh tonnes. Ranganathan said: "Nowhere in the recent past has such procurement been done. This is an ambitious target. Does the government have the wherewithal to procure so much and store it? There are no storage facilit ies available. The fear among the farmers is that the government may not have the infrastructure, including finance, to buy so much of paddy because private trade is not prepared to lift samba paddy. So the farmer is forced to sell the paddy only to the government."

He suggested that one way of getting rid of the enormous surplus was to convert part of the paddy stock into rice, "flood" the retail market at Rs.10 or Rs.11 a kg and "break the private trade's hand which is playing havoc with us". Paddy could also be s ent to Kerala, a deficit State, he said.


ANDHRA PRADESH farmers have been hit by an unprecedented crash in crop prices. Procurement by the Food Corporation of India in the State has been tardy owing to a lack of storage space in the FCI godowns, which are filled with the previous year's stocks. This situation has led farmers to resort to distress sales of foodgrains, and in extreme cases to suicide. The N. Chandrababu Naidu-led Telugu Desam Party, the party in government in the State and an ally of the NDA, has done precious little to provide relief to the farmers.

The farming community is gripped by unrest as never before. Although the problems are not exclusive to Andhra Pradesh, the discontent and frustration among farmers are perhaps more pronounced in the State than elsewhere as relief by way of market interve ntion by the FCI and State agencies has not materialised. Farmers have suffered the vagaries of the monsoon but the present crisis is not attributed to natural calamity but to an unprecedented crash in the prices of rice, groundnut, tobacco, cotton and c hillies.

The State has maintained an upswing in the production of foodgrains thanks to additional areas brought under the coverage of canals and borewells. According to the Department of Agriculture, foodgrains output in 2000 was 132 lakh tonnes as against the no rmal output of 125 lakh tonnes. In 1999, it was 149 lakh tonnes. For the current year, the State has set a target of 163 lakh tonnes. Marketing has emerged as an insurmountable problem as consumption levels, including the off-take for the PDS, did not gr ow correspondingly. Moreover, cold storage facilities and value addition in the form of processing units did not keep pace with additional production.

However, Agriculture Minister V. Sobhandreeswara Rao does not agree with the perception that the farmers' woes have been wrought by surplus production. "India's food production is around 210 million tonnes as against the current demand of 240 million ton nes. There is still a shortage of 30 million tonnes. There is scope for strategies to absorb additional production levels and make farming viable," he argued.

The State government has put the blame on the Centre. In fact, Chief Minister Chandrababu Naidu suggested during a national debate on the implications of the WTO regime that indiscriminate import of rice, edible oils and other produce and inadequate proc urement by the FCI were responsible for the problem. The State government has set up a task force to study the crisis.

The crisis began unfolding in October with the FCI slowing down the procurement of rice in view of space constraints. The FCI launches its annual procurement drive around October and lifts about 10 lakh tonnes of rice a month. Its warehousing capacity in the State is around 25 lakh tonnes. Fifteen lakh tonnes of rice and five lakh tonnes of wheat were in the godowns before the start of the current procurement season. The problem was compounded with rice millers holding 15 lakh tonnes and farmers about 1 0 lakh tonnes out of last year's production. This led to a glut in the market, causing prices to fall sharply.

As against the minimum support price of Rs.510 a quintal for common paddy and Rs.540 a quintal for the Grade A variety, farmers could not secure more than Rs.450 a quintal. In fact, the minimum support price itself was not commensurate with production co sts, agricultural officials admit.

The fate of farmers who took to oil palm cultivation after incentives were offered under the Oil Seeds Mission is no better. They are reeling under the impact of the dumping of palmolein in the Indian market by Malaysia and Indonesia. Andhra Pradesh lead s in oil palm cultivation, with 50,000 hectares under palm plantations. Indiscriminate imports have destroyed this sector. The 8,000-odd oil palm growers are planning to begin an agitation demanding payment of arrears that are due from oil processing uni ts.

Faced with protests by farmers at market yards and with the Opposition parties backing the restive farming community, the State government turned its ire on the Centre. But the assurances by the Centre to arrange direct purchase of 10 lakh tonnes of padd y and procure 10 lakh tonnes of rice every month (the FCI procures around 55 lakh tonnes of rice every year) were not kept. Of the 10 lakh tonnes of paddy, the FCI has agreed to procure three lakh tonnes while the State government, through its agencies l ike Markfed, made a commitment to procure seven lakh tonnes in one month. The procurement by both the Central and State governments did not touch even a lakh tonnes by mid-December.

Andhra Pradesh used to export about 10 lakh tonnes of rice to other countries and sell 20 to 30 lakh tonnes to other States after setting apart about 40 lakh tonnes for the PDS. The FCI procured 55 lakh tonnes of rice last year, of which the PDS requirem ent was ploughed back to the State. But in the last two years, exports declined as the State's rice was found to be more expensive at $5 to $10 a quintal.

Rice and groundnut account for 40 lakh hectares of the 80 lakh hectares of cropped area in the kharif season and 15 lakh hectares of the 35 lakh hectares of cropped area in the rabi season. The market for groundnut is none too encouraging. As against a m inimum support price of Rs.1,220 a quintal, the farmer gets only Rs.1,100. A farmer in Karnataka gets Rs.1,380 a quintal. Maize was sold in Andhra Pradesh markets at Rs.320 to Rs.350 a quintal as against the minimum support price of Rs.445. Chillies wort h about Rs.100 crores are lying in cold storage in Guntur for want of a market.

During the latest round of Janmabhoomi (an interface between government officials and people from January 2 to 8), Ministers and officials faced hostile groups of farmers who gave vent to their anger at being let down by the government. Activists of Cong ress(I), the Communist Party of India and the Communist Party of India (Marxist) organised demonstrations at gram sabhas and gheraoed Ministers, demanding relief for farmers. Truckloads of rice bags were brought to some gram sabhas. In Vijayawada, activi sts of Left parties dumped paddy bags in the river as a symbolic protest against "the indifference of the government".

Unfazed by these protests, the Chief Minister attended a number of gram sabha meetings in early January to explain the government's action plan. "For the cause of the farmers, we have even threatened to withdraw support to the NDA government," was his re frain.

The large number of suicide deaths of farmers has pushed the government on the defensive. The CPI(M) claims that more than 400 farmers ended their lives unable to bear crop losses, debt burdens and non-remunerative returns on their produce. The party wan ts an independent commission to probe the deaths.


IT is Punjab, India's wheat granary, that best illustrates the paradox of economic liberalisation: godowns overflowing with foodgrains, and a hungry population that has no access to it. Massive stocks of paddy harvested last year and 12 lakh tonnes of mi lled rice are occupying storage space in Food Corporation of India godowns in the State. In addition to this, 90 lakh tonnes of wheat from last year's spring harvest is rotting in storage. All this must be cleared to make way for this year's wheat harves t which will arrive in April and 67 lakh tonnes of paddy that is on its way. But a full-blown crisis threatens to develop as the FCI is unable to find buyers for Punjab wheat in other States. This is not all.

While last year's paddy harvest disaster has not quite come to an end, new and frightening prospects are already confronting the growers of oilseeds and wheat in Punjab and the apple farmers of Himachal Pradesh. The World Trade Organisation regime is sta rting to make itself felt on the ground. Farmers and experts alike feel that Punjab's produce could be pushed out of the marketplace by heavily subsidised imports of agricultural produce.

The Punjab government is still figuring out how to use the Rs.350-crore bailout made available to the State's farmers last year. About 110 lakh tonnes of paddy was purchased by private rice millers and government institutions in October after delayed pro curement caused prices to crash. Standards were relaxed to allow millers to turn into rice a relatively low 64 per cent of the weight of the paddy they were issued. Even at these low standards, some 67 lakh tonnes of rice ought to have been milled by now . If milling is not speeded up, much of last year's crop could also be devastated by rain and pests. The enormity of the problem becomes clear if seen in the light of what happened to the 90 lakh tones of wheat from last spring's harvest procured by Stat e agencies for the Central pool on behalf of the FCI.

The government has embarked on speedy expansion of storage facilities and asked the Centre to procure its entire stock of foodgrains on behalf of other States. But the real problem lies elsewhere. Savage cuts in subsidies for the public distribution syst em have put previously affordable foodgrains out of the reach of poor consumers. In addition, the poor quality of PDS supplies from Punjab -- the result of deliberate and politically motivated relaxation of standards -- have given a bad name to the State 's foodgrains. Moreover, States like Andhra Pradesh and Orissa, which had purchased large amounts of Punjab grain in the past, have improved their own production and thus reduced their demand.

If these problems are not serious enough, worse seems to be in store. Punjab's Finance Minister Kanwaljit Singh sees dark times ahead for the State's farmers. In a speech in Jalandhar on August 8, he pointed out that the WTO regime had led to indiscrimin ate imports of agricultural commodities, notably of vegetable oils. Farmers in the West, he said, were able to undercut Punjab farmers because of the enormous agricultural subsidies they enjoy. The Centre, he said, signed the WTO agreement in 1994 withou t consulting the States. "If farmers in Punjab are to survive," the Minister added, "we must address the problem right now."

Sadly, Kanwaljit Singh is among the very few to take the issue seriously. Food and Supplies Minister Madan Mohan Mittal told journalists in Hoshiarpur on the same day that the WTO would not affect farmers' interests. Some import duties, he said, would so on be imposed on agricultural imports. No one in New Delhi, however, seems clear on what these duties will be and when they might actually come into force.

IN their 1996 book, Impact of GATT on Punjab Agriculture, economists G.S. Bhalla and Gurmail Singh pointed to other serious problems. Punjab currently suffers from serious groundwater depletion problem. In 85 of 117 development blocks, the use of groundwater has exceeded the recharge, leading to an annual drop of between 0.3 and 0.5 metre in the water table. This is posing a threat to the long-term sustainability of irrigated agriculture. The answer to this problem is to reduce dependence on wate r-intensive crops such as paddy and wheat and sugarcane. However, in a liberalised market environment, such changes would be difficult since the government's ability to influence cropping patterns through pricing is reduced.

Punjab's problems are not unique. Last year, apple growers' associations in Jammu and Kashmir expressed deep concern over fruit imports, pointing out that their sales were affected by cheaper imported produce. Exotic and not-so-exotic fruit from Australi a, New Zealand and elsewhere is already widely available in metropolitan cities and, because of heavy subsidies, is often cheaper than the produce of Indian farmers. Proponents of liberalisation argue that farmers in Punjab and elsewhere can compete by g rowing high-value agricultural produce, like tulips and strawberries, for example. Such operations, however, are highly capital-intensive and of little relevance to tens of thousands of small and medium peasants already crippled by high input costs and c hronic indebtedness.


IN the volatile political landscape of Bihar, the collapse of the Central government's paddy procurement mechanism and the distress sale of paddy by its producers have become issues around which the ruling Rashtriya Janata Dal (RJD) is building a mass mo vement. The Congress(I), its coalition partner, has launched a series of agitations on its own against the "anti-farmer policies" and to put pressure on the Bharatiya Janata Party-led government at the Centre to amend its procurement policies. The State BJP is concerned about the political damage an "agricultural crisis affecting 70 per cent of the population" might inflict on the party in the next elections.

Laloo Prasad Yadav, the RJD president, submitted a memorandum to Prime Minister A.B. Vajpayee demanding that the Central agencies purchase at least 20 lakh tonnes of the 80 lakh tonnes of paddy produced this year at the minimum support price and that the FCI open one procurement centre for every two blocks in the State. The FCI's parameters on moisture and foreign matter contamination, he said, should be relaxed, as had been done in the case of Punjab, failing which, the State government should be given an equivalent subsidy so that it could procure the foodgrains itself. The FCI, he stated, had not purchased even a quintal of paddy in several districts, including Rohtas, Bhojpur, Sasaram, Nawada and Gaya. Laloo Prasad told Frontline that most of the FCI's procurement centres were non-functional. They were not accepting paddy, forcing farmers to resort to distress sale. He claimed that the State government had provided all possible assistance to the FCI, including ad ditional storage space. He also demanded a ban on the entry of foodgrains from other States into Bihar.

The first phase of the RJD's agitation started on December 31 at the Bhitihrawa Ashram in Champaran set up by Mahatma Gandhi. The State-wide agitation would culminate in a Desh Bachao rally (save the nation rally) at Gandhi Maidan in Patna on Marc h 4. Laloo Prasad is currently touring the rural areas to mobilise farmers with the slogan of "Desh Bachao Gaon Bachao". Party spokesman Shivanand Tiwari told Frontline that a rally would be held at the Boat Club grounds in Delhi on January 30. Meanwhile, farmers have already resorted to rail and road blockades at several places in Bihar with their paddy-laden tractors to force the Centre to procure paddy at the minimum support price.

In the first phase of the Congress(I)'s agitation, its State and district units staged dharnas and demonstrations in front of the FCI's purchase centres. Pradesh Congress Committee president Shakeel Ahmed said that only Rs.90 lakhs worth of paddy had bee n procured so far in Bihar. He accused the NDA government of neglecting the interests of Bihar farmers.

"There is an agricultural crisis and it is perhaps the single most important issue in the country today," said Sushil Kumar Modi, the BJP leader of the opposition in the Assembly. He appealed to Union Food and Supply Minister Shanta Kumar to relax the pa rametres of the FCI and sought an immediate ban on the import of foodgrains from other States. At the same time, he blamed the State government for the plight of farmers, alleging that it had neither opened a single procurement centre nor given funds to the cooperative societies to purchase foodgrains at the local level. He further stated that owing to the 4 per cent sales tax levied by the State government, cheaper foodgrains were coming in from West Bengal, Uttar Pradesh and Madhya Pradesh.


IN Orissa, the Biju Janata Dal-BJP coalition government has sent an urgent message to the Centre requesting it to stop immediately any further dispatch of foodgrains as the godowns in the State are already full and consequently, procurement activity has come to a near standstill. Food and Civil Supplies Minister Bedprakash Agrawal of the BJP drew attention to the fact that while procurement by the FCI had stopped, there was massive import of rice and wheat to the State for storage in FCI godowns.

Chief Minister Naveen Patnaik wrote to the Prime Minister urging him to stop the movement of foodgrains to Orissa and offload the existing stocks in the State on West Bengal. The arrival of a consignment of 50,000 tonnes of rice from Punjab has been a ma jor cause of worry for FCI officials as the godowns are full and purchase of foodgrains from local farmers has stopped. There are reports of distress sale from various parts of Orissa.

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