The fall of white gold

Print edition : August 05, 2016

At a cotton auction centre in Yavatmal, Maharashtra. A file photograph. Photo: Bloomberg

Cotton was once considered India’s “white gold”. In recent times, this cash crop, which brought immense prosperity to the agricultural community and revenue to the exchequer, has been reduced to a “worthless crop” that farmers are finding hard to cultivate. The black soil of the Vidarbha region in Maharashtra is extremely fertile and conducive to cotton cultivation. This natural advantage made the State become the second largest producer of cotton in India. Today, according to official data, barely 35 per cent of the farmers in the eight districts of the region cultivate cotton as their single crop.

Farmers, activists and agriculture experts insist that a combination of liberalisation, globalisation and privatisation has reduced “king” cotton to this situation. The cotton belt of the country was directly hit by the new economic policy of the 1990s. Kishore Tiwari, of the Vidarbha Jan Andolan Samiti, a farmers’ advocacy group, said it was no coincidence that the cotton crop’s downfall began in the early 1990s.

In the early 1990s, the prices of cotton were good, and farmers made profits as the mechanism of minimum support price (MSP) was in place and the government provided subsidies. In fact, the number of cotton farmers increased in that period, he said. At its peak, cotton fetched Rs.7,000-8,000 a quintal. Today it sells at about Rs.4,000 a quintal. When the economic reforms started, the government permitted imports of cotton from the United States at 5 per cent duty. “This destroyed the domestic market,” Tiwari said. The imports from the U.S. increased in multiples, causing a severe crisis by 2000. With the introduction of liberalisation policies, Indian cotton farmers were deprived of access to subsidies, and they were ill-equipped to compete in an open market setting, Tiwari said.

The problem was compounded by the introduction of the pest-resistant Bt cotton variety of seed, said Keshav Takrande, a farmer in Wardha. “We were told that the seeds would give a high yield, but the cost of the seed is prohibitive. Besides, if the rainfall is not normal, it does not matter how good the seed is. The harvest will not be sufficient to make up for the cost of cultivation. This has been happening for more than 20 years, and we also have had successive years of drought,” Takrande said.

Vidarbha’s agrarian crisis reached its peak when in 1997 hundreds of farmers committed suicide owing to indebtedness caused by poor harvest and market conditions. From 1997 to 2006, the region witnessed a staggering 36,428 cases of suicide, according to the National Crime Records Bureau. In 2006 alone, 4,453 farmers committed suicide because of mounting debt. In spite of wide media attention to the crisis and relief packages provided by the Central government, the problem never abated. In 2015, 1,328 farmers committed suicide in the region—the highest number of deaths due to distress since 2006.

“It must be understood that the government no longer provided a safety net. This added to the mounting distress,” said Swapnil Barai, an activist working on the farming crisis in Vidarbha. He said liberalisation enabled better access to quality farming products. However, it also began replacing traditional practices. There should have been a gradual shift or the best of both practices should have been adopted, but it did not happen that way.

Sadly, some farmers killed themselves because they could not repay as meagre an amount as Rs.10,000. A farmer was forced to take the extreme step after the cotton crop failed and he thought there was little recourse. The farmers’ credit with the banks would have been exhausted, and they probably thought that the government would compensate the family and that the compensation amount would cover the debt.

“The reforms gave the farmers access to expensive and promising biotechnology. We had to modernise our methods. However, the reforms did not include crop insurance, land irrigation and access to bank loans, which are essential for farmers,” said Vijay Jawandhia, leader of the Kisan Shetkari Sanghatana based in Wardha.

In Maharashtra the sugarcane crop enjoys a lot of government support, as most of the sugar mills are owned by politicians. So, if the state intervenes even in a free economy, both farmers and crops can thrive.

The landholdings of Vidarbha’s farmers range from 5 acres (2 hectares) to 25 acres (10 hectares). There are close to 3.5 million farmers in the region, cultivating mainly cotton, soyabean and pulses, according to the State Agriculture Department. Cotton was the main crop of the region, but farmers began shifting to soyabean in the early 2000s as an alternative crop, Jawandhia said. But even the soyabean crop is facing hard times.

Here is an example of the bleak situation that has continued for close to 20 years. Satish Mahalle from Amravati district owns 14 acres (5.6 hectares), on which he cultivates mainly cotton and soyabean. He told Frontline that he spent approximately Rs.40,000 an acre. This included the cost of seeds, hiring of bullocks for ploughing, fertilizer, electricity, pesticides, labour and transport. The government announced an MSP of Rs.4,000 a quintal this year. Mahalle harvests five quintals an acre in a good crop year. This would fetch him Rs.20,000, which is just half of his investment. “That is why I plan to shift completely to soyabean. Many farmers plan to stop cultivating cotton because of the increase in costs,” he said.

The lack of political support has also contributed to the crisis. During his election campaign, Narendra Modi said if the Bharatiya Janata Party (BJP) was elected to power, it would set the MSP at investment plus 50 per cent profit. The BJP government had failed to keep its promise, Tiwari said. “We were extremely disappointed with the BJP,” he said.

In June, Chief Minister Devendra Fadnavis, who belongs to Vidarbha, said farmers would be given seeds for free.

These are small gestures. Both the Central and State governments have to be more proactive and improve the agricultural sector and mitigate the crisis facing cotton farmers. The farming crisis and suicides are black spots on India’s supposed growth story. Ghanshyam Darne, a farmer and teacher in Yavatmal, said there was no indication that things would improve in the near future for the farming community.

Anupama Katakam

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