A brief note on the agricultural crisis in India

The recent farmers’ agitations in different parts of the country, including Madhya Pradesh, Maharashtra, Tamil Nadu, Rajasthan and some other states are a grim reminder of the distress that India’s agrarian society, which includes majority of the Indian population, is going through, especially in the last 25 years. The solutions floating around typically include farm loan waiver, increase in minimum support price (MSP), etc. Though these measures may act like a temporary soothing balm to some, the distress cannot be reversed unless the structural problems of this growth paradigm are addressed. To understand the phenomenon, let us first look into the gravity of the situation and then try to understand few important factors contributing towards that distress.

While speaking of the agrarian society, which is under intense distress in India, we generally understand the farmer (including agricultural laborers); however, it is much larger than that. The village carpenter, weaver, potter and people in varied other professions are also a part of that society; their first customer is the farmer. When the farmer goes bankrupt, the weavers starve, the carpenters die; this is because these professionals in the countryside get a significant chunk of their income as food grains and vegetables. So it is important to understand that the agrarian society on the whole gets distressed in case the farmers are in distress; the proportion of Indians under duress, due to agricultural crisis, is indeed huge.

The National Crime Records Bureau (NCRB) is considered the most authentic official record keeper of the number of farm suicides in India. Though the numbers from NCRB are gross underestimates (and I will explain why), they indicate the alarming extent of distress in the countryside. According to the NCRB, the number of farm suicides since 1995 crossed the 3 lakh mark in 2014. The figures for 2013, 2014, and 2015 are 11772, 12360 and 12602 respectively i.e. almost 1 suicide in every 40 minutes. The actual figure could be anything – 1 in 30, 1 in 20, 1 in 10 – just anything; unfortunately my guess would be as good as yours.

According to the Census a farmer is anyone who operates 183 or more days on a plot of land in a year. Obviously, the police, who provide the data for NCRB, generally do not read the Census; they rather depend on what their bosses tell them. The typical question that they ask to the kin of the dead is whether they have a ‘patta’ for the land that they cultivate to prove that the dead person was a farmer. The kin of the dead tenant farmer or agricultural laborer would invariably fail to furnish such a document leading to most of such cases being reported as non-farm suicides. Will the society in this country ever allow a Dalit or Adivasi to own a ‘patta’ in their name? The answer is obvious – as a result, they are also excluded from the count of farm suicides.

The biggest farming suicide group excluded through this mechanism is that of women. Hardly does any woman have a ‘patta’ in their name in this country. Consider the above fact in the context of this: around 65% of agricultural work in this country is done by women. In spite of that, they would be counted as farmer’s wife (which is counted separately) and not farmer. From this discussion the level of underestimation of farm suicide numbers in the most authentic official record is amply clear. What this makes us understand is the total nonchalant attitude of the state machinery towards the vulnerable population of the country which includes women, Dalits, tribals, small farmers, agricultural laborers, etc.

The root of the economic liberalization, privatization and globalization (LPG) campaign that aggressively picked up in 1991 in India, lies in the Washington Consensus, which is a 10 point prescription provided by economists from IMF, World Bank and US Treasury Department. Even a naïve glance at the prescription will very clearly reveal its objective; it is to facilitate global capital’s access to the following:

i. Natural resources which belong to the people of those developing countries,

ii. Human resource or labor of those countries and

iii. Huge markets that these developing countries have to offer.

Shamelessly, all this plunder happens at the cost of the poor majority. It categorically recommends withdrawal of government support from all sectors that it is into. In India, among other effects, this has resulted in a sharp increase in the cost of agricultural inputs because of withdrawal of subsidies. The LPG paradigm also has been bringing about what is nothing short of market fundamentalism or what is commonly referred to as an open market economy. As a result the prices of agricultural produce are decided by global corporate agribusiness companies who control a large part of agricultural production.

The situation is further aggravated by the subsidies that Western governments pay to agri-business companies under the pressure of corporations which are involved in the downstream of the agribusiness supply chain. The poor, emaciated cotton farmer from Vidarbha, in absence of much government support and with his or her limited resources has to compete with the US government subsidized global agribusiness company. Unable to ‘compete’ in this open market, the farmer’s debt keeps piling up season after season, ultimately leading to suicide.

The system of determination of prices of crops, especially, food crops is unethical and inhuman to the core – it should be distributed as per the food requirements of the population and its availability, not on the basis of who has more purchasing power. An article as fundamental for human existence as food, when converted into a commodity, serving the interests of parties hankering for profits, is a recipe for gradual disaster bringing huge volatility in the prices. Financial contracts for food grains and other crops are increasingly traded in the derivative markets by derivative commodity traders who have no connection with the production process whatsoever. (In principle derivative contracts are upside or downside bets on the expected price of a certain quantity of that commodity at a future date.) The money being circulated in the derivative markets are basically speculative in nature and have a huge role to play in controlling the prices of agricultural produce. The derivative trader, sitting in his cushy office decides the money value of the labor that is put in by the toiling farmer.

The only objective of the system of LPG has been to maximize profits for the ruling classes by providing them easy access to natural resources, human resources and markets as discussed before. The following observation reiterates this fact: Though 1 farmer commits suicide every half an hour in this country (according to NCRB data, which as explained, are gross underestimates), the other actors involved in the value stream continue to be profitable. In the upstream, the manufacturers of pesticides, fertilizers, seeds, etc. along with their dealers and retailers continue to make huge profits. Similarly, in the downstream, the distributors, retailers, etc, of the agricultural produce continue to swell their bottom-line. The value that is created by the poor farmer is basically extracted by the capitalist forces and the feudal forces, who act as an ally to them.

A very important agricultural input is credit. National Bank for Agriculture and Rural Development (NABARD), which is the apex financial institution for agricultural credit is supposed to play a vital role in it. In the 2016-2017 credit plan of NABARD for Maharashtra, 53% of the outlay is allocated for the city of Mumbai and its suburbs. It is for all those poor, starving farmers of Malabar Hill and Cuff Parade in Mumbai. Each of the finance ministers belonging to successive governments have claimed to have doubled or trebled agricultural credit. As a matter of fact, all have told the truth; however, the money has not gone to the farmers. Between 2005 and 2013, the loan composition of less than Rs 25000 almost collapsed which basically includes the loans taken by marginal and small farmers. What increased was the percentage of loans above Rs 1 crore. How many farmers do we know who march off to the bank to take loans of Rs 1 crore, upto 10 crores and upto 25 crores?

In absence of institutional credit, the farmer has to borrow from the local moneylender, who charges an exorbitant rate of interest, to buy non-subsidized agricultural inputs from the ‘free market’. The farmer fails to get a proper price for his produce because of factors such as poorly designed MSP, apathy from state controlled procurement agencies, lack of access to mandis by small farmers, etc. This often leads to loss of land rights of the farmer to the moneylender. The next season the farmer has to again borrow from the moneylender and follow the same vicious cycle, ultimately leading him to suicide under the burden of burgeoning debt.

Unemployment in the agricultural sector increased in the reform period as agriculture was not profitable due to the fall in the price of farm products (which was because of allowing imports of subsidized agricultural produce) and rise in the input costs (because of gradual state withdrawal). As a result, the number of people who were employed in the sector and the area under cultivation decreased, which in turn caused a decline in rural employment.

Between 1991 Census and 2011 Census, there is a gigantic drop (approximately, 5 crore) in the number of ‘main cultivator’, which is defined as a person who cultivates a piece of land for 183 or more days a year. This means, on an average approximately 6850 farmers are losing the main cultivator status every day. The question is, where have all these people gone in a situation when the population of this country has grown? The answer lies in the next column of the Census report: as the main cultivator population has gone down, the agricultural labor figures have exploded. As an example, in undivided Andhra Pradesh the main cultivator number reduced by 13 lakh between Census 2001 and 2011; there was an increase of 34 lakh in agricultural labor. This means 2 things: first, that not only have farmers been rendered as landless agricultural laborers but a lot of weavers, potters, etc have also been forced to convert to the same; and second, that many farmers are leaving agriculture partially or completely to look for other employment opportunities.

According to the National Sample Survey, the annual rate of growth of the employment in the rural areas was 2.07 per cent in 1984-1987, while it declined to a mere 0.66 per cent in 1993-2000, which corresponds to the period of liberalization. Millions of farmers, mainly landless laborers and small peasants, are abandoning agriculture and migrating to the cities to work in the construction sector, service sector or industry as casual workers, mostly with very low wages, horrible workers rights, minimal social security and horrendous living conditions – the largest chunk being that of construction workers. It is no wonder that the only sector of the Indian economy which has shown an increase in employment in the last decade is the construction sector. But this underlies a massive disruption in rural lives and livelihoods, with a large section of people previously connected with agriculture abandoning it and joining the reserve army of labor in cities. While the poor farmers’ life deteriorates, the agribusiness companies, who control the farming and the industries where these ex-farmers are ‘supplied’ as cheap labor, flourish.

Government policies are gradually moving towards an insurance based system as compensation for crop failures. This shows the real intentions and nature of the ruling establishment and can be traced to the same LPG paradigm. It would be useful to understand that at a very broad level, companies raise capital from 2 main sources – debt, which simply means loans from banks or non-banking financial companies (NBFCs) and equity, which basically comes from the stock markets (This is for companies which are listed in the stock exchanges). While there is an obligation of companies to pay back the loans to banks and NBFCs, there is none in case of raising equity from the stock market. Incidentally one of the biggest investors in the stock markets is insurance companies. Quite naturally, the premiums paid for crop insurance also end up as an easy source of capital for big companies listed in the stock exchanges. In this process the farmer who is distressed due to a crop failure gets hardly any direct support from the government; they find it extremely difficult to access the claim due to their lack of education about the subject and the attitude that is in general meted out by the privileged to the poor. However, corporate interests are satisfied.

In this article only a few of the main contributors of the agrarian distress have been discussed. It can clearly be understood that the problem lies in the methodology of growth that India has chosen to follow – one in which markets are allowed to decide the price, government and the state machinery tend to play a minimalist role in protecting the masses dependent on agriculture, cheap capital is provided to big corporations at the cost of poor farmers and the people who wield power in our society (the capitalist and feudal forces) run amok. We need to give a serious thought whether this methodology can at all change, without a change in the power structure in our society.

A complete paradigm shift is required in the way the economy is structured to bring freedom to the toiling masses of this country. As conscious and responsible citizens of this country it is our duty and moral obligation that we stand up against these forces that prevent this freedom and want to socialize the costs and risks while privatizing the profits.