Vishal Pawar chose to be a farmer. He worked with a pesticide company to gain in-depth knowledge about different kinds of pesticides. He left his job in 2010 to start farming on a plot of 15 acres owned by his family, in the drought-prone Vidarbha region of Maharashtra. He irrigated his farmland with water from a well in this plot, using modern techniques. But extreme drought in 2013 sucked the water out his well, as well as the lifeblood out of his ambitions. His crop failed. He fell in debt, and with it, the inevitable debt trap that a large number of Indian farmers are suckered into each time drought hits and monsoons fail.
He leased another 10 acres of land, hoping to put in extra effort to help repay his debts. The situation was none the better in the following seasons, worsening further in 2015. That year in the State of Maharashtra, more than 1000 defeated farmers – who just couldn’t see the crops they wanted to see, for all that they invested – resorted to suicide. Vishal ended up being one of them. He left behind four suicide notes, addressed to the government, the bank he took loans from, his family, and his young daughter. He hoped in his letters, through his despair, that his family wouldn’t be encumbered with the debts that he had taken on. For all the education and experience Vishal had gained about modern farming techniques, his ambitions ended up being consumed by crop failure.
The Number Of Suicides In The Farm Sector Is Shockingly High
Farmer suicides are nothing new in India. They’ve become quite banal in fact, and we read or hear about them every year. Although the data-averse Central government has stopped releasing National Crime Records Bureau (NCRB) data, which capture numbers and trends on farmer suicides, since 2016, we can still get an idea of the scale of the problem from the last time they were published. Data collected under suicides in the farm sector cover both farmers and agricultural labourers.
In simple terms, the former own the land they till, while the latter doesn’t. Now, both 2014 and 2015 were drought years, and while the overall number of farm sector suicides remained more or less the same (around 12,500 (!)) the number of farmer suicides saw a sharp rise of 42% from 2014 to 2015. One farmer resorted to suicide every hour in 2015. Just let that sink in.
58% of the suicides in 2015 were found to be due to “farm-related issues”, bankruptcy and indebtedness. It’s difficult to find a trend as there are too few data points, but what is amply clear is that the number of suicides in the farm sector is shockingly high, and that even ownership of land hasn’t helped reduce farm distress, mostly because 86% of cultivators in India possess less than 2 hectares of land. This severely limits their capacity for output, meaning lower income and profits as well as greater risk for taking on debt. On top of that, Indian agriculture is still heavily dependent on monsoons for irrigation. One season of drought, therefore, becomes catastrophic for farmers.
Of course, farm suicides are the most extreme distress responses from Indian farmers exposed to issues that plague the Indian agricultural sector. Some of the systemic challenges to the farm sector have already been mentioned here while discussing farmer suicides – lack of a framework to address the issue of onerous repayment liabilities, lack of logistical and warehousing facilities, lack of proper irrigation facilities, small landholdings, fragmented land assets, high input costs etc. Also, it’s not just drought that adversely affects farmers. Even bountiful produce aided by good monsoons leads to a glut in supply, causing prices to fall rapidly, leading to evaporation of profits.
Krishi Utthan Bill
Most farmers are forced to do what is essentially subsistence farming, meaning they end up consuming more than they produce. All these factors lead to low incomes and profits for the farmers or even losses. So far, State government responses have focused mostly on misguided, vote-agglutinating farm loan waivers rather than on bringing about systemic changes in a scientific manner to address farm distress. So we would expect lawmakers to help provide structural frameworks that protect our farmers and the farm sector as a whole. Lok Sabha MP from Arunachal East, Mr. Ninong Ering, has been pitching his Krishi Utthan Bill, for a while now, which seeks to do exactly that. Let us take a peek.
First off, the Bill proposes a basic income for all farmers. This is an idea whose time has come. A state that has socialist ideals (still) enshrined in its Constitution needs to do a lot more for its vulnerable farmers than it does currently. Since the 1991 economic reforms, India’s economy has been driven by the productivity of its service sector, which now owns a majority share in India’s GDP at 52.5%, and the export potential of its MSME sector, which provides 45% of the revenue generated from exports.
The contribution of agriculture to India’s GDP has now contracted to around 16%, with its share in exports just around 13%. This magnitude of the problem becomes clear when one realizes that nearly half of the labour force in India is engaged in agriculture. This shows that no substantive effort has been made by the state over the years to help boost farm sector productivity. Successive governments have made their presence felt in their unresponsiveness.
The system of minimum support prices (MSPs) for crops has failed to provide any real succour, even as governments continue to fail at fully implementing the Swaminathan Commission’s recommendations of providing farmers with an MSP that covers not just 1.5 times their production costs – which was conceded in a weakened form in the 2018 budget keeping the 2019 elections in mind – but also the opportunity costs of farming.
Schemes like MGNREGA have helped to an extent to provide income supplementation for small and marginal farmers and agricultural labourers, but these don’t address the opportunity costs. Other schemes, like the KUSUM scheme (which isn’t exactly faring brilliantly), help partially address the issue of opportunity costs, assuming proper implementation.
However, and quite importantly, they put the onus on the farmers themselves rather than on the state for the security of their incomes. With elections looming, the government in its vote-on-account budget announced the PM-Kisan Samman Nidhi scheme, which granted income supplementation to farmers so meagre as to be pointless. What’s worse is that it seeks to benefit only landholding farmers, meaning agricultural labourers are left out of the purview of the scheme. Some State governments, like those of Odisha and Telangana, were doing much better already.
While the idea of a basic income for farmers is welcome, there must be a proper, universal reference for fixing the minimum. This job is typically done by advisory commissions formed by the government. And being advisory in nature, the government is not obliged to follow through on their recommendations. It is time draft legislation provided such references so that the executive is obligated to realize its provisions. The UN poverty limit of $1.90 per head per day would be a good place to start looking for solutions.
Apart from basic income, the Bill proposes a four-pronged strategy to address farm distress:
- reduce the costs of farming;
- fair price for crops;
- protection against natural risks; and
- additional income of the farmers by the profit-sharing mechanism.
Broadly speaking, this strategy is what a socialist state should follow in order to address farm issues. Reducing input costs for farming will require the government to make necessary investments in agricultural infrastructure. Cooperative farming might also help in not just bringing down per capita input costs, but also in exploiting economies of scale. For that to happen, however, there must be protection against natural risks, which, again would require the state to invest in infrastructure and modern irrigation technologies. Fair price for crops is a must, and value addition to farm produce could help farmers take advantage of markets propitious for profit-making. However, a fair profit-sharing mechanism needs to be laid out through legislation.
The specific provisions of note in the Bill are:
National Agricultural Council
This is meant to be an enterprise in cooperative federalism, along the lines of the GST Council. This body is meant to help in coordinating in implementation and uniformity in the application of the provisions of the Act (when the Bill becomes one) across the country. It is a bit early to see the GST Council experiment as a success or failure, but what is amply clear is that the GST Council gives the Centre a potential veto power over the States. The proposed National Agricultural Council will have to ensure that it doesn’t suffer from this kind of infirmity. Also, to what extent a NAC would be effective is unclear. It would seem desirable to have representatives of farmer unions at State level or even regional level empowered to influence decisions at Council meetings.
Profit-sharing cess
This is meant to be imposed as a cess on value-added products from the farm. This is supposed to help farmers take a deserving slice out of the gargantuan profits that the value-adding MNCs make using raw materials they produce. Although this seems like a great idea, this doesn’t do much to address the power imbalance between contract farmers and the MNCs in question. As the Pepsico case earlier this year demonstrated clearly, profit-hungry MNCs might look to catch unsuspecting (current or ex-) contract farmers off-guard to make a killing in the courts. In addition to facilitating profit-sharing, the state ought, under Article 39A, to provide contract farmers with full and accessible legal support against any harassment or exploitation by MNCs.
Agriculture Risk Fund
Proceeds from the proposed cess are to be collected under this non-lapsable Fund. A basic income would be paid to farmers from this Fund. Farmers who suffer damages due to natural disasters would also be compensated from this Fund, thus serving as something of an agricultural insurance fund. Although the idea of a basic income for farmers is laudable, as discussed earlier, the problem with this proposition is that it leaves out landless agricultural labourers. It should also recognize special provisions for covering the needs of Dalit, Adivasi and women farmers. There can be no complete justice if they are left out. The Fund also seeks to provide for agricultural infrastructure. This must take into account the threats posed to Indian agriculture by climate change, and therefore must focus on sustainable agriculture. For example, investments must be made in providing for rainwater harvesting in drought-prone areas and things like drip irrigation and satellite-image based variable rate fertilizer application to limit damage to soil fertility due to excess salinity.
Price Deficit Compensation
This provision purports to help farmers who have been cheated into accepting less-than-MSP returns for their crops realize the deserved prices. Technically, MSP is a price floor, which is seen as market-distorting. India’s MSP regime is already under strict watch by WTO – where the Global North is always looking to prey on the vulnerabilities of the Global South – as it is seen as a form of farm subsidy, which is expected not to exceed 10% market value of a crop. This makes it difficult for the government to artificially raise MSPs beyond a limit. So, the question of whether MSP is ‘enough’ is moot. Even so, it is not yet clear how the price deficit compensation mechanism suggested by this Bill will be implemented, as it will likely be the aggrieved farmer’s responsibility to prove that he/she was cheated. The CACP last year recommended that farmers be given a legal right to sell their produce at MSP. But even here, enforcement of such rights becomes an issue, given that States are already beginning to renege on the promise of APMCs.
In sum, the Krishi Utthan Bill, 2019 is a progressive attempt to right some of the wrongs done to farmers in the country. Among the most important changes, it seeks to bring about is the introduction of a basic income for farmers, which should really be the way forward given the uncertainties in the Indian agricultural sector. The ideas of a profit-sharing cess and an Agriculture Risk Fund are also worth trying. However, care must be taken to ensure at every step to protect farmers who are vulnerable. The provision for a price deficit compensation works only to the extent the idea of an MSP – which as we have seen runs into multiple obstacles – works, and also to the extent that such compensations can actually be realized.
The proposed National Agricultural Council needs to learn from the mistakes of the GST Council model it takes inspiration from if it has to be tried out. Even then, it is difficult to predict the extent to which it will work. Other problems of the Indian farm sector also need to be taken into account. Investment in agriculture needs to be adapted to the growing menace of climate change by making use of renewable energy sources. Any proposal for the protection of farmers should focus on the attitude of institutional lenders towards small and marginal farmers. For instance, it has been found that under priority agri-sector lending done by banks, a large proportion is given to agri-based industries instead of farmers making use of legal loopholes.
The majority of India’s working population is involved in the agricultural sector. But most of them don’t know how to make their trade profitable. Their fates are subject to nature’s vagaries and to the state’s apathy. It is desirable to have more educated people like Vishal Pawar enrich our farms and farmers, yet we see more sacrifices than success stories. With global warming leading to rising average temperatures and more erratic monsoon patterns, it is not just India’s food security that is threatened, but also more farmers than ever are now at risk.
In this emergent situation, it is of critical importance to have a policy that helps economize agricultural input and make it sustainable. Farmers put the food on our plates, in addition to their own. Happy and healthy farmers will produce happy and healthy citizens. As responsible citizens, therefore, we ought to do a lot more in helping design policy that will address farmer issues. Mr Ering’s outreach – asking for citizens’ views on his sponsored Bill – therefore deserves praise regardless of its merits or demerits. Hopefully, his efforts will bear fruit – literally.