“Terms of trade are favouring the urban middle class at the cost of the farmers,” said former Finance Secretary Dr S Narayan.
Speaking at the Triplicane Cultural Academy, Narayan pointed to food inflation kept low: “production of foodgrains is high; states like Madhya Pradesh have registered agri-growth by 10 per cent per annum for eight years. Cereals, sugarcane, other agriculture commodities and horticulture products are recording healthy surpluses. But the farmers are in distress.
“Demonetisation hit the farmers most. Agriculture has no income tax and all transactions are in cash. India is a total cash economy. Demonetisation resulted in an 18-20 per cent drop in farm planting and in lower fertilizer consumption. One witnessed widespread farmer agitations. The government, with elections around the corner, could not solve this problem and remain content with offering Rs 6000 for small farmers with less than five acres and focused on the urban middle class,” said Narayan.
The issues concerning agriculture are much deeper and call for structural reforms. Unfortunately, governments for long have not been daring to attend to this.
Uneconomic land holdings
With inexorable fragmentation of land, average farm holding in Tamil Nadu is two acres. These do not lend for the application of science, technology or mechanisation. The support system by the government has not been effective in improving the productivity of small farms. Average yields are a fraction of the potential, eg., tomato yields on an average are 5 tonnes per acre compared to close to 100 tonnes per acre in California where farm sizes are large and there is an effective use of science, technology and farm management. Production of corn in India likewise, is around 800 kg per acre related to the potential of 10,000 kg per acre in mid-west USA.
Small farmers are not able to test and correct the soil essential for optimum yield; nor do they use certified quality seeds. They cannot benefit from mechanisation and they lack holistic management. By and large, they have been sticking to raising conventional crops unmindful of their suitability to agro-climatic conditions.
Agglomerate the land holdings
There is an urgent need to agglomerate land holdings to viable sizes of 50 acres and more when agribusiness will be profitable. IE has been suggesting leasing of land over 15 years with enforceable contracts. This will attract investments in agriculture by corporates and individuals who would strive to make the operations profitable. Such a system will also provide for lease income to the owner as also wage employment. This will end the current system of distress sale of unviable farm holdings, absentee land ownership and the mushrooming of local dadas garnering precious land but making little efforts to improve productivity.
The APMC Act of several states have been amended permitting such lease over the long term, but the corresponding effort to ensure the sanctity of contracts has not been followed up.
A mere increase in MSP won’t do
Without addressing this fundamental structural deficiency, periodic revision of the minimum support prices appears just a palliative. Such focus on scaling up agribusiness would also provide the clout to the large-sized farms to focus on better market orientation through crop selection, better prices, improving shelf life through better scientific storage and preservation as also in processing the commodity into value-added products. Apparently, such practices are not feasible for a farmer owning an acre or two.
It is not as if prices are kept artificially low. Powerful sugarcane lobby has succeeded in getting the price increased from the level of around Rs 80/tonne in 1978 to close to Rs 3000/tonne today. There has been a corresponding increase in the retail price of sugar from Rs 2/kg to around Rs 40/kg in this period. Look also at the other equally serious issue: the income from a two-acre farm gets a net profit of around Rs 60,000 p.a. or around Rs 5000 p.m. This is hardly sufficient to the owner.
Narayan would agree that the efforts of the government so far are superficial and appear as placebos or palliatives. Steps are needed to wean the large numbers of these from agriculture by creating opportunities in a variety of allied occupations like storage, food processing, marketing… – SV
