India – no country for farmers

By | August 8, 2016

Our Agriculture Sector and Farmer find themselves in dire straits partly due to the Policies of the respective Governments, flawed Costing/Pricing Polity and shrinking of Land Holdings.

The clear indicator that something is seriously wrong can be gauged by the fact that, on average, 2,035 farmers have been losing ‘Main Cultivator’ status every single day for the last 20 years i.e. 2035 less Farmers every day. The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways. The NSSO 70th Round data revealed that the average monthly income of an agricultural household is just Rs. 6426/- at the national level. Within this average monthly income, income from cultivation is reported to be only 47.9% (the remaining comes from livestock: 11.9%; from wage/salary: 32.2% and from non-farm business: 8%). If this amount is divided into two adults per family, the daily wage comes to Rs 107 which is way below the minimum wage fixed in any state of India. This is in stark contrast to the 7 Pay Commission recommendations in which minimum pay of a Govt Employee i.e. a Helper will increase to Rs. 18,000 from existing of Rs. 7,000. In the past 45 years, the minimum support price (MSP) of wheat was hiked by 19 times, whereas the basic salary plus DA of a government employee was raised by an average of 120 to 150 times.

The Profit Margins of the farmers have been steadily declining on account of rising Input Costs. In 2015 Punjab State Agricultural Department factored the increase in Input Costs and recommended that the MSP of Wheat should be Rs 1950 per quintal. The Chief Minister of Punjab requested the CACP and the Center but to no avail, the MSP of Wheat for the Rabi season of 2015 was fixed at Rs 1525/-. How can a Farmer bear a loss of Rs 425 per quintal? One of the reasons of the present Agrarian Crisis is that all the Governments have been underpaying the Farmer to control the Inflation and will continue to do so.

There was a ray of hope in the farmers mind that the present Government will implement Swaminathan Report, which was a poll promise by the Prime Minister Shri Narendra Modi. But alas, all hopes were dashed in Feb 2015, when the Government told the Supreme Court that it would not be able to enhance the minimum support price (MSP) for agricultural produce to be 50% more than the input cost. Additional solicitor general Maninder Singh submitted the Centre’s affidavit which stated that,” prescribing an increase of at least 50% on cost may distort the market”. The argument that 60 cr people will be underpaid by the Government to ensure that the market is not distorted, defies logic. My take on this is, that will the director of CACP take 15 days salary for 30 days work, I bet he will not. Then, why is the Farmer exploited in such a blatant way?

Govt imported 5 Lakh tons of duty free maize, which led to a crash in February spot price of Rs 400 and for June deliveries in the future market to Rs 1172, way below the MSP. Now, what is the fault of the farmer who had maize planted in his fields and was forced to sell below MSP. The government must compensate the farmer in such circumstances as this starts a never ending cycle of indebtness, which ends very unpleasantly. It is understood that imports were required as there were no stocks in the country, but the government must factor in the farmers concern too.

I admire the various initiatives which the Government has come up with like Pradhan Mantri Fasal Bima Yojana, National Agriculture Market, Pradhan Mantri Krisi Sinchai Yojana, Soil Card etc, Agri Apps, but am at a loss to understand/comprehend that how will these schemes help the farmer if the price at which he sells is below the input costs incurred by him?

Recently, the Govt signed a long term memorandum with Mozambique for import of Pulses, under which the imports will rise to 200,000 Tons in 2021 .Going by the MoU, India will build a cooperative farming model in Mozambique by identifying and choosing a network of farmers who will be provided with seeds and other improvements. The pulses produced by this network of farmers will be procured at the Minimum Support Price (MSP) of the same produce in India.

It is perplexing that only 1% of the Pulses are procured by Govt agencies in India at MSP and no effort was made to improve the domestic procurement mechanism, but the Govt had no qualms in assuring the African Farmer 100% procurement of pulses at MSP. It is worth noting that the Govt increased the minimum support price (MSP) of pulses by up to Rs 425 per quintal for this year to boost output and check price rise. Please keep in mind that the transportation cost would add to the landed cost of pulses. Had there been a robust procurement mechanism by the FCI or state governments, like wheat/paddy coupled with realistic MSP, the farmer would have gone for pulses too. A fact supporting this argument is that Pulses sowing as on 15 July increased by 40% as compared to last year. It is felt by majority of Agri Experts that this outsourcing of agriculture is detrimental to the interest of the Indian farmer.
Now, the Govt has decided to form a committee under Chief Economic Advosor to frame a policy on pulses which will look into various options, including MSP (Minimum Support Price), Bonus and subsidizing Farmer who opt for Pulses.

It is sad that Govt took cognizance of the flawed policy aspects only when there was a national uproar. The Govt needs to formulate a real time Agri-Policy encompassing all Food Produce and go for long term solutions rather than knee jerk reactions.

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8 thoughts on “India – no country for farmers

  1. Niraj Vashi

    Farm is a state subject and should be a national one. Farm productivity is one to blame. Farmers must be given all support they need in terms of education, equipment, seeds, soil testing facilities and even co-operative farming options so that overall farm productivity of region increase every year. Should I be doing Maize or I should look at Sugarcane is not something a standalone farmer is in a position to figure out. So there must be top level advisories that help farm choose his crop. Biggest problem of farmer is guaranteed offtake at a price. Past Govts should have liberalised food and vegetable retail sector and made sure that intermediaries are removed and farms get direct access to markets. Most farmers dont want their kids to get into farming, therefore total land under cultivation will drop as against the population which will keep growing creating a severe imbalance resulting into food inflation.

    Reply
  2. Dr bhadoria B S

    The flaw is in calculation of cost of production to arrive at MSP. The foregone interest on capital employed(land value) is not added in cost of prduction. Instead land rent is added which is fixed by govt and never revised.further if land rented for more then 3 year one looses right on the property by law.Thus it is vertually illegal to rent land for aggriculre.

    Reply
    1. Ramandeep Mann

      You are right…the Imputed Rent factored & Family Labor is all Flawed. CACP …..needs to overhaul the archaic factoration system. But the problem is that the Ruling Establishments pan Political parties have always believed that under paying the farmer is the only solution to rein in Inflation. So CACP is only independent on paper….in reality….CACP also services the Political Masters.

      There is an urgent need of reviewing our “Absent” Agri Policy w.r.t Fertilizer Subsidy Mechanism,Direct Transfer of Subsidy,Land Digitization,Import/Export Policy,Costing/Pricing Polity i.e. MSP Issue etc.
      @ramanmann1974

      Reply
      1. Dr. Bijendra Singh

        I have seen capc mandate it says only land rate. Thus moving high court can only solve the problem.
        Another problem is labour rates are averaged through country thus high labor rate states are grossly disadvantaged.

        Reply
    2. Ramandeep Mann Post author

      You are right…the Imputed Rent factored & Family Labor is all Flawed.
      CACP …..needs to overhaul the archaic factoration system. But the problem is that the Ruling Establishments pan Political parties have always believed that under paying the farmer is the only solution to rein in Inflation. So CACP is only independent on paper….in reality….CACP also services the Political Masters.

      There is an urgent need of reviewing our “Absent” Agri Policy w.r.t Fertilizer Subsidy Mechanism,Direct Transfer of Subsidy,Land Digitization,Import/Export Policy,Costing/Pricing Polity i.e. MSP Issue etc.
      @ramanmann1974

      Reply
  3. sailendra

    Please write on the problems of paddy farmers. Unlike wheat the MSP of rice is not raised.

    Reply
    1. Ramandeep Mann Post author

      Very True…..Govt increased Paddy MSP by Rs 60 i.e. 4.2%…which is even less than the Food Inflation…………

      @ramanmann1974

      Reply
    2. Ramandeep Mann

      Very True…..Govt increased Paddy MSP by Rs 60 i.e. 4.2%…which is even less than the Food Inflation…………

      Will write soon…..

      @ramanmann1974

      Reply

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