Saturday, 10 June 2017

Farmers on Rampage

The newspapers and all other media are rife with the coverage on farmers agitation. Voices from all political parties in all colours are striving to show solidarity with farmers.

I have been a farmers grandson and have observed rain based agriculture for 20 years before our farm was taken away by the brutal tenancy act and a bunch of lies.

It is generally understood that small land holdings, depleting water tables, rampant use of fertilisers and chemicals, sparse rainfall have all rendered agriculture nonviable.

The Government of the day is expected to announce a Minimum Support Price (MSP) for agricultural produce. The father of green revolution advises that the MSP should be 50% higher than the production cost.

The Government of the day is also expected to regulate food prices and keep inflation under control.

If the producers of food grains are required to be given a higher price and the prices of food grains have to be kept under control, doesn't this look like a catch-22 situation? Apart for this, the Government has to keep its fiscal deficit under control by cutting down on subsidies. Over an above these pulls and pressures the Government is also under considerable pressure to cut down on agricultural subsidies from the international community.

All this calls for an out of the box thinking and a brainstorming session to find an everlasting solution for the ills of this system.

Before I go about thinking aloud and airing my views about the prevailing situation, let me take the reader back to 2014-15 when, Pulses' prices had hit record highs. a lot was said about the prices of pulses skyrocketing and fingers were pointed at the party in power and accusing them of rigging the prices. It actually turned out that, the farmers had not sown pulses because of bad market conditions. once the prices improved, the sowing area for pulses improved, this led to a bumper crop of pulses in 2016. which has in-turn led to lower prices, leading the farmers to take to the streets, claiming MSP.

This story has repeated in Onions, Sugarcane, Tomatoes, Paddy, Wheat and a host of other crops too. The answer does not lie in MSP or loan waiver. the answer lies in education. In Kannada there is a proverb that goes like this "ಕೋಟಿ ವಿದ್ಯೆ ಗಿಂತ  ಮೇಟಿ ವಿದ್ಯೆ ಮೇಲು " meaning "The knowledge of farming/agriculture is far superior than than any other education".

Now some out-of-the-box thoughts on this crisis.

  • Undertake an agricultural census and digitise the agricultural land holding records.
  • Consolidate Land holdings by clubbing small land holders. Encourage creation of farming co-operatives / companies / partnerships and provide concessions to such entities.
  • Announce income tax on Agricultural income for all individual land owners with a land holding of more than 4 hectares for irrigated lands and 10 hectares for non-irrigated lands 
  • Integrate electronic markets or E-NAM across the country.
  • Declare all APMCs without membership in E-NAM as void. Mandate that all APMCs should compulsorily become members of E-NAM
  • Initialise a licencing process for moneylenders and regulate money lending to farmers. Most agricultural loans from banks are not so bad that they drive the farmers to suicide, but the private loans are the ones that drive them to suicide. But, the blame is always heaped on the organised banking community.
  • Instead of going for complete digitisation of transactions, the better way would be to 
    • Make digital payments compulsory for buying fertilisers and and agro-chemicals
    • Make cash deposits easier by not charging any fees for cash deposits. Banks may charge for withdrawals (after a certain limit), but not for deposits.
    • All kinds of payments to Government and its agencies to be made compulsorily in digital form. This will reduce cash transactions to a large extent.
Unless the agricultural markets are reformed and a free market environment is created, no ray of hope can be seen. Government will have to set up robust systems for free and fair markets to continue. 

A change in the mindset of the farmers will also have to be brought in to emphasise and drill down the fact that the government is just an enabler and not your customer.