“While, like last year, I seek the blessings of Lord Indra to bestow on us timely and bountiful monsoons, I would pray to Goddess Lakshmi as well. I think it is a good strategy to diversify one's risks,” are the words of the ex-finance minister (and now President) Mr. Pranab Mukherjee during his budget speech for the year 2011-12. The statement is symbolic of the unfortunate ways in which our ministers have been keener on invoking Gods and Goddesses rather than depending on science and technology and straightforward ground level solutions to come to the rescue of India's dwindling agriculture sector, which employs around 50% of India’s workforce, but is decreasing in its contribution to the GDP year after year. “As per latest estimates released by Central Statistics Office (CSO) the share of agricultural products/Agriculture and Allied Sectors in Gross Domestic Product (GDP) of the country was 51.9 per cent in 1950-51, which has now come down to 13.7 per cent in 2012-13 at 2004-05 prices...” This statement of Minister of State for Agriculture Tariq Anwar last month in a reply to a query in the Rajya Sabha shows the pathetic downfall of a once glowing sector. Even in absolute terms, India’s foodgrain production declined to 250.14 million tonnes in 2012-13 from 259.32 tonnes in 2011-2012.
What continues rising in this sector is just the number of farmer suicides, which reached a shameful figure of 15,440 in 2012, close to 50 farmer suicides every single day of the year, as per the National Crime Records Bureau. The government itself admits that since 1995, more than 300,000 farmers have committed suicide.
Leaving aside our pseudo-intellectual ministers, it’s more important to understand the real problems of agriculture. At the farm level, the usual suspects are clearly the ones that are addressed the least. The acreage in India has been around 140 million hectares, but with the number of farmers increasing, the divisions in land have resulted in decrease in productivity and diminishing economies of scale, what to say about reduced financing options and killing debt traps. Apart from this, lack of irrigation, warehousing/cold-storage facilities, and an almost non-existent technology support from the government also are critical issues for farmers, pushing them towards destitution.
But what takes the cake in the whole value chain is something else. Every year, like an annual event or an Indian festival, vegetables and agri-products find themselves in a comedy circus. On the one hand, our government boasts of record yields, whereas on the other, this so called hollow boast of ‘record yields’ fails to reach its real customers. Think about it – as per the government, we’ve had one of the best monsoons this year. The Central Water Commission confirmed in August 2013 that our water reserves nationally are now at an ever-high level in a decade. We’re apparently experiencing a bumper crop year. Clearly, such a claim is laughable when you consider the rising prices of fruits and vegetables all around.
SubmitBut then, isn’t that the case every year? Every year, onions, tomatoes and other essential food items find themselves being upgraded from basic necessities to luxurious items. And the chief culprits for this and the related obscene price rise are hoarding and black marketing. However, despite repeated offences by traders and recurring problems of agri-products pricing, not much heed towards agriculture reforms at the ground level has been given. Unlike other nations, agriculture in India is still treated as a child of a lesser God. Take for instance China. After 1994, the government of China introduced policies that limited the amount of grains that could be imported (giving a boost to domestic production). This brought the domestic farmers to the centre stage and increased the domestic supply of crops. In 1995, a policy named “Governor’s Grain Bag Responsibility System” was incepted, which made the local governors accountable for supply and demand and also for maintaining the prices in their jurisdiction. Later, by the end of 1997, China introduced agricultural industrialisation management strategies for professionalising the flow of produce to the market and morphing the entire agriculture system into a market-oriented system. The next in the line was balancing production in urban and rural areas, wherein urban industries were asked to facilitate agriculture and guide rural farmers for better yields. The reforms didn’t end here.
Comprehending the need for sustainable development and long-term progress, the agriculture reforms included compulsory rural education, financial security, internationalisation of farming and market openness. As I wrote in one of my previous editorials where I compared India and China, as per a World Bank study, an Indian farmer contributed $400 to the agriculture sector back in 1994, which increased to $500 by the end of 2009 (a mere increase of 25 per cent); while a Chinese farmer increased his contribution by 85 per cent and is currently adding $550 to the sector. Going further, the Chinese government has definite and clear-cut policies to check food inflation, price rise and hoarding. All big traders are provided with guidelines to report to the authorities within 24 hours if they decide to increase the food prices by 4 or more per cent. Moreover, criminalising unethical activities, the government has provisions of imposing penalties on those cartels (especially for traders dealing with flour, rice, noodles, cooking oil, milk and gas) that are found influencing prices. The fine can go upto a million yuan and imprisonment. Besides all these reforms, China also adopted land reforms to allow every farmer to own his land for agriculture and exposed their farmers to scientific and technology-oriented farming. This is evident from close to 10,000 agricultural patents that today China owns compared to around 50 by India. In a similar tone, Argentina allows its authorities to freeze prices and imposes fines and imprisonment in case of any breach.
Contrast this with India. The conviction rate under the Essential Commodities Act, 1955 and the Prevention of Blackmarketing and Maintenance of Supplies Act, 1980, was only 2.47 per cent in 2009, 3.55 per cent in 2010 and 6.68 per cent in 2011. While unlettered Indian politicians exclaim that the rise in prices will benefit the Indian farmer – without realising that the Indian farmer is still selling at the minimum price only, while the so called ‘benefit’ is being gained by the hoarder and final retailer – others can’t even make up their mind on whether export bans should be put in place to rein in prices. In 2011, an onion export ban (that was put in place because of rising onion prices) was lifted in ten days flat by a committee of Empowered Group of Ministers, led by – no surprises – the then finance minister Pranab Mukherjee. The situation is quite similar even now. On August 13, 2013, Food Minister K. V. Thomas said, “We would wait for 10 days and if the prices do not comedown, would ban exports,” Minister said. On August 23, 2013, just ten days later, he said, “Currently there is no proposal under consideration to ban the export of onion... Prices of commodities including vegetables like onion and tomatoes are mainly governed by market forces of demand and supply, cost of transportation and storage, weather conditions etc.” But then, where’s the ground level action against hoarders that should have been undertaken days, if not weeks ago?
Increase in onions prices is just an indicator of several malaises that are floating seamlessly in our agriculture system. For a start, the agriculture ministry should immediately take steps to introduce stringent laws against hoarding, publicly arrest hoarders and initiate action against them, and open the market further for agriculture produce. After all, here we are talking about policies that are not for a few crore farmers but for the entire nation and for the larger good of the economy and society.
- 22 September 2013 |
- Dr. Arindam on Indian Economy