Posted in Finance Articles, Total Reads: 2913
, Published on 11 September 2012
Since the time when the Green Revolution mobilized the idea of agricultural revolution, the production of wheat has produced the best results in fueling self-sufficiency of India. Along with high yielding seeds and irrigation facilities, the enthusiasm of farmers is credited to M. S. Swaminathan and his team. In this regard, Punjab has made tremendous progress in the field of agriculture. Punjab is known as the bread basket of India, primarily because of its increased wheat production just as Ukraine is known as the bread basket of the world.
In order to assess the impact of the new agricultural policy of the Government of India, whereby the government, under WTO norms, wants to completely do away with its subsidy programme, a review of the situation in Punjab was conducted recently.
Farming community’s take on crop cultivation
A sample of 250 farmers was taken from every income group, i.e. very affluent, affluent, upper middle and middle income groups. While their reaction to questions varied to a lesser or greater extent, one surprising statement was made unanimously by them.
Every farmer, who owned a piece of land, said that he would prefer a year when every farmer had a bad crop instead of a bumper crop. The farming community justified their statement by saying that if a mild disaster fell on all of them; it was not a disaster, but a boon as they would then actually become richer. While, on the other hand a wealthy farmer said that a large volume of crop could not fetch them the revenue which a small volume could.
Working out the logic behind their unusual argument, economists realized that an individual farmer, however well off he might be, was a ‘price taker’ and could not affect the prevailing price, hence the farming community as a whole determined its revenue in terms of production. To this some agriculturists who were really surprised, said that; while on one hand, the Government of India along with agricultural scientists were deeply involved in researching on methods of growing a bumper crop, on the other hand the farmers themselves aspire for scarce production.
The scientists pondered with amaze on, how the farmers were able to earn good revenue with low production of crops. They thought that when there is a scarcity of food production, although the prices go up but the volumes come down. So how were the farmers really able to evaluate which was a better situation, a low production high price or a high production low price.
So to understand the farming community’s logic, it was important for one to have an understanding of the situation in more detail and not draw any conclusion merely on the laws of demand and supply.
Further studies of the farmers across all earning levels revealed that the best situation for a farmer is a good harvest in his own field and a general crop failure, while the worst situation is a bad harvest in a farmer’s field and a good one for everyone else. But if everyone is to enjoy a harvest, a moderately bad harvest is preferred to a very good one!
But the most important factor that came to the forefront was that the farmers are highly critical of government’s import policy regarding foodgrains during a food crisis. The reason for this is that the government imports foodgrains during food crisis and makes them available to the non-farming community at a much cheaper rate. This puts pressure on the government exchequer and harms the farming community badly. Moreover, the quality of foodgrains supplied by the government is mostly poor and of a much lower standard. Thus, the government harms itself and the farming and non-farming communities.
However, farmers are very happy with the government’s policy of buying foodgrains from the farmers during a bumper crop. The farming community wants that the government should intervene when there is a bumper crop, but should not over-react during shortages by importing cheap and inferior quality foodgrains.
Thus, economists agree that the farming community understands and applies the powerful relation between price elasticity, prices and revenue. Their behavior revolves around this powerful relation.
Farmer Suicides in Punjab: A Paradox
“While the Government wishes to maintain Punjab primarily as an agrarian state that continues to feed the rest of the nation, it does not provide relief for Punjab farmers who are providing the food but suffering and dying under the after-effects of the Green Revolution.” — Inderjit Singh Jaijee, Convener, MASR
MASR is a Punjab-based advocacy NGO that documents farmer suicides. It was founded in 1987 to document human rights abuses during the period of militancy.
It is an unusual situation that Punjabi farmers, known to be proud and self-reliant, are resorting to suicide. A substantial proportion of the Punjabi work force remains dependent on agriculture for its livelihood and faces a serious problem to be gainfully employed elsewhere as a consequence of squeezing share of agriculture income.
The growth rate of the Punjab agricultural sector dwindled from 5.15 percent per annum in the 1980s to 2.16 percent per annum by the 1990s. The contribution of the overall agricultural sector to the GDP of India has plummeted sharply over the years. Unemployment in both the rural and urban populations has increased during this period, which suggests that workers unemployed in agriculture or industry have not found alternative employment.
Resource-intensive agriculture requires farmers to take large amounts of loans that are mostly found through informal sources due to the paucity of formal credit systems. Farmers thus find themselves under enormous debt and financial pressure. It is thus, the failure of the institutional set up in supplying credit commensurate with demand that is mainly responsible for the crisis and its manifestation in the form of suicides. Hence, the farmers live with constant pressure to pay back their money-lenders.
In fact, as debt mounts, farmers even approach banks and take loans on false pretexts like to buy a tractor, only in order to pay the money-lender his installment. The money-lenders are not regulated. They levy high interest rates ranging from 24 to 30 percent and mostly operate without any formal written records. The scope of abusive usury practices is thus very large. Farmers live in a vicious cycle of debt, pressure, guilt, and lies that drive them further into more debt.
An endnote to reflect upon
Therefore, it is such a shameful and ironical situation, that in Punjab, which is considered to be an agriculturally prosperous state; there the farmers have such a miserable and obnoxious life. So, we Indians can contemplate what kind of lives our brothers and sisters who are the food providers of our country, are living in states like Bihar, West Bengal, Jharkhand and Chhattisgarh where illiteracy and corruption are in abundance.
We may think that the farmers, who have taken upon them the responsibility to feed a billion mouths, themselves must have plenty to eat as they are growing crops. So how can it be possible that someone who is a provider, himself has scarcity of the very thing that he is providing? But, my dear friends, this is the truth that millions of such farmers are facing since decades. They take care that we have a peaceful sleep, having had a hearty meal but they and their families have to sleep empty stomach.
So, it is my wholehearted appeal to the Government of India, all the concerned authorities and to all my dear brothers and sisters, that it is high time that we as a nation, come together and join hands to bring about a revolution by which we create an enjoyable and prosperous environment for our farming community. Only then, can we truly realize the dream of a nation that our leaders and freedom fighters saw. Only then, can salvation be achieved, only then can light be seen at both ends of the tunnel.
This article has been authored by Aditya Das from Shailesh J. Mehta School of Management, IIT Bombay.