Every business requires finance and credit; farming is no exception. However, the credit system in India does not favour the poor and it is close to impossible for the small and marginal farmer to get loan from nationalised and cooperative banks. The paperwork required of a poor farmer for getting a small crop loan virtually pushes him out of the vicious ring of non-institutional credit of the private money lender who naturally charges him exorbitant rates of interest, thus depriving the poor farmer of all the meagre earnings he can make of a small piece of land. According to a Times of India report, nationalised banks were refusing to issue government funded interest-free loans to farmers. The one lakh rupee loan would be interest free if the principal would be returned within a year.
REASONS FOR FARMER’S PROBLEMS
Agriculture policy of the government: Agriculture lends employment to nearly half of India’s population. Earlier our farmers practised ‘subsistence farming’. This means that they produced only as much as required to feed themselves and would sell the surplus in market. They would preserve and use their own seeds and so had seed sovereignty. However, this subsistence farming proved inadequate to feed the teeming millions after Independence and India was forced to adopt the green revolution pioneered by Dr Norman Borlaug. This new method of farming was based on HYV (high yielding variety) seeds and a heavy dose of insecticides and fertilisers.
There is no doubt that food production in India rose dramatically with present wheat produce close to 94 million MT from the 10 million MT back in the 60’s. However, all this has come at a price. The cost of production has gone up dramatically reducing the profit that farmers made and put the Indian farmers at the mercy of the market that now control the prices and supply of the HYV seeds.
The green revolution also destroyed bio-diversity among the crops grown and introduced a mono-cropping culture and tendency in the Indian farmer for more and more produce with higher prices. Thus the agriculture policy of the government destroyed the environment, exposed the poor farmer to the vagaries of the market and reduced his profits by increasing the cost of production.
TRADE POLICY
After the collapse of communism, the West gave the slogan of privatisation, liberalisation and globalisation. It wants free trade sans barriers and tariffs. The concept sounds good except that it is a diabolical way of neo-colonisation. But many do not realise that the 4 million odd American farmers are subsidised by the US government to the tune of $ 20 billion. India too offers more or less the same amount of subsidy except that it applies to nearly 300 million farmers. Hence there is no way the Indian farmer can compete with the American farmer in terms of price competitiveness and is always at the loss in terms of getting remunerative prices for his harvest.
Under the influence and lobbying of the global food conglomerate Monsanto Inc the Uruguay round of trade talks in 1987 accepted that intellectual property rights applied to seeds as well and so all seed consumers ought to pay royalty to the company for purchase of its products. Immediately the price of Bt-Cotton the flagship seed of Monsanto shot up 8000% breaking the back of all poor cotton producing farmers. India too after 1991 introduced the SAP (structural adjustment programme) under pressure from the IMF / World Bank and allowed MNCs into the Indian market. Soon Monsanto along with their Indian partners swamped the market with their HYV seeds and GMOs commercialising the entire Indian agriculture sector causing great damage to the overall interests of the Indian farmer.
MONETARY / BANKING POLICY
The current Indian economy runs on fiat currency, deficit financing and interest based lending. This means that the currency is continually devalued and inflation is a part of life. The various costs of production for the farmer listed earlier are always increasing and the compensation he receives is ever losing value because of the rising prices of all essential commodities, consumables and durables. He cannot get interest-free loans and so is exposed to the private money lenders who exploit him without mercy by charging heavy interest rates and so he is perpetually in debt. This is the most important reason for farmers’ suicides and all focus should be on making our economy and society a zero-interest or interest-free one if we have to prevent the Indian farmer from becoming extinct.
SOLUTIONS TO FARMERS’ PROBLEMS
The Dr Narendra Jadhav Committee constituted by the government of Maharashtra to probe and offer solutions to farmers suicides has submitted some excellent recommendations:
AGRI SOLUTIONS
There should be a complete revamp of the prevailing cropping pattern in different regions of Maharashtra. Farmers should be encouraged to grow only those crops which suit their soil and climatic conditions. The new formula should include both organic and cost-effective inorganic methods. Farmers practising mono-cropping should be encouraged to grow more than one crop and have bio diversity on their fields. All pending irrigation projects to be completed and strict action against those selling spurious seeds in market.
FINANCIAL SOLUTIONS
There should be more and more rural financial institutions that lend without interest. Nationalised and cooperative banks must minimise paperwork and make the process of loan disbursement simple and easy. There is an imperative need to create an effective alternative to the prevailing system of moneylenders and relieving farmers from their clutches. In this regard, a plan for ‘Moneylender-free Village’ with at least one member of each family in the village becoming a member of some Self-Help Group (SHG) and every rural and semi-urban branch of each bank should adopt one village in its jurisdiction.
REMUNERATIVE PRICE SOLUTIONS
There MSP (minimum support price) is decided by the central government. At present it does not cover even the entire cost of production. M.S. Swaminathan has recommended that the support price should be the cost of production plus 50% profit. At present, it is only 15% profit.
MARKETING SYSTEM SOLUTIONS
In the prevailing agricultural marketing system, farmers are often exploited to a very large extent by middlemen and agents. The gap between farmers and final consumers should be reduced by creating an ‘agent free agricultural marketing system’. Additionally, farmers should be informed about prices of agriculture produce in different markets at their respective villages. The State level Krishi Vikas Parishad and the District level Samitis should formulate a plan to set up Krishi Kiosk one each for every ten villages on the lines of e-chaupal.
STORAGE INFRASTRUCTURE SOLUTIONS
The Government of Maharashtra should actively encourage the use of the RIDF (rural infrastructure development fund) for creation of basic infrastructural facilities in the rural areas through gram panchayats, NGOs and co-operative societies. It must set up rural warehouses and cold storage facilities.
FARMER FOCUSSED POLICIES
The Government must give marriage grants, education grants and loan waivers on periodic basis to help farmers and provide some kind of a social security net. They must also be trained on the latest techniques and tools available to increase agriculture produce along with awareness on agro business which will help them diversify their income source and lead to progress and prosperity.
[concluded;the first part of this article was published in Radiance Viewsweekly, Issue No. 23, 7-13 September 2014]