AGRARIAN DISTRESS:

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Agricultural Distress in India

 26 Jun 2019

Why in News?
The last two years have been filled with images of farmers protests by the way of dumping
vegetables by the roadside and resorting to distress sales of grains and pulses.

Reasons
 Poor policy and Planning: In the past, Government strategy primarily focused on raising
agricultural output and improving food security rather than recognising the need to raise farmer’s
income,
 Absence of direct measure to promote farmers welfare.
 Declining average size of farm holdings: Increasing demographic pressure, disguised employment
in agriculture and conversion of agricultural land for alternative uses, have drastically reduced the
average land holding.
 Dependence on rainfall and climate: Indian agriculture is heavily dependent on monsoon and
ever-increasing global temperature has made agriculture more prone to extreme weather events.
 Collapsing farm prices: Low global prices have affected exports and the cheaper imports have hurt
domestic prices in the country.
 Lack of easy credit to agriculture and dependence on money lenders.
 Fragmented supply chains:

o Large gaps in storage, Cold chains

o Limited connectivity
o Absence of marketing infrastructure
 Lack of Mechanisation: Introduction of latest technology has been limited due to various reasons
like accessibility for credit and low awareness.
 Crop production is always at risk because of pests and diseases.
 Shortage of inputs like seeds and irrigation facilities.
 Deficiencies in Agricultural Produce Market Committees (APMC) Act.
 Profiteering by middlemen.

Impact

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 The above factors have resulted in low income for farmers which is evident from the incidence of
poverty among farm households.
 The low and highly fluctuating farm income is causing a detrimental effect on the interest in
farming and farm investments and is also forcing more and more cultivators, particularly younger
age group, to leave farming.
 The country also witnessed a sharp increase in the number of farmers suicides in the last decades.
 This can cause an adverse effect on the future of food security and the state of agriculture in the
country.
The National Commission on Farmers (NCF) and Evergreen Revolution

 NCF was constituted on November 18, 2004, under the chairmanship of Professor M.S.
Swaminathan.
 Its recommendations mainly focused on issues of access to resources and social security
entitlements and contain suggestions for inclusive growth of farmers and the agriculture sector in
India.
 On the issue of Minimum Support Price, the committee recommended providing farmers with a
minimum support price at 50% above the cost of production classified as C2 by the Commission for
Agricultural Costs and Prices (CACP).
 CACP proposes three definitions of production costs :

o A2: Actual paid-out expenses incurred by farmers — in cash and kind on seeds, fertilisers,
pesticides etc.
o A2+FL: It is A2 cost plus an imputed value of unpaid family labour.
o C2: It accounts for the rentals or interest loans, owned land and fixed capital assets over and
above A2+FL.
 The Committee recommended the MSP to be basic cost and prescribed MSP 50% above C2.

Solutions
 Development initiatives including infrastructure, technological interventions, farmer friendly
policies and institutional mechanisms can increase the agricultural growth and farmers income.
 Technology can help to reduce ‘yield gaps’ and thus improve productivity.
 The water-use efficiency can be improved significantly with better use of technologies that include
drip irrigation.
 The quantitative framework for doubling farmers income has the following seven sources of
growth:

o Increase in productivity of crops

o Increase in production of livestock
o Improvement in the efficiency of input use (cost saving)
o Increase in crop intensity
o Diversification towards high-value crops

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 o Improved price realization by farmers
o The shift of cultivators to non-farm jobs
 Improvements in allied sectors: Many small farmers cannot leave agriculture because of a lack of
opportunities in the non-farm sector. Hence, allied sectors like horticulture, food processing, poultry
etc needs to be pushed. For instance, government initiative like Project CHAMAN, AGRI-UDAAN
programme, Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters
(SAMPADA) etc. are notable.
 Cooperative Farming: In this context, consolidation of land holdings also becomes important to
raise farmer incomes. Farmers can voluntarily come together and pool land to gain the benefits of
size. Through consolidation, farmers can reap the economies of scale both in input procurement and
output marketing.
 There is a need to make a shift from rice and wheat-centric policies to millet, pulses, fruits,
vegetables, livestock and fish.
 The creation of a competitive, stable and unified national market is needed for farmers to get
better prices.

Government Steps to reduce Agrarian Distress

 The goal set to double farmers' income by 2022-23 is central to promote farmers welfare, reduce
agrarian distress and bring parity between the income of farmers and those working in non-
agricultural professions.
 In recent years, the Central government has taken various measures like the PM Fasal Bima
Yojana (PMFBY), PM Krishi Sinchai Yojana (PMKSY), electronic National Agricultural
market (e-NAM), Soil health card, Neem-coated urea etc.
 Agriculture is a major component of Priority Sector Lending (PSL), and the target for bank
lending to agriculture has been revised upwards every year.
 In addition to food subsidy under PDS, the government also provides fertilizer subsidy year after
year.
 In the budget of 2018 for farmers, the Union budget has announced MSPs at 50% above the
production cost.
 It also proposed to launch “Operation Greens” in the agriculture sector on the same lines of the
milk sector’s “Operation Flood”.
 The 2019 budget announced a farm support scheme (PM-KISAN) for farmers owning up to 2
hectares of lands.
 Some States have introduced farm support schemes, examples being the Rythu Bandhu Scheme
(Telangana) and the Krushak Assistance for Livelihood and Income Augmentation (KALIA)
scheme (Odisha)

Conclusion
 The ever changing agriculture sector requires proactive policy management which can maximize
benefits for all stakeholders.
 Raising the MSP, price deficiency payments or income support schemes can only be a partial
solution to the problem of providing remunerative returns to farmers.
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 A sustainable solution is market reforms to enable better price discovery combined with long-term
trade policies favourable to exports.
 For better price for farmers, agriculture has to go beyond farming and develop a value
chain comprising farming, wholesaling, warehousing, logistics, processing and retailing.
 The most effective and least distortionary way to support farmers would be through direct benefit
transfers.
 What is abundantly clear is that loan waivers aren’t the panacea they’re made out to be politically.
Those who want to help India’s farmers should be working much harder to figure out what they
really need.

AGRARIAN DISTRESS:

With 60% of Indian population dependent on it and contributing 17% of the GDP, Indian Agricultural sector is facing
adverse economic scenario characterised by Fragmented Land holdings; Vulnerability to weather shocks; Increased Input
Prices; Dependence on Informal Credit sources; Low Output Prices.

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Low growth, poor earnings and distress behaviour such as large-scale internal migration and disproportionately high
suicides have signalled that something is wrong with the rural sector.

Reasons:

 With the advent of the Green Revolution, modern methods of cultivation, primarily use of machinery, high-
yielding varieties of seeds, fertilisers and pesticides were emphasised. This strategy led to increase in agricultural
productivity but had probably “unintended” consequences.
 The new advancement led to cultivation of a single crop under the pressure of market. Farmer had to draw more
and more credit to plough the land.
 The uncertainty of crop yield and fluctuation in prices constituted distress to the farmers.
 There has been an observable decline in groundwater levels and not much has improved in storage and post-
harvest risk management.
 Development of Genetically modified crops have made farmers on private monopolies and chemical pesticides.
 India’s transportation costs are, on average, 20-30 percent higher than those of other countries mainly due to a
fragmented supply chain. This fragmentation is itself the result of policies that have inhibited investment,
integration and competition in transport, storage and distribution.
 Agricultural income declined but could not translate into decline of population dependence on agriculture.
 The high costs of getting agricultural produce from farm to market erode any advantage the Indian farmer enjoys
by virtue of being a cheap producer.
 Exclusion from institutional credit sources, the dependence on informal sources of credit, such as agricultural
input dealers was high. The level of indebtedness were also alarming.
 With limited insurance against unforeseen events, small and marginal farmers were at greater risk.
 Other reasons like changed pattern of land holdings, Changed cropping pattern, Liberalisation policies which
pushed Indian agriculture into the global markets without a level playing field, Growing cost of cultivation,
Uncertainty of crop output, Lack of profitable prices, indebtedness, neglect of agriculture by the government and
its agencies, decline of public investment, individualisation of agricultural operations constitute the vicious cycle a
farmer is trapped in.

Suggestions:

 Implement M.S. Swaminathan committee report on Minimum Support Price (MSP).

 Create an integrated and competitive domestic agricultural market and improve communication, transport, storage,
distribution, and agricultural support services.
 Providing farmers better access to services from transportation to distribution will enhance the economic gains
from, and strengthen the political case for, agricultural trade liberalization

Farmers’ Suicides in India – Reasons and

Responses

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India is an agrarian country with around 70% of its people depending directly or indirectly
upon agriculture. But farmers’ suicides in India is worrying.

As per the Central Government despite a multi-pronged approach to improving income and
social security of farmers, over 12,000 suicides were reported in the agricultural sector
every year since 2013. Farmer suicides account for approximately 10% of all suicides in
India. (Reference: TOI)

There is no denying that the menace of farmer’s suicides exists and runs counter to the
aspirations of reaping benefits of our demographic dividend. In this article, we are
analysing the farmers’ suicides in India and its related data, the reasons and the way
forward.

Farmers’ Suicides – What do the facts say?

 The list includes farmers-cultivators and agricultural labourers.
 Seven states account for 87.5% of total suicides in the farming sector in the country.
The states are Maharashtra, Karnataka, Telangana, Madhya
Pradesh, Chhattisgarh, Andhra Pradesh and Tamil Nadu 606.
 Both marginal farmers and small farmers are committing suicide.
 Maharashtra is the worst affected state.
 Ironically, Punjab, which benefited most from the Green Revolution, also presents a
depressing picture of farmer’s suicides in India. Between 1995-2015, 4687 farmers’
suicides have been reported from the state of Punjab of which 1334 from one Mansa
district alone.

What are the reasons behind farmers’ suicides in India?

Scholars have given various reasons such as monsoon failure, climate change,
high debt burdens, government policies, mental health, personal issues and family
problems among the reasons of farmers’ suicides in India. Let’s analyse.

 The surge in input costs: A major cause of the farmers’ suicides in India has been
the increasing burden on the farmers due to inflated prices of agricultural inputs. The
culmination of these factors is seen in the overall increase in the cost of cultivation,
for wheat, the cost at present is three times than it was in 2005.

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  Cost of chemicals and seeds: Be it the fertilisers, crop protection chemicals or
even the seeds for cultivation, farming has become expensive for the already
indebted farmers.
 Costs of Agricultural equipment: The input costs, moreover, aren’t limited to
the basic raw materials. Using agricultural equipment and machinery like
tractors, submersible pumps etc adds to the already surging costs. Besides, these
secondary inputs have themselves become less affordable for the small and
marginal farmers.
 Labour costs: Likewise, hiring labourers and animals is getting costlier too.
While this may reflect an improvement in the socio-economic status of the
labourers, driven primarily by MGNERGA and hike in minimum basic income,
this has not gone too well with boosting the agriculture sector.
 Distressed due to loans:
 NCRB data points out that in 2474 suicides out of the studied 3000 farmer
suicides in 2015 the victims had unpaid loans from local banks. This is clear
enough an indication for drawing correlations between the two. Whether or not
the banks had been harassing them, however, is a long-drawn debate and needs
more specific empirical evidence.
 Moreover, a shift away from usual trend also revealed that of the loans taken by
these farmers, only 9.8% were loans from money-lenders. Thus the pressure or
muscle-power of money-lenders could be far from being a major driving force,
as is otherwise perceived.
 Another source of strong linkages between farmer suicides and indebtedness is
reflected from the spread of the two. While Maharashtra had 1293 suicides for
indebtedness, Karnataka had 946. Note that both these states saw one of the
highest incidences of farmer suicides as well as indebtedness.
 Lack of direct integration with the market: Although initiatives like the National
Agricultural Market and contract farming are helping integrate the farmers’ produce
directly with the market, cutting the role of intermediaries, the reality is still lagging
behind.
 Lack of awareness: The digital divide, as well as the literacy gap, has made the
marginal and small farmers particularly vulnerable due to their inability to utilise the
positives of government policies. This is reflected in the continued unsustainable
cropping practices – like cultivating sugarcane in water-deficit regions.
 Water crisis: The concentration of these suicides in the water-deficit regions of states
like Maharashtra, Karnataka is a manifestation of how the water crisis and thereby
failure to meet production demands have intensified the menace. This is particularly
true in the backdrop of continued failed monsoons.
 Interstate water disputes: What has added to the already prevalent crisis is the
unwillingness to cater to each other’s water needs amongst the states. A case in point
is the recently resurfaced Kaveri dispute that saw Karnataka and Tamil Nadu battle
out water shortage both in and outside the tribunal even to the extent of non-
compliance with the tribunal award.
 Climate change has acted as the last nail in the coffin by resulting in furthering of the
uncertainties associated with the already uncertain monsoon system and hence
agricultural production. While incidents like flash floods have led to crop losses,
deferred monsoons have seen production shortfall year-in and year-out
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  India’s urban consumer driven economic policies: The political economy of India
is driven more by the urban consumers than the rural producers. This is reflected in
the urgency to impose price controls in case of price rise (imposing Minimum Export
Prices, bringing items under Essential Commodities etc) and a lacklustre
withdrawal once the price is under control. Contrast this with how we have been
imposing minimum import price to secure our steel sector. This differential treatment
to primary sector also limits profit margin and thereby hinders farmers’ chances of
breaking free from the cycle of indebtedness.
 Loan waivers instead of restructuring, re-investment measures: Our approach of
handling farmer indebtedness and hence farmer suicides has been appeasement
politics like the recent move by the UP government to waive off Rs 36000 crore
worth of loans. Surprisingly this comes at a time when agricultural yield is expected
to be better in the wake of a good monsoon.
 In essence, the factors sum up to crop failure, unsustainable production and
subsequent farmer indebtedness leading to failure of strengthening the economic state
of the farmer as the driving force behind these suicides.

Is Suicide a matter of economics?

The National Mental Health Association of the USA states that “No matter the race or age
of the person; how rich or poor they are, it is true that most people who commit suicide
have a mental or emotional disorder”. Suicide is not a matter of economics.

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This is well supported by the data released by World Health Organisation in 2011: while
the suicide rate in India, an agrarian economy, was 13 per 100,000; that of industrialised,
rich countries were often higher or comparable– South Korea – 28.5, Japan – 20.1, Russia –
18.2, USA- 12.6, Australia- 12.5, and UK-11.8. (Reference – Hindustan Times)

Responses to farmers’ suicides

Some of the major relief packages and debt waiver schemes announced by the government
are summarised below:

 2006 relief package – primarily aimed at 31 districts in the four states of Andhra
Pradesh, Maharashtra, Karnataka, and Kerala with a high relative incidence of
farmers suicides.
 Agricultural debt waiver and debt relief scheme, 2008 – Agricultural Debt Waiver
and Debt Relief Scheme in 2008 benefited over 36 million farmers at a cost of 65000
crore rupees (US$10 billion). This spending was aimed at writing of part of loan
principal as well as the interest owed by the farmers.
 2013 diversify income sources package – In 2013, the Government of India
launched a Special Livestock Sector and Fisheries Package for farmers suicide-prone
regions of Andhra Pradesh, Maharashtra, Karnataka and Kerala. The package was
aimed to diversify income sources of farmers.
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Apart from these Central Government initiatives, there are many efforts from the state
governments side like Maharashtra Bill to regulate farmer loan terms, 2008 and Kerala
Farmers’ Debt Relief Commission (Amendment) Bill, 2012.

Way Ahead

 Policies of integrated pest management to prevent pest damage – An all-inclusive

approach that integrates biological, chemical, mechanical and physical methodology
should be used to prevent crop damage. In this case, seeking inspiration
from Vietnam’s no-spray early rule (predatory beetles are sustained for a biological
pest control, cutting pesticide requirement by 50%) can be a good way to start.
 Lower fertilizer costs – Helping fertiliser industries cut down on costs, through
internal funding rather than external borrowing should lower the input costs.
 Leveraging advancements in Science and Technology by ensuring that state seed
policies focus on new genotypes, contract farming and sensitization to adverse
weather conditions.
 Precision farming techniques like SRI (Systematic Rice Intensification) must be
encouraged.
 Farm equipment policy must focus on imported equipment to provide for cheaper
local manufacture, some incentives like grant of duty credit scrips may be tried.
 Subsidies must be rerouted towards capital generation and entrepreneurial Custom
Hiring Centers (CHCs) and the implementation must be ensured in a timely fashion.
 Corporate Social Responsibility (CSR) must be encouraged in the agricultural
sector, particularly towards capacity-building, skill development and the
establishment of CHCs.
 Institutional financing must also be ensured to be adequate and inclusive rather than
catering to the elites within the farming community.
 Cooperative farming must be promoted amongst small and marginal farmers to
ensure that they are not left lurking while the big farmers reap the benefit at their cost.
 Doubling the farmer income by 2022 is a healthy aim, but loan waivers can’t be the
answer. Instead, sustainable agriculture that thrives on re-investment & restructuring
is the way ahead. The role that the state has been playing is one of emancipation, but
what the primary sector and the farmer needs is empowerment.
 Direct interventions:
 Early-warning signals for unsustainable loans to launch a 2-pronged approach
catering to both the burdened farmers as well as stressed banks.
 Options for restructuring loans must be used wherever possible.

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  Insurance claim settlements must be speedy and just.
 District wise list of indebted farmers and efforts in de-stressing them through
counselling and other alternative mechanisms should be tried.
 NABARD and local administration must take control of the situation and play a
greater role in curbing farmers’ suicides.
 Innovative efforts like Crowdfunding can be employed through the involvement of
Civil Society Organizations (CSOs).
 Efforts like Agro-Climatic zoning, education through DD Kisan, Soil Health Card
Scheme, various crop insurance and facilitative schemes like PM Krishi Sinchayi
Yojana will go a long way in helping out
 Community-led awareness must be taken employing a role model approach
highlighting progress of farmers who have benefited from sustainable & climate-
tailored agricultural practices

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