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Saturday, June 19, 2004

The electoral reverses suffered by ruling parties in most states forced governments to focus on agriculture.  It was untouched by economic reform and this neglect is aggravating the rural and agrarian crisis.  One tragic and dramatic manifestation of this crisis is the spate of suicides by farmers, particularly in Andhra Pradesh and Karnataka. Deeply indebted farmers, facing the prospect of starvation as well as loss of land assets, sometimes resort to the extreme step of suicide.  It is the relative deprivation, not absolute poverty that is leading to extreme individual responses like suicides.  The media and political parties understandably are focusing on suicides and the short-term relief to the families.

But the real crisis is an escalating and a long-term one.  After independence, pitifully small investments were made in agriculture resulting in low productivity, making farming unproductive and uncompetitive.  This crisis was further compounded by irrational and anti-farmer policies of governments.

In late 80’s, food grains were imported at a price much higher than domestic price, only to depress the market in India.  Or for that matter, whenever cotton prices were showing upward trend, exports were banned and imports were allowed even when the international price was higher than domestic prices.  Even now, a mature politician like Sharad Pawar announces a strange policy of not allowing export of food grains!  Millions of farmers have been pauperized by such callous neglect of the interests of agriculture.   And then, our politicians and bureaucrats feign surprise at the decline of agriculture and shed crocodile tears when farmers commit suicide.

Inadequate storage and processing facilities cause enormous distress to producers of perishable commodities.  Early last month, tomato in AP sold at 25 paise per kg on farm, and the price was not sufficient to recover even the cost of plucking.  Many farmers had to destroy the crop.  A month later, and consumers now have to shell out Rs. 15-20 a kg!  If only agro-processing units could buy tomato at Rs. 2 per kg when prices crash and storage facilities exist, things would have been radically better for the farmers as well as consumers.

What can we do to restore health to agriculture? There are four critical issues we need to address:

 First, productivity must improve.  Rice production in an ‘average country’ like Egypt is 9088 kg/ hectare while in AP it is a mere 2748 kg.  A tiny country like Cape Verde Islands (open the atlas and you can see it as small dots off the Atlantic coast of Africa) has a mango productivity that is more than 112 times that of AP.  Even by Indian standards, productivity in AP is lower in many other crops like sugarcane, groundnut, tobacco, cotton, banana, onion, pulses and oil seeds. We do have impressive infrastructure but we need adequately funded and properly focused research in new high yielding, disease-resistant varieties.  Productivity is also low because Urea is used in excess (it is subsidized) but Phosphorous and Potassium are under utilized.  Even worse, while our soils are poor in micronutrients (like Zinc) they are not even mapped for such deficiencies. All these need to be set right to enhance productivity and make our agriculture competitive.

Second, a proper and healthy credit system is the necessary prerequisite for sustainable agriculture. In their anxiety to get short-term accolades, politicians often destroyed credit institutions through misplaced sympathy, adhocism and tokenism.  It is time they realized that when credit institutions do an outstanding job, farmers’ distress is minimal.  Two outstanding examples are the Mulkanoor Cooperative Bank in Karimnagar district and the thrift societies promoted by Cooperative Development Foundation (CDF) in the Warangal-Karimnagar belt of AP.  None of these villages witnessed acute distress despite severe droughts.

Third, proper marketing facilities are the key to agricultural prosperity. The Mandi Act enacted in Punjab under the leadership of Pratap Singh Kairon and Chotu Lal is a great example to follow. New marketing mechanisms, removal of all internal and external trading restrictions, freedom to establish alternative markets, agricultural market reforms, proper storage facilities, and promotion of contract farming with market tie-ups – all these are critical for the future of agriculture.

Fourth, value addition needs to be promoted assiduously.  While Kellogg’s corn and wheat flakes are sold at exorbitant prices, no processing facilities exist for our produce.  Infrastructure building, research and development, technology transfer, promotion of processing industry through special incentives, new mechanisms to ensure input supply, proper storage and transport facilities are all necessary to transform our medieval agriculture into modern, vibrant economic activity.

No doubt, huge investments are needed to boost agriculture.  But there are also several non-monetary inputs that can help farmers dramatically without infusion of large cash.  Political parties and policy makers must focus on these practical, long-term solutions and implement them with sustained focus. Sympathy, short-term sops and populism cannot substitute sensible policies and well-considered actions.