Resolution on Agrarian Crisis and the Way Out
Addressing the Agricultural Summit in Delhi on April 9, 2005, Prime Minister Manmohan Singh disputed the notion of the country passing through an agricultural crisis. Just after a year and two months he had to rush to Vidarbha on June 1, 2006 with a relief package to stem the wave of farmers’ suicides. His package however failed to prevent farmers from committing suicide and since his 2006 visit, the number of farmers who have committed suicides in Vidarbha alone has crossed 1200.
The agrarian crisis is a cruel counterpoint to the heady euphoria of a soaring Sensex and tall talks of double-digit economic growth. Marked by virtual stagnation in agricultural growth and increasing unviability of farming itself, agriculture is in a state of veritable disaster. Suicides by highly indebted farmers incurring heavy loss in farming have been continuing as a phenomenon in successive NDA and UPA regimes, and the “packaged” panaceas of the governments have hardly been able to stem this suicide wave. The failure of the government to even ease the crisis with its packages and remakes of the same packages, only proves that the government’s contention that the crisis was transient, partial and localized only in some regions of the country is totally wrong. Rather, the crisis is more fundamental and structural and its aggravation is very much rooted in the neo-liberal policies of liberalization and globalization.
On the face of it, the agrarian crisis presents itself as a series of paradoxes:
Only a closer look at the underlying factors at a deeper level can unravel the mystery behind these paradoxes. Apart from the tragic suicides by farmers, the agrarian crisis has many other serious dimensions like increasing unviability of farming as consequence of steep increase in input prices and a large lag of output prices, almost virtual stagnation in agricultural growth, growing indebtedness of farmers, recent deceleration of non-farm growth, the irrigation crisis, the crisis in the development of rural infrastructure, the ecological crisis and so on. Factors like the unprecedented corporate land-grab for industry and real estate speculation, declining public investment and capital formation in agriculture, continuing dependence of farmers on private moneylenders with usurious interests, lack of adequate insurance coverage for farming in the face of frequent natural and market risks, growing stranglehold of multinational companies in seeds and pesticide business, in retail and wholesale trade in agricultural commodities, heavy subsidies to agriculture in the developed countries and the inability of the poor Indian farmers to compete with the heavily subsidized agribusinesses and farmers of the West in the international market and trade liberalization and reckless opening up of the Indian agriculture in such a backdrop despite occasional posturing at the WTO, have all contributed to the aggravation of the present crisis. A deliberate conspiracy to dismantle state procurement and the public distribution system (PDS) despite declining food availability and alarmingly decreasing per capita consumption of food also contributed no less to the agrarian crisis. Above all, the failure to carry out land reforms and the continuing skewed landownership and land tenure and widespread prevalence of tenancy, mostly in its semi-feudal forms, remains the fundamental reason and the foundation of this crisis.
Stagnation in agricultural production
The average annual growth rate of foodgrains production in the last 12 years (from 1994-95 to 2006-07) works out to a meagre 1.49 per cent. The growth rate of non-foodgrains works out to 1.46 per cent per annum in this period. There is no need to stress the implication of the fact that this is lesser than the growth rate of the population. Interestingly, this entire period is, by strange coincidence, supposed to be the greatest and unprecedented boom period for the overall economy and the total GDP of the country.
According to the Economic Survey 2001-02, the average annual growth rate of crop production in the 1990s was a meagre 1.73% only. If we take the primary sector as a whole, the average annual growth rate of primary sector between 1991-92 and 2001-02 was just 2.7%. And if we look at agricultural production alone, the Economic Survey 2003-04 puts it at an annual average of 0.58% between 1992-93 and 2002-03. Even after excluding the extreme distress year of 2002-03, which witnessed an unprecedented negative growth of -15.6%, the average growth rate for the ten years from 1992-93 to 2001-02 works out to 2.2%.
These low agricultural growth rates still conceal the more severe crisis on the foodgrain crops front as certain non-food crops like horticulture and oilseeds have shown a relatively higher growth rate. If the overall agricultural growth could not register an average of 2 per cent growth in recent years, foodgrains production recorded barely half a per cent growth per annum in the last six years. In absolute terms, compared to 1999-2000 when the total foodgrains production in the country was 209.8 million tonnes, by 2006-07 the foodgrains production could be increased barely by about 6 million tonnes in as many years as the figure stood at 216.13 million tonnes in 2006-07. Food self-sufficiency, leave alone food security, is already under threat.
Another manifestation of the crisis, as well as a factor contributing to it, is the petering out of the rural non-farm success story by the late 1990s. Compared to around 1% annual growth rate in agricultural employment, the rural non-farm employment was growing at the rate of 4.3% per annum in the 1980s and it fell to just 2% during 1998-2000. Several studies have established the mutual inter-dependence between the farm and the non-farm growth, one acting as a stimulant for the other. And now both are reinforcing each other’s stagnation. Many studies have confirmed that the decline in rural non-farm activities by the end of 1990s was mainly due to a sharp decline in public investment over the years.
Growing Indebtedness and the Resurgence of Usury
Heavy indebtedness has been the immediate reason for most suicides by farmers. The NSSO survey on farmers’ indebtedness conducted in 2002-2003 but published in 2005 July had the following findings: the shares of indebted farmers in some states are – Andhra Pradesh (82 per cent), Tamil Nadu (74.5 per cent), Punjab (65.4 per cent), Kerala (64.4 per cent), Karnataka (61. 6 per cent), Maharashtra (54.8 per cent, but very high in Vidarbha and north Maharashtra), Haryana (53 per cent), Rajasthan (53 per cent), Gujarat (53 per cent), Madhya Pradesh (53 per cent) and West Bengal (53 per cent) and the share of indebted farmers’ households is low only in states like Uttar Pradesh, Bihar, Orissa, MP, Chattisgarh, Jharkhand etc., where incidentally agriculture is very backward and incidence of suicides among farmers is also low.
It is not just routine indebtedness but a virtual debt trap for many farmers. For instance, in Punjab, the total annual rural debt of the state—Rs.24,000 crore in 2003-04—is more than its gross annual earnings from agriculture. According to a recent report of the National Sample Survey Organization (NSSO), each Punjab farmer has a debt of Rs.41,576, against the national average of Rs.12,505. If the total debt is more than the gross annual earnings from agriculture and if the average debt per farmer is Rs. 41,576, that means already many small and marginal farmers must have irretrievably fallen into the debt trap. Their interest commitment per year would work out to more than their earnings/profits from agriculture. As it is, many of them have been forced out of farming, losing their land and a good number even resorting to the extreme step. Punjab is a clear example to show that under conditions of the present Indian agrarian crisis, high indebtedness is also associated with high-income but high-risk, high-investment and high-cost farming which precisely is being advocated as the solution for the crisis.
Institutional credit hardly accounts for 40 per cent of the total agricultural credit and farmers depend on private moneylenders who charge exorbitant rates of interest – up to 60 per cent and even more. Liberalisation of the banking sector and the recommendations of the Narasimham Committees have pushed banks to curtail their priority sector lending, especially to agriculture. The number of rural bank branches of Scheduled Commercial Banks witnessed an absolute decline in the 1990s as many loss-making branches were closed down. There were 33,017 rural branches of SCBs in 1995 and in 2004 there were only 32,080 which means around 1000 branches have been closed down in this period.
Even the number of farm loan accounts with scheduled commercial banks had declined, as cited above, in absolute terms from 27.74 million in March 1992 to 20.84 million in March 2003. To top it all, the RBI has now begun toying with the idea of legitimizing private moneylenders by registering them and legalizing their private moneylending! It would be no surprise if the banks start franchising their lending operations next through these moneylenders in this era of outsourcing!
Whatever institutional credit is available is cornered mostly by big farmers. Several case studies have shown that bulk of the institutional credit goes to farmers owning more than 10 acres. And kulaks often recycle this institutional credit as private loans to small and middle peasants at usurious rates of interest. When it comes to repayment, these kulaks often turn out to be willful defaulters. Of course, the share of agricultural credit in total non-performing assets of banks is only around 3-4 per cent while major and medium companies account for 60 per cent of bank NPAs. Yet while the corporate sector gets away with astronomical amount of defaults and major and medium companies periodically get loan waivers without a grumble from the banking bureaucracy, the loans of small farmers are never written off. Medium, small and marginal farmers have a strong case and ample justification for loan waiver. A former Union Banking Secretary has argued strongly in favour of loan waiver for loans of up to Rs. 10,000 and his calculation is that such a waiver across the country would only entail a financial burden of Rs. 4,000-5,000 crore which the Union Government can easily make good to banks, but the UPA government is completely silent on this proposal.
Trade Liberalisation in Agricultural Commodities
A key factor behind the agrarian crisis is the impact of trade liberalisation on the output prices following the signing of the Agreement on Agriculture under the WTO. The price crash due to trade liberalisation has been quite traumatic in certain cases. Kerala is perhaps the worst affected state due to the fallout of the WTO agreement. Over the past few years, ever since economic liberalisation became the development mantra, "God’s own country" has been flooded with cheap and highly subsidised agricultural imports, throwing its agrarian economy out of gear. Coconut prices have crashed, down from Rs.8 to Rs.2 at some point of time. Rubber has plummeted from Rs.60 to Rs.16 and coffee from Rs.58 in 1999 to Rs.30 per kg in 2000. Even spices have not been spared, with pepper prices falling from Rs.2,600 to Rs.1,300 per quintal in the consecutive period. Despite the fall in domestic prices, the export of spices from India fell from Rs.2043.68 crore in 1999-2000 to Rs.1940.55 crore in 2001-02. Despite Manmohan Government’s emphasis on export-oriented diversification and assistance to big businesses with spending on export infrastructure for floriculture, export of floriculture products fell from Rs.1655.49 crore in 2002-03 to a mere Rs.304.69 crore in 2005-06.
The Vajpayee Government eliminated the quantitative restrictions (QRs) on 714 agricultural commodities and products on April 1, 2001, fully two years ahead of the time India was required to do so by the WTO. Average tariff level was lowered to 35%, far below the bound rate fixed by the WTO, which was 100% for crops. No wonder then that agricultural imports are growing much faster than agricultural exports. In fact, between 1998 and 2000-01, the average annual import of farm products rose by about 64 per cent, while exports declined by 7 per cent. In fact, the impact of trade liberalisation is not fully captured by the increase in the volume of imports. Even if there is no actual import, the low international prices and the threat of potential import depress the domestic price. And international prices are pulled down not by market forces of supply and demand, but primarily by absurdly high farm subsidies in developed countries. In the United States, subsidy to a mere 9,00,000 farmers has increased by 700% since 1996. The US Government is providing a subsidy of US $35,000 to each of its farmers. How can the poor Indian farmer, with an average annual income of $300-400, compete with his American counterpart?
Though, after 2000, the agriculture exports show an increase in absolute figures – from Rs.34653.94 crore in 2002-03 to Rs.49802.92 crore in 2005-06 – the share of agricultural exports in country’s total exports fell from 13.58 per cent in 2002-03 to 10.95 per cent in 2005-06. Worse, though the aggregate value of exports has increased, the unit value has declined for many commodities bringing down farmers’ earnings.
The indebtedness and suicides by cotton farmers in Vidarbha and Telengana should also be seen as a particularly disastrous upshot of trade liberalization. Cotton exports were liberalised in 1990-91 in the backdrop of high international prices. In a single year, there was a jump of 3,74,000 tonnes in the export of raw cotton – more than a tenfold jump in a single year – compared to just 34,000 tonnes of total export in the previous three years. Lured by high prices, lakhs of farmers diversified and switched over to cotton, especially in Telengana, Vidarbha and North Karnataka and even in Punjab, taking heavy loans at exorbitant interests to meet the switchover costs and high input costs of cotton cultivation. But the world prices of cotton started crashing from the end of 1996 onwards and by 2001 it was practically at half the level it was in 1995. Currently, it is the turn of the so-called “high-value” farming of sugarcane growers to suffer a similar fate as suffered by cotton farmers in the late 1990s. Following a crash in the international market prices and glut in exports, domestic sugar stocks are piling up and unscrupulous sugar mill barons are trying to take undue advantage of the adversity of the farmers by refusing to specify beforehand the price at which they would procure or the quantity they would take and force the farmers to go in for distress sales to some “independent” agents who are only undeclared middlemen for the mills, at prices much below the MSP.
Price Precipice – Output Prices Stagnate, Input Prices Soar
Indian farmers are being squeezed by a price precipice – sharply increasing input prices and stagnating output prices. The prices of all agricultural inputs are skyrocketing – fertilisers, pesticides, seeds, water and even infrastructure costs like transportation and cold storage. Thanks to perennial power crisis in many states the farmers are increasingly dependent on diesel engines and the price of diesel has more than doubled since 1998. The prices of fertilizers have also increased steadily. So have traditional seed prices, not to speak of the exorbitant monopoly prices of genetically modified seeds.
In contrast, the output price for paddy never increased more than 4 per cent per annum since 2001-02 and the price of wheat more than 2 per cent on an average. The price crash in the case of the so-called “commercial crops” is even more dramatic. Pepper prices have fallen from Rs.27,000 a quintal in 1997 to about Rs.5,400 a quintal subsequently. Coffee prices dropped to a low of Rs.30-40 a kg at some point before some marginal recovery. The better grades of cardamom have seen prices dip by 75 per cent. Even where value addition to the agricultural produce has gone up substantially as in the case of horticultural crops like vegetables, the share of the farmer in this value addition is virtually zero thanks to the speculative trade lobby and fleecing middlemen.
The collapse in output prices is not a result of increased production or higher productivity. In fact, prices are falling even as the rate of production is falling, though the reverse should happen if the forces of demand and supply are in full play. Significantly, output prices have fallen even as the cost of production has gone up. The cause for this unprecedented fall is partly the wrong export-import policies. According to Prof.Abhijit Sen, former chairman of the Agricultural Costs and Prices Commission and now a Planning Commission member, the terms of trade have shifted 5 to 6% against agriculture since late 1990s. The profitability of agriculture has fallen by 25-40% depending on the crop, season and region. Barbara Harriss-White has documented the crisis of rice farmers in West Bengal due to price crash – which has led to some farmers’ suicides even in the most fertile paddy belt of Burdwan – because of the LF Government’s failure to allocate adequate funds to the food department to procure paddy from the farmers at centrally fixed MSP and because of competition from cheaper rice smuggled in from Nepal, Bangladesh and Burma and from Bihar and Jharkhand where wages are too low.
The ratio of retail price (the price the consumer pays) for vegetables in metropolitan cities to the farm-gate price (the price the farmer gets) is often 10:1. This despite the fact that traders are not a few in number and hoarding is not possible with perishables. But still there is effective price manipulation by organized trade cartels. For instance, recently farmers in Nasik landed into a crisis when they got Rs.1-2 for onions even as onions were selling in the range of Rs.25-40 in Delhi and even in Mumbai. Such price differentials make no rational economic sense given the level of transportation cost. Speculative role of the mercantile capital alone can explain this and such speculation would become deadlier now following the entry of big capital into wholesale and retail trading.
Another paradoxical twist to this price precipice is that the use of more inputs, in quantity as well as value terms, has not increased the productivity, production, and earnings of farmers but only their indebtedness.
This price precipice, aggravated by the entry of big capital in procurement, wholesale and retail trade in agricultural commodities, and the role of the speculative big capital in forward trading, is yet another major factor causing the agrarian crisis and all these are the direct result of neo-liberal policies of liberalisation and globalization of the UPA and NDA regimes.
Strategic Neglect of Indian Agriculture
The Ninth Plan as well as the Tenth Plan had set the target of agricultural growth at 4 per cent per annum and it could not be achieved. Without seriously analysing the reasons for this failure, the Approach Paper to the Eleventh Plan has again come up with 4 per cent target and the failure story is going to repeat once again all over.
"The Department of Agriculture had sought an outlay of Rs.18,253.81 crore for the Ninth Five-Year Plan, but was provided Rs.7,813.69 crore, which was only 43 per cent of the demand. Again during the 10th Plan, as against a demand of Rs.25,000 crore, the sector was given Rs.13,000 crore, which was just 52.8 per cent of the demand. No wonder, the Plan targets were not achieved. The target set for the current XI Plan is 4 per cent"
Interestingly, the Approach Paper to the Eleventh Plan of the Planning Commission approved by the National Development Council itself says: “Several modelling exercises suggest that a 4% growth of agriculture will not be sustainable from the demand side even with 8 to 9 per cent GDP growth unless agricultural exports pick up the slack or definite steps are taken to increase consumption by the poor beyond what is likely as a result of GDP growth alone”. A sharp increase in agricultural exports, going by the trend in the post-WTO Agreement on Agriculture (AoA) regime, is a pious dream. And the chances of any dramatic – nay, even moderate – increase in the food consumption of the poor is equally remote in spite of all the hype about the NREGA.
Contrary to its lip service to higher agricultural growth, the UPA Government appears to have come to the conclusion that agricultural growth is not important to the overall GDP growth. Several bourgeois ideologues have argued that the share of agriculture in the GDP has declined to 18.5 per cent and even doubling the present 2 per cent agricultural growth would contribute at best 0.5 per cent to the GDP growth. This argument is fallacious on several counts. Firstly, 60 per cent of the workforce is still dependent on agriculture. Higher incomes to them, due to higher agricultural growth, alone can sustain non-agricultural growth. Secondly, service sector growth cannot be sustained without sustained growth in the real productive sectors of the economy. Thirdly, high GDP growth cannot be sustained only through higher investment, depending on foreign fund flows, both FDI and external commercial borrowing by the industry. If the Indian economy has to acquire more internal dynamism, agriculture should continue to remain the foundation for overall growth. With persistent and prolonged stagnation in the agricultural sector, a prolonged recession in the manufacturing and service sectors is not far away and when it sets in, greater surrender to foreign capital is inevitable.
Declining Public Investment in Agriculture
Rural expenditure has fallen to less than six per cent of GDP during the last five years, a fall of around 30,000 crores of rupees annually. In absolute terms, public investments in agriculture have been stagnating or falling over years, and stand at around Rs.20,000 crore today.
The Gross Capital Formation in agriculture is shockingly low. The share of agriculture in total gross capital formation (GCF) had progressively come down from 15.4 per cent in 1980-81 to about 8 per cent by the end of the Ninth Plan (2001-02), and that as a percentage of GDP it has declined from 3.5 in 1980-81 to 1.3 in 2001-02.
Presently, bulk of the capital formation comes from farmers. According to the Economic Survey 2002-03 [p.172], during 1993-94 to 1995-96, the share of public sector had already declined to 32.3% in Gross Capital Formation (GCF) in Agriculture and it further declined to 26.6% during 1996-97 to 1998-99 and to 24.8% during 1999-2000 to 2001-02.
But the decline in public sector investment and capital formation has not been made good by the limited increase in private investment and capital formation. All India Debt and Investment Surveys (AIDIS) reveal a decline in the gross capital formation of rural households from 9.6 per cent in 1962 to 6.5 per cent in 1982, and further to 3.7 per cent in 1992. These surveys show a decline in the number of cultivator households reporting investment in farm business from 19.3 per cent in 1972 to 11.89 per cent in 1991-92, suggesting a vicious circle of low income, low investment and low output.
This decline in public investment is reflected most ominously in the area of irrigation. The investment in irrigation has sharply come down from 23 percent of the total outlay in the first five-year plan period to a mere five percent now notwithstanding Bharat Nirman and its Accelerated Irrigation Benefit Scheme (AIBS) and this scenario looks worse considering the fact that the share of plan outlay itself has shrunk dramatically in the total government expenditure. Even if the full target for the irrigation component of Bharat Nirman is to be spent, each district in India would only get around Rs.70 crore on an average, which is mere peanuts.
Contrast this steady drop in investment in agriculture to the massive tax concessions granted to the corporate sector. The Finance Minister himself put the value of such concessions at a staggering Rs. 158,000 crore in his 2006-07 budget. Tax loss due to SEZs has also been estimated by the Finance Ministry to be around an additional Rs.100,000 crore in the next few years.
According to the RBI, while public investment in agriculture declined from 3.4 per cent of agricultural GDP during 1976-80 to 2.6 per cent during 2005-06, budgetary subsidies to agriculture surged from three per cent (1976-80) to seven per cent of the GDP (2001-03). Now bulk of the subsidies to agriculture goes to big farmers cultivating 10 or more acres, while fertilizer subsidies go mostly to inefficient fertilizer units. Some economists have rightly argued in favour of reversing this 4:1 ratio between subsidy and investment to achieve more broad-based growth as the bulk of these subsidies are being grabbed by kulaks while investment will have more beneficial impact on small and medium farmers.
Non-Existent Rural Infrastructure
Higher agricultural growth and escape from the agrarian crisis are impossible without further development of rural infrastructure. For reasons of space, we are dealing here only with a couple of key areas of other infrastructural aspects. Despite all the hype about promoting high-value horticulture and a so-called thrust with the Horticultural Mission, the number of cold-storages in the whole of India 2006 was only 5101 and their total capacity was only 21.6 million tonnes of storage though the total production of horticultural crops was around 185 million tonnes that year. Punjab, the “horticultural contract farming” showpiece, had only 420 cold-storages with a capacity of 1.3 million tonnes whereas West Bengal had 434 with a capacity of 5.3 million tonnes.
According to the data provided by the Ministry of Shipping and Road Transport and Highways, in 2002, the whole of Indian countryside had only 2,15,630 kms of zila panchayat roads and, of this, only 4,99,462 kms of roads were surfaced roads (not necessarily all-weather, metalled roads), 2,83,832 kms were unsurfaced roads and the rest were unmotorable and the corresponding figures for panchayat samiti roads were 1,48,184 kms, 37,273 kms and 1,01,831 kms. To get an idea how woefully short this is, the number of inhabited villages in India according to the 2001 Census is 593,732. If we consider only these zila parishad and panchayat samiti roads figures and exclude the roads that come under village panchayats, it doesn’t work out to even 1 km of such roads per village, and zila parishad and panchayat samiti roads are those which interconnect villages and connect them to nearby markets in towns and cities.
Often we have areas developed in one aspect of infrastructure but miserably lacking in other components. Take the case of Himachal Pradesh for example. Paradoxically enough, this state has the highest concentration of cold-storages but most of the villages have no road connectivity! Out of a total of 16,997 villages, only 5,876 villages are connected by roads.
The public expenditure for the development of rural infrastructure is mostly funded by the Rural Infrastructure Development Fund (RIDF), and in the five years between 2001-02 to 2005-06, the total amount disbursed by the RIDF was only Rs. 22092 crore, averaging less than Rs.4500 crore per year and this works out to around Rs.70,000 per village in India for infrastructural development! By contrast, the Finance Minister plans to mobilize Rs. 160,000 crore in the next few years for infrastructural development for industries including ports, airports, highways and freeways and power!
Failure and Betrayal on the Land Reform Front
The failure of the Indian big bourgeoisie to carry out thorough land reforms in India because of their historic alliance with feudal landlords comes back to haunt them time and again. If the agrarian crisis has assumed such serious proportions, one of the fundamental reasons lies in the present skewed land ownership and land tenure.
There is still enormous concentration of land in a few hands. Around 1.6 per cent of total landholders occupy approximately 17.3 per cent of the total operated area, and on the other hand, no less than 59.4 per cent of landholders operate just 15.1 per cent of it. This inequality in landholding and survival of landlordism is at the root of the present agrarian crisis.
According to the NSSO Operational Holdings data, about 78.7% of holdings falling in marginal and small farmers categories operating less than 2.0 hectares of land operate only 32.4% of the total area whereas 8.7% of holdings belonging to medium and large category operating above 4 hectares of land operate 44.4% of total area. The average size of holding for marginal farmers accounting for 61.6% of the operational holdings is a paltry 0.40 hectare in 1995-96. For another 18.7% of holdings falling in the small farmer category, the average holding size is 1.42 hectare. [Agricultural Statistics at a Glance 2004, Ministry of Agriculture] State-subsidised consolidation of holdings, especially in the case of small and marginal farmers and tenants, has been given up. Moreover, a sizable chunk of tenant farmers pay a substantial part of their produce/earnings to the landowners. In other words, a huge chunk of money is thus being siphoned off by the landowners which otherwise could have gone into reinvestment in agriculture and increasing productivity.
West Bengal under three decades of Left Front rule is widely hailed as the most celebrated land redistribution and tenancy reform model in the country. But recently the UNDP’s West Bengal Human Development Report confirmed a reverse trend of eviction of pattadars and sharecroppers that was being observed on a micro level for quite some time. According to this report, 13.23% of pattadars who had gained land under redistribution programme have now lost their land while 14.37% of registered bargadars have also been evicted. In other words, around 2.5 lakh small sharecroppers have been evicted – mostly reinforced by unviability and lack of access to institutional credit – under the CPI(M)-led Left regime even before the government started grabbing their land – the plan is to acquire a total of 1,25,000 acres of farm land for corporate houses, foreign and domestic – to hand it over to the Tatas and Salims!
Like several other state governments, the CPI(M)-led Left Front government of West Bengal is also contemplating a reversal of land ceiling legislation to enable consolidation of viable holding. But the government never bothered to consider the ideas of its own erstwhile ministers and architects of land reforms who had recommended that the state government make arrangement for bank credit for outright purchase of barga/rented land from the landowners by around 1.6 million bargadars accounting for 25-28% of the operated area in West Bengal. Readily available state-guaranteed bank credit to tenants for such consolidation of rented holdings and to marginal owners to buy more land and consolidate their holdings would go a long way in improving the viability of agriculture. But all governments are now thinking of relaxing or reversing tenancy laws to facilitate land consolidation by re-expropriating small and marginal peasants.
Ecological Crisis and Climate Change
The ecological problems thrown up by Green Revolution like waterlogging and the consequent new pest attacks, salinity and crop failure, decline in groundwater table, soil erosion and depletion of soil nutrients, chemical pollution due to improper use of fertilizers and pesticides etc., are well known. All these problems stand aggravated in the present phase of post-Green Revolution crisis. These problems can hardly be addressed at the farm level only, yet with declining public investment, the government not only doesn’t spend money to overcome these problems but doesn’t have a policy even to address these. The death of many young girls exploited as child labour due to pesticide poisoning in MNC cotton seed farms in AP is well known. India is an attractive emerging market for all pesticides that are banned in EU. Informed scientists live with the fear of the unknown as a result of allowing MNCs to undertake indiscriminate field trials of GM crops. Unscrupulous companies mislead farmers by selling them toxic injectible enzymes and steroid stimulants to make their plants and vegetables grow bigger. Yet this serious ecological dimension of the present agrarian crisis has evoked very little attention.
The plight of the agricultural sector is often compounded by so-called natural disasters like drought and flood. It is now however increasingly recognized that such disasters are much more man-made than natural. As a result of climate change, total seasonal/annual precipitation is declining and rainfall pattern is erratic. Monsoons are also becoming erratic, both spatially and temporally, and do not coincide with traditional agricultural seasons. Either there are heavy rains and floods. The total water flows in the rivers are receding. Worse, there are inexplicable high-tides in the sea as a result of which saline water enters the rivers and fields get inundated under sea water, damaging agriculture. Surface water sources either do not get filled up or simply dry up. Scientists explain all these with one factor – global warming.
A study brought out by the Centre for Disaster Management and Rural Reconstruction in March 2003 says that there are 232 blocks in 40 districts with desert conditions (including cold desert) spread in seven states covering an area of 4,57,949 sq.km., and 971 blocks in 183 districts spread in 16 states covering an area of 7,45,914 sq.km., which are drought prone. The report further says that about 29% of the total geographical area of India is drought prone. There is a drought in the country once in five years on an average. The decline in area under cultivation in the drought-affected districts varied from 10-30% during the drought in 2002, and the consequent fall in production was estimated at 18-20% in kharif and 10-12% in rabi.
The government’s approach toward these disasters is callous, ad-hoc and extremely inadequate. Even when an area is recognized as drought- or flood-hit, farmers are compensated most inadequately for the crop loss. While their loss runs up to Rs.10,000-15,000 per acre, the maximum they have got was in the range of Rs.2000-3000. Even in the proposed Disaster Management Bill, there is no legally entitled right to compensation. And the long-term damages are usually not addressed at all.
Instead of putting pressure on the governments of the developed nations to rein in their industry and to curb carbon emissions, a section of the pro-corporate media is blaming the tropical agriculture with standing water in the fields for methane and CO2 emissions. As much as many of the irrigation-related problems are related to global warming, saving Indian farmers is also inextricably linked with putting curbs on Western big businesses.
Crisis Spreads to Allied Sectors
Relatively higher growth in allied sectors like fishing and dairying initially helped the government to cover up to some extent the real extent of crisis in crop sector. But after the abolition of QRs in import of dairy products and slashing of tariff rates by the Vajpayee Government, dumping of cheaper skimmed milk power in the Indian market and the low international prices have transmitted the crisis to Indian dairy farmers as well. Under WTO, India bound itself to only 15 per cent duty upto 10,000 tonnes of powdered milk imports. With milk from Denmak and Holland flooding Indian markets, Punjab, where diversification into dairying was very advanced, was among the worst affected. There is also a conspiracy by the government to subvert the successful cooperative dairy movement and NDDB and the Operation Flood schemes are not being extended to several states.
Fisheries is also under stress as the operation of foreign trawlers and other fishing vessels of foreign companies in Indian waters has reduced the catch of smaller Indian fishermen by half, especially in Kerala-Mangalore coast. In the mid-1980s, the then Congress government reversed the existing policy of banning foreign vessels from fishing in Indian waters and in 1986 allowed 97 foreign companies with 311 vessels to do fishing in Indian waters. The NDA Government adopted a new policy in 2001 to allow more foreign fishing companies, precipitating a severe crisis for Kerala fisherfolk. In October 2004, the UPA Cabinet cleared the Marine Fishing Policy 2004 and gave its nod for suitable amendments to the Marine Fishing Regulation Act and the Maritime Zones on India (Regulation of Fishing by Foreign Vessels) Act 1981 to allow foreign vessels and foreign companies to fish in Indian waters. The WTO removed fishing from agriculture category and brought it under non-agriculture. In spite of committee recommendations calling for banning of deep-sea fishing by foreign vessels, the UPA Government allowed, in 2005, under its new policy, 725 joint venture companies which are only front companies for foreign companies to fish in Indian waters.
The globalisation of Indian seas and liberalization of Indian fisheries, by both the NDA and the UPA governments, have wreaked a greater havoc on the fisherfolks in southern states than the tsunami. In such a backdrop, it is only a matter of time before the allied sectors also land into a similar crisis like the crop production sector.
Since the corporate landgrab is an extraneous factor adding to the agony of farmers suffering from the agrarian crisis and not an inherent part of the agrarian crisis itself, we are here making only a passing reference to this major phenomenon. Till July 31 2007, the BoA has granted formal approvals to 362 SEZs involving 55,000 hectares and in-principle approval to 186 SEZs involving above 140,000 hectares. SEZs apart, real estate projects like new privately promoted towns and satellite townships around urban centres have grabbed lakhs of hectares of peri-urban land. MoUs signed by different state governments for mining and other mega industrial projects also entail substantial corporate landgrab. This unprecedented landgrab ‘legitimized’ under the Land Acquisition Act of the colonial era is resulting in massive displacement of agricultural population, loss of vast stretches of fertile agricultural land in many places, and outright destruction of employment and livelihood for sections of the rural poor. This is adding to their misery.
Impact of the Crisis on Agricultural Labourers
Agrarian crisis not only affects peasants but also agricultural labourers as rich farmers try to pass on part of the burden of their crisis on labourers. Employment opportunities decline and real wages of agricultural labourers stagnate and even decline in some areas. Caste oppression intensifies as a form of labour control.
The official data (NSSO/RLE) however claim a steady increase in the real wages of agricultural labourers between 1983 to 1999-2000. The peak liberalization period of 1993-94 to 1999-2000 is being trumpeted as the period of very sharp increase in real wages of agricultural labourers. At the all-India level, the average wage per agricultural labourer had almost doubled from Rs.21.34 to Rs.40.15 in this period. This doubling of real wages has been reported in official data in almost all states except Assam, Madhya Pradesh, Rajasthan, Orissa and Uttar Pradesh where the increase had somewhat fallen short by 10-20 per cent. Is it really true that the real wages are increasing steadily in all regions? Especially when employment growth in agriculture had fallen to 0.1 per cent, resulting in absolutely no expansion in demand for labour and no additional labour absorption? Empirical data from field reports clearly suggest contrary trends, with such increase being observed only in some regions of Andhra Pradesh and Tamil Nadu (there too real wages are stagnating since 2000 despite increases in nominal wage as prices have been increasing more sharply). Agricultural wages growth in traditionally high-wage regions like Kerala, Punjab, Haryana and western UP has been getting depressed clearly.
Wage differentials across regions and states have also increased in this period as suggested by the increasing coefficient of variation in wage levels across states in the RLE data. In fact, the wage differentials are very sharp: in 1999-2000, the average wage per agricultural labourer was Rs.95.34 and Rs.63.44 in Kerala and Punjab and Rs.28.63 and Rs.35.04 in Orissa and Bihar. The per worker productivity was Rs.30,816 in Punjab, Rs.28,695 in Haryana, Rs.18,983 in Kerala whereas it was only Rs.5,856 in Orissa and Rs.4,834 in Bihar. The per hectare productivity in 1996-97 (at 1990-93 constant prices) in these states were (Rs/ha at 1990-93 constant prices): Rs.13,288 in Punjab, Rs.10,072 in Haryana, Rs.15,397 in Tamil Nadu, Rs.17,424 in Kerala but only Rs.5,390 in Orissa and Rs.6,403 in Bihar. Due to higher level of organization and consciousness, the wage level is more in Kerala than in Punjab and in Bihar than in Orissa despite relatively lower productivity in these states. Yet these productivity differentials are crucial in governing wage differentials and as liberalization and globalisation accentuate the unevenness of the spread of capitalist penetration in agriculture with myriad variations in forms in different regions, the wage levels are also becoming highly uneven.
Even assuming that the official data on the extent of real wage increase for agricultural labourers in 1990s to be correct, the agrarian crisis has brought about a perceptible trend of wage compression in recent years in all states. The stagnation is now also reflected in NSSO figures: NSSO 61 Round report shows that the average daily earning of a labourer in agriculture in 2003-04 was Rs.40.10 whereas it was Rs.40.15 in 1999-2000. Not only medium farmers but also big kulaks complain of bad times and refuse wage increases. The share of family labour is increasing among small and middle farmers. The stagnation in non-farm employment and wages are also tightening the labour market conditions for agricultural labourers. Between 1991 and 2001 Censuses, in many states, the number of agricultural labourers has sharply increased, and on closer examination it turns out that the increase is sharper among marginal agricultural labourers than among main agricultural labourers. Especially, the relatively higher increase among marginal labourers is common among women labourers. This is one important dimension of “feminization of agricultural labour”. Under pressure for wage compression due to the crisis, landowners resort to increasing use of female labour and women labourers are invariably paid 60-70 per cent, or even 50 per cent and below in some areas, compared to men in different operations for the same type of work. That this happens even in the so-called “contract” work in some places in Tamil Nadu and Andhra Pradesh is a clear proof that unrelated to intensity of work or labour productivity differentials, wage differentials are rooted in kulaks’ exploitation of patriarchal values of the traditional village society to reduce their wage cost by exploiting women for very low wages.
In the peak liberalization era, while the employment growth in the whole of the economy came down from 2.06 per cent per annum in 1983-84 to 1993-94 period to 1.82 per cent in 1993-94 to 2004-05 period, the employment growth in agriculture had almost collapsed to zero (0.10 per cent). The stagnation of non-farm employment growth by late 1990s compounded this problem. The relative share of non-farm workers among all rural labourers has marginally declined of late. According to Rural Labour Enquiry, the percentage of agricultural labourers to total rural labourers increased marginally from 83.27 per cent in 1987-88 to 84.81 per cent in 1999-2000. The share of workforce in agriculture in the country came down slowly – from 63.9 per cent in 1993-94 to 56.5 per cent in 2004-05. During this period, the share of agricultural sector in the GDP fell from around 33 per cent to 20.5 per cent. Thus a large section of workforce continue to remain trapped in low-productivity and low-wage agricultural occupation with a huge agricultural labour surplus population having its negative implications for agricultural labour market and wages.
According to 2001 Census figures, migration among agricultural labourers to other states and even to other areas in their own state has increased sharply between 1991 and 2001. This is mainly due to sharp reduction in employment opportunities in agriculture locally during the liberalization years. While in-migration into areas like Punjab, which witnessed heavy migration of agricultural labourers from Bihar, UP and Orissa in the past, has plateaued, outmigration has started from areas like Wyanad in Kerala, which had witnessed large-scale in-migration in the past, to coffee plantations in Coorg. Though wage levels are one-and-a-half times higher in Wyanad, due to acute unemployment in agriculture because of the crisis of commercial crops brought about by trade liberalization, side-by-side with high incidence of suicides, there is also large-scale out-migration of labourers and small and marginal farmers from Wyanad.
Poverty, Underconsumption and Starvation
One of the larger social dimensions of the agrarian crisis is the decline in income and consumption levels of the landless labourers and small and marginal farmers. The wise men in the Planning Commission now say that low incomes and low consumption are due to low agricultural growth and then in the same breath go on to say that growth can go up only if incomes and consumption and thereby demand for agricultural products go up!
According to the NSSO report 594, the average monthly per capita expenditure (MPCE) of farmer households in the countryside was Rs. 503. NSSO report 505 of the 59th Round puts the incidence of poverty among farmers at 30.73 per cent. This means nearly a third of the peasantry in India is under the poverty line and the incidence of poverty among agricultural labourers as a social group is more than double.
Per capita net availability of foodgrains was 503.1 grams per day in 1996-97 and it declined to 444 grams per day in 2004-05 as per the data put out by the Ministry of Agriculture. The figures of per capita net availability are however much higher than actual per capita consumption for it also includes stocks held by the FCI, private traders/hoarders and households.
Under the false pretext of fiscal burden and fiscal crisis, the UPA Government has been attempting to subvert and do away with the very mechanism of state procurement and even the PDS. Food subsidy for the APL population was abolished a decade ago by the Left-supported UF regime through the introduction of the TPDS scheme though considerable sections of the APL population are also badly in need of subsidized foodgrains and the issue prices even for the BPL category have been hiked repeatedly leading to a sharp reduction in the offtake. And this is happening in a situation when the extent of coverage of the BPL population in some states, especially in the Hindi belt, under the PDS is already shockingly low. Thanks to speculation by mercantile capital and hoarders and big capital also joining this league in a big way in recent times, the difference between the farmgate price and the retail price that consumers pay is very huge. This alone disproves the myth that organized retail would bring down the consumer price.
As per the latest NSSO data, the incidence of poverty among agricultural labourers and dalits as separate social groups is more than double than among the general population in many states and their consumption expenditure levels are also comparatively very low. The severe malnutrition crisis widespread in India, especially among children and women, is thus inseparably linked with liberalization in agriculture. Starvation deaths witnessed in the tribal belts of Maharashtra and Andhra Pradesh, and among the rural poor in Jharkhand, Bihar and Orissa have already begun to spread in many other states including UP and West Bengal. Apart from starvation deaths, the incidence of trafficking of peasant girls by unscrupulous brokers who exploit their poverty and smuggle them out on the false promise of well-paid jobs in cities and force them into prostitution is also on the increase.
Diversification and Switchover to “High-Value Farming” –
Manmohan’s Bogus Solution
Dr. Manmohan Singh repeatedly advocates switchover to high-value farming and the MNCs, corporates and their ideologues are putting the onus for agrarian crisis in Punjab on what they call “wheat-paddy monocropping” and propose diversification into exportable high-value horticultural and fruit crops as the sure solution. Such switchover is prohibitively expensive for the already heavily indebted small and medium farmers and in a situation where food availability and food self-sufficiency is already under threat, and the government is importing huge quantities of wheat paying foreign agribusiness corporations prices 60-80 per cent above what it pays to the country’s farmers, the switchover formula is a clear recipe for disaster. It should be noted that the total area under foodgrains has been steadily declining in India: it was 116 million hectare in 1961 before the Green Revolution and it went up to 128 million hectares in 1990-91 but declined to 113 million hectares in 2002-03. At the same time, the severity of the crisis and consequently the incidence of suicides is also particularly high in regions like Wyanad in Kerala where farmers have gone into high value cash-crop farming, or Telengana in Andhra and Vidarbha in Maharashtra, where they have been lured to switch over to high-cost, high-debt, and highly capital intensive cotton farming.
Manmohan Singh’s panacea of diversification based on contract farming for big corporates is equally absurd. To take just one example, while potato yield is 197.6 quintals per hectare in West Bengal, it is just about half in neighbouring Bihar and Orissa making diversification into potato cultivation patently unattractive to the small farmer in these states. It clearly shows that the problem is deeper and related more to capital scarcity, investment inadequacy and class relations than mere monocropping and lack of diversification. Likewise, the sad story of tobacco growers in Gujarat where the acreage came down by 80 per cent in the last five years from 2002 despite 60 per cent more productivity than Andhra Pradesh shows us how lack of marketing outlet can play havoc with farmers in spite of high productivity. This is simply because the cost of production of tobacco in Gujarat is high due to higher labour and irrigation costs and the monopoly ITC refuses to pay higher price for the Gujarat tobacco, instead procuring tobacco through contract farming scheme in Andhra Pradesh and Karnataka where the yield levels are as low as 1,121 and 675 kg per hectare respectively compared to 1,760 kg per hectare in Gujarat. Similarly, tobacco growers in Uttar Pradesh are also handicapped by lack of marketing outlet despite high productivity. The ITC prefers to buy cheap, often through coercion and price manipulation by pitting AP farmers against the farmers of Karnataka, mainly from the low-productivity farmers in these two states.
This contract farming conundrum in tobacco, manipulated by an MNC like ITC, drives home the truth that diversification into high-value commercial crops is not only not a panacea for agrarian crisis but can in fact render the crisis more profound.
The Empty Slogan of Second Green Revolution
There is also a clamour for a second green revolution to overcome the ongoing agrarian crisis. Any such second breakthrough presupposes a revolution in dryland farming. But no new technological breakthrough is in sight in any major crop comparable to the success of the HYV varieties of the original Green Revolution of the late 1960s. Acting at the behest of the seeds MNCs, the Department of Biotechnology has hastily permitted large-scale field trials of the controversial GM crops despite caution by the Supreme Court. The much-hyped Bt.cotton seeds of Monsanto have proved to be a disastrous failure time and again and studies have established the link between the crisis of cotton farmers in Vidarbha and the failure of Monsanto’s Bt. cotton seeds there. Yet the Seed Bill 2004 has no liability clause, to compensate the farmers, against the corporates which supply spurious seeds that fail.
Meanwhile, there is an attempt to hijack the Indian human resources and talents, who delivered excellent results in the early decades of the Green Revolution in delivering high-productivity crop varieties, through the Indo-US Knowledge Initiative on Agriculture, the governing board of which is dominated by representatives from MNCs like Monsanto and Wal-Mart. During the original green revolution occurred the first “Great Gene Robbery,” when MS Swaminathan, currently the chairman of the National Commission for Farmers and then the chairman of the Indian Council for Agricultural Research, simply handed over to the US MNCs, through the Manila-based IRRI, the germplasm of more than a lakh rice varieties, and the second green revolution aptly begins with this second gene robbery as under this “initiative” Indian scientists are to work for developing genetically modified crops suited to tropics for the US corporates! This is not just outsourcing but downright destruction of Indian independence in agricultural research and as bad as the threatened erosion of Indian sovereignty under the Indo-US nuclear deal.
Hardworking Indian scientists and farmers ushered in the first green revolution which substantially enhanced agricultural production and productivity despite many cost-hiking and ecological problems associated with it. What Monsantos, Wal-Marts and comprador rulers like Manmohans would usher in, in the name of second green revolution, is anybody’s guess.
The Way Out
Though only a thoroughgoing agrarian revolution with sweeping agrarian reforms can liberate Indian agriculture and the peasantry from ever-recurring, periodical crises due to the landlord-path of capitalist transition, partial mitigation of the ongoing agrarian crisis is possible if the Indian big bourgeoisie is compelled to undertake a comprehensive package under the pressure of the peasant movement.
The highlights of such a package should be as follows:
While widely propagating this package of immediate solutions we must also establish stronger links between agrarian struggles and the broader democratic movement. Rallying progressive democratic sections of the non-agrarian population in support of the struggles of the rural poor and small and middle peasants and building up powerful campaigns against attacks on fighting peasants and agricultural must be taken up as an important task of the Party and all its mass organizations. We must demand exemplary punishment to the police-politician-anti-social nexus responsible for Kalinganagar-Nandigram-Mudigonda type of massacres and unconditional acquittal of all rural poor and peasant activists who have been implicated and imprisoned in false cases.