The problem in Indian agriculture was never about production but about pricing, storage, and distribution. Loan waivers are not a solution agreed but when we cut out the middlemen and take care of our farming communities things would get better. Farm Loan waiver may be a relief. But real solution lies in ensuring economies of scales of production and minimum support price. The year 2017 was marked by several farmers’ protests nationwide, with a few turning violent. Last month, in New Delhi, 184 farmer groups came together from Tamil Nadu, Maharashtra, Madhya Pradesh, Uttar Pradesh, Punjab and Telangana to take part in a ‘protest walk’. The protest once again highlighted the plight of farmers and the extent of agrarian distress. The trend continued in the year 2018 and the farmers instead of concentrating on production were forced to take agitation to provocate the government.
This year, the Ministry has proposed deliberations to discuss the challenges that the farmers face in crop cultivation, animal husbandry, dairying, and fisheries. The aim is to work towards an action plan using better access to credit, skill development, and entrepreneurial opportunities. The agriculture sector is characterised by instability in incomes because of various types of risks involved in production, market, and prices. The National Commission of Farmers (2006), chaired by M.S. Swaminathan, had pointed out that something “very serious and terribly wrong is happening in the countryside.” The agriculture growth rates have been unsteady in the recent past. While it was 1.5 per cent in 2012-13, it rose to 5.6 per cent in 2013-14. In 2014-15, the rate dipped to (-) 0.2 per cent, while in 2015-16 it was 0.7 per cent. The provisional estimate puts it at 4.9 per cent in 2016-17. The trend reflects the distress in the agriculture sector.
The main reason for farm crises is the rising pressure of population on farming and land assets. The government data show the average farm size in India is small, at 1.15 hectare, and since 1970-71, there has been a steady declining trend in land holdings. The small and marginal land holdings (less than 2 hectares) account for 72 per cent of land holdings, and this predominance of small operational holdings is a major limitation to reaping the benefits of economies of scale. Since small and marginal farmers have a little marketable surplus, they are left with low bargaining power and no say over prices.
As farmers have been demanding “freedom from debt and remunerative price” through several platforms, they carry on fighting risks in production, weather, and disaster, price, credit, market and those in policy. While crop production is always at risk because of pests, diseases, shortage of inputs like seeds and irrigation, which could result in low productivity and declining yield, the lower than the remunerative price in the absence of marketing infrastructure and profiteering by middlemen adds to the financial distress of farmers. Also, the predominance of informal sources of credit, mainly through moneylenders, and lack of capital for short term and long term loans have resulted in the absence of stable incomes and profits.
This turned agriculture into an unprofitable occupation and compelled farmers, especially the small and marginal, to borrow costly money from informal sources of credit, which deepened the crises. While the farming sector has its own set of risks, like any other economic activity, to increase and ensure a stable flow of income to farmers it is vital to manage and reduce the risks by analysing, categorising and addressing them. There lies the real success.