Dhaval Kulkarni
Mumbai, February 25
While the Centre is considering a major agriculture debt bailout
package for farmers which may be announced in the coming budget,
farmer leaders and experts feel that it may turn out to be a half-
measure unless accompanied by a corresponding rise in the support
prices for agricultural produce.
Amidst food security concerns, lack of irrigation and rising
urbanization creating pressures on agriculture land, they feel that
unless the minimum support prices were revised to factor in the actual
costs of production, indebtedness of the Indian farmer would be a
recurring phenomenon.
In its final report submitted to the Bombay High Court in March 2005,
the Tata Institute of Social Sciences (TISS) had noted how the cost of
cultivation for most crops had increased due to higher input prices.
In an indictment of the system, the report noted that "not a single
support price for the last 10 years has met the cost of cultivation,
except sugarcane for two years."
"Higher cost of production, in the absence of a corresponding increase
in prices, affects the viability of farming. On one hand, the cost of
production increases due to increased input prices and at the same
time market imperfections do not allow the farming household to
generate sufficient profits.." it added.
"The basic issue is that of price. Even after loan waivers are
granted, farmers need support prices which factor in the production
costs and a good profit," said Ajay Dandekar, Visiting Professor,
Institute of Rural Management, Anand in Gujarat, who was part of the
committee that compiled the TISS report.
Lack of proper prices was trapping the farmer under a debt cycle due
to the lack of repayment capacity, and even after the V.P Singh
Government had granted loan waivers to farmers almost two decades ago
and recent interest waivers for Vidharbha farmers, the suicides were
continuing.
Dandekar said the government needed to hike the support prices or dole
out cash subsidies like developed nations and protect the local
market. Though income levels in India were low, around 60 per cent of
the workforce was engaged in agriculture, and better prices for
agriculture commodities would boost the rural economy.
"Farmers need to be given complete loan waivers and better prices for
their commodities to avoid debts traps," said Raghunath Patil of
farmer organization Shetkari Sanghatana, which has been demanding a
hike in the support price for sugarcane. Patil demanded that the
government give a rate based on the actual costs of production or
allow market forces to decide the prices.
He pointed out that the minimum support price for sugarcane, which was
fixed at Rs 811.50 per ton for nine per cent recovery of sugar was way
below the actual production costs. Patil said that while costs of
using a tractor on the land had been pegged at Rs 700 per acre while
arriving at the figure, it was actually Rs 3,000 and said if realistic
prices were factored in, the actual support price needed to be Rs
1,800 per ton.
"Unless the support prices are hiked, there is no use of loan waivers,
as the causes of indebtedness will not be eradicated," said Patil.
"A loan waiver is needed, but the farmer also needs to be given the
power to repay his loans by increasing the prices (for agricultural
products)," observed Vijay Jawandia, farmer leader and former
president of the Shetkari Sanghatana.
With agricultural commodity prices on the upswing due to the global
market, Jawandia demanded that the government needed to announce a
mechanism to stabilise these prices for the next few years, so that
there would be no price falls below those rates even if production
soared. He also demanded that the farmers who tended rain- fed land,
and accounted for a majority of agriculturists, but got little by way
of subsidies, be given loans by the government at a zero percent rate
of interest.
The TISS report noted how the average gap in the minimum support price
and the cost of cultivation per crop from 1996- 2004 varied from minus
50 per cent for sunflower and mug, minus 38 per cent for cotton and
minus 12 per cent for sugarcane and observed how crops were "being
cultivated at a loss to cultivators."
It also mentions a statement from the Joint Director, Agriculture
Price Cell, about how the minimum support prices, which are fixed and
declared by the Ministry of Agriculture, Government of India, before
the sowing season, did not give full justice to the farmers of
Maharashtra, (who had a high cost of production).
"The Central Government should also go in for a differential matrix in
terms of minimum support prices. The minimum support price mechanism
should take care that it matches the cost of cultivation in each
state, crop by crop," it recommended.
Box:
Maharashtra:
Geographical area- 307.58 lakh hectares
Gross cropped area- 225.56 hectares
Gross irrigated area- 19.64 per cent
Rain fed area- 80.24 per cent
Declining size of operational holdings:
1970- 71 49 lakh holdings 21.20 lakh marginal farmers (43 per cent)
2000- 01 121 lakh holdings 88.86 lakh (73 per cent)
