The World Beckons India to Become It’s ‘Anna Data’ 16th March 2009
Last June the media reported the then US President Bush as holding the prosperity of the 350 million strong Indian middleclass demanding better nutritious food as the reason for the spike in world food prises. But he did not grudge India’s prosperity. He saw ‘prosperity in developing countries’ as an opportunity to sell more of their (US’s) products.
Reacting to this, our ‘nethas’, cutting across party lines, alleged ‘he wants Indians to be malnourished’. ‘India is not a net importer of food, it is an exporter’, ‘only diversion of land for ethanol production in US has triggered food crisis’ they said. But Bush, neither appeared to want Indians to be mal nourished, nor did he grudge the prosperity of India as it is in their (US’s) interest to sell more to India. Then, why accuse him so? Further, if India is a net importer of food, US would only welcome India’s prosperity as they can export more food to us. Only since our curbing food exports now is hurting them, they are a worried lot. Our politicians have obviously misread him. Bush may be wrong 99 times, but not this time. This response is un-warranted.
However, while Bush saw an opportunity in India’s prosperity – our ‘nethas’ claim ‘he does not know economics’ – our netha’s only are failing to see the great opportunity offered by the global food crisis situation. The world needs food, but the developed countries do not produce enough for themselves. Whether they divert arable land for bio fuel or leave it uncultivated is not our concern. As long as they don’t cultivate Ganja and send it to India through the under world, we should have nothing to sulk. We have a huge pool of rural population, nearly 750 millions strong, which is primarily agricultural and badly under employed. With proper policies we can increase food production enormously, feed the ‘over one billion population’ well (nutritiously) and export the surplus to the countries that need them, turning Rural India in to a gold mine. If we stop considering ‘Rural India’ (masses) as lazy, waste, burden on the economy (as the netha’s and the elites do) and realise that it is a great resource – an asset – we can soon become the ‘Anna data’ – Provider of food, a one stop food shop – for the whole world. We have the potential, native knowledge, capacity, infrastructure, manpower and what not. We only lack the political will.
When the oil rich Arabian countries realised in the 60s, that the world – particularly, the oil guzzling western and European nations – depend on them for oil, they grabbed the opportunity with both hands and rest is history. Then why can’t we do it now, when the world needs food from India? The hurdle is only that our netha’s know too much of economics!!!
Our recent misadventures with the economic reforms have driven the rural populace to penury and agriculture has become a quagmire now. An article published in The Hindu dt. 12th to 15th Nov. 2007 read, ‘149,244 farmers have committed suicide between 1997 and 2005 as per the National Crimes Record Bureau’ averaging to about 16,583 per year. This has been going on un-abated ever since the introduction (and as a consequence) of the so-called economic reforms by Shri Narasimha rao as PM along with Manmohan Singh as FM in 1991. Projecting for the period from 1991 to 2008, the number of suicides by farmers could be more than 300,000. We have to hold our head in shame. This is a testimony to the great knowledge of economics of our netha’s. No amount of development of the 350 millions can justify the suicide by 3 lakh farmers. We cannot develop a section of the population walking on the dead bodies of our farmers. The reforms may have brought prosperity to the middle and rich class, effectively enabling the ‘haves’ to become ‘have mores’ but it has rendered the ‘have nots’ to ‘have nothings’. The main problem is faulty agricultural policy (or the lack of a credible policy) irrespective of the party in power. The paradigm shift in the view/attitude to agriculture has resulted in the disaster of farmers committing suicide in such huge numbers that we may as well call it ‘genocide’. The ‘Liberalisation & Globalisation’ regime has widened the rural – urban divide in to a ‘Gash’ and in these 17 odd years it has deepened further in to a ‘Gorge’. It has now added another name to the list of endangered species, ‘The farmers’. Now we need to ‘re farm’ to correct the blunders of the ‘reform’.
A news piece in The New Indian Express dt. 29th Nov 2007 read ‘Terrorism has claimed 351 lives in the year 2007 in India till now, as per the Director (Internal security) of the Union Home ministry’. This raises a basic question, ‘Are the hand full of disgruntled elements hiding in caves and forests trying to remind the civilised world of their existence through sporadic strikes on innocent civilians claiming about 350 lives a year to be dreaded so much or the self centred politicians claiming to protect 1.1 billion people and giving us a welfare government, but delivering a death knell on the rural, farming and marginalized communities, resulting in the genocide of about 16,500 farmers every year, year after year, not realising their blunder even after their misadventures have resulted in such a terrible catastrophe, to be dreaded?’. The terrorists look benign in comparison.
Apart from killing more than 300,000 farmers, the reforms have only resulted in the closure of most of the industries which were in existence prior to 1991, rendering millions of industrial workers jobless, prematurely retiring several thousand experienced hands in banks and PSUs, staggering levels of inflation (stagflation), and accentuating the disparities severely. The number of jobs created since 1991 is a small fraction of those lost. Most the jobs created also are temporary ones transferring data from paper records to E bites – just a pausing phase – not a sustainable productive activity. It is another matter that with the ‘Global economic meltdown’ even the rosy picture painted about the urban India is sadly turning grey. Clearly the polity is not working for India and her people. We are not their masters and they do not represent us. Their masters are elsewhere. UPA or NDA, Congress, BJP or Left – Reminds of a commercial jingle of early seventies, ‘Everything is same except the name’.
Though there was a hue and cry about the increase in prices of some food articles recently, the prices of farm produce have not only not been keeping pace with the other goods and services, they have not kept pace with even the increase in the cost of inputs to agriculture. For example, the retail price of sugar has remained at Rs. 15 to 16 per Kg and rice (say fine variety) at Rs. 22 to 23 per Kg since many years – until very recently when there was some jump – in spite of steep rise in prices of diesel, power, fertilisers and even farm labour wages. Vegetables have been selling at a high of Rs. 25 a Kg for some time every year since 1990 at Chennai. This is in contrast to the over all inflation ranging from 3 to 11 percent per year during this period, as admitted by the Government and much higher actually. Also compare this with the increase in salaries of employees not only in specific sectors, but in Government service as well. Even farm labour wages have gone up over 6 folds since 1994, but price of some varieties of rice went up only by about 85 % in this period – from Rs 12 to 22 till about August 2008 and now it has risen to about 33 still less than 175 % only.
For the farmers the actual cost of production of cereals is much higher than the Minimum Support Price (MSP) at present. The case of vegetables is much worse. Most often the farmer gets a price of only Re 1 to Rs 2 per kg for vegetables, although it may sell at Rs 20 to 25 in cities. The cost of even plucking the fruits is higher than what he gets as the price.
While, the farmer does not get a return to justify his continuing in the farm business (in fact, he does not find justification to even continue living), the middlemen, the wholesale dealers, retail dealer and often the black marketers, make merry of every situation – a bumper crop or a failed crop. Inflation in the prices of food articles if any, is mainly due to hoarding, commodity trading, futures trading etc. and the farmer gets little benefit from the rise in price.
We have to give the farmer his due. Farm produce – rice, wheat, maize, pulses, oil seeds, sugar cane, cotton, vegetables etc. should be awarded a Fair Remunerative Price (FRP) and not just a Minimum Support Price (MSP). Is there any industry in the world selling its produce for minimum support price? Then, why a MSP for farm produce? Why not a FRP?
If alone the farmer is able to get a meaning full return, he will come out of the debt trap and he will not only re invest in the next crop, he will also invest the surplus funds to expand his farming activities as well as diversify in to processing of farm produce and other related activities. Food production will multiply manifold and we can literally feed the world. This will immediately vastly improve the rural employment potential, utilisation of wasteland and the rural economy, obviate the rural employment guarantee scheme and erase the poverty line, leading further to an all round development of the rural areas. The improved rural economy will boost the market for the industrial products too. The market for industrial products will explode, not just expand, leading to the urban and national economy improving in leaps and bounds. The improvement in the urban employment potential will be a by-product. Thus there will be a chain reaction leading to elimination of unemployment and under nourishment. The vastly improved rural and urban employment potential will even obviate a major headache in governance – reservations.
Further the improved economic condition of the villages will lead to their demanding and getting better roads, water supply, power, schools, hospitals and what not? The farmer will willingly pay for all these developments and the government will find their demand justifiable.
We may wonder where to get the extra water, fertilizers etc. needed to increase agricultural production. Use of chemical fertilizers and pesticides is anyway getting reduced with the growing awareness of their harmful effects. Farmyard manure and compost do not need any inputs from outside the farm. The increase in farm production will automatically increase the availability of farm refuse for the manure and composts. With the improvement in the viability and profitability of the farming activity, the awareness level of the farmers and willingness to adopt scientific methods will automatically improve. They will adopt less water intensive farming practices as well as take more responsibility in collecting and storing rainwater.
The Genesis and the Solution
Every industrial product is ‘cost’, taking in to account, apart from the cost of materials and labour, the rental values, interests on investments (not only loans), overheads, stocking cost, marketing cost, provision to cover rejections, wastages and loss in transit, after sales service liabilities, warranty provisions, publicity and creation of brand image. The industrial product is then priced adding a profit margin over the cost. Thus unless the industrial unit is mismanaged, the industrial activity is assured of profitable operation even for a mediocre performer.
Where as in agriculture, rent for the land, return (interest) on investment, labour put in by the owner of the farm and his family members – for cultivation, supervision, guarding the crop from men and animals, reaping the yield, packaging, shipping and selling the produce, go unaccounted. The cost of using own cattle for ploughing (the cost of feeding, washing and maintaining the cattle, as well as the replacement cost) the cost (value) of the farmyard manure prepared from the cattle waste and other farm wastes are not accounted. The water used from his well or the village tank goes unaccounted too.
Further not every crop yields a bumper harvest. Draughts, floods, pest infestations, and non-availability of inputs (seeds, fertilisers, pesticides, labour and water) at the right time, make a good yield a rarity and bumper crops only a jackpot. Even in a bumper harvest year, the prices fall and the net yield to the farmer is only paltry.
In fact, even a farm worker gets a decent wage in most of the places. His main problem is only that he does not get anywhere near 250 days of work in a year as an industrial worker does. On the other hand, the owner of a small holding, is not able to recover even his own labour cost and not to speak of his family members’. He actually works harder and for a longer duration in his own farm, than when he goes out to another farm to work for wages. In effect, it appears to be more rewarding to work as a farm worker than to cultivate ones own land.
If one has to cultivate land not owned by him, he has to pay a share of the yield as lease charges to the owner. When he cultivates his own land, should he not get that much surplus return, as he would have had to pay if it was a leased land? Should he not get the wages for his and his family members’ labour? Should he not get adequate returns to justify the owning and using cattle? Should he not get a price to compensate for the losses incurred due to failed crops?
But, when a farmer takes his wares to sell, he often gets a price, which is far lesser than even the cost of reaping and selling the produce. In the absence of a fair remunerative pricing policy, he is unable to sell the produce at its inherent value, but is selling only at a fraction of the cost of the produce driven by the so-called market forces and un-remunerative MSP. He is in effect subsidising the users of his produce. As his operations yield a net loss, his economic condition deteriorates with every crop and is left with the ultimate decision of ending his life. Farming has thus become a quagmire and every non-farming consumer of farm produce is culpable in his suicide.
While the situation is such in the farming sector, we have an example of what is right at the other end – Milk. At the dawn of independence, we were importing Milk products. But now we are No. 1 in milk production in the world having over taken the long time No. 1 – USA – a few years ago. How did the transformation take place? White revolution? The Amul experiment of establishing cooperative milk production and marketing society in Gujarat became such a smashing success, that it got replicated in all other states too. Today the producer gets a fair price for his produce, while the consumer gets quality milk at a fair price too. The producers get well bread cattle, guidance to rear the cattle and even financial assistance for buying the cattle and run the dairy, from the federation. The federation then collects the milk from various points at remunerative price (to the dairy farmer), processes it to improve shelf life and convert it in to other dairy products, packages and supplies to consumers through its own outlets at affordable prices. It is a win-win situation. The rural economy as well as the nations economy has got a big boost due to this, apart from the producer and the consumer benefiting immensely.
This success story of milk should be replicated for farm produce – cereals, pulses, vegetables, oil seed, cane, spices etc. by forming a ‘Cooperative, Farm Development, Produce Procurement and Marketing Federation’. As for the logistics, we have in place a very well established network for agricultural support. The ‘Departments of agriculture & horticulture’ along with the ‘Agricultural universities’ can take up the costing activity and establish the remunerative prices as above, also advice the farmers on selection of more suitable and profitable crop in each block, while the federation can sanction loans, supply quality seeds, fertiliser etc., guide the farmers to get best yield, collect the yield paying a remunerative support price, process it for better shelf life and value addition, package it and sell it through the federation’s own out lets as well as export what ever is exportable.
This will inevitably lead to the traders – wholesale and retail dealers – of agri/ horticultural products loosing their business. That includes the FCI. But the revitalised economy will easily absorb these people and their infrastructure. The warehouses of the Food Corporation of India can be transferred or leased to the federation and Civil Supplies Departments can procure from the federation and meet the requirements of the BPL sections of the population. In fact the implementation of the above scheme will automatically lead to shrinking of the BPL population and the need to subsidise, as the rural economy will grow in leaps and bounds. We may have to only maintain some level of subsidy for the farm inputs keeping in mind the world market for our farm produce.
Initially the prices of certain items like rice may go up. However, that will be only fair to the farmers producing those items. There will be a ripple effect on the labour wages and hence the calculation of the remunerative price. Subsequently the more organised farming activity will lead to better selection of crops, better inputs, practices, management, waste reduction, insurance, ultimately resulting in stabilising the prices leading to a high level of social justice.
The formation of the federation and establishing fair remunerative prices for farm produce will not only arrest the suicide by farmers, it will also arrest the migration of people from villages to cities and in fact reverse it.
The Government claims that as a result of the introduction of reforms the GNP has been growing at about 9% until recently, in-spite of the contribution of the rural economy – farm economy – being very low at about 1.5 to 2% only and that while the contribution of service sectors to GNP is 55% that of agriculture is only 17%. ‘What an absurdity’. The contribution of farm products to the GNP is many times higher than what is reported. The unjust low valuation of farm produce relative to industrial products and other services only makes it appear so low. If the farm produce, rural industrial produce and rural services are given their due value taking the unsubsidised value of the agricultural inputs and calculating the cost of cultivation the way industrial products are cost and the dollar value is corrected to reflect its true purchasing power (the Purchasing Power Parity – PPP – value of 1 USD is only Rs 10 and not Rs 50), you may find a total reversal of the values of contribution to GNP with the farm sector showing a much higher figure (may be 50 to 60%) while the services and export sector a much lower figure (say 10% only). Not to speak of the real value of the out puts from the two sectors. One is productive, basic and most essential – cannot do without, while the other is just a recording, non-essential, can do without. In fact if the above exercise is done, the result will drive the government to correct the blunder of 1991 (reforms or deforms?) reverse the disastrous course and look at economy in the right perspective.
Apart from farm produce, there are so many other activities going on in the rural India having huge intrinsic value, which are not valued at all. For example, the firewood collected meticulously and used as fuel. Is the effort and fuel value considered while computing the GNP? So is the case with the Hay used as cattle feed, farmyard manure and the water collected and supplied through the irrigation system.
A bumper crop or a failure has a major impact on the overall economy, as no other sector. A good or a failed monsoon reflects in the overall performance of the economy as nothing else. Even the electoral prospects of political parties are influenced by the monsoon heavily. These issues highlight the point that the farm produce are much more valuable than the value assigned at present.
Thus sanctioning a FRP for farm produce and organising a cooperative procurement and marketing federation will be a Sakala Roga Nivarani for all the economic ills of the world. Will our netha’s rectify their myopic vision, make amends for the havoc they have caused by the reforms and realise the opportunity arising out of the global food crisis at least now? But in the current political atmosphere, we do not have any party, except may be the communists, capable of understanding the problems of the farmers and introducing programmes to compensate the farmers for the injustice perpetrated on them in the past 18 years. 70 percent of India’s over 100 crore population is still living in villages, and most of them are still largely dependent on farming. While Manmohan singh and Chidambaram have not taken any serious step to solve the problems of the farmer which were created by them only in the first place, they go all out to save the dollar rate from dropping and the sensex from crashing. Even the waiver of farm loans and rural employment guarantee scheme were introduced by them not by choice but under extreme pressure from the left parties.
The economic policy of Manmohan and Chidambaram at the best may appear to have benefited a part of the 30 percent urban, rich, middle class, industrial and corporate employees and government employees. The 70 percent rural population is a neglected lot and is being treated as second class citizens only. No party can form a government without the support of the 70 percent rural population. Then why should they vote for any of these parties who do not care for them. Even the government agrees today that there are two Indias now – urban India and rural Bharat. While India is moving ahead, Bharat is slipping behind. If alone they [rural Indians] select some good candidates among themselves and send them to the parliament, assemblies and local bodies, we can not only rewrite the fate of rural India but the whole of India and even the whole world.
At the least as suggested above, if a ‘Co operative marketing organisation’ is formed, the farmers become members of the society, eliminate middle men, set up direct sales outlets and sell their produce, private small and large traders of farm produce will get eased out of the system and subsequently farm produce will be available only in the co operative society. At that time it will possible for the society to command a fair remunerative price for its produce and with the income generated, rural economy will under go a revolutionary change. This co operative society should arrange loans for the farmers, give certified seeds and other inputs, say no firmly to GM and BT crops, guide them, insure the yield, set up warehouses, set up sales out lets etc. and thus the rural people ‘Bharat’ can govern themselves in a major way. Their dependence on the Government will reduce and the government can concentrate on ‘India’.
To do this we need not look up to the government or politicians, or expect some one to land from the skies. It is in the hands of the rural – farming – community itself.
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