The Hindu Business Line : How to salvage Indian agriculture

AGRICULTURE was the focus of the Prime Minister's attention at the recent National Development Council (NDC) meeting attended by Chief Ministers and the top brass of the Planning Commission. Again, the Prime Minister succumbed to the idea of forming a sub-committee on agricultural affairs.

With two years to go before the curtain falls on the Tenth Plan, and at the time when the NDC is "endorsing" the Mid-Term Appraisal (MTA), one must introspect on the goings-on in the agricultural sector in the last 13 months — the time the United Progressive Alliance (UPA) Government has been in office.

There can be no discussion on agriculture independent of the farmer because more than 60 per cent of India's population is engaged in agricultural activity, one way or another.

The first question that needs to be asked is: Are the terms of trade favourable to the farmer?

If not, why? Productivity is no longer the focus. The farmers not only need to produce higher quantities, they need to do so competitively.

Up to about the early 1990s, agriculture thrived; not because there were breakthroughs in agriculture technology, for the so-called Green Revolution had run out of steam by the late 1970s and productivity was stagnating due to environmental, primarily soil related, problems, but because agriculture was "protected" by tariff walls.

The farmer was content to produce, however non-competitively, because there was a ready domestic market to absorb his produce.

And he could also export the surplus. But all that changed when the World Trade Organisation entered the picture. Vietnam edged out the premium Malabar pepper, and Guatemala replaced the Indian cardamom because both countries not only produced these commodities in surplus, but did so at more competitive prices.

This despite the fact that it was in Panniyur in Kannur district of Kerala, in 1953, that the first pepper research station in the world was established.

For cardamom, India was on top of the world trade up to the 1970s and nobody then had even heard of the tiny South American country of Guatemala.

This takes us to the central and very unsettling question: Has the agricultural fraternity been able to provide competitive and sustainable technology to the Indian farmer? The technology that the farmer adopts to produce pepper or cardamom in the 21st century is almost the same as that used in the previous century; it is 30 years old. Ditto for foodgrains. Ask a rice or wheat farmer from Punjab and he would credit his success to a combination of a good variety, plenty of water for irrigation, chemical fertilisers and pesticides.

The story ends there.

Investment in agricultural research and development to enhance total factor productivity is miniscule.

So what can be done to salvage the crisis in the agricultural sector? The thinking in the Planning Commission is that supply of free water and electricity should be stopped. But if one were to examine situations such as those prevailing in the bone-dry areas of Vidarbha in Maharashtra, where there is no water to pump, the idea of free power has no relevance. Agriculture is in crisis because input costs are rising and output prices are declining.

Accumulating debt is leading to farmer suicides. A Vidarbha farmer is forced to sell cotton for Rs 1,600 a quintal, though the minimum support price (MSP) is Rs 2,300. And a rice farmer in Palakkad (the "rice bowl" of Kerala) has to sell his produce under Rs 3,000 a tonne when the MSP is Rs 7,000.

If agriculture has to be salvaged, the farm fraternity will have to work hard to make it globally competitive.

New Delhi needs to re-visit the tariff structure vis-à-vis the WTO.

India must not succumb to pressures to further lower the applied rates. Prices of several agricultural products have crashed because of the hasty removal of quantitative restrictions on more than 2,000 items, many of which were farm items.

India's share of exports is less than one per cent of the global agricultural trade. It may be better to concentrate on the domestic market than to chase exports.

Three years ago, the previous NDA Government "exported" wheat at Below Poverty Line (BPL) rates, when millions of Indians starved, and now the Agriculture Minister, Mr Sharad Pawar, is contemplating wheat imports to meet the needs of the food-for-work programme and the Public Distribution System, at not less than Rs 11,000-12,000 a tonne for landed wheat.

Many agricultural experts call India "self-sufficient" in wheat, though food production is trailing population growth.

Another option would be a drastic redistribution of land so that the rights rest with those who till it. Failing all this is the option to have a national policy for farmers to exit the sector and migrate to urban centres.

The prospects of the agricultural sector surviving the crisis are dim unless India breaks the status quo and takes up seriously the task putting things in order.

If that does not happen, the merry-go-round of commissions and sub-commissions will go on, while the suicide list of farmers continues to grow.

(The author is a senior fellow of the Alexander von Humboldt Foundation.)

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