Farmers+Vidharba+Cotton+Debt = Suicides

This is an equation which has managed to remain in the limelight for a considerable length of time.

The aftermath has brought a hell lot of infamy to powerful (politically and otherwise) families engaged in the extremely profitable business of private money-lending at usurious rates.

The mainstream mass media has got a milch cow and the result is that the Prime Minister and the Agriculture Minister were forced to spare some of their precious time to visit the area (read Vidharba).

The bureaucracy and local level politicians are ecstatic as huge amount of funds will be there for them to disburse and in the process another opportunity to line their own pockets.

In the interest of brevity, I will come straight to the point- all that the politicians, the ministers, the media, the bureaucrats have been saying is that the problem is due to low procurement price of cotton, high input costs and high cost of funds. The putative remedy that appears to have emerged by consensus, as gleaned from the various articles / reports appearing in the mass media seems to be-
1. writing off the outstanding debts;
2. making available funds at low interest rates;
3. disbursal of relief (in monetary terms) to the affected farmers;
4. a hike in the procurement price.

I have no doubt that the combined effect of these remedies will definitely keep the farmers alive, just as artificial life support system keeps some people alive for extended periods; but it may not cure the underlying illness. I fervently hope that this particular paradox is understood by not only the powers that be, but also by the mass media. All of them must understand that artificial life support system is not the cure. Once the paradox sinks in, then and only then will they be able to try and attempt to find an effective cure.

It may be galling for our policymakers to recollect that in the 1930s Agricultural Adjustment Administration was established in the U.S. to deal with the problems being faced by the farming community during the depression. The actions were more or less similar to what is being sought to be done by the government for the farmers in Vidharba, but the fact remains that even in the 1930s the program had only limited success and it was declared unconstitutional in 1936.


No doubt, even today, in the U.S., there exists a system of regulating the prices of farm commodities to allow the farming community to enjoy consistency in their purchasing power and to ensure that their inflation adjusted income does not suffer uncontrolled erosion. There is no harm in providing similar benefits to our farmers but not at the cost of allowing them to fall into a trap where they lose sight of the continuous exercise of mapping their comparative advantage. It is vitally important to ensure that the motivation for utilizing the comparative advantage not only exists but grows, as this is the only means by which the farming community can be insulated from the vagaries of globalization and liberalization. Moreover once the comparative advantage is brought into the matrix, globalization and liberalization will cease to be a threat and will turn into an opportunity.

So what could be the remedy? I do not know but let us atleast start thinking. Why is the procurement price so low that on an average it does not even cover the production cost? Perhaps the productivity is much less than ideal. Why is that so? Perhaps the farming methods are outdated and there is lack of efficiency at all the stages; perhaps the land holdings are small and it in turn severely impacts efficiency due to lack of economy of scale. Why the farmers are perennially neck deep in debt? Perhaps due to their own inefficiencies, or due to vagaries of nature, or due to lack of crop insurance schemes, or due to lack of knowledge about their rights and facilities, or due to absence of the much needed infrastructure.

After going through the brainstorming session what comes to the fore? Well, empowerment alongwith creation / fortification of infrastructure is all that is needed.

The need of the hour is to take a holistic view of the situation. As the impact of globalization continues unabated, such situations are bound to keep on arising with ever increasing frequency. The farming community must keep pace with the ever changing situation and they must be prepared to change not only the short term tactics but even the long term strategy to ensure that their business of farming remains in consonance with the realities of the market. If cotton is not profitable they must be ready to produce vegetables. If that is not good enough they must be ready to produce exotic vegetables and if even that is not good enough for their survival they must be ready to produce anything and everything that the market fancies at that particular point of time.

The Government must be responsible enough inasmuch as that it should provide all necessary infrastructure in terms of irrigation facilities, funds, cold storage chains, technical know-how etc. to ensure that the competitiveness is preserved. In fact the Government should go a step further and ensure the development of co-operative spirit so that the disadvantage of fragmented holdings is converted into an advantage. An excellent home grown example is Amul.

Now, please do not get into the argument that the State (Government) must provide subsidies to offset not only the inefficiencies but to provide a level playing field as agriculture is heavily subsidized in the U.S. and European Union. Let us face the reality the same process may not be sustainable in our country. The reasons are simple- first and foremost we do not have the financial muscles to sustain such levels of support (just have a look at the finances of the State Electricity Boards which suffer from the legacy of supplying power at highly subsidized rates to the farmers and are still doing that) and secondly, it is an undisputed fact that agricultural practices in the U.S. of A are much more efficient.

And pray why not import agricultural produce from U.S.A. at rates lower than domestic production costs even if it is well established that the rate is low due to subsidies? In effect what it means, atleast in the short term is that the consumers in our country may be benefited due to the subsidies doled out by the U.S. Government. For the moment forget the brouhaha of WTO and think, what is wrong in it? I do not find any disadvantage save and except that it may render our own agriculturists with no work; and there lies another paradox. Whether subsidy is required to be doled at an enhanced level may not be the issue; but development of infrastructure and dissemination of knowledge and information so as to adequately empower the farming community to enable it to leverage its comparative advantage is certainly germane.

There is an immediate need to try and find out-
¨ the crops, where intrinsically, advantage lies with our farmers;
¨ the produce, which is in demand in the international market, but supply is constrained, and whether such produce can be grown in India with some competitive advantage (viz. vanilla, rubber, tea, exotic vegetables etc.);
¨ the ways and means to convert the availability of cheap labour into a major advantage;
¨ ways and means to bring about a socioeconomic change so that co-operation becomes the way of life;
¨ ways and means to disseminate the crucial knowhow

Thereafter what is needed is formulation of policy to ensure the availability of proper know-how, infrastructure, organizational ability and inputs. Huge expenditure, both in terms of actual financial outlay as well as that of the other even more precious commodity (atleast as far as our policy makers and bureaucrats are concerned), the cerebral output, will have to be committed, but it may lead to permanent or atleast long term remedy.

And this is where we have failed miserably; to see any positive change, the basic paradigm of the nation must change. The instinctive kneejerk reaction of administering medicines for symptomatic treatment of the superficial malady will not be sufficiently effective because the only real option is to first arrive at the proper diagnosis of the underlying causative disease and then prescribe the medicine for its cure as well as prevention.

Let us hope that in future the equation changes to –
Farmers+Opportunity+Co-operation+Infrastructure+Empowerment= Affluence

Post Script
Try engaging any of the top consulting firms and after doing a SWOT analysis they may come up with a wholesome nonsense. On the other hand try to use your own homegrown cerebral muscles (fortified with vitamin Commonsense) and if the solution is found to be successful, the Management Schools will start teaching it as a case study to their young wannabe managers and consultants so that they are careful not to use it when they are faced with analogous situations in real life. No one will pay them for doling out commonsense but everyone will be ready with the moneybags for complete nonsense veiled in latest and most arcane jargon.