Agriculture: The Green Fist
The farmer will be on centre stage in 2019, as promises shower on the largest vote bank, but what is he likely to get in the end? BW Businessworld takes stock
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The Modi regime’s focus from the start had been to reshape the entire farming system in India through an income revolution. The government’s rather larger - than- life - vision is to double farmers’ income by 2022. Yet, the years 2017 and 2018 will probably be best remembered for attempts to “use farmers as a tool” to serve political ends. In 2019, a year that will prove decisive for the electorate, what then should the farmer expect – beyond promises that is?
One reason why the farmer becomes a hapless “tool” in the hands of politicians is that most of agrarian India is still rain-fed. As economist and former member of the Planning Commission, Abhijit Sen points out, the Indian farmer still looks to the Rain Gods for a good crop. Worldwide, that was the plight of the farmer in the 1860s when poet Owen Lovejoy penned his tribute to the tiller of the soil. “First of all our gratitude is due, To him whose goodness like the falling dew; descends on all alike, and crowns the year, with the rich fruits you exhibit here,” wrote Owen Lovejoy.
A India Brand Equity Foundation (IBEF) report on the Indian agro-economy and its outlook says the record farm output of recent years have encouraged the government to aim for higher production in 2018-19 too. During the 2017-18 crop year, foodgrain production is estimated to have been a record 284.83 million tonnes. Milk production was estimated at 165.4 million tonnes, while meat production was 7.4 million tonnes. As of September 2018, the total area sown with Kharif crops in India extended to 105.78 million hectares.
‘The rich fruits’
During the 2018-19 financial year (FY), the government targets foodgrain production of 285.2 million tonnes. India is the second largest fruit producer in the world. Production of horticulture crops is estimated to have been a record 307.16 million tonnes in the 2017-18 financial year. The total agricultural exports from India grew at a CAGR of 16.45 per cent between the FY 2010 and FY 2018 to touch $38.21 billion. In April-August 2018 agricultural exports were $15.67 billion. India is the largest producer, consumer and exporter of spices and spice products. Spice exports from India were worth $3.1 billion in FY 2017-18. (Please see infographic ‘GVA from Agriculture’)
When everything about Indian agriculture sounds so good, need the farmer worry? Ashok Dalwai, CEO of the National Rainfed Area Authority, emphasises that the “government is live to the challenges of agriculture and concerns of our farmers.” He points out that the “agriculture sector over the last few years has entered a new phase and is currently at an inflection point. Today the country is not only food secure but is also generating surpluses in various sectors of agriculture.” He points to the record output of foodgrain, horticultural produce and milk in FY 2017-18.
Agriculture’s contribution to India’s Gross Value Added (GVA) grew 4.6 per cent in the first six months of the 2018-19 financial year, compared to 2.8 per cent in the previous fiscal. Foodgrain production is expected to be higher at 141.6 million tonnes for the Kharif season, over 134.67 million tonnes in the Kharif season last year. Sugarcane and oilseeds crops are also expected to be more bountiful this season than in the last, while cotton output may fall a little over the previous Kharif season.
“This became possible on account of specific interventions of the government backed by both suitable policies and programmes,” says Dalwai. “Within a short period of about three years, the nation has jumped from a situation where there was a huge deficiency in pulses to one of near self- sufficiency. This example illustrates the agility of the government.” He acknowledges that some sticky issues do still trouble farmers. The challenge today he says, is to ensure remunerative prices for farm produce, an issue that is being addressed by the government through a comprehensive package of policies for market reforms and robust procurement operations.
Where ‘gratitude is due’
Yet producers have been restive in the agro-economy. When the Maharashtra Milk Producers went on strike, Shyam Ashtekar, a member of the Shetkari Sangthna (Joshi), said, “Middlemen are at the core of the issue. What they (farmers) grow sells at a much higher price to consumers, but farmers still fight for minimum remunerative prices”. Minimum support prices (MSP) have been progressively raised for Kharif crops, which of course, did not prevent the debacle of the ruling coalition at the state Assembly elections in agrarian states.
Virendra Singh ‘Mast’, President of the Bhartiya Janta Party Kisan Morcha, spoke derisively of the organised protests by farmers’ unions in New Delhi, a few weeks before the state elections were scheduled. “I tried talking to them to come to some consensus, but they simply didn’t talk,” he said. He dismissed the agitations as “organised and sponsored protests by Opposition parties,” who had done nothing for farmers in the last six decades. “At least our government has started doing something on ground to change the condition of farmers,” Mast said.
Leaders of other farmers’ unions though, say that the increase in suicide rates among farmers was a major reason for farmer protests and demands for unconditional loan waivers. Agribusiness investment and regulatory expert Vijay Sardana says, “In my view, the Opposition will encash the situation and farmers’ sentiments, because the ruling regime could not address the farmers’ distress in the last 4.5 years.” The ruling regime would have to provide proof of welfare measures for farmers on the ground, he felt. An attempt at such demonstration may lead the BJP-led NDA government to change its stance on unconditional farm loan waivers – a step former Reserve Bank of India Governor, Raghuram Rajan, had described as suicidal. Such a decision may subsequently prompt financial institutions to stop lending to farmers altogether. Agriculture policy experts admit privately that loan waivers may ultimately lead to the proliferation of “loan sharks”, since institutional finance may become unavailable. The infographic ‘Credit to Farmers and Allied Agricultural Activities’ shows an uptick in credit disbursal to the farming community over the last few years. The trend may see a reversal if farm loans are waived at random. “Loan waiver is not an answer as long as crop realisation is not more than C2 plus the inflation, because in a loss-making business, no incentives can provide lasting solutions,” says Sardana. Incidentally, farmer suicide rates have not come down at all in Punjab, a state that had taken a lead in waiving off farm loans. Experts also believe that farmers’ investment schemes like Rythu Bandhu, believed to have proven a game changer in the recent Telangana elections, may also inspire the Central government to offer incentives through a direct benefit transfer (DBT) scheme for farm investment, rather than through post-harvest supports.
Chairman of the Fertiliser Association of India, K. S. Raju says, “I may not like to comment on any government schemes, but I only wish it won’t prove to be another DBT”. Critics believe that the publicity of the Rythu Bandhu scheme outpaces its effectiveness. The scheme does not quite include marginal farmers, or farmers with small landholdings of less than two acres, who form the multitude in India. An election year, though, may entice the government to choose popular paths to victory and schemes like Rythu Bandhu may be offered to the nation.
The green fist
“Both, the policies and programmes of the government in respect of the agriculture sector are in tandem with the field situation and always aim at finding solutions to the existing challenges,” says Dalwai. “For example, the government realises that with increasing surpluses of various commodities, the challenge that farmers faced was marketing,” he says, adding, “In order to ensure remunerative prices, the government has rolled out several market-related programmes.” Dalwai points out that reforms will take time to show full results since agriculture markets are not perfect anywhere in the world. “Hence the package approaches of higher MSP and MSP-linked procurements as adopted by the government,” he explains. Sardana says the farmer could only be rescued if all laws that protect rent seekers and exploitative elements were scrapped. Farm output he says, will continue to rise even in 2019, because of better technological intervention.
This much is for sure – the green fist of the farmer will continue to call the shots in 2019, irrespective of who sits on which bench in Parliament.