The Great Farmer Betrayal
The facts are all too familiar. The Congress-led UPA Government, elected on the promise of boosting agriculture, systematically damages the very dignity of farmers. This time, the Central Government has employed the instrument of fertilizers. As the story goes, while fertilizer prices are allowed to rise unchecked, the government makes no move to offset the harm caused to the farmer. Consequently, the government does not even bother about increasing the Minimum Support Price (the price at which farm produce is bought by the government) to balance the rising prices of fertilizers if not for anything else. This is the predicament faced by farmers in Madhya Pradesh.
Recently the BJP Kisan Morcha conducted a protest in Indore. The protesters argued that whereas one bag of Diammonium Phosphate (DAP) fertilizer during the 2009-10 Rabi season cost Rs 530, the corresponding cost of an equal amount of fertilizer in the 2010-11 Rabi season was Rs. 965. Further, the BJP Government in Madhya Pradesh had asked the Centre for 2.17 lakh metric tonnes of fertilizers but the Congress-led Central Government had only released 1.45 lakh metric tonnes. Little does the Congress realize that partisan politics has impoverished the already beaten and wounded farmer.
The UPA’s bankruptcy of ideas is out on open display. When a government has no vision for its rural population except for heavily-funded entitlements, the deficiencies of the policy will come home to roost. The farmers of Madhya Pradesh have made a modest demand: In view of the rising DAP price, it is only fair that the government offsets our increased costs with a better support price. Of course, this is too much to expect from a government that has pushed fiscal deficit to the hilt! The country has been reeling under a double-digit food price inflation. Increasing the MSP would tantamount to further fuelling food inflation.
The truth is that even the farmers have no idea as to how much of a corner they have been pushed into by the UPA Government and its policies. A quick examination of government’s rural policies will reveal the various mechanisms that the UPA has engineered to destroy the country’s economy. When a government formulates policy exclusively on the basis of myopic electoral calculations, it deliberately allows political interest to trump national interest. The worst affected by the government’s knee-jerk policy solutions for the rural population is the farmer and herein lies the great farmer betrayal.
The flagship scheme of the UPA was the National Rural Employment Guarantee Scheme (NREGS/NREGA). Hitherto unemployed people would be assigned some form of employment and would be paid some amount of money. The glaring flaw with this ‘master plan’ is that the employment was not directed towards any production activity in the economy. Consequently, a situation arose where the total money in the economy increased but there was no increase in the total amount of goods and services. This resulted in an unprecedented rise in rural demand which is an ideal condition for an inflationary spiral. But how did this affect the farmer? Firstly, relatively higher wages meant that it would be extremely difficult for farmers to procure agricultural labour for the sowing and harvest season. Secondly, rising inflation meant the cost of agricultural raw materials such as seeds, fertilizers, tractors, etc. would increase thereby making it more difficult for farmers to procure these items and consequently reducing the farmer’s margin.
Having generated rural inflation, the UPA Government took up the task of hiking fuel prices. A fuel price hike is unique in that it affects every aspect of the economy (with the possible exception of the oil companies). In 2010, the government began decontrolling petrol prices. As recently as June 2011, the government had initiated the decontrol of diesel and kerosene prices. Diesel is inextricably linked to agricultural activity. Tractors run on diesel. Transportation of agricultural produce from the farm to the market requires fuel. Increased fuel prices not only mean that the farmer’s costs will increase but also that in view of the increased costs, the prices of agricultural commodities will increase for the final consumer. The injustice in this arrangement is evident from the fact that the farmer is not benefitted from higher prices as most of it is pocketed by the middleman.
High costs, lower margins and overall inflation resulted in an obvious fallout: A high rate of farmer suicides. Farmers were finding it impossible to repay loans. Unwilling to continue in a debt trap and unable to put up with the loss of repute and dignity, farmers took their lives and the lives of their families. Faced with the prospect of an all-India farmer backlash, the government resorted to knee-jerk policy making yet again. In 2008, months before the 2009 Lok Sabha election, the then Finance Minister, P. Chidambaram announced a 60,000 crore rupees loan waiver for farmers. It would be imprudent to dispute the burning need for such a loan waiver. The problem lies in the fact that a loan waiver in an otherwise anti-farmer environment can only postpone the problem and not solve it.
The resilient Indian farmer put up with all this. In May 2009, the UPA government was re-elected with a stronger mandate. The socialist fundamentalists in the NAC had come up with a new idea – the Food Security Bill. The Bill has an ambitious target of providing food entitlements to close to 70% of the population. But this is where the proverbial castle in thin air comes crashing down. The Food Security Bill seeks to reinvent the Public Distribution System (PDS) as a mechanism which will give cash to persons with the hope that they will spend it on purchasing food. But cash is not food. PDS as we know it works on the basis of procurement of food grains from farmers. Procurement incentivizes farmers to produce. Unlike procurement, cash can be used for any purpose including those not related to food. Where cash is not used to purchase food, it discourages farm production.
So how can the farmers be helped? The farmer betrayal is premised on exclusionary economics. To be fair to the position, a government is required to take a macro perspective of the various economic forces which affect farmers. The complaint is not that the government did not take a broad perspective of the economy but that the government, while taking a broad perspective of the economy, allowed farmer interests to be subordinated all the time! The government needs to stop seeing the farmer as being isolated from economic growth but rather as a potential participant in growth. The solution therefore must lie in a new and comprehensive Agricultural Policy that focuses on improving farm productivity and consequently ensuring that lower input costs and higher returns accrue to the farmer.
A new Agricultural Policy must not be a lame duck. It must demonstrate a different thinking. The 2010 Resolution of the Swadeshi Jagran Manch National Convention observes that both public and private sector investment in irrigation has declined tremendously. Better irrigation facilitates better productivity. Would it not be wise, for instance, to channelize NREGA activity towards installing better and more advanced systems of irrigation? Chemical fertilizers are not only expensive but also have the undesirable effect of damaging the soil. In contrast, organic fertilizers are considerably less expensive and have the potential of phenomenally improving farm productivity. Perhaps, the Agricultural Policy can include these features.
As fate would have it, no radical change in agriculture is possible unless our leaders sit up and take notice. In an article titled ‘Voice of the people and state response in Hindu tradition of rajdharma’ (Organiser, 30. 10. 2011), Radha Rajan recalls the Delhi Siege of 1988 led by the famous farmer-crusader, Mahendra Singh Tikait. For seven days, lakhs of farmers thronged the National Capital with their tractors and cattle, demanding that the government increase the sugarcane procurement price and reduce the water and power tariffs. Within a week, the government conceded to the demands. Tikait’s was a movement that stood completely on the strength of its cause. In December 2010, farmers led by the Bharatiya Kisan Sangh laid siege to Bhopal. The farmers did not budge from the state capital until the Chief Minister issued favourable orders.
In the stories of these protests, there is a lesson for the Opposition. Political parties give off the impression that no one cares for the farmer. Their exclusion, it would appear, is not only from economic growth but also from political influence. The irony is that agriculture engages more than 50% of the population. Resolutions on Agriculture passed by various political parties are important but what would truly make a difference is a national effort to rally farmers towards demanding that the Central Government formulates a structurally different, pro-farmer agricultural policy within a certain time limit. That effort would unquestionably win the hearts of the farmers. Will the farmers in Madhya Pradesh spearhead this movement? Are they willing to stand up and be counted?
Adhitya Srinivasan is a friend of CRI.
This article originally appeared in the Organiser. Reproduced here with author’s permission.