May 25, 2015

Modi Govt's 1 year: Is agriculture the weakest link or there is something more to it?

As Prime Minister Narendra Modi’s government completes one year in office, many believe that the one sector that missed attention and remains the weakest link in the economic growth story is agriculture.

With close to 60-crore people engaged in agriculture, and considering that this is probably the first time the BJP broke through its image of being an urban-centric party by mustering political support from all across the country in its historic electoral triumph, the continuing neglect of agricultural should not be perceived as an economic oversight. It’s actually designed as part of a well-thought out economic strategy to shift bulk of the population out of agriculture.

Let there be no doubt. Arvind Panagariya in his inaugural piece on the Niti Ayog website wrote: “But in the long run, the potential of agriculture to bring prosperity to a vast population remains limited. In sum, agricultural growth and expansion of good jobs in industry and services can go hand-in-hand to bring rapid elimination of poverty and shared prosperity for all.” This sums it all.  The Narendra Modi government is not neglecting agriculture. It is creating conditions that enable more and more farmers to abandon agriculture.

I am sure you will agree that otherwise no vice-chairman of country’s economic think-tank could have said it so loudly and clearly if he didn’t have the mandate to say so.

Keeping agriculture impoverished therefore is the easiest way to make this happen. Otherwise I see no reason why at a time when the international prices of agricultural commodities are witnessing an unprecedented crash, and when a partial drought in 2014 accompanied by unseasonal rains in the early part of 2015 has left farmers battered and bruised, the Modi government remains unfazed.  Except for providing a relatively higher crop compensation for rain-hit farmers, motivated more by the national TV media suddenly waking up to the agrarian crisis, there is nothing that shows government’s seriousness in tackling the worsening farm crisis. In fact, with El Nino hovering over, there is a possibility of a drought which will further accentuate the farm crisis. 

In a complete U-turn to its electoral promise of providing 50 per cent higher minimum support price (MSP), the government has informed the Supreme Court that it cannot do so considering the impact it will have on market prices. The farm prices have therefore been raised by a paltry Rs 50 per quintal, corresponding to an increase of just 3.6 per cent. At the same time, BJP-ruled States – Madhya Pradesh, Chhattisgarh and Rajasthan – have been directed not to provide any bonus over and above the MSP. Moreover, with WTO breathing down its neck, the government may now find it difficult to raise as well as extend the MSP provision for other crops, except for wheat and paddy.

Paying farmers a distress price and then to say that ‘the potential of agriculture to bring prosperity for a vast majority of the population remains limited', is in fact a clever ploy to kill agriculture and move people out to urban areas. If farmers were to be paid an economic price for their harvest there is no reason why agriculture cannot be a prosperous sector. Similalry if Govt employees were not to be paid a fair income package, they too would quit government employment. There is also no denying that children of farmers do have aspirations and would like to buy motorcycles and iPads. Agriculture too can meet these aspirations provided the mainline economic thinking allows farming to prosper.

Not only declining farm incomes, agriculture also is being starved of public investments. At a time when MNREGA outlay is higher than that for agriculture I don’t know how a miracle can be ushered in the rural areas. In the 11th Plan, agriculture received just Rs 1-lakh crore. This is less than the subsidy of Rs 1.62-lakh crore given for the construction of the Terminal-3 of the New Delhi airport. In the 12th Plan, agriculture which employs 60-crore people, received Rs 1.5 lakh crore. With such dismally low public investments, all efforts seem to be somehow to keep the farm sector gasping for breath. As if this is not enough, mainline economists are lobbying for drastically cutting down on social security support under the garb of containing the fiscal deficit. 

I am hoping that the Prime Minister would see through the futility of forcing small farmers to become dehari mazdoors. The challenge is how to revitalize agriculture in a manner that it not only provides gainful employment but also gears up to withstand the challenges of feeding the country in the years to come.I am sure Narendra Modi understands the importance of spreading the gains of economic development far and wide. There is no better pathway than to make agriculture an economically viable proposition. But only if his economic advisors let him do so. #

Is agriculture the weakest link or there is something more to it? May 25, 2015.  

May 19, 2015

How farmers continue to subsidise consumers and the industry.

A poor woman in a village wants to buy a bakri. She desires to be economically independent, and that knowing that she can eke out living, approaches a micro-finance institution (MFI) for a small loan. She needs roughly Rs 7,000 or so which no bank would be willing to provide her.

The MFI operating through a self-help group lends her the money at an interest of 24 per cent to be paid back at weekly intervals. Effectively the interest rate comes to 36 per cent.

On the other hand, industrialist Laxmi Mittal decides to invest in Bathinda petro refinery that the Punjab government is setting up in a joint venture. The cash-starved State government gave him a loan of Rs 1,250-crore at 0.1 per cent rate of interest spread over five years and on top of it gave him a tax holiday of 15 years. Similarly, for Tata’s Nano factor in Gujarat, the State government had given him a loan of several hundred crores to be paid back in 20 years at an interest of 0.1 per cent. Of course there is nothing wrong in extending a helping hand to the industry.

I bet if the poor women in the village had also got a loan for buying a bakri at 0.1 per cent interest, she would have been driving a Nano car at the end of the year !

Some years back, in the early 1990s I read a report of the Commission for Agricultural Costs and Prices (CACP), the body that determines the minimum support price for agricultural commodities. This report for the kharif season clearly stated that cotton farmers were deliberately paid 20 per cent less price for over 20 years so as to keep the textile industry economically viable. In other words, what we are never told is that actually it is the cotton farmers who had all been subsidizing the textile industry all these years.

A few months back, the cotton prices crashed from Rs 4,500 to Rs 5,200 per quintal to about Rs 3, 200 per quintal. Since the cotton farmers had subsidized the textile industry all these years, I had expected the rich and powerful textile industry to come to the rescues of cotton growers in this hour of need. But it didn’t happen. Farmers were left to count their losses.

These two examples clearly illustrate why and how the rural population, mainly comprising farmers, has been kept impoverished all these years. Not only in case of cotton, farmers across the board have been deliberately paid a low price for their produce either to ensure that the industry gets the raw material at a cheaper price or have been penalized to keep the food prices low for the consumers.

The 2014 report of the National Sample Survey Organisation (NSSO) tells us that the average monthly income that a farm family derives from farming activities is a paltry Rs 3,078. To make the ends meet, a farm family has to work in some other non-agricultural activities, including MNREGA. That makes for an average of Rs 6,000 per family per month. No wonder, 58 per cent farmers go to bed hungry, and 76 per cent want to quit agriculture if given a choice.

This year, soon after the NDA government took over in May 2014, the minimum support price for wheat and rice has been increased by just Rs 50 per quintal. Last year, the wheat farmers received a price of Rs 1400 per quintal, this year they are being paid Rs 1450 per quintal, an increase of 3.2 per cent. On the other hand, government employees have been paid two DA installments in the same period which add up to 13 per cent of their salaries.  This low price for farmers is simply to ensure that food inflation is kept in control. But the same principal is not followed when it comes to government employees. They continue to get DA regardless. In other words, it is the farmer who is subsidising the consumers.

It is primarily for this reason that agriculture appears to be a losing proposition. Planners and policy makers therefore advocate farmers to be moved out of agriculture. Forcible land acquisition is being justified in the name of a better economic future for the farmers. I have heard Finance Minister say time and again that he is supporting industry simply because the revenue he gets from the industry is what can be invested in rural areas. Industry has been given tax concessions to the tune of Rs 42-lakh crore in the past ten years, beginning 204-05, so as to prop up industrial growth, manufacturing output and boost job creation. Nothing of the sort has happened.

This skewed economic thinking is leading to policies that push farmers out of agriculture to swarm in to the cities. It is expected that in another 15 years, by 2030, nearly 50 per cent of India’s population would be living in the urban centres. These cities and towns would occupy approximately 2 per cent of the country’s geographical area. To me this is not only economic madness but also speaks volumes about the lack of political and scientific vision. With such a massive translocation of population, living in the cities will be like living in ghettos. Already, 60 per cent of Mumbai’s population comprises slums, and these slums are in 8 per cent of Mumbai. 

Economic approach therefore has to change. It should aim at making the rural areas economically viable. Instead of pushing rural population out of agriculture the thrust should be to provide gainful employment in the countryside. It has to begin with providing the right kind of economic incentives to farmers and other living in the villages. Farmers too are entrepreneurs, and the younger generation in villages too can become start-ups. All they need is policy support. This has to be accompanied by public sector investments in the villages. So far, the effort has been to keep the countryside starved of resources. In the 12th Five-Year plan, only Rs 1.5 lakh crore has been invested in agriculture. This is a pittance considering 60 crore people directly or indirectly survive on farming. How long can India afford to keep farmers impoverished? 

सोच बदलने का समय  Dainik Jagran, May 16, 2015

गांवों की ओर भी देखें हमारे हुक्मरान Nai Dunia, May 16, 2015

May 18, 2015

Organic farming is an idea whose time has come

Organic farming is the new buzzword. With Gujarat being the latest entrant, 9 States – Kerala, Karnataka, Andhra Pradesh, Sikkim, Mizoram, Madhya Pradesh, Himachal Pradesh and Nagaland – have formulated organic farming policies. In addition, Maharashtra, Chhattisgarh, Tamil Nadu, Uttarakhand and Goa are in the process of framing organic farming policies.

Presiding over the formal launch of the Gujarat Organic Farming Policy at Ahmedabad on May 16, I said that organic agriculture is an idea whose time has come. Globally, India is the fastest growing market when it comes to organic foods. Against 11.3 per cent annual growth being seen in the US for organic foods, India is much ahead. According to the India Organic Food Market Forecast and Opportunities: “the organic food market revenues are expected to grow at a combined annual growth rate of about 25 per cent in the period 2014-19.”

Gujarat’s organic farming policy was prepared after an elaborate consultation process involving more than 1,200 people across 7 different locations. This participative process lasting over 8 months included 650 farmers, 130 scientists and 80 women, says Kapil Shah of Jatan, the Baroda-based voluntary society that initiated the policy formulation process. Gujarat has allocated Rs 10-crore in the current fiscal to promote organic farming.

Interestingly, along with organic foods, there is also rapidly growing market for milk of desi cows. Rich in minerals, and known to prevent some of the lifestyle diseases like Type-1 diabetes, coronary heart disease, and autism, the demand for A2 milk – as it is called – is growing. At a number of places across the country, small dairies comprising native cow breeds have sprung up. Haryana is among the States that have announced financial support for small dairies of native cow breeds. Rajasthan too is encouraging the shift towards native breeds.

While State Governments are keenly formulating organic farming policies, the desired shift towards enlarging the area under organic farming practices is not keeping pace with the growing demand for organic foods. This is primarily because of the lack of clarity at the political as well as policy planning level. Somehow policy makers are still not convinced whether the country’s food needs in the times to come can be met from non-chemical farming systems.

Strangely, while India is a signatory to the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD), I find most policy makers are unaware of its report, released in 2008, which looked at different technological options in the light of climate change, water availability, loss of cultivable lands, existing trends in population growth, and rural/urban food and poverty dynamics. The report categorically states that ‘business as usual’ are not the answer and advocate a shift towards non-chemical farming as the only sustainable way ahead.  

I therefore think there is an urgent need to make IAASTD report a mandatory reading for senior bureaucrats/scientist-administrators. At the same time, non-chemical farming practices will only get a fillip when a suitable subsidy regime is crafted. It is primarily because chemical fertilizers, pesticides and seed are subsidized in a manner that these become cheaper than the organic inputs that farmers are lured towards the chemical-based farming systems. The need now is to provide financial support for organic inputs, including farm-yard manure and natural farming products like panchkavya.

In the quest to increase food production, there has been a complete disregard to eco-system services. With 2nd generation environmental impacts now becoming pronounced, ascribing an economic value to eco-system services like maintaining soil fertility needs to be calculated. A healthy soil leads to a health crop, which in turn leads to healthy living. The advantages from preserving and conserving a healthy soil therefore are multifarious and needs economic support to make this viable for the farmers. At the same time, organic farming needs to be backed by research and development. Agricultural Universities must shift the plant breeding approach from the existing thrust on breeding improved crop varieties which are responsive to chemical fertilizers to being responsive to organic resources. This is what I call as organic breeding. 

And finally, the banking system too needs to provide farm credit for organic farming systems and also for keeping native cattle breeds. At a time when consumers demand for organic is on an upswing, national policies have to be in tune with the changing times. Let’s not be caught napping.#

Organic food is an idea whose time has come May 18, 2015.

May 9, 2015

While US forced to import organic foods on consumer preference, India is pushing for GM crops

While Environment Minister Prakash Javadekar is known to be aggressively pushing for more State Governments granting permission to hold field trials of genetically modified (GM) crops, the United States is being forced by growing consumer demand to import more of organic foods.

According to trade data compiled by the US Organic Trade Association and the Pennsylvania State University, the rising demand for organic foods has pushed the import bill for corn and soybean, the two most important GM crops being cultivated in America. Although corn and soybean go primarily into cattle and poultry feed, consumers are increasingly wanting milk and food products to be free of GM ingredients.

While import of soybean from India has more than doubled to $ 73.8 million in 2014, import of organic corn into US from Romania has risen from $545,000 in 2013 to more than $ 11.6 million in 2014, just in a gap of one year.

Most imports of organic corn and soybean into US is from Romania, Turkey, Netherlands, Canada, Argentina and India.

In India, 4 State Governments – Andhra Pradesh, Maharashtra, Karnataka and Punjab – have allowed field trials of GM crops. Pressure is mounting on other State Governments to fall in line. The biotech industry led by the Association of Biotec Led Enterprises (ABLE) has reportedly written to Prime Minister Narendra Modi to expedite the regulatory process for clearing the field trials.

Sales of foods free of synthetic chemicals and GM ingredients in the US have reached $ 35.9 billion in 2014, Bloomberg reports. It shows an annual increase of 11 per cent, which is indicative of the rising preference for organically produced foods. Led by the White House where the First lady Michelle Obama grows only organic food in the sprawling gardens and is also known to serve organic food to guests, the consumer preference for safe and healthy foods in the US is growing rapidly.

Since most of the GM crops have led to the doubling in the application of chemical herbicides like Glysophate – whose use has increased to over 283.5 million pounds in 2012 – and has also led to the emergence of superweeds in some 60 million acres of crop land, there are questions being asked on the need to promote GM crops which exacerbate environmental damages. More so with WHO classifying Glysophate as a probable carcinogen, public opinion as seen in grocery sales data is indicates a gradual shifting to safe foods grown without the use of chemicals and GM.

While the export of soymeal from India to US has shown an increase, India’s soymeal exports for feed purposes are down to a 26-year low with Iran and Japan shifting to cheaper supplies from China, Brazil and Argentina.  This is worrying considering that India had dominated the soymeal market all these years.
It was primarily because of the resistance from the Soybean Processor Association of India (SOPA) that former Agriculture Minister Ajit Singh during his tenure had opposed research trials of GM Soybean. The industry had claimed that importers preference for Indian Soymeal would be lost once contamination from GM crops becomes obvious.

This is also true for exports of commodities like rice, including basmati, for which GM crops are being readied. Allowing GM rice field trials, even if its cultivation was excluded from the biodiversity rich hotspots including in Orissa where it is believed to have originated, would not be able to curtail contamination. One the genie is out, it is out. Considering that rice and corn shipments detected with GM ingredients have been sent back by some countries in the recent past, India’s rice exports too could face a formidable challenge. India is at present the biggest exporter of rice. 

At a time when no GM crop is known to increase crop productivity, utmost caution has to be adopted before the country is opened up for field trails. India cannot allow its agricultural commodity exports to suffer. Research can easily be conducted under contained conditions, and it is open secret that the push for field trials (in large areas) is primarily for seed production interests. #

While US forced to import organic foods on consumer preference, India is pushing for GM crops May 8, 2015.