The elusive search for the quick fix

By S. Swaminathan

Indian agriculture or quite a few crop segments in it are now trapped in a crisis of low prices. Farm-yard prices of a range of commodities including paddy, maize, potato, arecanut and coconut have plummeted in recent months thereby breeding a growing sense of frustration and helplessness among the farmers. Is it a crisis of deficiency of demand or a glut in production? It is not that the two causal factors are mutually exclusive.

The weight of statistical evidence available on production of agricultural commodities would perhaps suggest that the output of a wide range of commodities in the country, over the last three years, has grown substantially under the cumulative impact of favourable monsoons, the largely ``incentivising'' influence of farm-price support policies and even increase in the gross cropped area applied to particular crops.

To take a few typical examples, rice production which was 82.53 million tonnes in 1997-98 (from a gross cropped area of 43.44 million hectares) went up to 88.25 million tonnes in 1999-2000 (from a cropped area of nearly 45 million hectares). Wheat production increased from 66.34 million tonnes in 1997-98 to 74.25 million tonnes in 1999-2000 with gross cropped area increasing from 26.69 million hectares to around 27.60 million hectares.

Commercial crops such as cotton, sugarcane, tobacco, groundnuts and coconuts have also registered an increase in output. That the increase in output in quite a few agricultural commodities could have outpaced demand is not difficult to comprehend even if the theory of lack of purchasing power of the consumers would be difficult to validate.

Political channelisation of farmer distress

With Assembly elections for five big States looming on the horizon, it would be surprising if the phenomenon of slumping agricultural prices is kept out of electoral polemics. The Congress has lost no time in screaming from house-tops that the crisis of declining prices for farm produce is a patent manifestation of the failure of the BJP-led NDA Government to address the predicament of the farming community.

The Left parties, of course, banishing their congenital aversion of the kulak class in agriculture (the rich farmers who account for the lion's share of the marketable surplus in most agricultural commodities) are now vociferous about protecting the agricultural community from the onslaught of the supposed WTO- inspired deluge of imports, which, in their assessment, is the main cause for the agony of the Indian farmer.

There is also the repeated oversimplification that agriculture has suffered neglect in the new era of liberalisation and that it is this ``policy vacuum'' that has taken a heavy toll of the incomes of farmers in recent times.

It is a measure of the murkiness of political discourse in the country that instead of looking at the strategic issues of agricultural development in an inescapable milieu of global inter-dependence, political parties have rushed to reap electoral harvests from the disequilibrium in the agricultural sector. The BJP seems to be sucked into a game of pre-emption by declaring that economic reforms should be extended to the farm sector without further delay. As if the National Agricultural Policy (NAP) formulation of the NDA Government, released last July, with its entirety of unexceptionable platitudes, has already been found to be of little operational value, the BJP national executive committee resolution, adopted earlier this month, has chosen to attack the situation of mountainous food stocks, falling market prices and dismal offtake of grains from the PDS through a rather familiar policy-mix - unrestricted inter-State movement of farm produce, limiting the role of the behemoth Food Corporation of India, opening up foodgrains trade for the private sector and ``engineering'' import tariffs for keeping out farm produce from the rest of the world. On his part, the Prime Minister, Mr. Atal Behari Vajpayee, seems to have joined the Opposition chorus that it is the WTO which is threatening to ruin Indian agriculture!

The conspiracy angle

Is it superficiality of understanding of simple laws of economics or the overwhelming urge to strike theatrical postures which explains why three former prime ministers of India have been making absolutist statements about the agricultural situation and in particular, the distress of farmers, and, attributing it all to the alleged large-scale imports of agricultural produce following the elimination of Quantitative Restrictions on imports? The plain fact is that the total value of agricultural imports which was around Rs. 12,500 crores in 1998-99 declined to Rs. 11,500 crores in 1999-2000.

The import data available for April-October 2000 do not substantiate the belief about large-scale inundation of Indian markets through agricultural imports, although imports of edible oils made to address the short-supply from domestic sources did make for an adverse impact on local prices.

The NDA Government has indeed applied the brakes on imports by raising import duties on sugar, wheat, rice and edible oils. While the policy of manoeuvring the supply-demand mismatch through import duty adjustments is well within the framework of WTO agreements which India has already entered into, there is no warrant for believing that a new WTO regime on agriculture (acceptable to an obstinately protectionist European Union) will lead to large-scale submergence of Indian agriculture as a perilous occupation.

The duality in Indian agriculture

Like many other aspects of Indian society where contrasts between privilege and deprivation are conspicuous, the agricultural economy shows its own dichotomy if not pluralism. Active campaigners for a uniform set of agricultural policies for the country cannot be oblivious to the profound diversity of soil endowments, climatic conditions and even of traditions and cultural mores in different regions of the country. In a country of over 100 million farmers (in terms of ownership of holdings) with about 77 per cent representing marginal and small farmers (cultivating average size of farms of one hectare or less), it would indeed be wishful thinking to formulate a national policy excepting in the nature of facilitation of efficient use of water and other resources.

What needs to be reckoned with is that agricultural development will continue to be an essentially private sector (``people'') concern with research initiatives and infrastructure support being provided by the Government and that too at the State level. To the extent that farmers (producing for the market and constituting less than 25 per cent of the farming community) are autonomous players in the economy, their judgments about crop selection and farming methods can be guided by the State rather than be mandated for them.

The small and marginal farmers depend on agriculture for subsistence and it would be pragmatism to enable them to consolidate their holdings to emerge as economic agents. While India has the sovereign right to defend the farmers from a holocaust in the name of global commodification of every agricultural produce, it would be an epic tragedy for the country to perpetuate an unsustainable system of fragmented land-holdings or not to empower enterprise and innovation in farming which would help harness the enormous untapped agricultural potential, with all the constraints and misuse of scarce resources, and particularly of the dwindling resource of water.

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