Do freebies destroy Agriculture production?

Article appeared in The Hindu  by MJ Prabhu

“It is a well known fact that the rural agricultural economy is in dire crisis today. Whether the government is aware of this or is deliberately ignoring farmers’ issues is a million dollar guess,” says Mr. R. Kulandaisamy a leading farmer and owner of Tari Bio-Tech, Thanjavur.

Prices plummet soon after harvest and traders refuse to buy the produce due to high stocks and volatile price fluctuations.

“The fluctuation in price or absence of buyers is mainly due to excess production of a single commodity. For main cereals such as paddy and wheat the government fixed a minimum price but today they are not able to purchase the entire quantity from farmers at that price,” says Mr. Kulandaisamy.

“If the farmer cannot sell the produce how can he get back his investment? A sugar factory is aware of its cane requirement and plans planting only for that requirement. Similarly Government must decide on its annual food grain requirement and decide to what extent crops need to be cultivated. But sadly that never happens,” he says.

The State agriculture department must select the most suited districts or taluks in terms of soil, water availability, and climate. Based on this, each area must be provided a target area of cultivation and season of cultivation.

“If this can be adopted then our resources will be saved – for instance Tiruvarur district, Tamil Nadu is suited only for paddy. But we find Ramnad farmers also growing paddy in spite of severe water shortage. Instead, these farmers can try to cultivate pulse or ground nut and get two harvests in a year,” explains Mr. Kulandaisamy.

While fixing the price, the Government should pay attention to the extent crops need to be grown. “If they do this, there will not be excess production and consequently any marketing problem,” he reasons.

Similarly each and every cropping pattern needs to be planned by the government before permitting farmers to cultivate. Even today a general belief exists that there is a shortage of cultivable lands.

“If the cultivable land availability is more, then the government needs to look at export market and fix a rate at least close to the international rate for the produce as well as the cultivation cost involved for a reasonable profit,” asserts the farmer.

One of the main reasons for declining produce is the freebies and subsidies. They are destroying agriculture and our lives, according to Mr. K. Tharsius his son.

Since power and water are provided free, a farmer does not feel the need to plan nor devise any improvised method to minimize their usage. “If farmers are charged for electricity it will help improve their efficiency in minimizing this scare resource,” says Mr. Tharsius.

Another impediment is the availability of fertilizers and chemicals. India is dependent on other countries and hence rates are increasing day by day. There are chances of these chemical fertilizers getting exhausted. The permanent solution is only through some renewable sources such as bio-fertilizers and organic manures, according to Mr. Kulandaisamy.

“It is high time the Government seriously starts thinking in proactive measures to revamp our agriculture system. The negative trend in agriculture today is bound to create adverse impact on the overall health of our nation’s economy. We need to find new avenues to keep farmers on the farm, attract new people to take up farming, and make agriculture profitable since it is the backbone of our country,” says Mr. Tharsius.

Mr. R. Kulandaisamy and Tharsius can be reached at email:tari_hitech@yahoo.com, website: www.tarigroup.com, mobiles: 98430-59117 and 98434-39909.

Farmers on Holiday - Farm Truths

A view of Himanshu in Mint, November 11, 2011

A gist of the article -

Farmers in East Godavari, AP have declared a crop holiday, refusing to cultivate paddy even though this is a fully irrigated region.  The issue has grabbed media attention.

The Indian farmer has been always vulnerable to fluctuations that are both natural and manmade.  The crisis was at its height in 1999-2000 and 2004-2005 where farmer suicides were at the highest.  But after that there has been a general improvement, barring the drought of 2009.  Agricultural investment picked up,  off take of agriculture credit increased, minimum support prices of wheat and paddy increased, there was a waiver of farm loans and all these helped the farmer. As a result there was better agricultural growth and significant improvements in yields were observed in many crops.

The fertile delta region of AP contributes a significant share to the overall paddy procurement in the country and has been at the forefront of the Green Revolution.  And these farmers were the largest beneficiaries of the loan waiver.  Then why are the farmers protesting?

East Godavari and the adjoining areas are sites of serious inequalities in landholding.  Most land in this area is tenanted, and in some villages it is close to 70-80%.  Although there are tenancy laws in AP, they have not been implemented in the right spirit.  There is no system of recording tenancy, and most contracts are oral  and no legal right of cultivation.  Although most of the land is cultivated by tenants, they are unable to get loans due to the absence of recorded tenancy or legal rights.  And in most cases, the landlords double as moneylenders, charging exorbitant rates of interest.  As a result, though there is no worsening of agricultural conditions, the farmers have not seen any improvement in their income, and in many cases there has been a decline in real income.

The state government is aware of this and farmer commissions have advocated according tenancy rights to tenant farmers, at least for loans. And the government decided to enact a legislation making it mandatory in June to record tenancy.  The strong landlord lobby made it categorical that the loan passbooks be given to tenant for one year only and not give them any legal right on the land.  There is a fear in the mind of the landlord that the tenancy rights could translate into legal rights to cultivate.

The crop holiday in reality is not by the tenant farmers but by the landlords and the farmers have no choice but to abide by the dictates of the landlord.

Read the story in detail here

Combating Food Price Rise in Mexico

When there was a food price crisis in 2008, the Mexican Government established a Oportunidadaes Programme, where it provided cash to poor families on the condition that children attended school and the family members regularly visited health centres.

Though the programme had been introduced in 1997, they realized that food subsidies were not effective in reducing poverty and were very expensive.   Administrative costs amounted to 40% of the total!

Cash transfers increased with the school grade and also were higher for girls in middle school.  Although it did not fully compensate for the increased food pries, it provided atleast 25% of the population with major protection.  The programme also has been found to improve the health of children and adults and raising the nutrition and school enrolment levels.

How is this programme as compared to the Rs 1 /kg of rice that is promoted in few of our states?

Plugging gaps in warehousing and storage

The National Bank for Agriculture and Rural Development has opened its doors to private industry.  Private firms can pitch for a Rs 2000 crore fund.  It covers all dry, wet, and cold storage needs of agriculture produce and agriculture inputs.

Earlier, NABARD had restricted itself to lending to only State Governments.  This is in order to plug the gaps and meet the needs in warehousing and storage of agri produce.  The fund is also available for State Governments, and will be made available on a first-come-first served basis. The interest is at 6.5% for the first seven years. Private firms will have a pay a small risk premium for repayments after the seven year period.

In AP, the shortage of storage facility has led to a crisis in the last season and affected both support price and procurement of paddy.  Under this scheme, if new godowns are constructed, it can help overcome the problem

Read the report  - The Hindu Business Line - September 30

India vs China

This is an interesting post that appeared in WSJ blog, by Lakshman Krishnamurthi and Sugandha Kandelwal, both from Kellogs school.  These are some important points from their post, which is the first one in the series.

                                        (Getty Images - also on WSJ blog)

The most important way of decreasing poverty in India is to increase farm incomes.  India has the largest arable land in the world next to the US. It is marginally larger than China, but yet China is the largest producer of rice, wheat, fruits and vegetables.  India's agriculture production is low.  Even though India has more land under paddy cultivation, China out produces India by a wide margin.  Even in cotton production where India has improved the production, China leads.

A major factor for India's low productivity is the low individual farm holdings. Small farms have become smaller and farmers lack access to farm inputs and credit. But surprisingly, Chinese farm holdings have become smaller.

The goal in the current five year plan is to increase annual food production by 20 million tonnes.  A severe drought decreased the production, but by March this year it had risen to 241 million tonnes, well on target.

The writers will continue their writing and we will cover it here.

Farmers go back to college

Pic and report from The Hindu, Sept 22,2011

Nearly 200 students aged 27 years to 75 years have enlisted for a three year open and distance education course called Bachelor of Farm Technology (BFT) at the Tamil Nadu Agriculture University, Coimbatore. The course was conceived by the Vice Chancellor, who observed that 10th class school dropouts who are into farming in Israel were so well informed.   The oldest student Mr Sundaranand is 80 years old.  He  feels that now he is now equipped with more scientific knowledge and approaches farming differently.  He firmly believes that farmers should be aware of new technologies.   


The teachers appreciate the fact that the 'older' students are very eager to learn.  


The course aims to create awareness among people about the many new technologies, crop growing, inputs and subsidies that the Government offers to farmers. In fact there is one paper in the last semester that deals with effective management of labour.


Read more of this article here.  

Flood Resistant Rice developed by TN Agri University

The Hindu Business Line, Sept 15

Rice is the primary food of billions of people around the world.  And more than 25% is grown in areas that experience extreme weather conditions.

Huge crop losses are reported whenever the paddy fields get submerged in flooded conditions.  After extensive research scientists have developed the Swarna Sub1 variety to counteract losses in submergence.  The present day strains cannot withstand flooding for more than a week.

The University undertook extensive research to study the efficiency of Swarna Sub1 in mitigating the effect of floods during 2010-11 samba season.  And demonstrations proved its sustainability.

Read the full report here 

Rise in India's cotton output

Business Standard - August 31, 2011

A new record in India's cotton output.  A likely rise up to 9% this year.  Farmers have migrated to cotton sowing from less remunerative crops.  Hurricane Irene destroyed crops in the US and prices would have an upward bias. The crop in other leading producer countries like China and Pakistan has not been encouraging.  Since the government has allowed cotton exports under Open General Licence, Indian traders would benefit from higher global prices.

Availability of cotton for 2011-12 is forecast for 40.75 million bales.

For a full report click the link

Agriculture is not only source of food....

The editorial that appeared in The Hindu Business Line, September 3, 2011


Granaries are packed.  Food grains are rotting.  Malnutrition continues.  This is the frightening scene in India.  The challenges of food and nutrition security are increasing.  Several hundred millions face malnutrition or under-nutrition because of a serious protein and calorie intake on a regular basis. India is low on the Human Development Index and high on the Global Hunger Index.  


There are dozen schemes promoted by five ministries to counteract the problem.  The progress in promoting nutrition is not uniform across the country and there is nothing to suggest that ‘food' supplied under the various welfare schemes is nutritious. The country deserves a far better coordinated approach to eliminating pervasive malnutrition. Policymakers must recognise the interconnectedness of agriculture, nutrition and health. Agriculture is not only a source of food and thereby nutrition, it is also a source of income that helps buy nutritious food.


India growth story is at once real and surreal. Real because our macro performance continues to be robust, making the country one of world's fastest growing economies; and surreal because the micro challenges of poverty, hunger, malnutrition and illiteracy have not been addressed with focused attention. Growth without development is an irony that India testifies to. The micro challenges have the potential to drag down growth. With over $300 billion in the forex kitty, India can afford to import food to meet any shortage, but money cannot buy nutrition. The latter must be tackled on a war-footing domestically with good governance.


Read the editorial here

Middlemen make huge profits on sale of perishable commodities

             Article that appeared in The Hindu - September 1, 2011

There is a monopoly that exists between the private guilds of middlemen, commission agents at whole sale markets and street vendors and vegetable sellers in the retail market says Mr Ajay Jhakar, Chairman, Bharat Krishak Sangh. 

They make huge profits on sale of perishable commodities.  Since the produce is perishable the farmer is compelled to sell his crop immediately after harvest.  And since he cannot wait for a better price he is exploited by the guilds.

The farmer’s share in consumer price keeps reducing even as the consumer pays more.  Perishable produce is purchased by the urban consumer at 50% more than the price at which the farmer sells his produce.  Adds  Mr  Jhakar – no other monopoly in the world is this profitable.  The consumer along with the farmer is being exploited.

It is therefore no surprise that world’s largest retail organisations are vying for the Indian markets.

He feels that certain conditions should be incorporated in the deal when FDI in multi-brand retails is being finalised.  They should buy 75% of the produce directly from the farmer.  50% of the agriculture produce sold to be purchased from farmers should be mandated to be within 100 kms of every store. This will benefit all stake holders especially the small farmer.

Read the full article which elaborates Mr Jhakar’s views and suggestions here. 

All Time High Production of Pulses

                           (Picture source - The Hindu - Business Line - August 26, 2011)

In the article in The Hindu Business Line, G Chandrashekhar discusses the possibility of India being self-reliant in pulses.

During 2010-11, pulse production showed was 17.29 MT, an all time record.   The great success story was with regard to production of Chick Pea ( 8.25MT), Green Gram (1.8MT) and Black Gram (1.7MT).  Acreage too has shown an increase. 

It is believed that the high open market prices of pulses in the last two years encouraged growers to plant more pulses and manage inputs better.  The Agriculture Secretary is on record that after 3-4 years imports may not be required.  For the target of 20 MT more fallow land would need to be brought under cultivation and through inter-cropping.

The current actual availability is only 16 MT – the market surplus after retaining seeds for sowing plus dal milling / processing losses.  This actually means the per-capita availability is 13.5 Kg.  There is a large difference in the per capita consumption of between the top 30% and the bottom 30%.  If the pulse consumption of the poor could be increased, the protein and calorie deficiency could be brought under control. 

Research is also on to evolve genetically modified pigeon pea and chick pea varieties and should be ready for commercialisation in the next 2-3 years. 

Will we indeed achieve self sufficiency in pulse production?

Read the full article here .  For further reading

Stronger Co-operatives can boost farm output

The Hindu Business Line - August 24, 2011

Dr K C Chakrabarthy, Deputy Governor RBI, speaking at FICCI-IBI banking seminar has said that strengthening co-operatives and involving private parties can help in improving productivity of agriculture sector.

The agri sector provides employment to about 60% of our population.  The agriculture share of GDP 15 years ago, was 50% , and  has now fallen to 14%.  Therefore, he says, food processing industry and agro based industry need to be given necessary boost to improve productivity and employment opportunities.

Although agricultural credit has grown, it is from urban and metropolitan branches of banks, and therefore raises the question as to which segment the credit is flowing into.  To improve the flow of credit there is a need for systematic co-operation between Regional Rural Banks and Primary Agricultural Credit Societies.

Read the full report here

Crop Holiday on Bumper Harvest in AP

Extract from article that appeared in MINT - August 23, 2011

Thousands of farmers are opting to take a break from growing paddy for at least one season.

Rising prices of farm inputs including seeds and fertilizer, a shortage of labour which, when available is becoming increasingly expensive, and lack of procurement by government agencies that have no space to store more foodgrain are responsible for the phenomenon known as “crop holiday”.

“This time, in place of rice, we have decided to cultivate grass for our cattle,” says 63-year-old M. Hanumanth Reddy of Irukodu in Medak district of Telangana region.

“Getting farm labour here is a major problem, and mechanization is not feasible as paddy fields are small and scattered. Even if we take a risk, we are not getting minimum support prices,” Reddy says.

It costs Rs 780-800 to cultivate 1 quintal, or 100 kg, of sona masuri, a premium-grade medium-size rice variety. The minimum support price for paddy set by the government was Rs 1,080 per quintal, but farmers received only around Rs 600-700 per quintal from rice millers who procure their produce, translating into a loss of Rs 100-180 per quintal.

In Andhra Pradesh, farmers are blaming the policies of the Centre as well as the state government for the predicament they are facing.

“Over 5 mt of paddy is still lying in the hands of farmers in Andhra Pradesh with no takers,” says agriculture scientist and food policy analyst Devender Sharma. “If there is normal rainfall, there will be another good crop, only to compound the crisis.”

“The crop holiday problem cannot be seen in isolation, it is a symptom of a bigger crisis that’s going to unfold at a national level in near future,” Sharma warns. “Unless there is an assured procurement and a guarantee minimum support price, farmers will be at a losing end.”

                             ( Pic Source - Mint - August 23, 2011)
The crop holiday in East Godavari is expected to affect the livelihood of around 80,000 farm workers.

“There are serious policy lapses. The state government did not focus on building more mandis (markets) and connecting them to production areas,” says Chengal Reddy, the Head of the Federation of Farmers.

“But it’s not too late. If all the panchayat (village council) buildings can be converted into makeshift godowns, a large portion of the grain can be saved from rotting in the farmers’ hands.”
Read the total article in Mint by Viswanath Pilla here

Media Support for Farming Sector is required

We have seen how media support for Anna Hazare has given him wide coverage and therefore created a major interest in the movement. The power of the media is immense.   In his book From Green to Evergreen Revolution, M.S Swaminathan emphasises the need for media to actively participate in revitalising the agriculture movement in India.

He feels that the Green Revolution was largely due to the involvement of  the print media and All India Radio  creating an enormous enthusiasm among farm families on opportunity created by the semi-dwarf varieties of wheat and rice to increase yield and income substantially.  The reports were as a result of visits of experienced journalists to Agri Research Centres and the Agricultural Universities.   Media Reports led to widespread demand for seeds of new strains and coupled with the reigns of the Agriculture Ministry in the hands of the capable Minister C Subramaniam, it led to timely public policy decisions. 

The media also helped to convert a small government programme – High Yielding Varieties Programme into a mass movement.  

It is now 40 years since the successful Green Revolution.  The PM talks of a desire for the second revolution.  The media however has not discussed why this is not happening.  While financial markets are given wide coverage, the agriculture sector is being ignored.  

Responsible journalism can highlight the problems of the agri sector and thus bring about a change.

AP to set up APEX Co-op Bank for SHGs

Source: Business Standard - Aug 17, 2011

The Andhra Pradesh government is all set to establish Apex Cooperative Bank for women self-help groups (SHGs) to minimise the scope for microfinance operations in the state.

Though the government had initially worked on the idea of forming a non-banking financial company (NBFC) in collaboration with public sector banks, it had to opt for the cooperative format as bankers informed about certain regulatory constraints in joining the NBFC, according to a senior government official.

The state Cabinet on Tuesday approved the proposal, which is expected to be formally launched next month.

The bank will be set up with the existing mandal samakhyas (federations of SHGs at mandal level) as its lending arms, thus bringing the vast SHG network into its fold. It is also designed to extensively leverage modern technology for loan transactions in such a way that a loan is sanctioned within 48 hours, according to government officials.

There are about 950,000 SHGs in the state, federated at the village level as village organisations (VOs). These VOs, in turn, are federated at mandal(administrative unit above the village level) mahila samakhyas (MMS), representing almost 10 million women members. The MMS, which have been involved in lending to SHGs for the past two years, currently handle Rs 7,000 crore business.

The proposed bank is expected to play a major role in meeting short-term financial needs of those groups that are already servicing term loans from commercial banks. As the groups are denied fresh leverage by banks during the currency of existing loans for the 3-5 year repayment period, the poor people have no alternative but to approach MFIs and money lenders for loans at high interest rates, the officials said.

The loans extended by the proposed bank would also carry the existing ‘Pavala Vaddi’ scheme under which timely repayments attract less than 4 per cent interest while the government reimburses the remaining interest component from the public exchequer.

Major Crops - barring cotton - take a hit in AP

Source: The Hindu Business Line - August 16, 2011

While farmers in water-rich areas of Andhra Pradesh have declared crop holiday in about three lakh acres, their counterparts in other parts of the State may end up losing crop in 10 lakh acres this season due to irregular or lack of rain.

Sowings in the State were completed in 53 lakh hectares, four lakh hectares short of the area which should have been covered so far. The State grows crops on 78.11 lakh ha in the kharif season.

Worst hit among major crops categories are paddy, groundnut, all pulses, and chilli. Sunflower is facing a complete wash-out. Cotton with the area sown registering a growth of 136 per cent at 16.48 lakh hectares as against the season average of 13.51 lakh ha. The farmers, however, had to sow twice in several parts, increasing costs on seeds and labour. The other gainers include turmeric at 0.57 lakh ha (season average 0.63 lakh) and castor with 1.82 lakh ha (1.77 lakh ha).

All but one (Srikakulam) district have registered shortfall in the rainfall. Twenty-two districts recorded rainfall in the range of -6 per cent to -23 per cent, while Srikaulam managed to achieve no deviation from the average of 375 mm as on date.

While sunflower and chillies fell in the below 25 per cent (of normal area covered), paddy and sesamum were in the 26-50 per cent band with redgram, groundnut, jowar and onion in the range of 51-75 per cent.

“Farmers need not worry about losing the season. They can still go for alternative crops such as green gram and maize,” the official said. The major loser, region-wise, is coastal Andhra. The region could see sowings in 11 lakh ha against the normal as-on-date sowing area of 15 lakh ha. The region has total arable land of 24.41 lakh ha. The water-scarce Rayalaseema region too lags at 11.87 lakh ha (13.69 lakh ha) as on date. The average crop area in the region stands at 24.41 lakh ha. Telangana region, which grows crops in 35.79 lakh ha in a normal year, is better off with a sown area of 30.48 lakh ha (28.62 lakh ha). Kadapa (Rayalaseema), Prakasam and East Godavari (Andhra) are the worst hit.

Fallow Land converted to Rice Field

Source:  The Hindu Business Line - August 16, 2011
Kerala has been a food deficit State for a long time now. Rice, which was the staple grain of its population, has made a smart comeback in the State, after a long hiatus. The falling trend in rice production has been reversed. Production and productivity of rice, which have been languishing for couple of decades, have now shown signs of growth. 

But for the current year, agricultural production will almost directly depend on the extent and pattern of rainfall over the highlands, midlands and low lands of Kerala. Thankfully, the rains during the South-West monsoon have been bounteous, maybe a bit on the higher side, Dr P.V. Balachandran, Director-Extension of the Kerala Agricultural University, said.

In fact, the State received two per cent excess rainfall at 1,570 mm till August 10 against 1, 536 mm last year. Most districts received fair amount of rainfall. The rain should facilitate good agricultural production this year.

The area under rice cultivation in the State had fallen sharply from 8.7 lh (lh) in 1970-71 to 2.3 lakh h in 2007-08. Production also plunged from 13.5 lakh tonnes to 5.8 lakh tonnes in the same period. But a slow and steady recovery has been evident since 2009-10, when the area under rice had grown close to 20,000 ha and production had grown by 1.25 lakh tonnes.

Last year's production, for which no published figures are available yet, should also be higher, Dr Balachandran said. It is quite unlikely that it will be on the lower side. While there is no shift in area from cash crops to paddy, the area lying fallow has been dropping in the State. More panchayats are now declaring themselves to be fallow-free. These growth trends are expected to boost the area under paddy in the current year. Productivity of rice had grown from 2.3 to 2.5 tonnes per hectare.