some reforms in agriculture farmer movement
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Farmers are unhappy across India. Politicians are scrambling to waive loans, raise procurement prices and promise more handouts. These will change little. Radical, multi-faceted reform is needed, and that calls for politics, not magical promises to double farmer incomes by 2022.
Farming thrives or declines as part of the larger economy. India’s growth is driven by services and industry, which grow multiple times as fast as farming does. New jobs will be created in the urban centres where services and industry flourish, people will move from country to town.
For the first time in 2011-12, the share of the workforce dependent on agriculture dropped below 50% in India. It will drop steadily. Less than 2% of the US workforce live off agriculture.
Productivity The Key
Urbanisation will take up a relatively tiny part of the land used for cultivating crops, but its demand for labour will be significant. Higher wages would draw workers out of rural areas.
Over 2006-14, rural wages rose for eight years on the trot, in real terms, thanks more to a construction boom across the land than to employment guarantee. Higher wages would push up the cost of cultivation. Should farmers then receive still higher minimum support prices, pegged at 150% of the all-in cost, as recommended by the Swaminathan Commission?
The answer depends on how Indian farm prices would compare with global prices. If the same commodity, when imported, were to cost less than its remunerative price fixed by the government, to use domestic produce is to burden the rest of the economy.
If rice and wheat were to be cheaper to import than to grow domestically, abjuring imports is to push up wage costs above what they ought to be and harm Indian industry’s ability to compete, and to reduce the consumption of food by an already malnourished population.
Of course, the global prices of farm produce bear layers of subsidy, direct and indirect. India would be perfectly justified in imposing tariffs to offset these distorting subsidies. If Indian food prices turn out to be still higher than imported food prices, should Indians consume needlessly expensive food, to keep Indian farmers happy?
The solution is to raise farm productivity in India, so that costs are in line with globally efficient production, as revealed by imports. India has varied agro-climatic conditions, in which almost anything grown anywhere in the world can grow.
As the world prospers, and the demand for chocolate outstrips the supply of cocoa, India can turn supplier of that additional cocoa needed. The logic applies to wine, coffee, tea and assorted nuts. The population is growing at the fastest clip in Africa, a continent that is prospering as well. Growth in numbers and prosperity will push up the demand for diverse foods. India can hope to meet a part of the additional demand for different kinds of food.
The biggest obstacle to switching or introducing new crops is a system of subsidies that entrench an existing crop, however lucrative an alternative could be. Sugarcane in relatively arid Maharashtra is sustained by subsidy on power, water and fertiliser.
In Punjab, generations of farmers have killed the soil with overuse of irrigation and fertiliser. Ideally, Punjab should diversify away from grain into fruits, vegetables and flowers, besides cotton. But free power, free water, subsidised fertiliser and procurement of what is produced at ‘remunerative’ prices favour the status-quo.
Subsidy As Patronage
The 2018-19 Union Budget puts agricultural subsidies at Rs 2.6 lakh crore (including food subsidy, which conflates subsidy for producers, consumers and the Food Corporation of India’s inefficiency, corruption, wastage and spoilage). That is 1.25% of 2017-18 GDP. Add the subsidy state governments bear on power and irrigation.
Agriculture easily gets 2% of GDP as subsidy. The result is still misery and farm unrest. What if farmers can be persuaded to give up traditional subsidy on inputs? A part of the subsidy savings can still go as income support, and the rest ploughed into productivity-enhancing investment, of which there has been a decline under the present government. This calls for politics, and political will.
Growing crops suited to agro-climatic and soil condition is just one part of increasing productivity. The other part is using knowhow, as in better varieties and farm practices. This calls for incentivising research and returns for its output, intellectual property.
Farming thrives or declines as part of the larger economy. India’s growth is driven by services and industry, which grow multiple times as fast as farming does. New jobs will be created in the urban centres where services and industry flourish, people will move from country to town.
For the first time in 2011-12, the share of the workforce dependent on agriculture dropped below 50% in India. It will drop steadily. Less than 2% of the US workforce live off agriculture.
Productivity The Key
Urbanisation will take up a relatively tiny part of the land used for cultivating crops, but its demand for labour will be significant. Higher wages would draw workers out of rural areas.
Over 2006-14, rural wages rose for eight years on the trot, in real terms, thanks more to a construction boom across the land than to employment guarantee. Higher wages would push up the cost of cultivation. Should farmers then receive still higher minimum support prices, pegged at 150% of the all-in cost, as recommended by the Swaminathan Commission?
The answer depends on how Indian farm prices would compare with global prices. If the same commodity, when imported, were to cost less than its remunerative price fixed by the government, to use domestic produce is to burden the rest of the economy.
If rice and wheat were to be cheaper to import than to grow domestically, abjuring imports is to push up wage costs above what they ought to be and harm Indian industry’s ability to compete, and to reduce the consumption of food by an already malnourished population.
Of course, the global prices of farm produce bear layers of subsidy, direct and indirect. India would be perfectly justified in imposing tariffs to offset these distorting subsidies. If Indian food prices turn out to be still higher than imported food prices, should Indians consume needlessly expensive food, to keep Indian farmers happy?
The solution is to raise farm productivity in India, so that costs are in line with globally efficient production, as revealed by imports. India has varied agro-climatic conditions, in which almost anything grown anywhere in the world can grow.
As the world prospers, and the demand for chocolate outstrips the supply of cocoa, India can turn supplier of that additional cocoa needed. The logic applies to wine, coffee, tea and assorted nuts. The population is growing at the fastest clip in Africa, a continent that is prospering as well. Growth in numbers and prosperity will push up the demand for diverse foods. India can hope to meet a part of the additional demand for different kinds of food.
The biggest obstacle to switching or introducing new crops is a system of subsidies that entrench an existing crop, however lucrative an alternative could be. Sugarcane in relatively arid Maharashtra is sustained by subsidy on power, water and fertiliser.
In Punjab, generations of farmers have killed the soil with overuse of irrigation and fertiliser. Ideally, Punjab should diversify away from grain into fruits, vegetables and flowers, besides cotton. But free power, free water, subsidised fertiliser and procurement of what is produced at ‘remunerative’ prices favour the status-quo.
Subsidy As Patronage
The 2018-19 Union Budget puts agricultural subsidies at Rs 2.6 lakh crore (including food subsidy, which conflates subsidy for producers, consumers and the Food Corporation of India’s inefficiency, corruption, wastage and spoilage). That is 1.25% of 2017-18 GDP. Add the subsidy state governments bear on power and irrigation.
Agriculture easily gets 2% of GDP as subsidy. The result is still misery and farm unrest. What if farmers can be persuaded to give up traditional subsidy on inputs? A part of the subsidy savings can still go as income support, and the rest ploughed into productivity-enhancing investment, of which there has been a decline under the present government. This calls for politics, and political will.
Growing crops suited to agro-climatic and soil condition is just one part of increasing productivity. The other part is using knowhow, as in better varieties and farm practices. This calls for incentivising research and returns for its output, intellectual property.
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Land reform, a purposive change in the way in which agricultural land is held or owned, the methods of cultivation that are employed, or the relation of agriculture to the rest of the economy. Reforms such as these may be proclaimed by a government, by interested groups, or by revolution
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