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LATEST NEWS UPDATES | Farmers' suicides reflective of death of rural banking by G Arun Kumar

Farmers' suicides reflective of death of rural banking by G Arun Kumar

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published Published on Jan 1, 2011   modified Modified on Jan 1, 2011

Since the beginning of December last, 220 tenant farmers in the state have committed suicide or died of shock, crushed by mounting debts and loss of crops. Overall, the farmer death toll stands at a staggering 350-400. Though the fickle weather wreaked havoc, experts believe it's only partly to blame as several other factors have worked against the farming community.

While economic expansion continues to bypass the farming community leaving them impoverished and in debt trap, subsidy cuts have made seed, fertilizer, pesticide and electricity more costly. "This desperation is shocking. It puts spotlight on the hardship and growing disparities among the farmers. The ryots feel squeezed as never before," V Vinod Goud, agriculture scientist, Icrisat, observed.

New snazzy cars zoom by and cellphones ring loud in the cities and towns, but in the countryside where the farmers toil they hardly get bank loans. "Banks charge 7% interest for cars but take 12% and more on farm tractors. Little wonder 5% of ryot community in the last 3-4 years have shifted to other jobs," rued B Chandra Reddy, vice-president, AP Rythu Sangham (APRS).

Though banks were supposed to lend term loans of Rs 54,050 crore to farmers, their target was slashed to Rs 15,652 crore. Curiously, banks do not lend to tenant farmers, while marginal farmers get a pittance. This dichotomy is seen more starkly in AP, which is known as the rice bowl of the country. In East Godavari district where at least 60 suicides were reported in the past two months, a vast majority of the ryots own less than five acres of land.

While 75 per cent of the farmers' earnings go into the hands of traders and middlemen, everything else they earn goes to moneylenders and pesticide dealers. "Our farmers get 1.67% subsidy whereas Pakistan offers 28% and China 39% to its farmers," Chandra Reddy revealed. He denied that failed crop alone sparked the suicide. He said unless state-owned banks raise lending to small farmers and extend loans to tenant farmers, the suicides won't stop.

Experts said the government education programmes have failed, leaving the mostly illiterate farmers dependent on private moneylenders and unscrupulous pesticide dealers for advice on managing crops. Most importantly, the deaths reveal the collapse of the rural banking system. Short of cheap bank credit, farmers were forced to turn to moneylenders who charge 30-35 per cent interest.

Take the case of Regala Subbaiah, 27, a tenant farmer of Takkellapadu in Dachepalli mandal in Guntur. With little understanding of the risks involved, he blindly copied a neighbour who was earning handsomely from the white gold (cotton). He took five acres on lease and cultivated cotton in two acres, chilli in two and paddy in one acre by incurring a debt of Rs 1 lakh. He paid Rs 50,000 towards lease. But the dream quickly soured as the entire crop was destroyed in the rain.

As his crops withered, Subbaiah's creditors came calling. In addition to pesticide dealers, some were fellow farmers who lent surplus cash at high interest. In all, he owed about Rs 1.5 lakh, with little prospect of earning anything this season. With no hope, he committed suicide by hanging himself on Dec. 24.

The farmers took a huge gamble on cash rich crops following an excellent monsoon. Over the past five years, many have switched from growing food staples such as rice, lentils and peanuts to cotton, chilli, tobacco because of the fabulous profits with greater investments on fertilizers and pesticides. In the past year alone, the area under cotton cultivation had swelled by 50 per cent in Warangal district.

Pesticide dealers swarm the villages, promising farmers miracle results and credit. "It's a vicious circle. If they abandon commercial crops, they are certain to have low returns and the only alternative will be to sell their land," a professor of Centre for Economic and Social Studies said. Chalapati Rao, agriculture official, said pesticide dealers thrived on farmers' ignorance and encouraged them to go in for cash crops.

The vacant look on the face of Lavuri Bala, a marginal farmer of Bolligutta thanda in Damarcharla mandal in Nalgonda, said it all. He tried to commit suicide on Dec. 14 by consuming pesticide, but his family rushed him to the hospital in time. After 10 days of treatment, he's back. He incurred Rs 70,000 for pumpset and another Rs 10,000 loan to cultivate paddy in one acre. Bala, 38, already owed Rs 25,000 bank loan before the suicide attempt. His wife Padma ended her life last year over financial woes.

As the demands for moratorium on loans, lowering of interest rates and ensuring minimum support price increase, farmers' sangham leaders claim the government package was a sham. "Even the paddy purchase centres are not willing to buy the wet stocks," said Jalagam Kumara Swamy of Bharatiya Kisan Sabha.

Then what's the way-out for the distressed farmer? "The suicides highlight that the state needs to modernize agriculture on a priority. Educating ryots, supervision of technology, finance, investment and providing equitable markets hold key to their future," Vinod Goud opined.


The Times of India, 2 January, 2011, http://timesofindia.indiatimes.com/city/hyderabad/Farmers-suicides-reflective-of-death-of-rural-banking/articleshow/7202975.cms


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