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Resource centre on India's rural distress
 
 

India’s farmers reap little despite rising food prices by James Lamont

Ram Dia Singh was ready to chuck in his life as a farmer in northern India to embrace that of an ascetic in the foothills of the Himalayan mountains.

When he consulted his guru in the hill town of Solan, instead of being welcomed into a holy order he was instructed to return to the land and do good works among fellow farmers who increasingly struggle to eke out a living from some of India’s most fertile land.

Mr Singh is considered a well-organised farmer in his community in the village of Bangan in southern Punjab. Yet rising food prices, the bane of India’s Congress party-led government, have not improved his lot, nor given other Punjabi farmers reason to cheer.

Punjab remains the main breadbasket of Asia’s third-largest economy. It exports food to the rest of India. And yet at a time when India’s agricultural markets are booming, many of Mr Singh’s neighbours are facing negative incomes in an agrarian crisis, forced on them by unwieldy state regulation.

On a scrap of paper, Mr Singh has written out his costs for growing wheat and rice on his family’s 30-acre plot. He does the mental arithmetic tallying his costs for ploughing, seed, fertiliser, zinc sulphate and pesticide. He then adds transport, irrigation and 20 days’ labour.

The result is a harvest of 17 quintals of wheat an acre, bringing in an income of Rs16,000 ($347) at a cost of Rs14,000, leaving a margin of just Rs2,000. He repeats the exercise with his rice crop to reveal a similarly wafer-thin margin. Mr Singh had diversified into more profitable sugar cane until the local sugar mill closed down.

“A good farmer with a good piece of land can just about break even,” he says.

A bleaker picture unfolds on surrounding small holdings. In India’s fast growing economy, costs are rising for agricultural inputs such as fertiliser and transport. The water table has fallen dramatically and the cost of irrigation has risen as farmers use more powerful pumps to draw water.

Wheat and rice crops are subject to government-set minimum support prices. Wheat prices have recently been raised 20 per cent but during the past decade prices have remained static.

“What benefits farmers is a steady rise in prices, not temporary fluctuations which can be harmful,” says H.S. Shergill, emeritus professor of economics at Punjab University.

“The price of most agricultural commodities in India is set by the government, but in practice the controls apply most to rice and wheat. Of 27 commodities, only two get that [state] price.”

Punjab, traditionally one of the country's richest states, was at the forefront of the Green Revolution, a movement in the 1960s to modernise agriculture with more intensive use of fertiliser and pesticide and mono-cropping. The irony is not lost on the farmers. They fume that the rural poor are subsidising India’s rising urban classes in New Delhi and Mumbai.

Caught between the twin pressures of rising costs and government efforts to hold down food prices, they are forced to take on more debt. Borrowing costs are upwards of 24 per cent. They sell their land to pay debts. But in a state with little industry outside of farming, most are trapped on the land with few alternative livelihoods.

Some local activists, such as Chandigarh-based Inderjit Singh Jaijee, a former executive at British multinational Dunlop, warn that the agrarian crisis in Punjab is exacting a rising human price and fuelling future militancy. “The government says some of these areas are Naxal [Maoist] prone areas. It’s not Naxal. It’s more to do with the economy and the way they are living,” says Mr Jaijee.

Suicide rates are also high. Mr Jaijee estimates that as many as 60,000 farmers have committed suicide in the past 20 years across the state, where official statistics put the figure at 132 in the past five years.

“The cost of production has gone up but the government price has not gone up proportionately,” he says. “We are straitjacketed.”