India that consumes doesn’t see eye to eye with India that farms

The All-India Kisan Sabha’s march of farmers, which culminated in Mumbai earlier this week, is yet another outcome of the fact that India’s agricultural policy is dictated by urban consumer bias

Modern India’s societal and policymaking attitude towards farmers is one of the greatest virtue-signalling scams in the history of mankind. There is no other group about whose welfare has so much been spoken by so many, for such few results. Most of our festivals are a thanksgiving to the earth and those who till; our school textbooks continue to institutionalise the myth about India being an ‘agricultural nation’; the slogan jai jawan, jai kisan reverberates at political rallies of all hues; finance ministers begin Budget speeches with an ode to the farmer and a promise to change their lot; our current prime minister wants to double their income by 2022; and well-heeled, urban Indians order frightfully expensive “organic” stuff online as if it were a non-80G contribution to the Indian farmer.

Yet, over the past two years, the country has witnessed farmer anger in almost every state. Farmers in Madhya Pradesh took to rioting in June 2017. Tamil Nadu’s farmers, camping in Delhi, shaved half their heads off, stripped themselves naked and stuffed rodents into their mouths to attract the attention of politicians to their woes. Now, thousands of Maharashtra’s farmers from different and distant parts have come walking barefoot to the state’s capital, Mumbai, to make their demands for loan waivers and crop loss compensation heard.

The big question newspaper Opinion page editors and assorted commentators are attempting to answer now, in the wake of the new wave of pessimism around the farm sector, is: Is Indian agriculture broken. By posing to ourselves such an unanswerably, weighty question, we are trying to achieve two things at once. One, get rid of the guilt. Two, obfuscate the path to truth. The question to be asked is if the relationship between India that farms and the India that consumes has broken down?

Agriculture is a giant black box for Indians not engaged in it. For all our harvest festivals and the urban protests in favour of rural charms such as Jallikattu and Kambala, India maybe raising a generation that thinks food is grown in supermarkets. It’s a first world disease a third world country is keen to catch. How often do we find anything about agriculture in mainstream news media? Usually, there is indirect coverage only when there is a sharp increase in food prices. And this is almost entirely consumer-centric. If agriculture reporters were a species, they’d be categorised by the International Union for Conservation of Nature (IUCN) as ‘extinct in the wild’. The commodities reporters (a big, unwieldy basket of a beat that includes everything from crude oil to gold and guar gum) often double up as agriculture reporters who can’t be trusted to tell apart a field of rice from ragi. Not surprisingly, it’s deemed a punishment posting or at best a stepping stone to a beat more “consequential”. For each reporter covering agriculture (18% of India’s GDP), there could be found 20 writing on a clutch of e-commerce companies with combined sales not exceeding $5 billion.

Prisoners of government-approved choices
In November 2017, Ashok Gulati, one of India’s best known agriculture economists, and Infosys chair professor for agriculture at Indian Council for Research on International Economic Relations (ICRIER) and his team of researchers made a riveting presentation at Indian Council for World Affairs’ Institute of Chinese Studies on the subject of lessons for Indian agriculture from Chinese reforms. Although several “senior” Indian editors were in attendance, compare the reportage of that event to Apple co-founder Steve Wozniak’s alleged, recent critique of India’s education to understand why the narrative around our farming is nonsensical.

Rural India, and by extension the India that farms, is believed to possess greater electoral heft than the rest. If that were true, they’d be driving to work in German minivans, not marching barefoot to Mantralaya.

Globally, food and agriculture is seen among the most exciting business to be in. In India, the farmer is reduced to an object of pity. The agricultural policy is dictated by urban consumer bias. The price of pulses or vegetables consumers pay rather than the profitability of farmers keeps politicians on the alert. Keeping farm prices artificially low to fuel industrial growth is an old socialist rope trick governments off all ideological inclinations employ.

According to Gulati, the much vaunted Indian economic reforms have passed the farm sector by. The reforms of 1991-92, carried out under the shadow of a balance of payments crisis, focused on exchange rate adjustments, reducing taxation on industrial goods and dismantling of the license and quota for industrial production. In simple terms, the government ceased to decide who should produce, say, bicycles or ball bearings, and in what quantity.

There has been no matching structural reform aimed at agriculture.

Thousands of Maharashtra’s farmers descended in Mumbai on March 12, after having started walking from Nashik earlier in the month, to demand a fair price for their crops and loan waivers. Photo: PTI

While industrialists had gained the freedom to play to their strengths — buying efficient technology off-the-shelf from overseas, the liberty letting the market decide the right price for their goods and services —Indian farmers remain prisoners of government-approved technological choices (GM or no GM) and government mandated procurement prices. If onion or tomato prices go up, the government steps in with price controls, export bans and zero-duty imports, offering a quick fix for the consumer but damaging farmer prospects over a two-three year cycle.

Gulati and his fellow researchers contend that the Chinese economic miracle was built on the foundations of the giant leap in farm prosperity it produced in six years between 1978 and 1984. As it moved from farm communes to landholding on long-term lease, the country agricultural GDP rose nearly 7%, and real farm incomes increased 15% annually. In comparison, India’s real farm income needs to grow at three times the current rate, to achieve PM Modi’s dream of doubling it by 2022. For a compounded annual agricultural growth of 11% needed to double farm income, there ought to be Rs 11 lakh crore worth of investment (four-fifth of it in public investment). “A 2000-page, 14-volume report by a committee on ‘doubling farm income’ can’t do it,” said Gulati, tongue firmly in his sunken cheek.

In the massive surge in hinterland income and consumption demand were sown the seeds of China’s manufacturing boom. In those six years, China halved its poverty compared to the 18 years it took India on the back of reforms that primarily addressed services and manufacturing sectors.

Is doubling of farm income even feasible let alone possible?
India’s economic growth is, by and large, a story of wealth trickling down from the services boom. Those in the urban areas who benefitted from the IT and allied services boom wanted more cars, two-wheelers, pizzas and branded clothes. It made sense, then, for global manufacturers to make for India in India. Unlike the China model where the farm sector was the springboard for demand, India’s services driven economy simply cannot sustain similar levels of domestic demand. In any case, Indian manufacturing trails China by two decades, making it hard to compete realistically.

China, in fact, offers the best agricultural comparison rather than Brazil, US or Australia (or other countries farthest from India our lawmakers love to visit on ‘study’ tours).

India’s poor productivity is often attributed to its fragmented landholding. India’s average landholding at 1.15 hectares is nearly twice that of China (0.66 ha). Oh, but China is a much larger country and has the Three Gorges dam. Untrue. India has nearly 200 million ha of crop area, of which 50% is irrigated compared to 166 million ha with 40% irrigation in China. Yet our eastern neighbour produces two times the amount of cereals and about four times the quantity of fruits and vegetables. Communist China allowed its farmers to get the best possible price for their produce. Democratic India, when prices rise, bans exports, abolishes import duties and, basically, throws its farmers under the tractor. Even when the market is willing to pay the farmer more, the Indian State intervenes.

Using pricing as a policy to achieve equity and keeping food prices artificially low — the worst form of economics — successive Indian governments have only redistributed poverty rather than spread prosperity. By giving nutritionally-poor foods such as rice and wheat to 60% of Indians at Rs 2 a kg when the actual procurement cost can be as high as Rs 20, whose interests are the governments serving? In the process, the State spends Rs 145,000 crore on misdirected food subsidies that keep a country undernourished and its farmers poor while investing only Rs 25,000 crore on agriculture. In Gulati’s words, it’s like having one foot on the accelerator and the other on the brake. Instead of directly giving money to those below poverty line, the State ends up distorting price mechanism. Suppressing prices in the name of urban poor makes farming householdjavascript:void(0)s poorer.

In a month, the Madhya Pradesh government lost Rs 750 crore (in buying a bumper crop of onion from farmers). The state’s annual food processing budget is Rs 7 crore. With that money, he (CM Shivraj Singh Chouhan) could have built several onion dehydration plants which would prevent such price shocks.
Ashok Gulati, Infosys chair professor for agriculture, Indian Council for Research on International Economic Relations

Think about it this way. The real rural consumption boom happened between 2007 and 2011 when global commodity prices shot through the roof. Despite the price controls, Indian farmers benefited from higher all round prices.

The perverse incentives of India’s farm policy allow Bollywood stars raking in millions and wealthy politicians declare themselves agriculturists to pay less income tax, even as the real agriculturists sink into a hole. Besides, access to highly subsidised urea encourages farmers to use them indiscriminately for short term gains while destroying long term soil health.

Gaps in technology, investment, innovation
India has an inexplicable mistrust of technology in agriculture. While the country eagerly embraced the latest mobile technology in the mid-1990s to its great benefit, it prefers its farmers stay away from global scientific advancements. Despite the evidence of BT cotton catapulting India as the world’s largest exporter of cotton in a matter of a decade since its introduction in 2003, the country views GM crops as evil. All major agricultural economies — the US, China and South American nations — have embraced GM crops. In fact ChemChina, a Chinese state-owned firm, acquired the Swiss seeds and chemicals giant Syngenta for a whopping $43 billion in 2016 to stay ahead in the GM crops race. In its opposition to GM, India has become a petri dish for a uniquely European brand of anti-GM activism.

Between 2000 and 2016, China’s spending on farm R&D as a proportion of the total value of agricultural output grew 47%. India’s R&D spends grew 5% in the same period. China is now a global leader in hybrid rice technology that offers up to 50% higher output than the high-yielding varieties India persists with. Hybrid seeds specialist Monsanto spends $1.7 billion on R&D while the entire budget for Indian Council of Agriculture Research (ICAR) is less than $1 billion.

According to Madappa ‘Rice’ Mahadevappa (he earned the popular middle name thanks to his research in rice breeding), a former head of Karnataka’s top rice research institute and a Padmabhushan awardee, farmers are the most emotionally exploited lot while agri scientists like him the most neglected. “Quite often the governments don’t know what scientists in their own institutes are doing. Many of our successful innovations don’t reach the farmers,” he said.

India’s farm policy remains stuck largely in a production paradigm. That means farmers often produce bumper crops but don’t have the means to get the right price. Last month in Karnataka, tomato prices crashed so low that farmers did not bother harvesting their excellent crop. The cost of harvesting and getting the fruits to the markets was higher than the selling price. Similarly, the farmer riots in Madhya Pradesh in June 2017 took place when their second successive bumper onion crop had no takers because of the supply glut. The market yard prices plummeted as low as 50 paise a kg. A panic-stricken state chief minister Shivraj Singh Chouhan promised his government would buy “the last available onion” from farmers at Rs 8 a kg. The government then sold the onions through PDS shops at Rs 2 a kg and had to simply bin a lot of the stock. “In a month, the MP government lost Rs 750 crore. The state’s annual food processing budget is Rs 7 crore. With that money, he could have built several onion dehydration plants which would prevent such price shocks,” explained Gulati in his lecture.

In the absence of structural reforms and a coherent agriculture policy that is aimed at making the farmer profitable, Indian farms will remain a parking lot for the poor. Farm loan waivers or not.

(TR Vivek is director, editorial, Hill+Knowlton India. Opinions expressed are personal)

Prof Yashwant Sinha’s easy tutorials for Indians on Modinomics
For every Nambi Narayanan, there are countless others whom the system fails
Were Jan Dhan accounts used to launder black money?
Editor’s Pick More