The Sad State of Agriculture: Problems Faced by Indian Farmers

Preface

In this post, let me share the typical problems faced by Indian farmers.

Ten years ago, I bought a small piece (1.4 acres) of barren land. At that time, the fabrics woven out of Sulzer air-jet looms had attractive profit margins. Hence many weaving factories were mushrooming up around my place. I too was actually planning to put a weaving factory on one end of this plot by availing bank credit and build my home on another end of the plot. Within a few months from my purchase, the textile market for air jet woven fabrics slumped. Thus I could enact the entire plan. Moreover within three months from the purchase of this land, I ended up buying a separate home. So I had to drop my original plans. It became a real-estate investment for capital gains. I had no idea to derive any yield out of it.

Improvement

Subsequently I was able to find adequate water when a borewell was dug to a depth of 500 feet, however. We know that agricultural income is exempt from income tax. Except for the initial establishment costs, Tamilnadu State Government provides free electricity for agriculture. So I went ahead and made the land cultivable and obtained an agricultural service connection.

Coconut groves demand less maintenance and intervention and hence are less labor intensive. The nuts are harvested every 45 days. So owning a coconut grove is almost a passive sort of tax-free income. With some additional investment, I developed the land into a coconut grove in the ensuing years. A cellphone/timer controlled electric switch was installed to control the submersible pump operation. Along with drip irrigation, I completely automated the irrigation.

Intercropping

A couple of months back, I thought of intercropping between the coconut trees for more income from agriculture. I already had a backyard vegetable garden at home. Cultivating leafy vegetables in the interspace between coconut trees seemed to be a great idea due to two reasons. Owing to exhaustive summer temperatures, not everybody can cultivate leafy vegetables during that part of the year. Temporary shades have to be erected to protect the crop from exorbitant heat. Not every farmer would be interested in pursuing all these efforts. However, coconut trees could act as the needed shade. There is usually a demand-supply mismatch in the auspicious season at the end of May and the beginning of June.

I decided to grow coriander leaves (cilantro) due to the high prices it could fetch in the aforesaid season. I planned the reaping days to coincide with the auspicious days. Hence I could get the maximum price for my produce. It is in this agriculture venture I had my firsthand experience as a farmer. I already have been witnessing the difficulties faced by my relatives who are farmers. This venture gave me more insights and first-hand experience. It helped me learn the problems faced by Indian farmers.

Problems faced by Indian farmers

Scale of operation

Real-estate prices have soared to exorbitant levels. It has made even owning a home a distant dream for a common man. Where has he the chance to buy a farm on his own then? Any land that an Indian farmer owns now is mostly inherited from his ancestors after division among siblings. This has been going on for generations. After so many bifurcations, whatever left with each individual is just a small, fragmented piece of land. Perhaps a couple of acres. So one of the major disadvantages of an Indian farmer is the small holding and the small scale of operation. Due to the small scale of operation, automation and mechanization are not at all affordable given the low income. In turn, our small cultivator has to rely completely on human labor for any farm activity.

Scarcity of farm labor

The traditional method of harvesting coconut from trees is to climb from tree to tree and pluck the ripe ones. However, these days it is hard to find labor for that practice. Instead the laborers have resorted to plucking the coconut using tall poles. Yes, with this method the productivity has actually improved compared to the traditional method. But what about other labor-intensive crops?

Farm job is a low-esteem job, particularly casual agricultural labor! Already urban migration and absorption of labor by industries and construction have taken their tolls on farm labor. The younger generation get educated and move on to other jobs. Farming is left with a steady decline in labor force. I doubt if anyone of the younger generation would choose farm labor as his/her career. Food inflation, owing to government’s minimum support prices (MSP), has driven up wages [1] of the remnant existing farm workforce. To add insult to the injury, government whisks away the leftover laborers under MGNREGA scheme! Productivity is least bothered under this scheme. Hence farm laborers are happy to work under this scheme rather than in farms. Therefore, MSP and MGNREGA have done no good to the small farmer. It rather has blessed him with high wages and scarcity of farm labor!

Inadequate price realization

Marketing is one of the major hurdles faced by our farmers. Outdated laws in India compel most of the times to sell a farmer’s produce in regulated markets. However, middlemen take a hefty cut. The total margin of middlemen in the entire chain adds up to 75 percent [2]. The farmer has to satisfy himself with peanuts! Had our farmers been able to avoid middlemen and reach the consumers on their own, they would have been able to realize better price for their products. However, they are exploited everywhere. Procurers like sugar factories are no different. Farmers always frown upon the weighing scales of sugar factories. Moreover, it may take even years to fully realize the price of sugarcane sold to the sugar factories by farmers!

Lack of storage facilities

According to ASSOCHAM, about 30-40% of India’s horticultural produce, roughly worth Rs 35,000 crore [3], gets wasted every year due to lack of cold storage facilities. Vegetables and fruits have demand throughout the year. However, abnormal seasonal variations like untimely rains destroy the crops. Even during seasonal times, he has to sell his produce the soonest before they get rot. That causes a glut in the market.

If the vegetables can be cold stored during surplus times, a farmer can realize better values for his produce during off seasons. Cost of owning and operating a cold storage is beyond the means of a small farmer. Only proactive government policies that encourage collective effort in this regard could be of help. Our government has not yet woken up to this reality although agriculture is the major contributor to the Indian economy. Who will make our rulers realize this need?

Spurious seeds, fertilizers and pesticides

Blame it on ignorance, corruption, poor laws and law enforcement, often farmers get mired with uncertified seeds, low-grade fertilizers and spurious pesticides that often lead to total crop loss. Getting entangled in one such unfortunate event brings life to a standstill for a farmer having lost time, energy and money.

With so many uncertain factors coming into play with a farmer such as environment, application of seed rate, quality of soil and water, sowing method, etc., the seed vendors easily escape the clutches of law and compensation. Having to spend further, a legal recourse seeking compensation in such instances would only take things from bad to worse. Life just taught them a costly lesson that needs to be avoided the next time! Tough ones move ahead. Heavily indebted ones end their lives! Have you ever been able to imagine the reasons why Indian farmers end their life? Agriculture ministers come and go every five years; even they couldn’t, how could you!

Impact of climate change

Global warming and climate change have made it less predictable when to sow and when to harvest. Unseasonal rain, sleet, drought, mist or wind eventually lead to crop failures. Or else, changes in pests, diseases and weeds make life miserable and impact significantly the fortunes of the farmer who bet everything he could on the land. Right from plowing, uncertainty is his only partner!

Our farmers need to be educated and encouraged to use modern agricultural techniques and scientifically proven farming practices. Similar to the techniques and practices implemented in Israel or elsewhere successfully. Adoption of greenhouse and vertical farming and hydroponics could become a boon. In fact our government is disbursing subsidies for poly-houses used in greenhouse cultivation. However, our farmers need to be guided on how to implement it and where to knock the doors for availing those rebates.

Indo-Israel Centre of Excellence for Vegetables, Gharaunda, Karnal, Haryana, set up under Indo-Israel Agriculture Cooperation Agreement is doing a commendable job. It gives training, assistance and guide our farmers in greenhouse farming. Farmers associated with the center are finding their income grow manifold. In making the second green revolution happen, nationwide agricultural universities have got a key role. Not only should they invent new technologies and scientific practices, but also create awareness and encourage adoption of the same. Will they step up to the plate?

Insurance is a subject matter of solicitation

As I said above, the crops are cultivated under traditional methods open to skies under natural conditions. Crops are subject to abrupt changes in temperature, humidity, light etc. Adverse climatic conditions affect the quality and yield of crops. A farmer invests all his savings and borrowings, open to sky, with no guarantee that he could take it back. So it is he who needs insurance the most. However, insurance is a subject matter of solicitation for him! Lack of education, ignorance, lack of resources, complacency, red tapism in application and claim – all these bar him from soliciting. Perhaps agriculture department officers can guide our farmers, but only bribery involved chores enthuse them!

Farm livestock no more profitable

Owing to the lack of steady cash flow, crops are less dependable to mete out daily expenses. To overcome this, farmers foster cattle and other livestock alongside farming for steady cash flow and additional income. Livestock can be fed with the farm surplus and waste. The livestock waste can be used as manure. However, the governments heavily regulate milk prices in favor of consumers. Furthermore, livestock feed prices is on a constant rise. Therefore, rearing livestock for a livelihood too is on the brink of indecisiveness. Livestock population compared to the previous livestock census of 2007 shows a 3.33% decrease [4]. Farmers resorted to reducing the male livestock to cut costs!

Limited access to credit

Lending to agriculture has significantly increased over the years. However, farming is still the least preferred occupation that any commercial bank would like to extend credit. Blame it on the small scale of operation, lack of education, irregular cash flow, unsteady income, lack of financial statements, crop failures, defaults and even suicides! Where does he turn to his working capital requirements if accessing formal credit is limited to him? Most of the times, our small farmer has to rely informal sources like friends, relatives, and other farm households. At last even borrow at exorbitant interest rates from local lenders or micro-financiers. The downtrodden sections of the society including the small farmers [5] are more exposed to these non-institutional sources for their borrowings. Thus they end up paying higher rates of interest (36 to 120% per year).

The lack of access to formal credit and higher interest for the availed credit place many constraints on the inputs and eventually on the outputs. All these have a negative bearing on their economic situation. Had our small farmer been able to avail formal credit easily, he would have been better off tackling the working capital needs and inflated costs. Simplifying the procedure for loan disbursement so that it is not difficult for the less-educated and illiterate households to access commercial banks for credit is the only way out. Only RBI can bell the cat!

Soaring real-estate prices

How come soaring real-estate prices could be a problem for a farmer? You should be kidding. It is capital gains and should be a boon, isn’t it?

In the 10 years since I have bought this piece of land, real estate prices have almost soared 30 times the price that I paid. Comparing to its value now, the yield it gives is negligible. It is around 15 kilometers away from the city. Proximity of a farm land to a city makes it more valuable.

The farmer might be a millionaire with his landholdings but the yield is just a minuscule compared to its value. What does this mean to a small farmer? Sell the land to a realtor and deposit the proceeds in a nationalized bank as fixed deposits for a regular income! Realtor converts the land to commercial space and buildings. Ultimately, shrinkage of cultivable space and loss of capital for our small farmer. I know persons who sold out their farms 25 years ago and deposited the proceedings in fixed deposits. They are cursing their stars now!

Bottom line

My endeavor with agriculture ended as soon as it started. The seeds didn’t germinate possibly due to two reasons, either due to hard water or due to the heat of April. I hadn’t gone for testing the water in a laboratory. However, six months after I sowed the seeds, part of them germinated with the northeast monsoon rains! Southwest monsoon barely brings any rain there. So that shows my conclusion to be right. Hard water might be good for coconut trees, as you might have seen coconut trees growing robustly on seashores, but not for horticulture.

Had it been successful, I would have earned a couple of lakhs but I ended up with a monetary loss of Rs 15,000/- and a time loss of two weeks. I was working under the sun along with the laborers all those days. Since my monetary loss was only Rs 15,000/- and since I didn’t have an intention to further proceed with agriculture, I didn’t dig deep into the reasons of failure. My venture into agriculture ceased with that. Will I ever foray into agriculture hereafter except coconut groves? No. Never. Once bitten twice shy. I had a very good lesson for myself as well as a good insight into agriculture and the problems faced by Indian farmers these days.

Due to the reasons I discussed above, more and more farmers are shelving farming and are moving to more attractive avenues or are moving to less labor intensive tree crops. You can’t eat money howsoever much you have. Should these concerns not addressed, there is no wonder that a food shortage occurs in the ensuing decades.

References

1. ^ Dr. Raghuram Rajan. Fighting Inflation. Inaugural speech at FIMMDA-PDAI Annual Conference 2014 at Mumbai (February 26, 2014). www.rbi.org.in. Retrieved January 8, 2015.
2. ^ Mayank Bhardwaj and Rajesh Kumar Singh. India targets middlemen in food chain as inflation bites (July 20, 2014). www.in.reuters.com. Retrieved January 8, 2015.
3. ^ Virendra Singh Rawat. UP leads in cold chain warehouse capacity in India (July 4, 2014). www.business-standard.com. Retrieved January 8, 2015.
4. ^ Ministry of Agriculture, Government of India. 19^th Livestock Census 2012 (June 17, 2014). www.dahd.nic.in. Retrieved January 8, 2015.
5. ^ Anjani Kumar et al. Institutional Credit to Agriculture Sector in India: Status,Performance and Determinants (July-December 2010). www.ageconsearch.umn.edu. Retrieved January 9, 2015.