Farmers missed the 2014 dance of democracy. They were busy in harvesting and marketing.

Punjab farmers didn't have time for election campaigns this year. They were busy harvesting and marketing wheat. 

By the time the 9^th round of voting finishes on May 12, it will be time for the farmers to also relax. No, it is not the regular election campaigns that have exhausted him.  Nor has he been busy with door to door campaigns for any candidate. Neither did he have any time to attend the election rallies of political stalwarts. In fact, in this year’s elections he hardly had any time to follow the dance of democracy.

Farmers were busy in harvesting the standing wheat crop. Ideally they would have got free of harvesting and marketing the wheat crop latest by the first week of April. But the unusual rains and hailstorm that continued as late as the first week had kept them in their crop fields. In the entire northwestern parts of the country the unusual rains had delayed harvesting by a fortnight on an average. The slow harvesting, the poor arrangements in the mandis and the delays caused by the tardy purchase process had made them indifferent to elections.

Knowing that it is of no use to disturb the farmers, political leaders too avoided the rural areas. In Punjab for instance newspaper reports say that farming largely remained unaffected by the political heat generated by 250 candidates in the fray for elections. The picture was no different in Haryana, Uttar Pradesh, Rajasthan and Madhya Pradesh.  In the Khanna grain market, the biggest market in Asia, sitting over his heap of grain Santosh Singh of Mandiala Kalan village says though some political parties are holding meetings in the villages but are drawing a blank. “Farmers have no time for them,” he told a journalist.

Not surprising therefore to find issues affecting farmers largely absent in the election campaigns. Most candidates are only mentioning farmers but not talking about their problems. Why only farmers, the candidates are also not speaking about the problems being confronted in the marketing and storage of the wheat crop. What is baffling is that even the common site of huge stocks of wheat lying in the open for want of adequate storage is not on the poll agenda of any political party. Nor is grain wastage an issue.

But farmers will certainly vote. Farmers unions have already announced their preferences. 

Travelling through the malwa belt in Punjab, I come across mountains of grains stacked in the open at a number of places. Covered (and some places uncovered) by a black tarpaulin cover the grain bags are lying under the open sky. I have witnessed these grains stocks lying in the open for over 25 years now. Every harvest season, the old stocks are replaced by the fresh arrivals. Nothing else has changed. The condition of the open grain storage only worsens with every passing year.

This year too there is no place to stock the fresh arrivals in Punjab and Haryana (and now in Madhya Pradesh also, which has emerged as a top wheat producer). With harvesting delayed by over a fortnight in Punjab because of freak weather conditions, it is still a depressing site to see heaps of wheat grain lying in the mandis. Farmers complain that they had to wait for days to find a place to offload their wheat in the mandis for want of space.

India's Wheat Story: Produce more, destroy more.

 

 Wheat grains being  cleaned in Punjab mandis

This has become a usual irritant. Every harvest season, there is no place to stock the fresh arrivals in Punjab and Haryana (and now in Madhya Pradesh, the new entrant in wheat production). With harvesting delayed by over a fortnight in Punjab because of freak weather conditions, it is still a depressing site to see heaps of wheat grain lying in the mandis.

Despite all the hue and cry for some years now over the failure to provide adequate storage capacity, news reports say that on April 1, although Punjab has a stored grain capacity of 14.3 million tonnes but space for 12.1 million tonnes was occupied by the previous year crop harvest. With nearly 14 million tonnes of wheat expected to be procured this year from Punjab alone, roughly about 70 per cent will have to be kept in the open.

Even the CAP storage -- covered and plinth -- wherein gunny bags are placed on a raised platform covered by a black tarpaulin, the total storage space available is 11.4 million tonnes out of which 4 million tonnes is presently occupied. We are all aware that foodgrains kept in CAP storage is prone to damage.

In neighbouring Haryana, wheat procurement is expected to be around 8.73 million tonnes. The actual procurement maybe a little less than the target envisaged because as per reports pouring in the villages along the Rajasthan border are selling wheat across the border to take advantage of a bonus that is being offered.

Well, if you thought the problem of storage is becoming acute this year, let me share with you the headlines of newspapers for the past three years. "Punjab, Haryana fall short of storage space for bumper wheat crop," screamed India Today (June 22, 2011). "Punjab, Haryana face problem of plenty' -- Times of India (May 3, 2012) and  in 2013 --" Huge wheat stocks at risk in Punjab, Haryana" Business Line (July 14, 2013).

But have we drawn any lessons from this callous neglect? How long can India afford to let foodgrains be damaged and become unsuitable for human consumption?

Meanwhile, Madhya Pradesh has emerged as a major wheat producer. It expects to surpass the production levels achieved in Punjab. But again, the State faces a big hurdle when it comes to storage. It has a capacity to stock 11 million tonnes in both covered and CAP storage but like in Punjab much of the space is occupied by the previous year's crop.

Overall, India is expecting a lower procurement of about 25 million tonnes of wheat against the target of 31 million tonnes. This will however not pose any problems on the food availability front considering that the country has a comfortable food stock of 48 million tonnes of wheat and rice already stacked from the previous harvests.

New York Times seeks a just global trade. But not fair only for America, it should be equally fair for the rest of the world.

The New York Times is right. In an editorial of April 19, 2014: This time, Get Global Trade Right (See link here: http://nyti.ms/1niE8x1) the newspaper finally admits the fault it made in assuming that lowering trade barriers would benefit the economy and the consumers."Those gains have not been as widespread as we hoped, and they have not been adequate to assist those who were harmed."

This belated realisation has already done immense damage to millions of livelihoods lost not only in the United States but more so elsewhere. It is here that I agree with the newspaper when it says: it is appropriate to take stock of what we have learned in 20 years since the passage of NAFTA and use that knowledge to design better agreements. But there is a catch here. Designing better agreements should not only be to ensure that the US benefits from the global trade treaties, but everyone across the table also benefits equally.

I agree that increased imports from China has resulted in a 44 per cent decline in manufacturing jobs between 1990 and 2007, but what about the damage to the Mexican labour markets and the farming sector? What about the jobs lost on both side of the border, the destruction of the Mexican farm economy by cheaper imports, and the resulting loss to livelihood security of millions plus the environmental damages that accrues, including large scale deforestation to enhance area under cultivation for corn? A Carnegie Endowment study points to 766,000 jobs eliminated in the first 7 years of NAFTA.

Let's move away from NAFTA. A newspaper report published in the Hindustan Times Chandigarh edition (April 24, 2014) titled Foreign apples poll issue in HP tells how Himachal Pradesh, the land of apples in India, is under threat from imported apples. Imported apples mainly come from China, US, New Zealand, Chile, Iran and Afghanistan. China alone exported 77,560 metric tonnes of apples to India in 2012-13. So while imported apples are flooding the Indian markets, the Indian apple growers are faced with a livelihood threat. Similarly, I don't see any justification in why China has become a major apple exporter to the US cornering close to 45 per cent of its domestic market whereas inferior quality Washington apples are flooding the markets elsewhere.

Even President Bill Clinton had apologised for flooding Haiti with cheaper American rice since the early 1990s thereby destroying Haiti's ability to produce rice for itself. This is what he told the US Senate Foreign Relations Committee March 10, 2010: "It may have been good for some of my farmers in Arkansas, but it has not worked. It was a mistake." (Read my Huffington Post article: When will America Opens Its Markets, Mr Obama? http://huff.to/1iTH7J00

But has America drawn any lessons? The answer is a big No.

In a study I did for Aprodev in Nov 2005 entitled Trade Liberalization in Agriculture: Lessons from the First 10 Years of WTO (http://aprodev.eu/files/Trade/Devinder%20study%20-%20Final.pdf)
I had explained how cheaper and highly subsidised agricultural commodities from the US, Canada and the European Union (and also the other Cairns Group members) had destroyed agriculture in developing countries driving out millions of small farmers from agriculture to look for menial jobs in the cities. Some other studies have shown that since the time Structural Development Programme was launched by IMF/World Bank (followed by the WTO era) 105 of the 149 Third World Countries had become food importing countries. The only two big gainers were North America and European Union. And let's not forget, importing food is importing unemployment.

Did the WTO do anything to remove the imbalances and make trade fair for everyone across the hemisphere? Didn't the office of the US Trade Representative in fact make it still worse?

Anyway, returning back to the NYT editorial I feel heartened that it talks of imposing intellectual property rights in a manner that it doesn't destroy the ability of Peru for instance to use generic drugs. But I expected NYT to strongly rebuke the US Administration for invoking Special 301 clause with impunity against all those countries (including India) which wants to protect its poor populations from the killing ways of the US drug industry. Take the case of a patented cancer drug Glivec for which Novartis has lost the battle in the Indian Supreme Court. I am aware that the Time magazine had hailed imatineb (Glivec's active ingredient) as a 'magic bullet' for curing cancer but the Supreme Court had in a landmark judgement struck down the patent application. In India, Glivec costs around $ 1,900 per month compared to $ 175 for the generic versions that companies like Cipla makes. (Novartis Loses Glivec Patent Battle in India http://on.wsj.com/QDyGHu).

Let me now draw the attention of NYT editorial writers to the highhandedness with which the US pushed aggressively for taming the Indian food subsidies, calling it trade distorting. Everyone knows that India has the largest population of hungry in the world. feeding these poor is not an easy task and certainly cannot be left to market forces. The US would know better since it is also struggling with the rising food subsidy bill (under SNAP) to feed its 47 million hungry. America provides 385 kg of food support every year (including cereals/grains) to its hungry millions, under food stamp, mid-day meal programme etc. In 2012, it’s food subsidy bill stood at $100 billion, up from $90 billion in 2010. Against this, India promises to provide 60 kg of wheat/rice/millets to its 830 million hungry. The total financial outlay for food security in India is about $20 billion or Rs 1.25 lakh crore. The US is objecting to India’s food subsidy but has no problem with its own food subsidy which is five times more than India.

There are at least 14 agricultural commodity trading groups which have written to the USTR expressing their unhappiness over the failure of US Govt to bring Indian food subsidies under the chopping block. They are not happy with the 4-year grace period that India has been able to wrest at the Bali Ministerial in December. They have said very categorically that the decision will negatively impact their commercial interests (Read my analysis Bali Ministerial: The very future of Indian Agriculture is at stake. http://devinder-sharma.blogspot.in/2013/11/bali-ministerial-very-future-of-indian.html).

What is good for America is certainly not good for the World. Let global trade treaties therefore be beneficial to all and sundry, and should not be dictated by the power of the powerful. While NYT is rightly worried at the decline in employment in America, please don't forget that the billions who are being pushed out of jobs in the developing world are also human beings. Add to this the deteriorating environment, the rise on greenhouse gasses and the resulting global warming. The cost of an unjust and iniquitous global trade is too heavy for the global community to be a mute spectator. I hope the NYT stands out as the voice of the voiceless across the globe. More power to your  pen.    

2014 Monsoon predictions are not that promising. Tighten your belt.

In the midst of all the noise and muck-slinging that dominates the election campaigns there is bad news on the horizon. No, I am not talking of the possibility of a hung Parliament where the numbers don’t add up for any political front, but the possibility of a post-election scenario wherein the rains fail. With 25 per cent probability of a drought predicted, and slim chances of a bountiful monsoon in the north-western and central regions, dark days stare ahead.

Although the Indian Meteorological Department (IMD) has ruled out the possibility of the warm El Nino currents of the Pacific playing truant with the monsoon rains, a leading private meteorology agency Skymet has forecasted a grim season ahead. The IMD dismisses these claims as a conspiracy by scientists in the US and Australia to rattle the commodity markets in India. “It is in the US and Australian interests that agricultural commodity and stock markets come down. They are spreading rumours. People will start hoarding and might start creating artificial scarcity of commodities. Don’t heed their advice,” Laxman Singh Rathore, director-general of IMD had said a few weeks back. 

Although IMD has never been able to predict an impending drought, but I see merit in what it is trying to convey. The moment a below-normal monsoon warning goes public, a lot of commercial interests benefit from the expected shortfall in rains. The resulting market sentiments push the food prices higher even when there is no shortfall in production. I have seen this happening in 2011 when food prices spiraled much before the low Kharif harvest had poured in. With business media channels daily naming the hot commodities where investors need to put their money in, commodity prices zoomed in expectation.

But while Agriculture Secretary says the government is not overtly worried at the prospects of the rains failing, the fact remains that Skymet’s earlier forecasts have been quite accurate. In 2012, it predicted 94 per cent rainfall, and the actual was 93 per cent: the next year in 2013 rains were a little higher at 106 per cent against the estimate of 103 per cent. This year, while the overall estimate of 94 per cent may not cause a significant drop in agricultural production and thereby impact grain availability considering the existing massive food reserves but what should be worrying is the prediction of a weak monsoon spread over northwest and west-central parts of the country – Gujarat, Saurashtra, Kutch, Punjab, Haryana, Rajasthan, Madhya Pradesh, Chhatisgarh, central Maharashtra, Goa, Konkan and parts of Karnataka and Telengana. It is always the rainfall spread that is important than the average. 

What makes the monsoon forecast a matter of concern is the prediction that El Nino – warm ocean currents in the Pacific region that often causes severe draught in Australia, New Zealand, Southeast Asia and India – might appear as the monsoon season gets along. While weather forecasters from Australia, China, South Korea, Japan and US have issued El Nino warnings, the saving grace is that such warnings were also issued in 2013 but somehow the impact was not as disastrous as many predicted. In 2013, the IMD had predicted the onslaught of El Nino in September when the rains were tapering off. In other words, El Nino does not cause heavy damage every time it emerges in the Indian Ocean. 

In 2009, the Met Department had predicted 96 per cent rainfall as the long-term average but the country had faced one of the worst droughts in recent times. The actual shortfall in rainfall was a huge 23 per cent resulting in low agricultural production. Paddy alone registered a fall of 12 per cent in production. But in 2012, when rains were also predicted to be in the range of 96 per cent there was a delay in the onset of rains in over 70 per cent of the cultivable areas but the overall impact was not as severe as in 2009. Interesting, this year Skymet is predicting rainfall to be 94 per cent of the long-term average and thatshould be taken as a forewarning.

If the weather plays foul it will be double whammy for farmers in central India. Unusual rains and hailstorm had lashed standing crop in the month of March resulting in a huge loss in Maharashtra and Madhya Pradesh. As many as 24 lakh hectares in Madhya Pradesh and another 18 lakh hectares in Maharashtra were hit be frequent hailstorms. Excessive damage was also reported from parts of Punjab, Haryana, Rajasthan, Uttarakhand, Himachal Pradesh, Karnataka and Tamil Nadu. The centre had provided a package of Rs 1,351 crores to Madhya Pradesh and Maharashtra for relief purposes.

Barely emerging out of the shadows of freak weather, the warning of a weak monsoon (and probably enlarging into a drought) will push millions of farmers into dire straits. Already reeling under a terrible agrarian distress, a severe drought even in some parts can leave behind a crumbling rural economy and a battered farming community. In the absence of any effective weather-based crop insurance scheme, and knowing how flimsy are the relief measures adopted, it is the farmers who suffer the worst from a deficient monsoon.

Earlier too, in 2002 and 2004, which happened to be drought years, rainfall deficiency was to the tune of 22 per cent and 17 per cent. In September 2012 when monsoon rains arrived late, four states had declared drought – Maharashtra, Gujarat, Karnataka and Rajasthan. But later these areas were lashed with heavy rains in the second half of August and the first half of September. So much so that excess water in several reservoirs had to be released thereby inundating several towns and villages. Gujarat had in fact pressed in evacuation services.  

This only shows that climatic variations arising from global warming are causing an unforeseen volatility in weather patterns. The long term strategy therefore has to be two pronged: 1) the economic growth model based on investments and exploitation of natural resources has to be balanced in such a manner that it does not leave the environment bleeding. 2) A country-wide drought proofing programme accompanied by weather-based crop insurance scheme has to be prepared. Although this has been talked about for quite long, but hasn’t yet received the priority that it deserves. 

Country’s economic growth depends on agriculture. If farming is affected negatively by the failure of monsoon and the inability of the government to minimize the impact, the resulting domino impact is felt by the entire economy. Even if the share of agriculture in the country’s GDP has come down to 14 per cent, its still remains the backbone of India’s economy. #

Fearing Drought. Deccan Herald, April 18, 2014. 

http://www.deccanherald.com/content/399762/fearing-drought.html 

मौसम की नई मुसीबत  Dainik Jagran, April 19, 2014.
http://www.jagran.com/editorial/apnibaat-new-trouble-of-weather-11246210.html

World Bank deliberately underestimates poverty

 

Dhravi slum in Mumbai -- National Geographic 

The business of poverty actually extends to sweeping the poor under the carpet. Over the years I find that while most governments across the world have failed to stem poverty (except in countries like China), the international financial institutions are bending backwards to demonstrate that economic liberalisation helps in reducing poverty, and often drastically. This is being achieved by tampering with statistics, and often providing social indicators that don't actually measure up. One such classic example is the dollar a day measure adopted by the World Bank to define the percentage of the population living in extreme poverty.

Global empirical evidence is now emerging challenging the World Bank's deliberate underestimation of poverty. Recent studies (ECLAC 2002, 2011) have conclusively shown that in Latin America for instance actual poverty rates are twice than what the World Bank had projected. More recently, on April 11, 2014, a study by the University of Bristol published in the Journal of Sociology concludes that the World Bank is painting a 'rosy' picture by keeping poverty too low due to its narrow definition. Dr Christopher Deeming of the Bristol University's School of Geographical Sciences is quoted as saying: "Our findings suggest that the current international poverty line of a dallar a day seriously underestimates global poverty."

He further states: "If the World Bank had in fact used a poverty line grounded in basic needs, rather in its present artificial one which only looks at one monetary measure, the total number of poor people in the world would increase substantially, perhaps by as much as 30 per cent." (The report can be read here: http://jos.sagepub.com/content/early/2014/04/09/1440783314523867.full.pdf+html).  This is exactly what I have been saying over the years. Take the case of poverty line in India. The stringent poverty measures that the Planning Commission has been adopting for decades actually only estimate the extent of starvation (India's poverty line is actually a starvation line. http://devinder-sharma.blogspot.in/2009/12/indias-poverty-line-is-actually.html).

Following the same prescription, India too has shown that its poverty has come down from 37 per cent to 22 per cent. This shameless demonstration of 'inclusive growth' comes at a time when the Arjun Sengupta committee had in 2007 worked out that 77 per cent of the population or roughly 834 million people were able to spend not more than Rs 20/day (roughly 30 US cents). Even in the United States, poverty is growing with estimates pointing to 1 in 7 living in poverty.  

Unless the World Bank makes an immediate correction, all projections of removing 'extreme poverty' by 2030 would be as farcical as its earlier target set in 1973 to remove 'absolute poverty' in low and middle income countries by the end of the century i.e. the year 2000.  But will the World Bank do this? Your guess is as good as mine. After all, it pays to keep poverty low. Only then you can justify the faulty economic policies.

Further reading: How to keep poverty low
http://www.huffingtonpost.com/devinder-sharma/how-to-keep-poverty-low_b_838329.html