Killing farming by simply keeping the farm incomes low.

Prime Minister Narendra Modi has announced a higher relief package for farmers. At the same time he has directed banks to restructure agricultural loans and also asked insurance companies to proactively settle the claims. “Helping farmers at this time of distress is the govt’s responsibility,” the prime minister assured the nation, stating that a team of central ministers were sent to the affected areas to assess the crop damage.

This is certainly a welcome step. But once the rains are over, the relief is distributed, and the nation’s attention shifts to how much is the loss in crop production and the resulting impact on food inflation, farmers will once again be forgotten.  This has been the travesty of farming all these years, and it is primarily for the deliberate neglect and apathy that agriculture continues to bleed.  In the past 20 years, close to 3 lakh farmers have committed suicide, 2 farmers every hour, and I am not sure how many more sacrifices are required before the nation sits back and takes notice.

Let’s be clear. The spate of farmer suicides in the wake of continuing spell of unseasonal rains is simply a reflection or a symptom of how fragile the farm economy is. Even a small aberration in weather – unseasonal rains, high winds, dry weather and drought – multiplies the risk factor for the farmers to a level that it becomes unmanageable.  Many farmers, who died in the past one month, died of heart attack, unable to bear the shock of seeing their healthy crop lying flat. Livelihood security therefore for any farming family hangs by a slender thread.

How fragile is the farm economy has been talked about very often, but little understood. It is generally believed that a reasonably good relief package at times of a calamity is enough to bring back the farmers economy. What is not know is that any natural calamities like heavy rains, floods and drought push back the farmer’s subsistence economy at least by three years.

To understand it a little more clearly I looked at the latest kharif and rabi reports of the Commission for Agricultural Costs and Prices (CACP). Since farmers have been demanding a higher minimum support price (MSP) for wheat and paddy, and knowing that the Centre has already conveyed to the Supreme Court its inability to raise farm prices by 50 per cent as ‘it will distort market prices’ a careful perusal of the cost and income estimates by the CACP tells us why farmers are killing themselves. Unless the government makes a determined effort to provide farmers with a guaranteed monthly income package I don’t see any hope of reviving the sinking farm economy.

Let us look at the costs and the return from the cultivation of some of the major crops of the region. The CACP is government’s own organization which works out the MSP for farmers. Its calculations therefore are more accurate than any other study or survey. In its latest reports, CACP has calculated the average cost and returns for the period 2010-11 and 2012-13. Now hold your breath. Accordingly, the net return for wheat on all India basis stands at Rs 14,260 per hectare. For Mustard, the return is Rs 14,960; and for gram Rs 7,479.

Since most suicides happened in Uttar Pradesh, I looked at the cost and price calculations for wheat-rice cropping pattern that most farmers would follow. For wheat, the average net return or income that a farmer gets from one hectare is Rs 10,758. Since wheat is a 6-month crop, the average income a wheat farmer can expect from cultivating one hectare comes to a paltry Rs 1793. With such a low return from wheat cultivation, there would always be a possibility for a UP farmer to take to suicides. Let’s now look at his annual income. If he is cultivating rice, the net returns have been computed at Rs 4311 only. Add the returns for both wheat and paddy it comes to Rs 15,669 or Rs 1306 per month.

Now, you will say that the average in Punjab would be much higher than the national average. The CACP works out the average net return in Punjab for wheat at Rs 18,701 per hectare. For Bihar, where there are no regulated APMC markets, average farmer’s return is Rs 9,986, about half of what Punjab farmers get.

In the case of kharif crops, the CACP estimates are for the period 2009-10 to 2011-12. The net return for paddy for the country has been computed at a low of Rs 4,500 per hectare. For cotton, another major crop, the net returns are to the tune of Rs 15, 689; and for ragi millet it is actually negative. Looking at the State-wise average costs, the net returns for paddy for Punjab is Rs 17, 651. For Haryana, it is Rs 17,960 per hectare, and for Andhra Pradesh Rs 6,483. Paddy farmers in Bihar and Assam get a negative return, which means they cultivate losses. The loss per hectare in Assam is Rs 3361 and in Bihar Rs 266.   

Since the general cropping pattern that Punjab and Haryana farmers follow in a year is also wheat followed by paddy, let us look at the combined returns for cultivating these two crops. Wheat provides the Punjab farmers with an average return of Rs 18,701 per hectare. Add to it the net return from paddy, Rs 17,651, the total a farmer earns from cultivating wheat and paddy in a year comes to Rs 36,352 from a hectare. For a month, the average a farming family in Punjab earns from one hectare is Rs 3,029. Yes, you got it right. It is Rs 3,029 per month.

If this is the average for Punjab, Haryana and Uttar Pradesh, which is considered to be the country’s food bowl, I shudder to think of the plight of farmers elsewhere in the country. This is primarily the reason why farmers are committing suicide, and also why a majority wants to quit agriculture if given a choice. The desperate need therefore is to set up a National Farmers Income Commission with the mandate to work out an assured monthly package for farmers depending on his crop productivity and also the geographical location of the farm. If a chaprasi can get a minimum monthly salary of Rs 15,000: and a safai karamchari in UP is paid Rs 18,500 as basic salary, why should the annadata not be get an assured monthly package. Why should the farmers alone bear the cost of keeping food prices low for the middle class? #

Suicidal apathy. Orissa Post. April 16, 2015
http://www.orissapost.com/epaper/160415/p8.htm 

Why relief packages and loan waivers won't enough to stem farm suicides. IndiaTogether. April 13, 2015
http://indiatogether.org/farming-crisis-and-farm-suicides-due-to-low-agricultural-returns-agriculture

जाना पहचाना संकट. Dainik Jagran, April 11, 2015
http://www.jagran.com/editorial/apnibaat-familiar-crisis-12252870.html

Farmers have become a burden on the country. Their plight is deliberate.

There is trouble on the farm front. With untimely rains accompanied by hailstorm and strong winds showing no signs of relenting, further deepening the prevailing agrarian crisis; and with the spate of farmer suicides on the rise, agriculture faces its worst ever crisis. While the rising number of farmer suicides is only a reflection of how fragile the agrarian economy is, the entire focus is on providing adequate relief and compensation to farmers who suffered crop losses.  

In this bargain, the real issues confronting farming are once again being sidelined. Once the rains are over, the relief is distributed, and the nation’s attention shifts to how much is the loss in crop production and the resulting impact on food inflation, farmers will once again be forgotten. This has been the travesty of farming all these years, and it is primarily for the deliberate neglect and apathy that agriculture continues to bleed. 

The intention is very clear. With the Centre conveying to the Supreme Court its inability in providing farmers with 50 per cent profit over the cost of cultivation, farmers are being left in the lurch. They are expected to fend for themselves, and face the vagaries of the markets once the Government begins to withdraw the minimum support price (MSP) for wheat and paddy. Economic Survey 2015 has made this amply clear.   

Farmers have reasons to feel betrayed. After a high-pitch election campaign a year earlier when the BJP’s prime ministerial candidate Narendra Modi time and again promised to enhance the Minimum Support Price (MSP) by 50 per cent if his party comes into power, the government has simply backtracked on its promise. But soon after coming into power, the government raised the MSP for paddy and wheat by a paltry Rs 50 per quintal, which translates into an increase of 3.6 per cent, not enough to offset the additional burden of inflation at that time.

The farmers’ anger is quite justified. Despite being at the bottom of the pyramid, Indian farmers have not failed the nation. While they continue to produce a bumper harvest year after year, they are made to pay the price for keeping food prices low for consumers. A per the latest estimates of the National Sample Survey Organisation (NSSO) a famer family on an average earns only Rs 3,078 from farming operations. According to another survey, nearly 58 per cent of the farmers go to bed hungry. Another survey by Centre for the Study of Developing Societies (CSDS) shows that 62 per cent farmers want to quit agriculture. 

On top of it, basmati rice and cotton witnessed a crash in its prices. While basmati rice production had doubled in Punjab and Haryana, an alarming dip in prices was observed. Disappointed farmers sold basmati at prices ranging between Rs 1600-2400 per quintal, against a price of Rs 3,261 to Rs 6,085 they got last year. In cotton too, prices slumped from an average of Rs 4,400 to Rs 5,200 per quintal last year to around Rs 3,000 this year, prompting the government to direct the Cotton Corporation of India to step in to buy at the procurement price of Rs 3,750 per quintal.

In Maharashtra alone, the downtrend in cotton and soybean prices had resulted in a loss of Rs 12,000-crores for farmers.

In case of sugarcane the situation is no better. In fact, reports of cane farmers committing suicide due to delayed payments have poured in recently from Uttar Pradesh, Maharashtra and Karnataka. Despite the sugar sector decontrol coming into effect, the fact remains that the mills have still to clear cane price arrears of Rs 12,300-crore.

Appearing before a Supreme Court bench of Justices S J Mukhopadhaya and N V Ramana, the additional solicitor general Maninder Singh however said: Prescribing an increase of at least 50 per cent on cost may distort the market. A mechanical linkage between MSP and cost of production may be counter-productive in some cases.” He told the court that the pricing policy seeks to achieve the objective of fair and remunerative prices and is not an income policy. While the Court is still to deliver its verdict, in simple words, the government has expressed its inability to hike the MSP.

At a time when the industry has managed to even wrest out of cost accounting procedures in many important sectors like coal, natural gas and automobile, and therefore can arbitrarily fix any price for their products, I find it amusing to know that providing a higher price to farmers will distort the markets. Considering that only 6 per cent India’s 60-crore farmers get the benefit of MSP, and the remaining 94 per cent is in any case dependent on the vagaries of markets, which shows the markets are only exploiting the farmers. If the markets had provided farmers with an economic price, I am sure 94 per cent of the farming community would have been a happy lot by now.

The question of an ‘income policy’ for farmers therefore assumes importance in the wake of the serial death dance that continues to be enacted on the farms. Over 3 lakh farmers have committed suicide in the past 17 years.  Moreover, with the World Trade Organisation (WTO) breathing down the neck, and demanding freezing of MSP for farmers, it looks difficult whether the government will have the political courage to defy WTO. Given these circumstances, the best option is to start looking for a guaranteed monthly income for farmers, which benefits the entire farming community unlike the pricing policy through a system of providing MSP for wheat and rice farmers.

The real big bang in economic reforms would therefore be when the government constitutes a National Farmers Income Commission that works out a minimum assured monthly income that a farming family must get. Incorporating crop harvest and also basing the calculations on the geographical location of the farm, the Commission should be directed to provide a real time estimate of the farm income for various categories of farmers. If a chaprasi in the government can get a minimum basic salary of Rs 15,000 per month, I see no reason why the farmers should be deprived of his legitimate due. #

Farmers urgently need help. April 9, 2015. DNA Mumbai.
http://epaper.dnaindia.com/story.aspx?id=77681&boxid=20514&ed_date=2015-04-09&ed_page=12&ed_code=820009   

खाली हैं अन्न उपजाने वाले हाथ April 9, 2015, Amar Ujala. 
http://www.amarujala.com/news/samachar/reflections/columns/poor-situation-of-farmers-hindi/?hc_location=ufi

Land Acquisition: Will farmer get a compensation of 4 times the market value?

For the past few days the government has been at pains to explain that farmers will get a compensation of four times the market value of the land that is acquired under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013, popularly referred to as Land Acquisition Act.

Amid protests by farmers and civil society groups, the controversial Land Acquisition Amendment Bill 2015 to replace the contentious ordinance was introduced in Lok Sabha on Feb 24. It does not make any changes in the compensation clause in the 2013 Act that promises four times the market value of the land in rural and two times in the urban area for farmers whose land is acquired for industrial purposes.

Although the 2013 Act has still not been implemented, and an amendment is being sought on hypothetical fears expressed by the industry, I decided to find out whether the 2013 Act that the previous UPA government had passed would really provide four times the compensation to farmers whose lands would be acquired. Considering the widely prevailing impression in the social media that farmers were being adequately and fairly compensated for their land and so those who opposed the new law were ‘anti-farmer’ it became even more important to look at how the law would translate in reality whenever it is put in practice.

To understand this, I take you back to Section 26 of 2013 Act. It provides for determination of market value of land by Collector, stating: The Collector shall adopt the following criteria in assessing and determining the market value of the land, namely:-

(a) The market value, if any, specified in the Indian Stamp Act,1899 (2 of 1899) for the registration of sale deeds or agreements to sell, as the case may be, in the area, where the land is situated; or

(b) The average sale price for similar type of land situated in the nearest village or nearest vicinity area; or

                  (c)  Consented amount of compensation in the case of acquisition of land for private        

                         companies or for PPP 

It also explains in sub-section (1) that the average sale price referred to in clause (b) shall be determined taking into account the sale deeds or the agreements to sell registered for similar type of area in the near village or near vicinity area during immediately preceding three years of the year in which such acquisition of land is proposed to be made.

(1) The market value calculated as per sub-section (1) shall be multiplied by a factor to be specified in the First Schedule.

The First Schedule

2	Factor by which the market value is to be multiplied in the case of rural areas	1.00 (One) to 2.00 (Two) based on the distance of project from urban area, as may be notified by the appropriate Government.
3.	In the case of urban areas	1 (One)

An informal group of eminent citizens in Chandigarh, comprising senior lawyers, senior journalists, retired bureaucrats and others have been examining various agricultural laws from time to time. As a member of this citizens group, I requested former Agriculture Secretary (Punjab), Capt S S Dhillon and senior advocate of the Punjab & Haryana High Court, Joginder Singh Toor, to help dissect the legal provisions of the 2013 Act.

As you know sale deeds are generally executed by the sub-registrar or Tehsildar under the Indian Stamp Act 1899.  Generally the collector rate is ½ or 1/3^rdof the prevailing market price.  If the market price is Rs 25 to Rs 30 lakh per acre, the collector rate is Rs 8/10/12 lakh. Taking the average of 3 years and multiplying it by a factor of 1 or 2 in rural areas. This discretion is left to the land acquisition officer. Even if he takes the maximum factor of 2, the value of land will be twice the collector rate.

In addition, the final award will include a ‘solatium’ (as specified in Section 30) equivalent to 100 per cent of the compensation amount.

The farmer therefore will either get a compensation equivalent to the prevailing market price or a maximum of twice the prevailing market price (if a factor of two is applied).  #