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Mainstream Vol. XLVIII, No 17, April 17, 2010

Directionless in Agriculture

Monday 19 April 2010, by Bharat Jhunjhunwala

The growth rate of agriculture was three per cent and that of manufacturing was 4.5 per cent during the first three decades after independence. The growth rate for agriculture has slipped to 2.8 per cent while that for manufacturing has increased to 6.4 per cent during the last 15 years. Farmers continue to commit suicides across the country. The groundwater level is declining. The country has to import wheat, edible oils and pulses year after year.

That said we must not ignore the great achievements of Indian agriculture during the last sixty years. Our greatest achievement is that of land reforms though they have not been implemented aggressively other than in West Bengal. Nevertheless, sharecroppers have mostly got control of land across the country. The energy of small farmers has come into play. They are managing land in a sustainable way since they have become the owners.

Another achievement is of a fourfold increase in the production of foodgrains from 51 million tonnes in 1950 to 195 million tonnes in 2005. Our position was desperate in the sixties. At that time India was dependent upon food aid from the United States under PL-480 to feed her people. Paul Ehrlich had written a book titled The Population Bomb at that time. He argued that the US should abandon countries like India that were beyond redemption. India’s population was rising so fast that there was no possibility of India feeding herself. The US should redirect its resources towards those countries which had some chance of survival, he had argued. India has managed to feed herself despite such predictions. Not only have we been able to feed the increasing numbers of people, we have also increased the per capita availability of foodgrains from 437 grams per day in 1960 to 480 grams in 2005. The credit for this great achievement goes to the government’s Minimum Price Support programme. Farmers were assured for reasonable prices and they delivered.

The question arises: why is the rate of growth in agriculture declining when there has been an increase in per capita availability? The secret lies in the fact that the rate of growth is measured in money value while foodgrain availability is measured in physical terms. Say, there is a six per cent increase in the tonnage of production of foodgrains this year. This should normally be reflected in a six per cent rate of growth of agriculture. That assumes no change in prices. But the rate of growth declines if there is, say, a four per cent decline in prices. The six per cent increase in physical production leads to only two per cent increase in the growth rate. The fact that growth rate has declined despite a large increase in production implies that the prices have been declining.

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Indian agriculture has become more diversified. Previously our main crops were wheat, rice, ragi, bajra and sugar cane. Now we are producing soya bean, peanuts, sunflower, mustard, moong, fruits, flowers and vegetables in large quantities. At one time fruits like mango, apple and grapes were available in selected shops in the district headquarters only. Nowadays these are available at virtually every street corner. Yet, farmers continue to commit suicides and our dependence on imports of edible oils and pulses is deepening. The main reason for these problems is decline in prices. Our agricultural policy is based on free trade. Decline in prices is considered to be good because that makes our goods more competitive in the global markets.

The solution will not come by encouraging farmers to increase their production so that their profits increase despite the declining prices. The success of this approach rests on the decline in prices being less than the increase in production. If production increases by six per cent but prices decline by eight per cent, then the farmer’s income will actually decline.

We are making two mistakes. The first mistake is that we do not have a strategy to maintain high agricultural prices. The farmers’ efforts to increase production may soon be made naught by the government’s efforts to secure lower prices. The second problem is that we are sacrificing the nation’s food security in the long term for short-term gains in trade. The rich countries are providing huge subsidies to their farmers to maintain the production because they do not want to become dependent on imports for their basic requirements. We should not become dependent on food imports.

We should consider a different strategy. We should provide protection to domestic farmers from imports. In case of excess production we should provide it to the other developing countries through our own PL-480-type programme.
We should expand the Minimum Support Price to a larger number of crops and bring a
legislation to arrest the decline in the levels of ground water.

We will need to reconsider our approach to globalisation. Globalisation means interdepen-dence. But interdependence should be mutual. If we are dependent on the Western countries for food and they are dependent on us for music and movies, then we will be in trouble. We will not be able to escape their pincer in case our crops fail. The developed countries are providing huge subsidies to their farmers. They say this is due to domestic political compulsions. I think this is not the truth. Actually they want to maintain their food security at any cost. They are not willing to embrace trade in foodgrains for domestic consumption because they do not want to become dependent on foreign countries for this essential requirement. But they are pushing India to meet her food requirement from imports. As a result, we will become dependent on them while they maintain their independence.

We should take a lesson from our history. In the seventeenth century India had thriving foreign trade under

the Mughal emperors. The British were not able to make inroads in our markets. At that time the Mughal rulers ceded trading rights to the British in return for them providing maritime security to our ships. This surrendering of naval responsibility was the beginning of British intrusion into India. We should not make the same mistake again by surrendering our food security to the Western countries.

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