Farmer's Distress.

Farmer’s Distress and Unemployment Problem: Two Phases of Same Coin.

Now -a-days media, political parties and whole country is busy discussing above two problems and the solutions for them. I intend to discuss here Farmer’s distress and reason out that in fact it is problem of unemployment. So solution of farmer’s distress does not lie within farm sector but outside it, say -service and industrial sector.

To begin with I wish to quote or reproduce what I had written on back of an Economics Text Book in 1981 and 2010.

“To be brief, Indian economics should / must follow following lines in that order for next 20 years

1. Making agriculture a commercial & perennial activity. (To absorb a large no. of disguised unemployment).

2. Creating non-agriculture opportunities at village level. (Absorbing surplus labor from agriculture)

3. Starting consumer industries (To cater the demand arising out of point 1 & 2)

4. Erecting capital & basic industries (To make point 1,2 & 3 possible)

Any other course or change in order of points will be counterproductive and will add to our difficulties.

Prakash
27/01/1981.”

(After 20 years we see result of not following above lines. Share of Agriculture in GDP is down, but percentage of persons dependent on Ag has not gone down, resulting in widening gap between Bharat and India including suicide by farmers.

Prakash
27/04/2010).

While I was advocating sequence of action from point 1 to 4, we all know that India’s development planning has taken sequence of 4 to 1. At the time when planning process started (1950s) in India, share of Agriculture in GDP was app. 55 % and dependent population on agriculture was app. 75% of total population. Now today these figures are 15 % and 60 % respectively. GDP to population ratio- which was app. 0.73 (55/75) worsened to 0.25(15/60) today. What does it means in simple term? If we decide to distribute Rs. 100 (GDP) among 100 people (total population), then and now, 1 rupee per person, in 1950, average agriculturist got only 73 paisa and today it gets 25 paisa only. Further over a period, average non agriculture citizen improved its share from Rs. 1.80 (45/25) in 1950 to Rs.2.13 (85/40) today. Now, further if we compare two groups, in 1950, non-agriculturist to agriculturist income was app. 2.50 times (1.80/0.73), and today it is 8.50 (2.13/0.25) times. This is relative poverty is problem.
To conclude the introduction, the economic history of Independent India is the story of India's evolution from a largely agricultural and trading society to a mixed economy of manufacturing and services while the majority still survives on agriculture. This trend will continue as still contribution of Agriculture Sector in Indian Economy is much higher than world’s average of 6.1 %.
Before, we further move on to discuss farmer’s distress. Let us be clear about two points. We are not discussing farmer’s distress in absolute term. We must agree that an average farmer is far better off today than “Mother India” or “Do Beegha Jameen”s farmer of 1950s. We wish to compare his position relatively with non agriculture group (This is big problem). Second point is, farm sector and farmer are not the same. Today farm sector is far better/ thriving or at least farm sector problem are different. Thanks to “Green Revolution” like efforts of 60s which is continued even today farm sector is able to provide full food (including pulse, meat and milk) security to nation. Here, there is paradox also, while in industry it is generally observed- even if industry becomes sick, industrialist prospers, but in agriculture trend is reverse of it.

In this light if we observe, most of the solution proposed to improve situation of farmer’s are wrongly targeted to increase numerator (of GDP/population equation) i.e. income of farmers. But these are against the natural trend of any economy, i.e. as development takes place, share of agriculture in GDP is sure to go down. Any artificial way of supporting the income of producer (farmer), by way of higher production or price is not economically viable and will be resisted by consumer (as well as international community) and cannot sustain indefinitely. Further, benefits may be pocketed by someone else ( as in MP traders benefitted more than farmer by Govt’s Bhavantar Yojana). Once again, I emphasis, today Farm Sector is not in problem (as witnessed by bumper crops) but the Farmer is, as in Madhya Pradesh, which made significant strides in Agriculture Sector production (especially wheat outpacing Punjab and Haryana) but no change in income( or condition) of farmers. Problem of over production is recently being seen for Milk also, where rates realised by producer has gone down. (Even though consumer rates have not gone down, much like what we saw in Petroleum products. In first case middle man and in second case govt made the huge profit).

In this limited sense, there is scope to improve farmer’s income by reducing the difference between what producer farmer gets and what consumer pays for a product. To fix this, the government needs to take tough steps and do away with artificial control on agriculture produce market and movement. We need to go hard against entrenched vested interest. Further perish- ability of produce and lack of holding capacity of farmers need to be tackled if distress sale by farmer is to be avoided.

Some peripheral points to take note by framers’ to reduce distress in their life. Going back to composition of GDP in 50s (55 % agriculture and 45 % non agriculture) and an average farmer getting 73 paisa (instead of Rs 1) share out of GDP. Converting GDP to consumption pattern (what is produced is consumed – leaving small part of import export) for average family 70-80 % ( leaving aside very affluent people) expenditure was for food, milk, vegetable etc. Spending on other, items like-communication, travel, entertainment etc was very low. There was not much difference between farmer and non farmer family, with advantage to farmer that most items of consumption were produced by in-house. Life was difficult but it was simple and same for all. Things changed, and changed fast since 1991. Share of expenditure of necessities (food etc) fell drastically and that of discretionary or demonstrative items grew rapidly (Private marketing gimmicks changing the priorities of life). Also as we have seen gap between two groups widened. All this have adverse effect on farmer who do not have matching income but aspiration. Result of all this-today a farmer house may not have toilet but essentially does have- TV, Motorcycle and Mobile.

Another contributory factor of distress is – even in absence of large land holding that are shrinking further due to division (average size of the landholding has reduced from 1.41 ha. to 1.25 ha. between 1995-6 to 2014-15), better education, and economic wealth, farmers has gone (with encouragement from Government/ private company) for mechanisation, high value, seed, pesticide, fertilizer etc. without realising that for majority of them such adoption is economically non remunerative. Thus farming, which was a small family enterprise 60 year earlier, and no major calamity in case of failure, has become cause of suicide today in case crop fails or price fails. Add to it farmers not observing conservative practice of any economic activity- provision of deprecation, loss etc. before consuming the realised income in good times.

My view of last two paragraphs is corroborated by the fact that suicide cases are higher in progressive states like Maharashtra and Andhra Pradesh and very low in backward/ agriculture dominated states like UP and Bihar. His distress is less economical and more social / psychological.

Above points if taken care of can reduce farmer’s distress in short run, but real problem is more people sharing income of agriculture than sector can support. In economics this is known as disguised unemployment ie people seem to working but not adding to production. In other words if certain people or population is taken out of agriculture production will not fall and income received by remaining people will be much higher.

Eventually over a half of the country’s population can-not live on agriculture-farming will just not be economically viable for such large population. Thus as said in the opening, surplus people/ labor force must be taken out of farm sector and absorbed in non-farm sector. Farmer’s problems can- not be solved in isolation. Without a solution in this direction, any other solution will only create greater distress and unrest. On the other hand, if people do give up farming what kind of jobs will they do? (Farmers themselves face this difficult question). Finally it boils down to creation of jobs.

To conclude no society or government can afford to ignore it any further. First step in this direction is to admit farmer distress unemployment is two phases of one problem. We must create job opportunities in non agriculture sector and prepare surplus farmer (and non farmer population) to take up these jobs. No other solution can solve farmer’s distress.