Agrarian crisis – When will govts ever learn?

A farmer taking his life in distress is the extreme manifestation of utter failures of government intentions as well as programmes for the welfare of agriculture sector over the decades. Despite accounting for the largest employment in the country, the sector is being laid waste and the farmer is left to his ill fate wrought by both nature- and man-made calamities. Dr Mohan Kanda, a former Chief Secretary of united Andhra Pradesh state and former member of the steering committee on agriculture of erstwhile Planning Commission, dwells on the pathetic plight of the farming community, lists out reasons which led to the present predicament for it, and suggests wayout to ameliorate the conditions of the Annadata

Seeds of discontent, distress

• Failure to anticipate ground realities as well as needs and demands of ryots while designing schemes

• Raising farm incomes has never been the ultimate goal of Central and State agencies

• Viability of farm holdings ignored while effecting rise in production and productivity

• Tardy implementation of minimum support price (MSP) arrangement to avoid distress sales

• Excessive use of inputs, adulteration thereof and

disconnect between product and market preference

• Decrease in agriculture share of GDP, but share of agriculture in employment (over 70%) remains intact.

• Climate change causes errant monsoons and increases frequency and intensity of natural calamities

• Govts’ understanding of what is possible or their plan of action is entirely off-target

Cause for grave concern

The scourge of farmers ending their lives on account of economic distress has for long engaged the attention of various fora across the country for some time now. Emotional and acrimonious debates are being witnessed in Parliament and the Legislatures of various states. The High Court of Andhra Pradesh has, recently, in a PIL, asked the Telangana and the Andhra Pradesh states to detail steps taken by them to remedy the situation which is driving farmers to this extreme step.

Both states have apparently taken the stand that all that is possible is being done. Given that the tragic and unacceptable phenomenon of farmers committing suicides continues unabated, and keeping in mind the tremendous capacity and reach of the State and the Central governments, it would appear that either their understanding of what is possible or their plan of action is entirely off-target!

This last statement is not intended to be a criticism of the state governments concerned. It is, rather, a comment on the general confusion and lack of coordination that characterises the functioning of all the major governmental and non-governmental players in the agriculture sector. As cases in point, let us take a closer look at the performance of the sector and of some of the major players and initiatives therein.

The relationship of India’s agriculture sector to the economy has undergone a significant transformation in recent years, with its share of the GDP falling, steadily from 51.8% in 1950-51 to 13.9% in 2013-14, indicating a shift away from the traditional agrarian character of the economy towards one dominated by the services sector. This decrease has not, however, been accompanied by a matching reduction in the share of agriculture in employment. More than 70% of the total workforce is still employed by the farm sector and a large proportion of the population is dependent on agriculture for sustenance.

On the other hand, as against a target of 4 per cent for agriculture and allied sectors in the Twelfth Plan (2012-17), the growth registered in the first year (at 2011- 12 prices) was 1.2 per cent in 2012-13, 3.7 per cent in 2013- 14, and 1.1 per cent in 2014-15. Gross capital formation in agriculture as a percentage of GDP, which was 20.69% in 1993-94, fell to 4.99% in 2011-12 at constant (2004-05) prices. Even in a year of record growth (2006-07), the contribution of the sector actually fell. The state of the sector is, indeed, a matter of grave concern – especially in the context of the size of the population and the ever increasing threat of looming food security.

Farm incomes important – not production and productivity

Food security cannot be de-linked from the need to maintain the viability of farm holdings. Increased production and enhanced productivity do not necessarily reflect healthy farming systems. As a matter of fact, the majority of suicides by farmers happened in the wake of glut in commodities such as cotton, tobacco, chillies, potato, and onion, following record production and yields. Growth can be achieved and sustained, only if farm incomes rise and the farmers’ share in the consumer-rupee increases, by the realisation of remunerative prices and reduction of transaction costs.

In the present approach, the system appears to have grabbed the wrong end of the stick: with the mandate of the (national- and state-level) agriculture departments remaining the measurement of production and enhanced productivity rather than the size of farm incomes. The country comprises various agro-ecological situations (five, fifteen, or a hundred and twenty, depending on the degree of detail employed).

These maintain a dynamic and sensitive relationship with the external environment - which comprises factors such as agro-climatic conditions and the performance of support systems providing backward and forward linkages in the value-chain – such as irrigation, power, research, extension, technology transfer, credit, insurance, supply of farm inputs – seeds, fertilisers and pesticides - and storage/processing/marketing. Although agriculture is a state subject, the central government remains the source for the funding of most of the programmes currently under implementation.

This fact, and the largely top-down, rigid and straitjacketed guidelines that inform these programmes have, overtime, led to:

• Lack of response to regionally differentiated sectoral/sectional concerns; and

• The states remaining passive recipients of central assistance

Demand-driven regime

There is a need for a paradigm shift, away from the current supply-dominated mode to a demand-driven regime – not only in respect of the design and architecture of the programmes of the central government, but also in terms of the pattern and quality of the response of the support systems, to the demands of the sector.

A quick and close look at the performance of the sector reveals the first major concern. The important players among those that support the value chain of agriculture (research, extension, input supply – seed, fertilisers, pesticides and implements – storage, processing and marketing, and financial services including banking/insurance), all remain - chronically, it could be said - in a supply mode.

Put another way, they practise the cafeteria approach: where a somewhat unilaterally prepared menu is served up and the farmer is required to choose only from the items available therein. The organisations involved have, thus far, not exhibited the ability (or the will) to tailor products in a demand-driven manner: a scenario in which varying differences in demand, across to crops, regions and farmer – sections, are primary considerations that inform the product design.

The Centre and the States

A sharper definition and recognition of the allocation of roles between the central and the state governments is an urgent need. The Central government’s preoccupation with running a large number of programmes has also led to a dangerous disconnect with the outside world with little meaningful dialogue taking place with the rapidly changing external environment – an overriding imperative, especially post-liberalisation/privatisation/globalisation.

The Ministry of Agriculture needs to undergo a self-imposed “one-time-catch up” exercise to remain au fait with the rapidly changing external environment. So should the players in the value chain. No macro-management In addition, there is also no effort at macro-management in important areas of the Centre’s basic functions - such as credit, insurance, research and exim policy (which is currently, at best, stop-go and knee-jerk in nature).

Employment Guarantee Scheme

Similarly, otherwise forward-looking and progressive measures such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNERGA) are also prone to problems caused by a poor understanding of ground realities as also implementation issues. While serving its primary purpose, the scheme has impacted adversely on the viability of agriculture operations in the shape of a steeply rising wage bill. Going forward, looking at wider use of small machines through custom hiring arrangements may provide a solution to this. However, the larger issue of failing to anticipate ground-level outcomes while designing schemes stands demonstrated.

Minimum support price regime

Likewise, the failure of the essentially robust Minimum Support Price (MSP) arrangement largely on account of tardy implementation was an important cause of the trust deficit that led to the farmers declaring a “Crop Holiday” in East Godavari District of Andhra Pradesh, in the year 2011.

Rashtriya Krishi Vikas Yojana

Another scheme that is surely a good beginning but certain to face some implementational challenges is the Rashtriya Krishi Vikas Yojana (RKVY). The need to strengthen planning ability at the grassroots levels should have, arguably, been anticipated and addressed at the policy stage itself.

At present, there are shortcomings in the ability of States to effectively channel the bulk funds at their disposal to the grassroots-level institutions and this hinders its effective implementation. The scheme certainly represents a considerable opportunity for the Center and the States to contemporise their approaches, individually and in partnership. This gap in ability can easily be filled by utilising the existing institutional infrastructure and the funds available under the programme.

Loan waivers

While well-intentioned schemes are hindered by shortcomings in policy-formulation, there are instances where the policy itself is misdirected, myopic, and even alarming in terms of consequences. Debt-waivers are a prime example of this. Among several others, debt-waivers have three hugely negative consequences:

• they cause depletion of net-lendable resources and therefore distort the agricultural credit system as a whole;

• they represent an entirely unacceptable intrusion into the lender-borrower relationship vitiating the recovery climate (and this ‘moral hazard’ lasts not just for that year but in the long-term);

• and they invariably reward and vindicate defaulters and penalise those who play by the rules.

This is much like Queen Antoinette wondering why poor people who had no bread could not eat cakes instead!

The distortion of the rural credit system is but one dimension of the problem. Another is the lack of clear understanding of the credit system at the policymaking level. For instance, it has been shown repeatedly that the availability of adequate credit in time is of prime importance, and the local moneylender is an important player in this process.

In fact, interest rates over very short periods are largely irrelevant unless they are usurious. Excessive use of inputs, adulteration thereof and disconnect between product and market preference cause most distress. Policymaking and implementation must factor in these nuances. A national level action plan is the need of the hour - for increasing the production and enhancing the productivity of different crops in different agro-ecological situations, while protecting the viability of the farm

The way forward

A number of steps need to be taken to commence the process of conversion of agriculture from a sustenance occupation to a commercial activity. First, the time has come for the Centre to get its act together and show all other actors the way towards a more productive and rational partnership. The arrangements with the states should be supplementary as well as complementary and ensure that mutual reinforcement and synergy eliminate possible gaps and overlaps in the overall effort.

A new and forward looking enabling policy environment needs also to be put in place. The architecture of this new environment should essentially arise from a realisation that the ability to ask questions is much more important than providing answers to them. Also, hitherto unfamiliar concerns such as climate change have caused errant behavior of the monsoons and increased the frequency and intensity of natural calamities.

This phenomenon has impacted adversely the viability of agriculture. Interventions in the future have, therefore, to remain flexible and dynamic. The linear and incremental approach of doing more things or doing them better has to be abandoned in favour of the ability do things differently.

The new approach should:

• Provide for bulk funding of States;

• Install a regime of MoUs based on state-wise work plans comprising interventions to address concerns in a region-crop-farmers’ section matrices – that promise preset and quantified deliverables. The sum total of the work-plans should reflect the realisation of national objectives - in terms of production and productivity, as well as those relating to concerns such as natural resource management, improved focus on the challenges faced by women and children etc., - and, above all, ensure higher farm incomes; and

• Accord due recognition to the role of independent external agencies as partners in ensuring efficacy of the processes of Design, Implementation, Monitoring and Evaluation (DIME).

The Rashtriya Krishi VikasYojana (RKVY), it must be acknowledged, has made a promising beginning in this direction. It has:

• created funds at the state level;

• provided discretion and flexibility to the states in the design and implementation of interventions; and

• created a joint mechanism, that includes other players, to sanction and monitor the implementation of projects/programmes.

This arrangement needs to be expanded creatively to respond to unaddressed concerns as well as issues noticed in recent experience:

• First, robust planning abilities have to the created at the state/district levels that can generate solutions to feed into the RKVY dispensation;

• The players in the value-chain, particularly the “big five”, viz., research, extension, meteorological services, credit/insurance and marketing must be encouraged to deliver tailored products fashioned to correspond to varying presentations of the demand, across regions, crops and sections of farmers;

• There is, at all levels, especially at the national level, an urgent need to put in place real-time and on-line vibrant mechanisms that can remain in continuous dialogue with the environment, proactively scanning for threats and opportunities and generating robust responses spontaneously.

This can be done by

• The strengthening of the Agriculture Technology Management Associations (ATMA),

• Doing the same with the State Agricultural Management and Extension Training Institute (SAMETI)s, and

• Setting up of a Cabinet Committee on Agriculture (including Rural Development?) – at the national level, which can be serviced by the National Academy of Agriculture Extension Management (MANAGE).

An a important factor to note in this connection is that the funding available under RKVY should be more than adequate to enable

• The proposed constitution/strengthening of mechanisms at the national state and district levels as well as

• The closing of the viability gap between the extant “cafeteria” products of the value-chain players and the proposed “demand-driven” solutions.

A holistic, real-time, and empowered mechanism that can stay in sync with the dynamics of agriculture, and enable the farmer to benefit from understanding emerging opportunities and threats, is an overriding and urgent imperative. Returning to the immediate context for this discussion -- the tragic increase in the numbers of farmer suicides – the two State Governments, as well as the Government of India need to take the people into confidence about the priority they attach to this subject.

High time to take the wake-up call

All governments have many options to choose from regarding what goes into the basket of concerns that engage them from time to time. These may include expeditions to Antarctica or planet Venus, through activities relating to sports, culture, education, health, industrial development, financial/fiscal management and many others. However, while the entire system continues to engage with all the issues all the time in a more or less uniform manner, the public is entitled to know whether those at the helm of affairs have a short-list of items on their agenda.

If they do, does a long-term vision for agriculture and the welfare of farmers figure on that list? If it does, what is the priority they accord to the need to the act on this pressing issue -- which directly impacts on the economics of agriculture, the most crucial sector of the economy? The necessity of immediately bringing this matter to the center of public discourse cannot be overstated as the prolonged neglect of this sector has reached a stage where any further indifference will have catastrophic consequences. In this context, the role of the judiciary must be mentioned.

The effective use of the instrument of public interest litigation has opened a new and exciting chapter in the history of governance in India’s post-Independence era. Once again an issue of grave public concern is engaging the attention of the Courts through this route. A holistic, real-time, and empowered mechanism that can stay in sync with the dynamics of agriculture, and enable the farmer to benefit from understanding emerging opportunities and threats, is an overriding and urgent imperative. Looking at substantial and sustainable changes in the approach to agriculture at the highest policy making levels is an immediate and overriding imperative.

I believe the time will soon come when the governments at the state and central levels will be called upon by the people to account for any preoccupation with issues other than those of utmost public concern – such as the provision of minimum facilities including food, drinking water, health care and education, ensuring the welfare and safety of women, children and the aged and, of course, enabling the transition of agriculture to a remunerative endeavor. One trusts that the leadership at the highest levels will engage with these issues before they are over whelmed by the compulsions of a violent denunciation of persistent inaction.

(Dr Mohan Kanda is a retired officer of the Indian Administrative Service who was formerly Secretary to the Government of India, Ministry of Agriculture, Chief Secretary to the Government of Andhra Pradesh, Member, National Disaster Management Authority of India, Member of the Steering Committee (of the erstwhile Planning Commission) on the Agriculture and Allied Sectors for the 12th Five Year Plan, and headed the Crop Holiday Committee, Government of Andhra Pradesh, in the year 2011).

Matter of grave concern

As against a target of 4 per cent for agriculture and allied sectors in the Twelfth Plan (2012-17), the growth registered in the first year (at 2011- 12 prices) was 1.2 per cent in 2012-13, 3.7 per cent in 2013- 14, and 1.1 per cent in 2014-15. Gross capital formation in agriculture as a percentage of GDP, which was 20.69% in 1993-94, fell to 4.99% in 2011-12 at constant (2004-05) prices. Even in a year of record growth (2006-07), the contribution of the sector actually fell. It is a matter of grave concern – especially in the context of the size of the population and the ever increasing threat of looming food security.

Farm incomes not priority of Centre, States

Majority of suicides by farmers happened in the wake of glut, following record production and yields. Growth can be achieved and sustained, only if farm incomes rise and the farmers’ share in the consumer-rupee increases, by the realisation of remunerative prices and reduction of transaction costs. But the mandate of the (national- and state-level) agriculture departments remains measurement of production and enhanced productivity rather than the size of farm incomes

Cafetaria approach by govts

Important players among those that support the value chain of agriculture (research, extension, input supply – seed, fertilisers, pesticides and implements – storage, processing and marketing, and financial services including banking/insurance), all remain - chronically, it could be said - in a supply mode. Put another way, they practise the cafeteria approach: where a somewhat unilaterally prepared menu is served up and the farmer is required to choose only from the items available therein. They are not demand-driven