India agriculture’s growing crisis

The country’s farmers are suffering as a lack of basic infrastructure leaves food to rot while financial pressures push many to suicide. Protests have forced some state response but more is needed.

Indian farmers during a protest in Kolkata last week against the government over farmer suicides in the state of Madhya Pradesh. Dibyangshu Sarkar / AFP

Mumbai // Unrest has been spreading across India’s farming community.

In recent weeks, they have blocked national highways in areas including Haryana and Punjab with their tractors.

Farmers in the state of Maharashtra, where Mumbai is located, also staged protests, throwing vegetables and spilling large quantities of milk on to the roads to draw attention to their plight. In Madhya Pradesh, in central India, several farmers were killed as police opened fire during protests. And farmers from Tamil Nadu in India congregated in New Delhi, carrying human skulls and holding dead mice in their mouths, in a desperate effort to get attention to their cause, with the south Indian state in the grips of a severe drought.

Their demands have been clear. The agrarian community want their loans waived and are seeking better prices for their produce, as they struggle to profit from the sector. Adding to their woes, they are burdened with large levels of debts. These factors combined have pushed large numbers of farmers in India to take their own lives.

Farmer suicides in India surged to 8,007 in 2015 from 5,650 the previous year – an increase of 41.7 per cent, according to data released by the national crime records bureau this year.

Maharashtra accounted for the highest number of farmer suicides among Indian states in 2015, with 4,291 cases, compared to 1,569 in Karnataka, and 1,290 in Madhya Pradesh.

“In the entire farm cycle, farmers take the biggest risk but are the least beneficiary,” says Rajiv Tevtiya, the chief executive and co-founder of RML Agtech, which creates technology-based products to help farmers improve agriculture productivity and profitability. “For instance, in case of drought or crop diseases, farmer crop fails whereas in case of glut, they are not even able to recover the cost.”

The troubles farmers face urgently need to be addresses to make the industry sustainable for the country’s farmers, he says.

Several states have announced loan waivers this month in reaction to therecent protests. But the problems run far deeper.

India’s farming sector is in crisis, with experts saying the industry in its current state fails to provide a sustainable livelihood for many who work in the industry. About half of the Indian population depends on agriculture for income. Agriculture and its related sectors contributed US$244.74 billion to India’s economy in the financial year to March 2016.

“Farming has been an integral backbone of the Indian economy,” says Vivek Nirmal, the joint managing director and chief executive of Prabhat Dairy, which works with 100,000 dairy farmers in India who supply milk to the company.

He says measures need to be taken to increase farmers’ incomes, but adds this does not necessarily mean simply increasing the amount of money they receive for their produce.

“To boost the agricultural sector and make it a sustainable business, productivity and infrastructure are the two key elements,” he says. “Increasing productivity through technology, educating the farmers, helping them source the best seed, working on seasonal issues, minimising waste by increasing warehouses and cold chain facilities, can ease the life of a farmer. So it is the mentioned issues that need to be solved more than the minimum support price issue.”

In India’s farming sector, there are a number of middlemen involved in the supply chain, which limits the amount of money farmers receive.

Meanwhile, a lack of refrigeration, power and storage means a lot of food is wasted because it perishes before it reaches the shops. If infrastructure to support agriculture was improved, this could provide a major boost to farmers’ incomes, Mr Nirmal says.

Arun Jaitley, India’s finance minister, when delivering the Indian government’s union budget in February, highlighted an aim to double farmers’ incomes by 2022. It earmarked more than $148bn in loans for farmers in the current financial year, in an effort to help boost the rural economy.

“India is the largest producer of spices, pulses, milk and tea, and the second-largest producer of wheat, rice, fruits and vegetables, sugarcane, cotton and oilseeds,” according to a recent report by the India Brand Equity Foundation.

In Maharashtra, following the spate of dramatic protests this month, the chief minister of the state, Devendra Fadnavis, gave in and agreed to a loan waiver for small farmers, despite earlier saying the state’s own debts precluded such action. The local government has proposed a cap of 100,000 rupees (Dh5,696) for each farmer for this debt relief, but farmers are calling for larger bailouts.

Uttar Pradesh, Punjab, and Karnataka, have followed suit and have also announced loan waivers. But analysts say such moves will ultimately have a limited – or even negative – impact.

“While the solution to the agrarian crisis facing the country is not an easy one, providing a debt waiver to farmers will only provide short-term relief. It will also lead to a bad credit culture, besides exerting pressure on state finances,” says Devendra Pant, the chief economist at India Ratings & Research.

“The waivers may mask the delinquencies for the time being. The unintended outcome of this could be reduced availability of credit to the farmers from banks, forcing them to resort to the unorganised lending sector.”

And these waivers could make a significant dent in India’s economy, some analysts say.

“More states are likely to trip on this politically slippery slope,” according to the investment bank Edelweiss Capital. “If the fever spreads, we envisage waivers could catapult to about 1.5 per cent of GDP.”

Despite the current malaise, the potential is there for the sector to thrive and for farmers to profit in a country of more than 1.2 billion people, it is argued.

“Farming can be a very profitable venture in India even for small and marginal farmers,” says Mr Tevtiya.

“Looking at the India demographics, the demand for agriculture products is only going to go up but it’s the supply which is still unpredictable. There are very few businesses in today’s world where demand is predictable [but] agriculture is one such business.”

Still, while demand may be relatively predictable, there are many aspects of farming that are highly unpredictable. As the monsoon rains make their way across the country, farmers will be looking to the skies and hoping for good rains, which are vital to have a good season of crop production. In recent years, poor monsoon rains have devastated many farmers. Expectations are for a normal monsoon season this year, which could bring some relief to farmers.

“Farmers who are purely into only farming do generally go through the vagaries of nature, which either adds to or affects their income immensely,” says Mr Nirmal. “Poor monsoon, pricing, everything matters.”

Mr Tevtiya adds: “Farm loan waivers are like a steroid which can make the farmer financially stable, but is not the long-term solution,” .

“We need to look for long-term solutions which can empower farmers and make them start thinking like a businessman.”

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