I was about 27 years of age when I decided to do agriculture in our village. Accordingly, I left a Central Govt. Job and went to my village in Andhra Pradesh. Myself and my younger two brothers pooled our land to cultivate the lands. We purchased a tractor and with great enthusiasm, started doing cultivation in our fields.
In the beginning of the first year, the crops have come up very nicely because of using the latest techniques, and required fertilizers, people in the village flocked to see our lands. But before cutting the crops, there were heavy floods and the crop was lost. When the expected yields were about 100 bags of paddy, the actual yield was only about 10 bags.
In the second year, we got reasonably good yields and tried to establish ourselves in the village.
In the third year, there was a huge drought in the area and the yields are very poor due to late release of canal water with insufficient quantities. The bank loans, reached only after the cultivation. By three years, we had incurred huge losses, which could be repaid only by selling a portion of land. In disgust, I left to join the service again. Technically, I migrated to Maharashtra where I got the Job.
I survived the calamity because of higher landholding, support of the family & education. If any of them are not available, I would have gone the way of many small farmers who either committed suicide or become a laborer.
However, the ground experience in agriculture was very much useful to me as I was working in the area of Agriculture and Water sector during the next 40 years.
Can such a failed farmer in agriculture give advice to the farmers what to do? May be YES or May be NOT.
The word sustainable means different things to different activities and people. A farmer with a family of 5 having a land of about 1 to 2 acres cultivates and earns his livelihood through agriculture. He is a mini entrepreneur in its true sense. He decides what to grow, provide inputs and after cultivation, he earns his livelihood. If you consider the land as a factory, it is true entrepreneurship consisting production, credit and sale of produce to earn the livelihood.
However unlike any manufacturing activity, the agriculture has 6 external forces which hinder the economics of the agriculture. The 6 forces are i) uneconomic land holding, ii) Climate, iii) Timely Credit, iv) Productivity, v) Marketing and vi) Government Policies in agriculture.
- UNECONOMIC LAND HOLDING:
The majority of the farmers have land less than 1 ac which is not economically viable for any type of agriculture and the farmers are not willing to pool their land as shares like any industry with the fear of losing the land and continue to cultivate the uneconomic landholding with loss year after year, resulting in high debts leading to suicides in extreme cases.
What is the solution? There are many. The following are some of the remedies
- Sell or lease the land and migrate
- Lease the land and do part time job (daily laborer) in the same village
- Cultivate land as a secondary occupation and use the produce only for self consumption while daily labor is the main occupation
- Have an alternate activity connected to agriculture like animal husbandry, poultry, producing organic manure and fertilizers etc
- Have a small shop with daily use for the local population like buying and selling oil, clothes, vegetables, rice, and other material for daily use.
- Do alternate jobs like stitching clothes, masonry job etc, if you want to stay in the same village?
- Never depend on agriculture and never take loan for agriculture operations, if your land holding is less than 0.5 ac. Let the land be fallow rather than take loan and do agriculture.
- Never stop sending your children to school. Only education can save your future generation.
- Try to do cooperative agriculture with relatives or likeminded people.
- The maximum command area should not be more than 40 ha with a maximum of 20 farmers.
- One of the elders can become the leader of the Cooperative society and your land would become your share capital in the society
- All of you are members of the society and would work in the field and get labor charges as per your assumed rates. This may be less than market rates as any profit would go to you only.
- Register society so that you can get benefits of getting loans from bank and also get fertilizers, seeds, pesticides at cheaper rates from Govt.
- You can insure the crops on society basis so that you get the compensation if the crops fail.
- You can also generate emergency fund by contributing Rs 30 per month per individual like in Self Help Groups and get loan against your deposits or the amount can be used for emergencies for health, education etc.
Climate is one of most difficult and unmanageable parameters which is beyond the farmers’ control. There will be always one drought and one flood in a period of 10 years, which effectively destroys the economic viability of the farmer. Some of the following remedies may be followed
- The farmer should follow the multiple, mixed crop strategy.
- The farmer has to divide his land into 5 parcels.
- They should grow 5 different crops and plant in different times, so that some crops yield early and some late in the season giving higher rates for your produce because of availability of the same in unseasonal times. One crop should be vegetables and other should be fruit crops. The remaining would be field crops. Vegetables would get you money on daily basis while fruit crops would get money on seasonal basis.
- If the unseasonal rains or drought destroy some crops, other crops would survive.
- The insurance is the key for the farmer’s survival and this should be on individual basis like car or life insurance rather than Government controlled insurance agency which depends on Govt. declaration on drought and floods for releasing the insured amount.
III: TIMELY CREDIT
Agriculture credit is in the hands of local money lenders since time immemorial and cannot be replaced by any system. Large numbers of committees were formed by Government of India and quite a few recommendations were made. But nothing has worked. Even the latest Self Help Groups are not completely successful in this regard. Some of the issues and suggestions are given below.
- The advantage of money lenders are timely credit and available at any time of the day.
- The interest rates are abnormally high depending on the requirement of the farmer. It may vary from 24 % to 50%.
- Once entered into an agreement, the farmer cannot come out of the system due to frequent failure of crops and very less market rates at the time of selling the farm produce. If unbearable, the farmers commit suicides.
- Many attempts have been made to control money lenders without success. As money lenders are part time agriculturists, they fall under agriculture and get credit from banks with less interest, as they are more viable. However, they use the money for lending with higher interest.
- They also get gold loans under agriculture with less interest. But they lend the money with high interest rates to local farmers.
- Many of the money lenders are registered and maintain two registers one for regular clients which are audited and income tax is filed while the other is with higher interest and not shown in any books.
- The loans taken from the banks by the real farmers normally go to the money lenders as timely credit is not available from banks, due to procedural delays in sanction of loans.
- Some of the financial agencies try to control the money lenders by trying to imitate them without success as the village branches of banks are one man show and the bank manager invariably stays nearby town as infrastructure for schools, living, health etc are not available in the villages. These stop from giving loans to the needy at the time of emergencies and the farmers have to go to the local money lenders.
- The Credit from Government banks always come late, if at all they come and he has to depend on the local money lender who charges anywhere between 24 to 50 % interest which makes agriculture non viable. The industries continuously cry for low interest rates of less than 10 % for their industrial activity
- The recovery of loans is also very difficult as the banks follow a system of periodic repayment based on their disbursements, while the farmers can repay at the time of harvesting of crops only. The banks wait till the farmers sell their produce. But, the farmers pay the high interest rates loans given by the money lenders before the banks and fail to repay the loans to the banks, which results in NPAs. The money lenders can recover by purchasing the farm produce at cheaper rates as they also many times work as marketing agencies to the buyers.
- The solutions are very difficult to arrive at. The farmers not only require credit for cultivating their lands, they also require for health, marriages & deaths in the family, repair of the house and buying other requirements and many day to day need of any individuals.
- Who will give money? The money received for agriculture purpose does not go into investment as there are many other emergency requirements, thereby the agriculture inputs cannot be purchased. This results either in low productivity or involvement of money lenders.
- The solutions can broadly be divided into two
- Give him a credit limit of Rs say 50000 for a family of 5 that is 3 adults and two children. Assuming 3 adults work for 100 days @ Rs 100 per day as per Government employment scheme like Mahatma Gandhi National Rural Employment Gurantee Act(MNREGA), they get 30000 per year and if they have 2 acres of land, the net income would be about 10000 per acre that is about 20000. The total amount would come about Rs 50000. The credit limit may also be kept at 50% of the cost of the land + their 100 days income. The family would register with only one bank (nearest to the village) and get a credit limit of Rs 50000 per year. He would take the money as and when he wants and repays as and when he gets money either from employment or from crops. If he does not repay in two years time, the bank would sell his 2 acres of land and recover the same. There is a danger that the farmers’ draw the money for the purchase of luxury items and default in payments. If they default, the land will be sold and recovered in two years time. The concerned bank manager has to have a good coordination with the local farmers to know who is doing what and how the money is spent.
- Will this method replace the money lender? No. But there will be considerable relief to the farmers and they need not commit suicide. The money lenders can be controlled to some extent by regular checks on his books and inform the farmers that they should not take loans from money lenders if the interest rates are more than 24 %. This cannot be controlled to a large extent as credit cards charge 36 % and still many use the same. The money lenders cannot be replaced. So, we should take their help but control them to a large extent.
The productivity of lands is very less in India because of old agricultural practices and mono culture of agriculture year after year. We can easily double the productivity, if proper agriculture practices are followed. But the farmer normally follows the traditional practices as his knowledge base and his risk taking capability is less.
The major suggestions are as under:
- Flood irrigation should be altogether banned. Irrigation water has to be used only either by sprinkler or drip systems. Large scale sprinkler system has to be encouraged as its adoption is simple unlike drip system. The solution is not giving subsidy on the equipment but demonstration of successful implementation of sprinkler systems on the fields and readily available credit with longer duration of payment. The manufacturer or dealer has to provide maintenance for two years and responsibility of training to the farmers should be on the dealer in addition to Government programmes. The dealer may be provided the cost of maintenance after he gets the farmers signature for every maintenance and training as per the schedule.
- The canals should be run only for 15 days in a month and the remaining days the farmers have to use groundwater for their crops.
- Electricity for agriculture purposes may be provided at least 4 hours in a day to about 8 hours per day.
- No high water consuming crops should be grown except in low lying or water logged areas where water is available in plenty.
- Modern Agriculture
- The farmers should be trained in new techniques of plowing fields, new techniques of seed and application of fertilizers, pesticides should be imparted by the dealers and through Government programs. Government should concentrate on training and demonstration. No subsidies should be given to fertilizers, pesticides etc. The money should be given to training and demonstration based on farmers’ participation. The money will be given to the dealers and other institutions based on the farmers’ signature for each training programme and as per budget for the programme. NGOs may be involved in this programme.
- If any business man makes a product for Rs 100 per piece, he will try to sell at least for Rs 120. If he cannot sell the product at a minimum profit, he will quite the business and try to set up another business. Only in agriculture, the farmer who produces a product for Rs 10/ kg, would have to sell for Rs 8/kg, year after year leading to higher debts and suicides. This is mainly due to poor marketing strategy of farmers and the exploiting nature of middle men. An Rs 8 / kg at farm gate is ultimately sold to the customer at Rs 40/kg, A huge profit to series of middle men. The producer gets the minimum and the middle men get the maximum. This happens only in agriculture.
- Storage capacities / Cold storages
- The holding capacity of farmers is very less as he has to sell the produce at any rate as soon as it is arrived as he has to repay the loan to money lenders and also to the banks and other relatives from whom he might have taken loan. This makes very easy to middle men to buy the produce cheaply. If there is a provision to store the produce for a short period of 3 to 6 months, it would help greatly to the farmers. If the farmers can store their produce in godowns and get 50% of the cost of the produce immediately, they can repay the immediate loans and sell their produce at higher economic rates subsequently and repay the 50% of the bank loan, they have taken while storing their produce. The NGOs and Government agencies should be encouraged to set up small godowns in villages for this purposes.
- Some of the produce required cold storage for storing perishable goods like vegetables etc. The same procedure should be followed to store the same for a short period, especially the rates crash when the perishable goods come to market in a large quantity.
- The market yards should be strictly monitored for sudden reducing the prices to help the middle men.
VI GOVERNMENT POLICIES
- Government policies also add to the misery of the farmers. If an item is produced at Rs 100 per piece in manufacturing industry, he is allowed to sell at 120 or more depending on the demand. But the farmer is not allowed to sell at more than the prescribed price by Government of India. Many times he has to sell far less than Government price.
- The Government sometimes proscribes export of certain food items and sometimes allows exporting, thereby creating instability in prices and the middle men get the profit at the expense of farmers.
- There is no agriculture insurance policy which ensures the stability of agriculture, even though many attempts are made to provide insurance, which failed. Insurance should be farmer to the agency. Government should not come in the middle except to frame proper policies and control. If the crop fails, the insurance company has to pay the agreed sum. There is no need to Government declaring drought or flood. The insurance company has to check the veracity of the claim and pay. If the company does not pay, the farmer has a right to go to Government for claims. A suitable system has to be developed like consumer courts.
- If the farmer from South India wants to sell onions in North India, he should be allowed to sell. There should be no restrictions. He should be able to sell his produce anywhere in India or abroad. If the Government has to procure, let them buy the same as per international rates for the product at that period.
- Providing subsidies and loan wavers by Government year after year normally do not reach the ultimate cultivator, except the middle men get the benefits.
- Let Government recognize agriculture as business and provide facilities, controls as per business activities to make the agriculture as an economic activity.
I hope some of the suggestions may be useful, especially to farmers who want to stay in villages and practice agriculture.
But, after doing all the above suggestions, do the farmers get good yields and good money. I still doubt. My father a hard core agriculturist used to say “Agriculture is not business. It will neither kill nor make you rich, only makes people to survive.”
I believe that we should not support “Survival Agriculture”, We should support “Sustainable Agriculture” where the farmers think of prosperity and not survival. We should move people from the concept of “Poverty alleviation to Poverty to Prosperity”. Let the people migrate to urban or semi urban areas and make their life easier and try to prosper and use their traditional agriculture knowledge to put into “Urban Agriculture” as a sustainable activity along with other business activity to work towards prosperity.