Nov 1, 2011 – The Indian elite, not limited to but including bureaucracy, judiciary, politicians, journalists, so-called intellectuals and the armchair civil society, infused with western philosophy and ideas, increasingly thinks like its counterparts in the west. It has largely lost its sense of Indian history, heritage and eastern values; especially so, when it comes to the farm sector and farmers. The general perception is that free and cheap are good and that farmers want free power, water and cheap fertilisers.

Alongside comes the conviction that farmers will accept sub-standard levels of living and inferior quality of inputs because they accept freebies. For some reason, the Indian farmer is considered to be a separate species; someone who does not want the things that the rest of ‘India shining’ wants; someone who is reconciled to his fate; a fate that assures him nothing but poverty. Nothing could be further from the truth. Consider a rather interesting question that is posted on the internet: “I am an Indian farmer and I want to work in Canada so what have I to do?” The question was suitably responded to by someone, who accepts that an Indian farmer might have aspirations that are perfectly in keeping with those of the rest of the country and does not want unwarranted interventions and assistance. He wants a fair deal just like every other Indian.

It would be important to appreciate that subsidized diesel, power, water and fertilisers are not meant to benefit farmers alone but are basically aimed at keeping commodity prices low for the public at large. Farmers would readily pay higher prices for inputs, provided prices received by them for their agricultural produce increased in proportion. That would, however, be unacceptable to any elected government or to consumers, especially the urban voters. It does not matter that the Indian farmer is caught in a trap of inadequate returns for his efforts, high prices for inputs and a loss of faith in his avocation, even when his produce commands exorbitant prices in the final market. This is the eventual quandary facing the Indian agriculturist.

Unfortunately, the ruling classes in India, as in other emerging countries, are still not ready to comprehend this reality. The UPA government is busy finalising more interventions such as the Right to Food Bill and much wasteful public expenditure, which will keep the Indian people dependent on government dole outs, rather than investing in the country’s scarce financial resources for sustainable increase in agricultural productivity. Investments will make a nation strong and self-sufficient while expenditures will keep it struggling and dependent. The caveat is that such investments be carefully made and those handling them are accountable for the monies invested and have been given the
expected outcomes.

Ignoring agriculture productivity or paying lip service to agriculture, as in India, has led to food shortages in many emerging countries and agricultural commodity prices have peaked. This has led to regime change and riots. The Tunisian dictator, Zine al Abidine Ben Ali and the Egyptian dictator, Hosni Mubarak, are gone; propelled in part by anger over high food prices. Ben Ali will be remembered as the despot who was toppled by a vegetable cart. This has led to charges that concern politicians in India: voters are angry about price inflation. Anger stems from fear of helplessness of being left behind; or being denied a decent living; the fear of children not getting their due. The government, however, is still uncertain about what to do.

Notwithstanding the dreaded dictatorship that the Chinese live under, there are lessons to be learnt from China’s long-term planning. When China considered reforming its systems, it started with agricultural reforms to gain self-sufficiency in food, followed by increasing industrial productivity. India, influenced by the west in the 1990s, started with financial reforms; but it has still not started agriculture reforms and productivity of the farm sector is languishing. Emerging countries like India developed their financial sector, as an engine of economic development. Globalisation has exposed the Indian farm sector to hitherto unknown forces; sometimes the farmer has been caught off guard.

What can India do? For starters, India can assimilate the existing knowledge available with all farmers in all its six lakh villages. Appointing an agriculture graduate or a master in agriculture in each village to provide extension services would cost no more than Rs 12,000 crore. This is less than 10 per cent of the expected expenditure on Right to Food Bill that would cost Rs1,20,000 crore or just 20 per cent of the MNREGA expenditure. One wonders why, if 55 per cent of the population could become selfsufficient with so little, does the government not wish to pursue this line of action. Why is the government desperate to feed everyone subsidised wheat or rice when India can grow what its people want to eat? It would be fair to believe that this comes from the mentality of looking down upon others; of giving aid; from the guilt of the superior classes, which is rather foreign, alien and quite feudal in nature, making it all rather distasteful. Again, it is all timed to begin before the next general elections leading to suspicion that it is intended to help the ruling party win. So much for state-funded elections.

The point that deserves reiteration is that farmers plead for help to become selfsufficient and not for subsidies. There is a monumental difference between the two and one doubts whether the powers that decide India’s fate understand the difference. Even if one gives the benefit of doubt to some of those in power, it
would be worthwhile to remember that often people with good intentions end up doing more damage than those without such intentions, because their thinking and approach are flawed even though they are trusted to lead the nation forward. The paralysis around the approach to bring down prices is only a sign of such times.

This leads on to a more sinister question: Is financialisation of the commodities market responsible for this food prices crisis even when the grower of food continues to be in a precarious state? Such financialisation implies that the “pattern of accumulation in which profit-making occurs increasingly through financial channels rather than through trade and commodity production,” as explained by Greta Krippner. Globally, there is increasing, though perhaps circumstantial, evidence of a strong connection between increasing financial market involvement in the commodities market.

The point that several global thinkers have made is that post the saturation and even collapse of the stock markets, large investors with a limited alternate investment opportunities have poured new investments into the commodities asset class in the last decade. This has led to a “financialisation” of commodities, which has, in turn, changed the price behaviour. The use of food as biofuel has emerged as another major factor leading to its northwards bound prices.

Prior to the 2009-10 Budget, farmers had met the Union Finance Minister and said that reforms, not concessions, held the key to agricultural growth in India. They wanted financial reforms to ensure credit flow, a good risk mitigation system, an efficient extension services mechanism and fair prices. Now that it is again time for the government to start working on the budget for 2012-13, it would be worthwhile revisiting what the farmers had told the Finance Minister because the compelling case they made did not seem to have had the desired results. Farmers also want the government to raise public spending, allow private investment in agriculture and take steps to curb the rampant cheating in markets; they want “respect and dignity.” They do not want to go on begging. “Year after year, state or central governments go on making us look like beggars,” the farmers said.

The point is the Indian farmer could become globally competitive if liberated from bureaucratic clutches. While China’s agriculture growth rate is between seven and nine per cent, India’s continues to languish. As far as agriculture credit is concerned, it would be a good idea to check which amongst India’s 120 million farm families have actually received it!