Sunday, 27 November, 2022
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Farmers’ problem is income, more than prices. Solution lies in setting up factories

If fewer hands were employed on farms, incomes per head would rise, and farmers would be less worried about assured product prices.

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The problems that farmers face have more to do with incomes than prices. Wheat is procured by the government at just under Rs 2,000 per quintal; you can get it in international markets at the same price. Rice, of which India is one of the leading exporters, presents a different picture: India offers the lowest prices for its rice in the international market. Yet, that price is attractive enough for farmers to grow excessive quantities of paddy, even in states where water tables have dropped precipitously. They should be switching to other crops, especially if the paddy procurement price is unattractive. That they don’t do so tells us a story.

Unlike rice, Indian sugar is uncompetitive in global markets and was exported last year with the help of a massive government subsidy equal to 30 per cent of the cost! This year, when no subsidy was announced, there were no exports. The subsidy really goes to the farmer, who is being paid too much for sugarcane. So, as with rice, he grows more of it than the country needs.

Rice and cane are water-intensive crops, and India is short of water. Prices should be engineered to reduce the acreage devoted to these two crops, but farmers are too powerful a political force to be ignored — as is evident right now all around Delhi. Since both crops get a guaranteed purchase price, why wouldn’t farmers agitate to keep the deal they have? If the government caves in, the farmers will go home, but the country will not get the agricultural reform it badly needs — if nothing else, then to prevent a bigger water crisis than already exists.

If the government offered to match global prices, would the agitating farmers go home? Paddy growers might, sugar growers won’t, while those growing crops like rubber will want to retain heavy import tariffs as protection. So different rules for different crops will continue, as they should. But however the government deals with the agitating farmers, crop rationalisation is essential, as is the need to improve productivity virtually across the board. Finally, too many people work on the land, so income per head is low and farmers feel poor and nurse a sense of grievance. Indeed, most of them are poor because half the workforce is in agriculture, producing only one-seventh of national income.

Also read: Shambles over farmers’ protest shows Modi-Shah BJP needs a Punjab tutorial

The solution lies not in farms but in factories. Labour-intensive manufacturing would absorb surplus labour, which would be more productive on the shop floor and get paid more. India is an outlier in its failure to engineer this fundamental transition in a developing country’s job market, away from dependence on land. If fewer hands were employed on the farms, incomes per head would rise for those who stay engaged in agriculture, and farmers would be less worried about assured product prices.

In the absence of proper manufacturing jobs, people have been turning to sub-optimal occupations. The economic census records the existence of 58 million “establishments”, of which more than 70 per cent had no paid staff, only the owner. More than half operated from within homes, or outside the home but without a fixed structure. Most of these are not enterprises in any meaningful sense of the term, they just reflect under-paid artisanal work or desperate survival strategies. Without proper jobs, the crisis will spread beyond the farms.

PS: Someone should start a campaign to get the Bharat Ratna awarded to F.C. Kohli, who died a few days ago at 96. Only M.S. Swaminathan (in agriculture) and Verghese Kurien (dairying) have changed people’s lives and India’s economic trajectory more than Kohli did. At Tata Consultancy Services, he laid the foundations of the software services industry, which has become India’s largest exporter, employing millions. His interests and work went beyond that, to promoting electrical engineering education, designing courses in systems engineering, and developing software that he said could eradicate illiteracy through 40 hours of training on a basic computer. He was low-key and would pass unnoticed in an airport. But his record matches those of M. Visvesvaraya and A.P.J. Abdul Kalam, the only engineers so far to be awarded the Bharat Ratna.

By Special Arrangement with Business Standard.

Also read: Punjab’s frustration & anger is rooted in its steep decline, now visible in farmers’ protests


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  1. Hit the bull’s eye. Excellent article. We are the only country remaining in agriculture still without shifting the workforce substantially to industries/manufacture. Truly an outlier that way. Many thanks for this sensible n succinct article.

  2. Finally, the only article on the PRINT which talks sense and explains objectively rather than the communist sentimental nonsense by the authors on THE PRINT including so called experts. I have never understood how an IAS ex-agriculture secretary who probably never studied botany or agriculture or even biological science or maybe even science or basic economics itself calls himself an expert in another article I read on THE PRINT today.
    The EDITORS are duty bound to check whether the article presented for publishing, even if a personal opinion has the proper expertise input and whether it is objective in its presentation and opinions in addition to being lucid, whatever its length might be.
    Sekhar Gupta sir, this article by Mr. Ninan is what makes sense to educated people. Please do your editorial supervision properly.

  3. Absolutely concur with your PS. “Someone should start a campaign to get the Bharat Ratna awarded to F.C. Kohli, who died a few days ago at 96.”. Few understand the real impact F C Kohli has had on the socio-economic makeup of India. Would have preferred to have seen this proposal as a lead article rather than be buried in a postscript. But i am glad that have put it out therr. Thank you.

  4. Problem for farmer is
    1) non availability and high cost labor and not too much as stated
    2)Un enumerative price. allow farmers to fix and guide them with real input cost and not as done now with 3 or 4 year old data and make them public .
    3)Avoid middle man, he only eats more than 50 %. still not in tax net.

  5. Labour intensive factories will not be there unless there are changes in labour and land laws!
    Secondly, India can move to labour intensive high value agriproduce like fruits and veg easily.

  6. I agree with Mr. Ninan. However, the main problem according to me is the burgeoning population of India. How many labour intensive industries can you create & where will you sell the produce.

    • How much manufacturing can be done ?
      There have to be consumers with adequate purchasing power and disposable income existing first for manufacturing to make profits.

  7. An excellent article. The problem is where to find employment to the crores of uneducated and unskilled population who have nowhere to go.

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