Recently, 184 farmer groups from across states congregated at Delhi to stage a protest walk to highlight their distress.
The issue is multi-dimensional and needs a studied and structural approach.
How is the trend in the farm sector?
The agriculture sector is characterised by instability in incomes because of various types of risks involved in production, market and prices.
“National Commission of Farmers – 2006”, chaired by noted scientist M.S.Swaminathan, had also pointed out some serious stress points in the sector through its reports.
The agriculture growth rates have been unsteady in the recent past, at 1.5% in 2012-13, to 5.6% in 2013-14 and (-) 0.2% in 2014-15.
These trends reflect the extent of distress and 2017 was also marked by several farmer protests nationwide, with a few turning violent.
What has precipitated this crisis?
Small Land Holding - Rising population pressure on land, is central to this crisis, with small and marginal farmers (less than 2 hectares) accounting for 72% of land holdings.
The average farm size in India is small, at 1.15 hectare, and since 1970-71, there has been a steady declining trend in land holdings.
This predominance of small operational holdings is a major limitation to reaping the benefits of economies of scale.
Since small and marginal farmers have little marketable surplus, they are left with low bargaining power and no say over prices.
Nature’s challenge - Crop production is always at risk because of pests, diseases and shortage of inputs like seeds, which could result in low yield.
Low irrigation coverage, drought, flooding and unseasonal rains and incompetent government relief operations are some other irritant factors.
Market Dynamics - The lower than remunerative price in the absence of marketing infrastructure and profiteering by middlemen only adds to the financial distress of farmers.
Inconsistent and uncertain policy regulations such as “Agricultural Produce Market Committee (APMC Act)” have only exacerbated the problems.
Fluctuations in demand and supply owing to ‘bumper or poor harvest’ and ‘speculation and hoarding’ by traders significantly damage farmer prospects.
This is because of their low resilience due to the perishable nature of goods, inability to hold or hedge in surplus-shortage scenarios.
Credit Access - Vicious informal credit through moneylenders, and lack of short term and long term formal loans have resulted in chronic indebtedness.
Crop insurance against losses has also not yet comprehensively taken root.
What is the way ahead?
Currently, farmers have been highlighting the demands for “remunerative price and freedom from debt” through several platforms.
These are seen as a safety cushion in their fight against risks of weather and disaster, price, credit, erratic market dynamics and policy uncertainty.
While growth in agriculture has slowed down, the costs of farm inputs have increased faster than farm produce prices.
As the cost of capital too has increased manifold over the years, agriculture has become largely an unprofitable venture.
To increase and ensure stable flow of income to farmers it is vital to manage and reduce the economic risks by analysing, categorising and addressing them.
