WHY INDIAN FARMING UNPROFITABLE

Some decades ago whenever someone asks questions why Indian farmers are poor, the readymade reply was that they are not able to produce a good quantity of crop per unit area and also the quality of products is also not up to the mark but at present when India is self-sufficient in agriculture and their storehouse is over-flooded with cereals and other crops and when some of the Indian state producing high-quality products which are at par with any international standard then why even now agricultural business is not as profitable as other businesses in India.

This is now normal instances Farmers protesting across India after producing bumper harvests but getting low prices. India’s agriculture sector has not able to generating enough money to make farmers profitable for nearly two decades now, as per the study by the Organization of Economic Cooperation and Development.

As per their report, India is only one of three countries where this phenomenon has happened. The study blames that government s an obsession with keeping food prices low at any cost to avoid inflation, as the main cause of this.

 Some of the people are in this thought that this is happening because most policymaker in the Indian government has no agricultural experience or their future have no connection to the farming business. Moreover, as Indian media is particularly making hue and cry about prices increase the government wants it to maintain it low as much as for the general public so that they should not lose vote share and elections. There are instances when many political parties lose their election due to an increase in the prices of a few agricultural commodities.

The price of any agriculture produce must be decided on the basis of how much cost a farmer spent on this particular crop to produce and market it but in contrast, in India, it is deicide by other compulsions. Prices are mostly decided by political compulsions and whenever there is an increased price of any agricultural commodity, the government immediately imports it to reduce prices. Farmers may be a big chunk for vote share in Indian Politics but due to many factions within the farming community their direct influence on Government policies are very minimum.

There are several instances when farmers were not able to get even the cost of cultivation and thrown away their produce without selling it or selling it at a price where they even not recover the cost of cultivation for that produce.

There is one more strange factor of Indian agriculture is that Indian agriculture is basically controlled by the middle man and some of the rich marketing businessman. As agriculture produce is a perishable commodity these marketing people and middle man take advantage of this situation and try to reduce the prices of agriculture produce by not buying it for some time to pressurize farmers to supply their produce at low prices. Not only this, as the cost of cultivation of agriculture produce is very high a majority of Indian farmers buy farm input from these marketing people on very high interest and have no option but to sell their produce to these people at any price.

These middlemen simply take these products at a lower price and store them for some time and sell it when prices are too high. Moreover, these products are seasonal, perishable in nature which is why farmers cannot keep it at their farms due to the non-availability of storage facilities.  In simple words agriculture in India suffers negative total revenues. This means assets going out of the sector are more than those coming in.

Farming, therefore, has steadily become an unprofitable occupation.

As per one study only India, Vietnam, and Ukraine have negative farm revenue, which means negative returns for producers.

There are Government policies as a key reason for holding farm incomes back. Government trade policies regarding the trade-off between prices consumers pay and prices farmers get are consumer-centric and one of the reasons of low farm income.

In the last few decades, there were export restrictions and minimum export prices were imposed but were not reviewed even when world agricultural commodity prices began to fall and due to this India lost the opportunity to export sugar, rice, maize, wheat, etc. There is also one more reason to it Government of different political parties kept pumping in more and more input subsidies to make farmers happy for immediate vote gain rather than long-run investments. There is a scarcity of cold storage in the rural sector and no government has given any emphasis on it.

There is the startling revelation by some researcher that about 60 % of farmers in India, who cultivate less than 0.80 hectares of land, would continue to be under the poverty line if they do not leave agriculture and join the non-agricultural business,

This the situation is happening due to government policies as their policy is just increasing food-centric rather than the overall well being of the agriculture sector. The main problems of this situation are also traded restrictions specifically designed to keep domestic food prices low, including a frequent ban on exports and MSPs set at lower than international prices. To hide behind it Government cited the Essential Commodities Act and the Agricultural Produce Market Committee Act, as the reason for these negative regulations and thereby hampering price discovery for farmers.

In my opinion, this is the right time that the Government of India as a national policy decides the minimum support price for all and each agricultural commodity and implement strictly. The government must buy agricultural produce directly from farmers and the role of middle man should be reduced to almost zero as these people are the main cause of this problem at the grassroots level. More storage facilities should be provided in the rural sector.

Bank loans should be available to farmers at very low interest so that they do not have to depend on private parties for this. Moreover due to large quantities of chemicals and fertilizers used in the cultivation of crops and health hazards of produce harvested from these farms making it very clear that ORGANIC FARMING will be needed in the future will again increase the cost of production.

Here we have to understand that it is better to provide good prices to farmers for their well-deserved labor rather than putting our whole health infrastructure to jeopardize.

Out of the box thinking and new innovative ideas is the need of the time to implement before it gets too late.