To what extent are farmers exploited?

8/2/2019 To what extent are farmers exploited?

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Subbaiya is a farmer belonging to one of the backward villages of AndhraPradesh. His family was engaged in agriculture as long as his eighty-

year-old grandmother could remember. This year Mr. Surya NarayanReddy of his zila (district) was standing for elections. He promised the

farmers free electricity, water, highly subsidized fertilizers and pesticides

and last but not the least a higher price for their crops. Subsequently, hewon the elections and didnt come back to the village till the next

elections.

Before the sowing season began, a coterie of government agents andofficials from some biotechnology company arrived to replace the

indigenous cost free seeds with corporate seeds, which in addition of not

being free of cost also required the farmers to use fertilizers andpesticides, in return of higher yield. This resulted in a substantial increase

in the expenditure, forcing them to borrow money from moneylenders.

These moneylenders unlike banks charge high interest rates, but are moreapproachable as they require less collateral support on the part of the poor

farmers. So, Subbaiya and other farmers, in the hope of receiving freeelectricity, water and subsidized pesticides and fertilizers and a higher

yield buy these seeds from the MNCs by borrowing money from themoneylenders.

Concessional credit facilities offered by the government are not yetwidespread in rural areas. Therefore, they keep going back to the

traditional and exploitative moneylenders for credit.

The entry of commercial seeds in the Indian market is a consequence of

the structural adjustment policies of the World Bank, in 1998, whichforced the Indian government to open up its seed sector to MNCs such as

Cargill, Monsanto and Syngenta. These companies sold hybrid varietiesof seeds that could not be saved by farmers due to patents as well as

engineering of seeds. This forced the farmers to buy seeds year after year,which was not the case earlier.

The support promised by the government to farmers under various

schemes, also proved a set back, as the electricity was rarely supplied andthe subsidies reached all farmers without any differentiation between therich and the poor farmers. Subbaiya and the relatives of Surya Narayan

Reddy who belonged to richer sections received subsidies alike.

Also, Subbaiya owned a cotton farm and thereby was entitled to Rs 1300

per acre subsidy and he received this on time. And this season there wereno rains; therefore his only source of water was the nearby bore well


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whose water was sourced through irrigational facilities. But due to thedearth of electricity, the field could not be fed with water.

TNEB (Tamil Nadu Electricity Board) has an estimated Rs10, 000 crore

in losses. The agriculture sector of TN contributes as much as 40% of this

loss due to the governments policy of providing free electricity to theagriculture sector. There has been a shortage of power supply for over a

decade. This has lead to increasing power cuts, therefore makingavailable only a very minimal amount of electricity for the farmers,

which has started to affect their yields.

Similarly subsidized pesticides and fertilizers encourage harmful farming

practices, which increases the replenishment period. This meant that theproductivity of the farmland would come down if enough time were not

given to replenish the land of its minerals etc. If the required time was not

given then it will lead to a fall in the yield in the next season, ultimatelyreducing the farmers earnings. The use of chemicals also pollutes ground

water resources and other nearby water sources. But these fertilizers and pesticides are the only source of increasing productivity and reducing

crop failure for the current harvest. Therefore, government policies, in

large, disregard the education of the farmer in various areas andencourage them to follow practices which are ultimately harmful not only

to the farmers, but also the consumers of the crops.

Also, according to Jeffery Sachs, an American economist, subsidies are

being grabbed by the rich farmers and others close to the officials.Therefore, what is rightly meant for the poor farmers is being unfairly

given to the rich farmers, further increasing the disparity between the richand the poor. Along with this there is always the case of fluctuation in

fertilizers and pesticide prices, which is not included in the subsidiesprogram of the government.

After harvest, the farmers sell their produce immediately as they do not

have the necessary facilities to store their produce. So, they sell it to the

merchant and other middlemen as soon as possible to avoid any kind of

damage. This merchant class buys the produce at exceptionally low ratesand sells them at higher prices.

Subbaiyas neighbor Ram owned a coconut farm, which produced around300-350 coconuts each year. He sold these to Ramana, a merchant for Rs2 each. Ramana in turn sold these at Rs 8 each to the individuals who sell

coconut on the streets in cities. His price is higher then the price at whichhe bought from Ram plus freight cost, as this would add up to only Rs 4


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each. Now, the individuals from the city who bought the coconuts in turnsell it for Rs 15 each. Ram only earned a profit of Rs 0.5 per coconut

where as Ramana a profit of Rs 4 each and the final coconut sellers earnRs 7 each.

This phenomenon is not just restricted to state or national level, but isalso seen in the international market.

Now, Ram also produces grapes and his major market is UK. So, once

the grapes are ripe enough to be sold. He plucks them puts them incartons and sells them to the agent of a UK based company that acts as awholesaler and sells grapes to supermarkets in the UK.

According to HM Revenue & Customs, between January and December,

the total value of fruit imported from India amounted to 32 million and

40% of all fruit imported from India was fresh grapes. The averageimport value of these grapes was 96p per kg, but it was sold in UK

supermarkets for almost 3 to 4 times this amount. This is a blatantexample of exploitation of Indian farmers.

Farmers, such as, Ram are exploited adversely as companies andmiddlemen earn high returns at the cost of these farmers earnings and

lives in some cases.

Subbaiya also has a brother Raghu, who had an acre land. He used it to

grow Paddy. But at the time of harvest prices fell, fetching an amount thatdidnt even cover his costs.

Despite the purpose of Minimum Support Price (MSP) being to insure the

farmers against agriculture price volatility, it hasnt really served itspurpose in many states. For instance, in 2006, the MSP for grain was set

just 1.6% higher than the previous year, despite wholesale prices rising4.3% in the previous year. This is an exemplary of poor planning.

Subbaiyas crop sadly failed, which meant he had no income and also no

money for going back to agriculture. It was difficult for him to narrowdown to the reason for the failure. This was the first time he adopted agenetically modified crop, so he was even more clueless. But the fact that

many who had adopted this crop in his village, in expectation of a higheryield and riches, faced crop failure proved that the culprit was none otherthan the biotechnology firm from whom they bought their seeds.


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Between 1998-2008, about 1.78 lakh farmers committed suicides. One ofthe major reasons for this as reported by media, NGOs and government

officials was crop failure from the use of genetically modified (GM)seeds.

The consequences of the crop failure seem like myriad of problems to afarmer. The crop failure results in no income, increased pressure to repay

mortgage liabilities etc. Subbaiya was brave enough to handle it, butmany others have been driven to sell their kidneys or worse commit

suicide because of not being able to handle the pressure of repaying theloans.

The government of Indias role in helping the farmers has so far beenquite depressing. The Aggregate measurement of support is widely

accepted as one of the best measures of state intervention. It is the

difference between the statesponsored income and the hypotheticalincomes in a free market environment. In 1998, Japans AMS was as high

as 70% of primary sector GDP, EECs (European EconomicCommission) was 50% of primary sector GDP, USAs was 30% of

primary sector GDP.

But in India the AMS was negative, according to a report submitted by

the Government of India to the WTO. It was -18%. This is a result ofmany unfortunate events such as crop failure, export restrictions,

exploitation of middlemen etc.

One of the main reasons for this is that the farmers are encouraged to buy

domestic fertilizers and pesticides whose costs are higher than the fulllanded cost of imported fertilizers and pesticides. This and other reasons

such as residual power supply to agricultural pumps, high repair andreplacement cost of equipment, and bribes etc. have also lead to this

situation.

India follows almost the same model as the European Union and other

American countries. Its policies are directed towards the greater portion

of the population. They cover all aspects of the agriculture industryincluding research & development, farmers credit facilities andinsurance schemes. Some of the schemes include the Scheme on organic

farming, Jute Technology Mission, Technology Mission on cotton, National Project for Cattle and Buffalo Breeding, Livestock InsuranceScheme, Development of Aquaculture, National Scheme on welfare of

fishermen, Technology development and transfer Promotion, Market


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Information Services for various sectors etc. The schemes can be nationalor state level initiatives. And these schemes vary from state to state.

Despite the enormous number of schemes followed, the farmers havent

benefited to a great extent. This can be attributed to poor execution or

even shoddy plans. The countless number of benefits and policies puttogether for farmers are of no use if they are not implemented properly.

The political structure of India is also exploitative and the politicians and

middlemen seem to prosper at the backdrop of poor and exploitedfarmers, which in itself is an incentive to keep them poor for the abovetwo groups.

As per reports 40% of Indian farmers want to leave agriculture, which is

a massive 240 million. The distress of these farmers is well reflected in

the above number. Setting right the evils of the agricultural sector is notas bleak as it appears. Everything has a good ending and it takes time and

the right person (idea) to achieve it.

To what extent are farmers exploited?

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