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Farmers need support

Punjab farmers are angry. The wheat procurement price remains frozen at last year's Rs 1,285 per quintal. While the wholesale market price of wheat in the first week of December has risen by 39% over the corresponding period last year, the procurement price is not being enhanced under the plea that it would mean more production which in turn would mean more wheat for storage. Devinder Sharma writes

chandigarh Updated: Dec 16, 2012 00:58 IST
Devinder Sharma

Punjab farmers are angry. The wheat procurement price remains frozen at last year's Rs 1,285 per quintal. While the wholesale market price of wheat in the first week of December has risen by 39% over the corresponding period last year, the procurement price is not being enhanced under the plea that it would mean more production which in turn would mean more wheat for storage.


Wheat is not the only crop that suffers from un-remunerative prices. While the government thinks the approval granted to FDI in retail will help remove the middlemen and thereby provide farmers with a better price, it is time to look at the massive subsidisation of agriculture in America and Europe. Most believe that farm incomes in America and Europe are high because farmers in those countries are very efficient. This is a fallacy. The fact is that despite large farm size and the use of sophisticated technology, farming in the Western countries, too, is a losing proposition. What actually provides income in the hands of farmers in the richest trading block - the Organisation for Economic Cooperation and Development (OECD) - are the massive government subsidies, including direct income support.

Let us make a comparison. In the 10-year period, between 1997 and 2008, the National Crime Record Bureau tells us that approximately 2.4 lakh farmers had committed suicide primarily to escape the humiliation that comes along with growing indebtedness. Another 42% want to quit agriculture if given an alternative. In the US on the other hand, between 1995 and 2009, farmers have been paid Rs 12.5 lakh crore as farm subsidies, including direct income support. In other words, while our farmers were reeling under mounting debt, the US farmers got a fat cheque sitting at home.

In Europe, the economic handouts are more lucrative. Farmers receive a per hectare subsidy in the form of direct income support of Rs 4,000. In the case of cereals alone, if you multiply Rs 4,000 with 2.2 lakh hectare area sown in 27 countries of the European Union, it comes to a staggering Rs 90.4 lakh crore.

This is only what farmers in the US and Europe get as direct income support. In addition, they also receive the benefit of 'counter-cyclic payments', which is the difference between the average market price and the target price; 'market loss payments', emergency income support payment to cover up the loss suffered by farmers for the failure of the government not to pursue trade agreements aggressively; and now subsidies under the crop insurance programme and the bio-fuel programme. No wonder, average farm incomes in many European countries have been nearly 100% to 200% higher than the average of the rest of the economy. In the Netherlands, the average farm household income is 270% higher than the national average.

No wonder, while the US and European farmers go on a cruise even when the international prices are down, the Indian farmer is left with little choice but to end his own life. You will be surprised that in some Nordic countries, the government provides subsidy for a one-month holiday for a farmer and his family anywhere in Europe. When was the last time you heard a farming family in India travelling on a holiday? Ever heard of even leave travel concession for farmers?

Let me share with you some of the highlights from an interesting study, entitled, 'Government's Continued Bailout for Corporate Agriculture' published by the US Environmental Working Group (EWG).

* US paid a quarter of a trillion in farm subsidies between 1995 and 2009.
* Direct payments have averaged around $5 billion every year since 2005.
* Subsidies under the crop insurance programme have tripled - from $2.7 billion in 2005 to $7.3 billion in 2009.
* Since 1995, crop insurance subsidies have crossed $35 billion.
* Between 1995 and 2009, the richest 10% of the farm families pocketed 74% of the entire subsidy.
* On an average, the wealthiest 10% received a total payment of $4,45,127 in the past 15 years.

Small farmers received an average of $8,862 per recipient in the same period.

Now this should come as an eye-opener. It is time to correct the general perception that Indian farmers are recipient of huge subsidies. Also, in my understanding, Indian farmers are being urged to apply more chemical inputs and go in for intensive farming practices to raise productivity. The common advice is that more the farm productivity, more would be the income. If this were true, farmers in the US and Europe, who have almost double the crop yields than India in several crops, should not be requiring agricultural subsidies. The fact is that whatever be the size of the crop field, modern agriculture turns out to be uneconomical. It is, therefore, time Indian farmers, too, were paid an assured monthly income like in the US and Europe.

(Devinder Sharma is food and agricultural policy expert. He tweets at @Devinder_Sharma)