Recently, in an upmarket cafe in south Mumbai, I overheard a lady remark that there are two types of people in India: those who can afford a Louis Vuitton handbag and those who can’t. A couple of days later, at a dinner in Hyderabad, I heard another unique definition of the poverty line. Uma, the cook, said: “The country is now divided into two: those who can afford onions everyday and those who can’t”.
Uma’s family is not poor: she and her husband earn R20,000 per month or R667 per day, far above the R96 per day earned by many Indians. Yet at R90 a kg, this staple is clearly unaffordable for most. Why can prices go up drastically? The government claims capitalist middlemen are hoarding onion stocks and artificially fuelling inflation. The Opposition said it is a case of the government’s inability to do anything for the common man. The deputy chairman of the Planning Commission, Montek Singh Ahluwalia, said these changes are inevitable since our developing economy is morphing into a developed one. But, like the onion, we have to peel many layers to get to the core of the problem.
At about 10 million tonnes of annual output (which works out to an abysmally low 20 grams per day per person, not counting exports), onion is not a major crop. Then why did the State fail to prevent prices from going through the roof? Though our foodgrain production has gone up, the onion fiasco proves once again that we need to reform our agricultural sector.
More and more farmers are finding agriculture a loss-making venture. This is because agriculture in India is designed to make losses and 78% are small and marginal farmers for whom sale proceeds are less than their input costs. They are vulnerable to the agents of fertiliser and pesticide companies who lure them to try new cash crops that need more fertilisers and pesticides. Ironically, when production falls below productivity projections of these companies, farmers have nowhere to go; they can only lament their losses.
The Punjab government’s Environmental Sustainability Report admits that the state has .03% organic matter in the soil as against an ideal 3%. This is disastrous for the water table, crops and climate change. It’s against this backdrop that the government is mulling two new solutions. First, introduction of genetically modified (GM) crops. Never mind that they will increase in fertilisers use, which in turn will push up the input costs. These crops will also deplete organic matter in soil.
Second, it is considering foreign direct investment in retail. An analysis of US price trends over the last 60 years shows that farmers have been getting less and less share of the final sale price. This means the aggregation of procurement by giants like Wal-Mart hasn’t helped farmers. In India too, biggies like Reliance and ITC haven’t been able to help farmers, as big corporate groups rely on new generation middlemen who are more expensive than the old traders.
We need a new culture in agriculture. We need new investment patterns and new forms of subsidies. Here are some suggestions: create facilities closer to production and procurement areas; set up subsidised warehouses and cold chains near the fields, not in cities. This will assure optimal prices for farmers, less seasonal fluctuations of retail prices for consumers and reduce artificial inflationary situations.
The other problem is of nutritional security. We are obsessed with production of foodgrain but it does not address the nutritional requirements of small farmers and their families. Traditionally, they grew rice, wheat, sorghum, millet and lentils and that guaranteed not just food but nutritional security. Now they grow loss-making cash crops and stand in serpentine queues in front of ration shops to buy rotten rice. It might be a good idea to provide subsidies to farmers (cash vouchers) so that they can opt for the organic route instead of the GM option. And why not a high minimum support price for nutritious cereals and essentials like onions?
Manoj Kumar is CEO, Naandi Foundation, Hyderabad The views expressed by the author are personal.