The State should equip farmers to deal with market volatilities

According to the latest agriculture census, more than 86% of farmers own less than two acres of land

The symbolism involved in the use of force by the Delhi police to prevent thousands of protesting farmers from entering the national capital is difficult to miss. The political-economy of rural distress is threatening to destabilise India’s otherwise laudable economic performance in the post-reform period.

Bharatiya Kisan union farmers seen during the Kisan Kranti Yatra, in Ghaziabad , October 1(Sakib Ali /Hindustan Times)

An overwhelming majority of India’s farmers practise what can be described as subsistence agriculture. According to the latest agriculture census, which was conducted in 2015-16, more than 86% of farmers own less than two acres of land. The average size of an operational holding is just around one acre. These numbers have been falling over time. Non-farm jobs have not grown at the desired pace. This basically means that there is a large reserve of economically insecure population in the villages which believes that the state has an obligation to bail out the crisis-ridden agriculture sector. Almost all political parties have made it a habit to exploit this sentiment for short-term gains rather than unleashing structural reforms.

Positioning on issues such as farm loan waivers, subsidised electricity to run irrigation pumps, ensuring procurement prices or clearing arrears for sugarcane farmers — many of which were also included in the demands of Uttar Pradesh’s farmers who were marching to Delhi — is driven more by Machiavellian considerations rather than any considered policy. Angry farmers are just a one-sided effect of this malice which spans across the political spectrum. Diversion of scarce economic resources for such measures often overrides the need to enhance capital investment in agriculture, which hampers long-term productivity gains. Indiscriminate use of water pumps and fertilisers by farmers has seriously undermined ecological sustainability. Last but not the least is the question of achieving some sort of a synergy between the market and the State while making agricultural policy.

The last point is especially pertinent in the case of sugarcane farmers. A glut in domestic production of sugar, partly a result of enhanced sugarcane yields, and partly due to crash in exports thanks to slump in international prices, has created a serious liquidity crisis for sugar mills. This has led to non-payments of almost ₹13,000 crore. There is merit in the argument that the government should do something to bail out distressed sugarcane farmers. But such a policy should not perpetuate the current disconnect between domestic production decisions and international market conditions.

This government has launched important initiatives such as crop insurance and soil health cards, among other measures, to improve the conditions of farmers. But the more important challenge lies in equipping farmers to deal with volatilities of agricultural markets.