Tuesday, June 20, 2017

They feed the nation, but cannot feed themselves. Why?

"Farm crisis is really a jobs crisis in disguise," wrote R Jagannathan. Farmers are agitating against a fall in earnings due to a fall inf food prices. Retail inflation has fallen to 2.18% and wholesale price inflation fell to 2.17% in May. While prices of cereals are still rising prices of vegetables and pulses are actually falling. Indian farmers have been shifting farming practices, so that horticulture production is higher than production of cereals. The government sets a minimum floor price for 26 agricultural commodities, known as the Minimum Support Price, or MSP. The government stocks foodgrains, so large scale buying by the Food Corporation of India increase prices of these commodities. There is no MSP for fruits and vegetables and these cannot be stored because of a lack of cold stores and reliable electricity supplies. Prices of some products have crashed by as much as 13.64%. Farmers have been agitating for waiver of their bank loans resulting in the shooting to death of 5 farmers by the police in Madhya Pradesh. The BJP promised loan waiver for farmers in UP before the assembly election in February. This was followed by the BJP government in Maharashtra and then the Congress government in Punjab. The BJP government in MP is resisting, hence the deaths. The Maharashtra government has announced loan of Rs 10,000 for farmers to prepare for the planting season ahead, including to those who own vehicles worth over Rs 1 million. MP has announced a subsidy of Rs 9,541 on electricity bills for farmers. "The politics fuelling the agitation is obvious: With the Narendra Modi-led BJP pummeling the Opposition in election after election, the anger in farmland has come as a godsend to political foes and even allies," wrote Jagannathan. Why not? The BJP won an enormous victory in UP by convincing the poor that demonetisation had hurt the rich, by neutralising their black money. In damning irony, the punitive effects of demonetisation is still depressing farm prices, leading to a rash of suicides by debt-ridden farmers. Why are our farmers in such distress despite repeated loan waivers amounting to trillions of rupees. Because 69.4% of farms are less than 1 hectare, so that they do not earn enough to survive and another 17.1% of households earn a surplus of Rs 891 every month which is easily wiped out in a crisis. The poorest borrow from local moneylenders and are not helped by loan waivers. So what is the answer? "The farm crisis is really a jobs crisis in disguise. If the jobs growth problem is handled, the farm crisis will abate steadily." And therein lies the main problem. Number of jobs is not growing, in fact some sectors are shedding workers. Having created the problems fellows have no idea what to do, so they throw taxpayer money and claim credit. Congress or BJP, nothing ever changes.

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