Indian Agriculture – crisis and cure

Part I: Capitalist agriculture is the graveyard for millions of peasants

As was expected, the Prime Minister promised many things to the desperate peasants of Maharashtra on his recent visit (30 June 2006) to drought affected areas of the state. These included:

(1)write off of overdue interest (2)rescheduling of agricultural credit over 3-5 years, with a year’s moratorium (3)setting up of an expert group to submit its report within 3 months to look into the problem of rural indebtedness

All three are the kind of promises that one has been hearing every time a prime minister has visited a tragedy affected area in the past 60 years.

The first two promises are pathetic in the context of the extent of the tragedy – some
tens of thousands of peasants have committed suicide in the last five years in just the three southern states of Andhra Pradesh, Kerala and Karnataka, and in Maharashtra as well; 600 peasants have committed suicide in Vidarbha district in the last one year alone on account of crop failure and debt. The relief being promised, even if it is actually realised by the peasants, is a pittance. What is required is to not only write off the interest but also the entire debt due to all lenders. Secondly, it is necessary to make available food and other necessities to every poor rural family. The government machinery has to be put on mission mode for the implementation of the above.

If the first two promises were grossly inadequate, the last promise is a travesty of the sincerity of the will of this Prime Minister and his government to deal with this colossal human tragedy. Why should the Prime Minister appoint an expert committee when barely 3 months ago, on April 13, a report has been presented to the government by a National Commission on Farmers, appointed by the government of India. Titled “Jai Kisan”, this report has outlined a Draft National Policy for Farmers in the context of the grave crisis facing Indian peasants and Indian agriculture.

When asked about the Report, the Union Agricultural Minister Sharad Pawar is reported to have responded: "Already three reports have been submitted. This is the fourth one, all running into more then 400 pages. Do I have the time to read all this?" The National Commission on Farmers had indeed submitted four reports in the last three years.

This response of the Minister reflects the lack of serious concern of successive governments for the millions of peasants barely eking out a living, and for what lies at the bottom of the acute crisis in agriculture, its root cause and how to eliminate that; instead, every ruling and opposition party plays political games in taking turns to offer relief "packages" that are at best palliatives.

What is the basis of the crisis in agriculture?

The crisis of Indian agriculture has been manifested in the increasing number of suicides in various parts of the country, in the phenomenon of villages being put up for sale, in the stagnancy of food production and declining crop yield. What is important to understand is that Indian agriculture and the condition of the majority of producers in this sector has been steadily deteroriarating. A majority of peasants lack the resources with which to face the uncertainties of commercial agriculture. They own small plots of land, they have no capital of their own and they do not make any profits in agriculture. The gains made by a small section of the peasantry during the Green Revolution have been exhausted as crop yields have declined rapidly; water resources available to and accessible by the peasants are extremely limited and the investment by the state has dwindled; getting water to the fields has been left to each individual peasant.

The steady decline in agricultural incomes across the country (see Box) reflects the squeeze between rising input prices and falling output prices that a majority of peasants are facing. It is made out by the bourgeoisie that input costs of seeds, fertilizers and power are subsidized. But a large number of studies have clearly shown that increasingly seeds have to be purchased from private seed companies, and that cultivators have to reckon with both increasing costs as well as dubious quality. It has been proven many times over that fertilizer subsidies go to the fertilizer companies and not to the peasants. The claim of free power is also an illusion. Peasants have to pay for diesel to pump water from their tube wells. In the absence of any investment in agriculture by the state, peasants have had to borrow heavily to sink their own tube wells.

In the case of output prices, import liberalisation has adversely affected commodity prices; for example, while global primary prices were rising up to 1996, they went into a prolonged decline thereafter, with between 40-50 per cent (cereals, cotton, sugar, jute) to 85 per cent (some edible oils) fall in unit dollar price between 1995 and 2001. Prices of goods like tea and coffee continue to fall and others have seen only a 10 to 15 per cent rise from the trough, in the last two years. Much of this is due to the dumping of commodities in the world market by countries like the U.S. where growers have benefited from subsidies, domestic support and export credit guarantee programmes. In most cases, the beneficiaries are large agro-processing corporations. The WTO order which the imperialists claim is fair and beneficial to all countries because it promotes "free" trade, has been set up and used by them to gain unfettered entry into markets around the globe.

The government has done nothing to guarantee reasonable output prices for the peasants whether they are growing foodgrain or cash crops. While only a few select crops are covered by the Minimum Procurement Prices (MSP), there is a threat of even these being withdrawn. Take the case of cotton - with the withdrawal of the Maharashtra government's Monopoly Cotton Procurement Scheme in May 2005, the price of cotton in 2005-06 season fell to Rs.1,700 quintal from the earlier Rs.2,250 a quintal; the latter, in any case, did not cover the cost of production for a majority of peasants.

While the urban working population is facing increasing prices of essential commodities in the market, the gains have been made by the biggest traders and not by the producers. The peasant is paid about a fraction of the final price, with several middlemen, i.e. traders at various stages between the producer and the final buyer making their money depending upon their money power. The bigger the trader, the more power he has to store, to manipulate the prices and to take advantage of the best prices while a majority of peasants have no wherewithal to wait for a favourable situation.

The increasing commercialisation and intensification of capitalism is agriculture has increased the vulnerability of the peasants to grave risks. They are producing for the market (which means higher costs of cultivation) but without any insurance against the risks they are exposed to. Any damage to crops on account of farming on very small plots, unviable for commercial and capitalist agriculture, means a loss of income and increased borrowings for household expenditure as well as for inputs for the next season.

In sum, the whole orientation is that of enabling private capital to exploit the vast resources of land and plunder the countryside for its own greed; there is no comprehensive agricultural plan which has as its objective both the satisfaction of the nutritional needs of the working population in the city and countryside and securing the livelihood of the producers.

Bourgeoisie’s reform agenda will further aggravate the crisis

The abysmal growth in agriculture which has been growing at 1 percent per annum in 2003-04 and 2004-05, has been recognised by the bourgeoisie as something that needs to be corrected, if the economy on the aggregate has to expand. But what the bourgeoisie sees is the potential in the land and resources that can be exploited by finance capital for profit. Towards this plan, which is in conformity with its overall vision of exploiting the resources of this country – natural and human – for the benefit of Indian and foreign finance capital, the bourgeoisie has taken steps to enable corporations to take over agriculture and make it a successful business. The entire focus of the bourgeoisie in addressing the stagnancy in agriculture is in putting the land to growing that produce which can bring the maximum profits to the food processing and food exporting private corporations. Corporations like Hindustan Lever, Pepsico, Cargill, and more recently Monsanto, Reliance, and others are being enabled by the government to enter into the business of selling seeds, contract farming, and setting up trading yards / mandis.

The most recent step in this direction has been the Indo-US Knowledge Initiative on Agricultural Research and Education Board with US retail monopoly Wal-Mart and Monsanto, to set the agenda for collaborative research and extension work in agriculture. This means that these corporations will be active in the manufacture and sale of inputs like seeds and pesticides and in introducing “technically superior” agri-practices supposedly in the interests of Indian peasants but in fact, to maximize returns for capital.

Monopolies are gradually gaining greater control over trade in agricultural output; all controls on trade and movement earlier exercised by the state are being liberalized and the path is being opened for Indian and foreign corporations. What is to be grown by the peasants is being determined by what will bring maximum profits to the capitalists. Contract farming – whereby these corporations will contract to purchase the product directly from the peasants – is the vehicle used to ensure that the peasants will grow those crops that the corporation wants to trade in or further process before trading.

There are also clear signs that this contract farming method will pave the way to acquisition of the most fertile lands by the agri-corporations; the bourgeoisie is moving towards creating the conditions for easy leasing and buying/selling of agricultural land which, till date, has been subject to limiting legislations in most of the states. Computerisation of land records is underway and attaching land of debtor peasants is the next step in realizing the hold of corporates over agriculture. The bourgeoisie’s plan is to gain direct control over a rising proportion of agricultural land through the liberalisation of buying and selling land without any of the present legal restrictions.

This agenda of the bourgeoisie is already being implemented and as this extends, the miseries of the peasants will only get exacerbated. The bourgeoisie’s claim is that its agenda is to make agriculture more efficient and profitable. But judging from experience so far, in India and in other countries, the cost for this will be paid for by the majority of peasants. The agricultural economy will only serve monopoly capital’s greed for maximum profits, and lead to greater ruination of peasants who will be excluded from the benefits.

(Part II of this article will discuss the Way out of the agricultural crisis)