Why Delhi smog is a call to address India’s farm crisis
India’s farm crisis requires a well-crafted strategy, not knee-jerk reactions or quick-fix solutions
As Delhi chokes on smog, the spotlight has once again been put on the farmers of the neighbouring states of Punjab and Haryana and their practice of burning farm stubble during the post-harvest season.
Faced with the prospect of employing scarce and costly labour to dispose the stubble, or purchasing an expensive machine to do the same job, or the unpleasant but effective alternative of burning what is left in their fields after the harvest, farmers seem to be preferring the last option for a quick and dirty end to the agricultural season. While Delhi’s residents seethe in anger at such a practice, it is worth considering the intense margin pressures that have led farmers to adopt such a practice in the first place.
As the chart below shows, farm costs have been rising over the past few years, and labour costs have seen the sharpest rise over the past decade. In the early years of the past decade, the combination of favourable weather, a global commodity boom, and high minimum support prices for rice and wheat ensured that farmers producing food grains could absorb the rising costs, and pay more for the labour they employed. But with these tailwinds turning into headwinds for Indian farmers over the past few years, it has become increasingly difficult to bear the escalating labour costs.
Faced with declining returns and rising farm costs, farmers have attempted replacing farm labour with machines. But they seem to have hit against a wall of diminishing returns already. As the chart below shows, capital productivity has declined sharply across Indian farms.
The erstwhile Planning Commission had warned of the unsustainability of this kind of capital-adoption in Indian agriculture. “Labour saving mechanisation, a significant contributor to the sharp increase of private investment in the Eleventh Plan period, was a natural response to tighter labour markets and rising wages,” the Planning Commission said in the 12th five-year-plan document. “But, while mechanisation helped farmers to cope with labour scarcity, it exacerbated a decline in capital productivity. Private capital stock in agriculture has increased twice as fast as agricultural GDP since the Ninth Plan and, although mitigated by terms of trade gains and a debt write-off, continued investment with declining capital productivity may not be sustainable”.
The ill-planned mechanization of farms has meant that despite increased use of capital, India’s farm productivity continues to grow at a slow pace. As the chart below shows, India is far behind China when it comes to total factor productivity (TFP) growth. TFP measures how effectively all the inputs of production are combined to produce a unit of output.
The annual stubble burning ritual is only one of the many symptoms of the crisis facing Indian farmers. In fact, the problem of farm stubble is a result of use of mechanized combine harvesters which were adopted to substitute more expensive human labour. Read more.
The absence of a well-thought farm policy for promoting sustainable farm practices has led to a degradation of key resources such as soil and water, and the ill-planned use of machinery without commensurate returns has put a heavy financial strain on farmers. The inefficient use of resources across Indian farms is a threat both to the country’s food security and its ecology.
While banning stubble burning might provide temporary relief, it is important for our policymakers to realize that there is no alternative to a well-designed agricultural strategy to raise farm output and incomes exponentially.