In an unprecedented move, farmers in East Godavari and adjoining districts of Andhra Pradesh declared a crop holiday last season, refusing to cultivate paddy in this fully irrigated region of the state. Farmers say the reason for this drastic step is that cultivating paddy has become unremunerative and they are left with no other choice. The agrarian crisis and its neglect by successive governments are responsible for the low profitability in agriculture. This issue has grabbed media attention.
Unfortunately, the real story behind the kind of “industrial action” by farmers is much more complex than what a simple reading of facts suggests. It is a fact that Indian agriculture has always been in a crisis, with the profitability of crop cultivation being far lower than what the cost of cultivation studies would like us to believe. In that sense, the Indian farmer has always been vulnerable to various shocks and fluctuations, natural as well as man-made. The crisis in Indian agriculture peaked between 1999-2000 and 2004-05, when maximum number of farmer suicides occurred.
The fact of the matter is that there has been a general improvement in the situation after 2004-05. Although this was largely a result of successive good monsoon rains since 2004-05 (barring the drought of 2009), government policy had a role to play in the agrarian revival. Not only did agricultural investment pick up significantly after 2004-05, offtake of agricultural credit increased by more than three times. This period also saw increase in the minimum support prices (MSPs) for wheat and paddy by almost 70% compared with the almost stagnant MSP between 1999-2000 and 2004-05. Not the least, the farm loan waiver of almost Rs 70,000 crore helped in easing the burden of highly indebted farmers.
Photo by Somasekhar/Mint.
The result was better-than- expected agricultural growth, with the average growth rate being 3.5% after 2004-05 compared with a rate of 1.5% between 1999-2000 and 2004-05. Significant improvements in yields were observed in many crops. Cotton is a notable example. So much so that the worst drought of the last three decades—in 2009—did not see any decline in output compared with the almost 7% decline during the last drought in 2002-03. But more importantly, the terms of trade moved significantly in favour of agriculture after 2004-05, ensuring better prices of output for farmers. The last three years of more than average procurement have ensured that farmers continue to enjoy the benefits of higher MSP for paddy and wheat. Clearly, there is little evidence of worsening agricultural conditions after 2004-05.
This is less so for the fertile delta region of Andhra Pradesh, which has been at the forefront of the Green Revolution. This is also the region that contributes a significant share to the overall paddy procurement in the country. Farmers in this region were, incidentally, the largest beneficiaries of the farm loan waiver. Then why are these farmers protesting?
East Godavari and its adjoining areas, although well-endowed and better supported by agricultural policies, are also sites of serious inequalities in landholding. While no official figures are available, numerous field studies suggest that majority of the land in this area is tenanted. Rough estimates from secondary data sources as well as primary surveys suggest that, on an average, the extent of tenanted land is 50% and in many villages it is close to 70-80%.
Although there are tenancy laws in Andhra Pradesh that have existed since independence, it is also true that they have not been implemented in the right spirit. There is no system of recording tenancy, with most contracts being oral and no legal right of cultivation. Although most of the land is cultivated by tenants, they are unable to get loans from any institutional source due to the absence of recorded tenancy or legal rights. In most cases, the landlords also double up as moneylenders, charging exorbitant rates of interest, a classic case of interlinkage of factor markets in agriculture. With increasing monetization of inputs and an increase in input costs, such as those of fertilizers, exploitation through moneylending became rampant. As a result, while the area as such has not seen any worsening of agrarian conditions, farmers have not seen any improvement in their income and have, in many cases, witnessed a decline in real income.
The state government knew this, and successive farmers’ commissions have advocated for according tenancy rights to tenant farmers, at least for availing institutional loans. The state government finally decided to enact a legislation in June, making it mandatory to record tenancy for the purpose of availing institutional loans. Although it succumbed to the landlord lobby and made it categorical that the loan passbooks given to tenant farmers will be for one year only and will not give them any legal right on the land, the fear of tenancy rights translating into legal rights to cultivate continued to remain in the minds of the landlords. The reality is that the present crop holiday is not a “tool-down” by the tenant farmers, but has been a case of “lockout” by landlords. The poor tenants have no choice but to abide by the dictates of the landlords if they have any hope of continuing to farm in the future.
Himanshu is assistant professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi.
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