How the state and the market failed farmers
Farmers continue to be vulnerable to frequent episodes of losses that neither the state nor the markets have been able to mitigate
The dramatic long march to Mumbai involving thousands of distressed farmers on 12 March is a remarkable feat of peaceful protest against the state, given its apathy towards farmers’ distress as well as its failures in safeguarding tribal land rights. However, what is surprisingly missing in this poignant narrative is the culpability of the market in the mess that the agricultural profession is in today, as well as evidence on whether, and how, the state and market have responded to the agrarian crisis that germinated over a decade ago.
Ten years back, as I embarked on my doctoral research at the Indira Gandhi Institute of Development Research (IGIDR) in the context of a protracted agrarian crisis, I tried to understand the risk and vulnerability of farm households. My fieldwork was concentrated on five villages of Wardha district in Maharashtra, where I studied 120 farmer households over three years, 2009-12, to generate panel data.
Growing commercial crops, such as cotton and soybean along with pigeon-pea, under rain-fed conditions was risky. Owing to their exclusion from institutional credit sources, the dependence on informal sources of credit, such as agricultural input dealers and kinship networks, was high. The level as well as specificities of indebtedness were also alarming. I found significant evidence on the vulnerability of households to income shocks from weather, and health shocks, among other factors. With limited insurance against unforeseen events, small and marginal farmers were at greater risk.
By 2012, genetically modified Bt cotton technology, which was commercialized in 2002, had attained near-universal adoption. Although farmers reported a general reduction in bollworm insect infestation, and, hence, the use of insecticides, there was a proliferation of newer varieties of cotton hybrids and use of chemical pesticides was widespread. At a crucial time in the past decade, when a farmer could not learn by doing or observing due to rapid market changes, the agricultural extension system was near dysfunctional. Consequently, the input dealer was the de facto expert for advice on agricultural practices and new products. Although several non-governmental organizations (NGOs) were involved in popularizing sustainability practices, the inertia in overcoming the default high-cost external input-oriented system of farming was formidable. Fast forward to 2018. I have been revisiting the study region for the past three years in an attempt to understand the changes over time. Ethnography and an analysis of the rich panel data of around 600 farmers in Wardha and Yavatmal, in collaboration with Thiagu Ranganathan (currently at the Indian Institute of Management, Nagpur) and a team of committed field investigators, offers a grave prognosis.
Over the decade, the average size of land holdings has fallen. The riskiness of agricultural production continues to be high and market-based insurance coverage remains low. There has been an observable decline in groundwater levels and not much has improved in storage and post-harvest risk management. Farmers have adapted to yield and price volatility through adjustments in crop and acreage choices. Unfortunately, neither agricultural credit nor agricultural insurance markets have evolved to cater to their liquidity and investment requirements. While microfinance showed some promise over the period, it lost its sheen following incidents of high default rates following demonetisation in 2016. Dependence on informal credit continues unfettered.
While there has not been a noteworthy productivity gain, the cost of cultivation has increased in real terms. The real incomes from cultivation are not only low but also variable, not enough to sustain the livelihoods of farm households. Interestingly, despite the widespread use of Bt cotton, use of pesticides continues to be high owing to secondary pest infestations and pesticide resistance. The practice of using “cocktails” of chemical pesticides for application on plants without adequate safety measures is rampant. The spate of pesticide-related poisoning cases in Yavatmal last year is a ghastly reminder of the potential hazards of current practices. Over the decade, despite the implementation of a plethora of well-intentioned schemes, agricultural extension services have not improved. Incidents of supplier-induced demand and aggressive sales of products that farmers do not need are common. Anecdotal evidence as well as a survey of input dealers indicate that herbicide and micronutrient use have gone up following the advisories from input dealers.
Despite the limited non-farm opportunities, farmers continue to spend considerably on the education of their children as well as on health, notwithstanding the risky and uncertain incomes. The set of results after over a decade of research in a region where severe agrarian distress is endemic suggests that farmers continue to be vulnerable to frequent episodes of losses in their economic activity that neither the state nor the markets have been able to mitigate.
While political economy considerations dictate the states’ announcements of farm loan waiver or other ad hoc schemes, the market distances itself from any responsibility. It is almost as if a moral economy of corporatized markets prevails, quick to profiteer from the decisions of the farmer as a consumer in both good and bad times, but inert and passive in mitigating his losses when bad times befall him as a producer.
Sarthak Gaurav is a teacher and researcher at SJMSOM, IIT, Bombay.
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