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Business News/ Politics / News/  Debt is driving Kerala’s farmers to suicide

Reeling under a mounting debt burden, farmers in Kerala’s Wayanad district, home to several plantation crops and accounting for nearly 22% of India’s total pepper production, are driven to commit suicides.

The Kerala State Farmers’ Debt Relief Commission, which submitted its report to the state government last week, acknowledges that the increasing debt burden owing to a fall in plantation crop prices had nudged 528 farmers to commit suicide in the last six years, though official figures are 371 between 2000 and 2006.

The commission, headed by former Kerala high court judge K.A. Abdul Gafoor, has recommended that the state government declare Wayanad as a “distress affected" district. If this is accepted, up to 75% of loan farmers have taken from primary cooperative banks can be written off. The government can also negotiate with commercial banks and the Reserve Bank of India to partially write off their loans and reschedule them by extending the term. The government set aside Rs160 crore in the last budget for debt relief, and the fund can be disbursed once the commission’s report is accepted and the area declared distress-affected. Gafoor says the panel will complete a similar report for Idukki district soon.

Since its formation under the Kerala State Farmers Debt Relief Act of 2006, the panel had held a series of meetings with local people, bankers, legislators, political parties and non-governmental organisations in two months before submitting the report.

Wayanad is one of the 31 districts in the country that got approval from the Union government in October 2006 for a rehabilitation package to revive its agrarian economy.

Besides, it also got approval for the backward regions grant fund of the Planning Commission. The commission extends a yearly assistance of Rs3,750 crore to 250 backward districts.

Spread over 2,131 sq. km, Wayanad has been a centre for cash crop cultivation with a cropped area of 213,000 hectares, with coffee and pepper being the main crops.

Net production of pepper, which was 13,083 tonnes in 2001-02, fell to 11,483 tonnes in 2005-06, pulling down productivity from 326kg per hectare to 277kg. Drought, pest infestation, falling prices and rising cost of cultivation pushed farmers to the brink of a crisis.

According to the report, farmers of this district suffered a loss of 89% of their cost of production that includes the total value of input cost for pepper cultivation over seven years and interest on loans taken from banks. The yield starts from the eighth year but was not enough to cover the cost given the very low price realization. Prices which ruled at Rs197 a kg in 1999 dipped to Rs69 in 2004 before rising to around Rs80 in 2006. The situation worsened with the spread of the foot-rot infestation, with pepper vines dying.

About 75% of the 84,644 ha under coffee is in the hands of 73,000 farmers with holdings of less than 4 ha. Total coffee production in Wayanad has been at the 50,000-tonne level, accounting for a little less than one-fifth of India’s annual production of around 275,000 tonnes.

Other crops such as tea, cardamom, ginger and banana have not been able to help farmers overcome the crisis, Gafoor says. Some farmers moved to neighbouring Karnataka and Tamil Nadu where they took land on lease.

But since they were not owners of the land, they could not avail of bank loans, and had to depend on moneylenders. According to figures available with the state-level bankers’ committee, over Rs292 crore of loans is outstanding from 78,782 borrowers.

This committee is a body of public sector banks operating in Kerala. Regional rural banks are owed Rs180 crore by 93,052 borrowers. The outstanding for primary cooperative banks was more than Rs750 crore at the end of 2005-06.

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Updated: 04 Jul 2007, 12:13 AM IST
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