Transcript Farmers’ Suicides and Agrarian Crisis in India

Farmers’ Distress In India
Srijit Mishra
[email protected]
Lecture to YSP participants, IGIDR
23 June 2009
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Presentation Format
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Suicide Mortality Rate
Risk Factors
Matrix of Issues
Twin Dimensions of Crisis in Agriculture
Risk Mitigation
Concluding Remarks
2
Suicide Mortality Rates
Male Suicides: Farmers vs Non-farmers, 1995-2007
20
19
18
17
16
15
14
13
12
11
10
1995
1996
1997
1998
1999
2000
Farmers
2001
2002
2003
2004
2005
2006
2007
Non-Farmers
3
The Risk Factors
NEUROBIOLOGICAL
(Predisposing)
SOCIO-ECONOMIC
(Precipitating)
The larger study on farmers' suicides focuses
on examining socio-economic aspects that
can be identified as important risk factors and
in providing some policy suggestions.
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Matrix of Issues
Issues
Demand
Supply
Output,
Price,
Income
Yield risk: weather, power,
pests, spurious inputs; Not
profitable; Poor returns
Increased price volatility; subsidies in
US/EU; low tariff; MSP not always
functional; Futures-virtual
Input
Supplier-induce-demand;
Deskilling; Increasing costs
– tragedy of commons
Poor link - research and extension;
unregulated private suppliers;
Inadequate pub investment
Credit
Formal – not timely;
repayment difficult
yield/price shocks; System
draws farmers into credit;
Consumerism
Decline in branches; decline in
agricultural/net bank credit (direct);
Increasing reliance on informal
sources at higher interest burden
Other
Dominance of lender/input
dealer; higher family size;
lack of social support
Interlinked markets; Non-farm option
is limited; Pub health response
(farmers); Pesticide avalability
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Two Dimensions of Crisis in
Agriculture

Agrarian Crisis
Threatening Livelihood
of Farmers
(particularly, the small
and marginal)
Farmer, people

Agricultural
(Developmental)
Crisis
Lies in the neglect of
agriculture
(designing of development
programmes and
allocation of resources)
Farming, goods
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Features of the Current Crisis

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
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
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Deceleration in production and productivity.
Waning profitability and poor returns.
High dependence on agriculture (64% rural persons
in 2004-05) – limited non-farm opportunities.
Low size-class of holdings (63% marginal, 2000-01).
Decline of public investment in irrigation and other
infrastructure.
Inadequate supply of credit from formal sources.
Failure of research and extension (rainfed/dryland).
Changing technology and market conditions has
increased uncertainties in product & factor markets.
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Deceleration in Production and
Yield
Crops
Production
Yield
TE 81-82 TE 93-94 TE 81-82 TE 93-94
to
to
to
to
TE 92-93 TE 04-05 TE 92-93 TE 04-05
Total
Foodgrains
Cereals
Pulses
Total Oilseeds
Sugarcane
Cotton (Lint)
3.0
3.2
1.5
6.6
3.9
4.2
1.0
1.2
-0.5
0.0
1.4
0.3
3.3
3.5
1.6
3.0
1.8
4.0
1.3
1.4
0.1
0.9
-0.2
-1.0
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Sectoral Share and Employment
Status of Rural Workforce
Rural Employment
1983
1999- 2004-05
2000
Agriculture
81.49
76.16
70.08
Non-Agriculture
18.51
23.84
29.92
Self-employed
61.37
55.76
60.2
Hired-Regular
7.15
6.83
7.1
Hired-Casual
31.49
37.41
32.8
Status of Rural Workforce
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Share of Agriculture in GDP and
Employment
Year
Share of Agriculture in
GDP at 1999-2000 Prices
Share of Agriculture in
Employment (UPSS)
1972-73
41.0
73.9
1993-94
30.0
63.9
1999-00
25.0
60.2
2004-05
20.2
56.5
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Monthly Per Capita
Income/Consumption by Size-Class of
Holdings, 2003
Income/Consumption (Rs)
9000
7000
5000
3000
1000
< 0.01
0.01 -0.40
0.41
–1.00
1.01
–2.00
2.01
–4.00
4.01
–10.00
>10.00
Size-class (hectares)
Income
Consumption
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Per capita per day returns, 2003 (Rs)
12.0
8.0
4.0
0.0
SC
ST
Cultivation, 2002-03
OBC
Farm Animals, 2003
Oth
All
Non-Farm Business, 2003
12
Farm Business Real Income Deflated
by CPIAL (1993-94=100)
105
100
95
90
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99
FBI
19992000
Trend
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Number of Poor and
undernourished farmers in million
Poor Undernouris
hed
1983-84
220
153
1987
170
121
1993-94
174
151
1999-00
123
180
2004-05
63
200
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Per worker productivity in
Agriculture across states
Per worker Prodctivity (Rs.'000)
40
30
20
10
0
BI
OR HP MP AP GU RA
UP
JK MA TN AS IND KA WB KE
1999-00
HA PU
2004-05
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Operational Holding and Area
(%)
Operational Holding
Operated Area
1960- 1981- 2003 1960- 1981- 2003
61
82 (59th) 61
82 (59th)
(17th) (37th)
(17th) (37th)
Marginal
39.1
56.0
71.0
6.9
11.5
22.6
Small
22.6
19.3
16.6
12.3
16.6
20.9
Semi-Medium
19.8
14.2
9.2
20.7
23.6
22.5
Medium
14.0
8.6
4.3
31.2
30.1
22.2
4.5
1.9
0.8
29.0
18.2
11.8
Large
All Sizes
100.0 100.0 100.0 100.0 100.0 100.0
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Irrigation Growth Rate
Period
Canals
Tanks
Wells &
Tube Wells
Others
Total
1970s
1.76
-2.53
4.25
1.19
2.21
1980s
1.33
-0.77
3.00
1.40
2.18
199091 to
200304
-1.09
-3.15
2.80
-0.49
1.06
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Captital Formation in
Agriculture
1980-81
Pub GCF
Agr/Agr
GDP
PVt GCF
Agr/Agr
GDP
GCF
Agr/GDP
GCF
Agr/GCF
1980-81
4.0
5.2
3.0
16.1
1990-91
2.4
8.1
2.8
11.5
1999-00
1.9
9.3
2.6
9.8
2005-06
2.5
10.7
2.4
7.3
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Share of credit disbursed to share
of area
2.5-5.0
acres
0.82
>5 acres
1981-82
Upto 2.5
acres
1.02
1991-92
0.54
0.75
1.42
2002-03
0.41
0.80
1.40
1.08
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Important Measures of Trade
Liberalization
External Trade
WTO: 1997, General System of Preference
1998, IPR for Agr products – seeds and GI
1998, QR dismantled for 470 products.
1999, OGL and QR extended to 1400 more.
1990 to 1997, tariff reduced from 100 to 30
Against min common access, but importing 2% of food requirements
Internal Market Seed: 100% foreign equity
Liberalisation
Fertiliser: Gradual reduction of subsidy
Power: charges increased but resistance by some states
Irrigation: Water rates increase, Participatory management
Credit: Undermining of importance of Priority Sector, Branches
declined, RRB priority lending diluted –restructured on commercial
considerations
Agr Marketing: Model Act, Forward Market
Fiscal
Reform
Tax reduction and public expenditure: grave implication for
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public investment in agriculture.
Evaluating Risk Mitigation through the
prism of Choice of Techniques
Ti: Xi →Yi; i=0,1.
T1>T0 if X1<X0 or Y1>Y0
(improvement if input-saving or output-enhancing
Now, if Y1>Y0 and X1>X0
(output-enhancing and uses more resources; further there
could be a change in composition of X)
and (Y1-X1)>(Y0-X0)
(net returns are higher)
But, (Y1/Y0)<(X1/X0)
(increase in output is lower than input – risk mitigation is more
difficult)
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Risk Mitigation: Alternative
Scenario
Yr
Traditional
Intensive
Sustainable
Input
Output
Net Returns
Consumption
CumSav
1
1.0
3.0
2.0
1.3
0.7
2
1.0
3.0
2.0
1.3
1.4
3
1.0
3.0
2.0
1.3
2.1
4
1.0
0.0
-1.0
1.1
0.0
1
3.0
6.0
3.0
1.8
1.2
2
3.0
6.0
3.0
1.8
2.4
3
3.0
6.0
3.0
1.8
3.6
4
3.0
0.0
-3.0
0.6
0.0
1
0.5
2.7
2.2
1.4
0.8
2
0.5
2.7
2.2
1.4
1.6
3
0.5
2.7
2.2
1.4
2.4
4
0.5
0.0
-0.5
1.2
1.2
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Evaluating Risk Mitigation: An
example
Characteristics
Net Returns
Costs
Cost/Returns
Insurance, 5% gross
(for crop loss <80%)
Yield, 85%
Revised Costs
Revised Net Returns
T0
T1 T1/T0, %
3930.0
13410.0
3.4
867.0
5720.0
27600.0
4.8
1666.0
14739.0
14277.0
462.0
28322.0
29266.0
-944.0
45.5
105.8
-304.3
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The Lesson
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Interventions that are thought to
address a part of the risk will also have
a cost dimension and it is in this that
instead of reducing ends up adding to
the risk.
With poor returns, the call of the hour is
to bring about an intervention or a mix
of products where costs should reduce
and returns should increase.
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Concluding Remarks
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Debt waiver ...
Challenge for technological and financial gurus is to innovate
products that reduce costs while increasing returns.
Address larger crisis of low returns and declining profitability (not
piecemeal).
Risk management should address yield, price, credit, income,
weather and other uncertainties.
Water availability with diversification in farm and also increasing
non-farm opportunities.
Improve research and extension, regulate private providers of
input and credit.
Organizing farmers through a federation of Self Help Groups
would help address an institutional vacuum.
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Selected Readings
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Bhaduri, Amit (2008a), Predatory Growth, Economic and Political Weekly, 43 (16), 10-14.
Bhaduri, Amit (2008b), Inaugural Comments, National Seminar on Health Equity in India,
Sarvodaya, St Pius College Campus, Mumbai (Organizd by SATHI, Pune), October 2-3,
2008.
Government of India (2007), Report of the Expert Group on Agricultural Indebtedness,
Ministry of Finance, New Delhi, (Chairman: R Radhakrishna).
Mishra, Srijit (2006), Suicide of Farmers in Maharashtra, Indira Gandhi Institute of
Development Research (IGIDR), Mumbai.
Mishra, Srijit (2007), Agrarian Scenario in Post-reform India: A Story of Distress, Despair
and Death, Orissa Economic Journal, 39, (1 & 2), 53-84. IGIDR Working paper version is
WP-2007-001.
Mishra, Srijit (2008) Risks, Farmers’ Suicides and Agrarian Crisis in India: Is There a Way
Out? Indian Journal of Agricultural Economics, 63 (1), 38-54. IGIDR Working paper
version is WP-2007-014.
Reddy, D. Narasimha and Srijit Mishra (eds.) (2009), Agrarian Crisis in India, Oxford
University Press, New Delhi.
Reserve Bank of India (2006), Report of the Working Group to Suggest Measures to
Assist Distressed Farmers, Rural Planning and Credit Department, Mumbai, (Chairman:
S. S. Johl).
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