Out today, the second — and concluding — part of our report on why Amul, India’s much-loved dairy federation, is in trouble.
a long time back, when i was at businessworld, i had written my first story on agriculture. that was on fixing the mandis. i had met sharad pawar for that story. it was 2004. he was new to the agriculture ministry. i was young and impressionistic. the story that emerged was technocratic and naive.
almost ten years have passed since then. as things turned out, pawar stayed agriculture minister between 2004 and 2009, and then again from 2009 to 2014. that is ten years. the longest anyone has been agriculture minister in the history of independent india. even more remarkably, it has been an unbroken ten year stretch.
given the crises in india’s farmlands, the length of pawar’s tenure in the agriculture ministry, and his reputation as someone who understands agriculture, what has his stint been like? in the last few weeks, we have seen the odd news report and a flurry of ads saying that agriculture in india has flourished under him. these reports and ads have pointed at the jump in agri production, exports, etc, to support their claims.
in today’s story, ET argues that while production numbers have gone up, this period has also seen an increase in market distortions like cartelisation and price manipulation. not to mention huge, puzzling flux in exim policies. at the same time, long-standing problems in indian agriculture, like weakening soils, collapsing groundwater levels, etc, have remained ignored.
you might also want to see this email interview with Pawar — it formed a part of the reportage for the story.
ps – for a more detailed look at some of the changes mentioned in this story, click on these links.
1. in the last 15 years, India’s farmlands — countrywide — have seen a puzzling spike in prices.
For the longest time, the price of farmland in Vadicherla stayed below Rs 20,000 an acre.Ten years ago, that began to change. “In 2003, an acre cost Rs 25,000. By 2006-07, it had climbed to Rs 2 lakhs,” says Byru Veeraiah, sarpanch of this village in Andhra Pradesh’s Mehbubnagar district, “By 2010, an acre cost Rs 3 lakh. And Rs 12 lakh by 2012.” It was a puzzling spike. This village with its 700-odd families is nowhere near big cities. Warangal, the nearest big town, is 50 kilometres away. Nor is it close to any highway. The Vijayawada-Hyderabad highway is a good 15 kilometres away. Nor is any farmland in the village or its vicinity being acquired by the government or companies.
Vadicherla is not alone. In the last ten years, the price of an acre in Ramavarapadu, a village next to Vijayawada, has leapt from Rs 7 lakh to Rs 7 crore. Or take Mardi, 15 kilometres off Solapur, Maharashtra. The price of an acre in this village, says Prakash Arjun Kate, a local, has “climbed from Rs 20,000-25,000 ten years ago to Rs 10 lakh now.”
Ramavarapadu, Vadicherla and Mardi are not isolated instances. Microstudies and anecdotal information suggest almost all of rural India is seeing a similar climb in farmland prices. If the trend suggested by the villages — and the microstudies and other anecdotal inputs — is indeed correct, then a large change is playing out in rural areas — their farmland markets are getting activated.
And the question is: Why now? And why are markets across the country waking up at the same time? And what does this mean for food security, rural livelihoods, migration patterns, you name it?
2. given these myriad land transactions, how much land is leaving agriculture? we cannot say for sure.
due to the great rural land grab, how much land is leaving agriculture? that is hard to say. the government says there is hardly any change — but that is unlikely. some say enough newer lands are being brought under farming to make up for the loss of farmland. but there is little mathematical work to back those claims up. puzzling, the whole thing.
3. then, india’s agricultural soils are weakening fast.
In his fields, Badhia Naval Singh , a farmer tilling 8 bighas of land in the Bagli tehsil in Madhya Pradesh, has been seeing something strange for a while now. Earlier, if he pulled out a tuft of grass, he would see earthworms . “Ab woh dikhna bandh ho gaye hain (they don’t show up any longer),” says the 45-year old .
Also, he says, when he ploughed earlier, the soil would break into soft crumbs and fall along the long furrows the plough left behind. Now, the soil is harder and the plough uproots a succession of large clods – dheplas, in local parlance – from the earth. The changing nature of soils – for the worse – is a refrain with farmers in these parts, even across the country.
4. and one reason they are weakening is india’s dunderheaded fertiliser policy regime.
Take NPK. In last year’s kharif, the NPK ratio was around 4.4:2.6:1. This kharif, it has worsened to 10.8:4.9:1… What about micronutrients? It’s hard to say. The fertiliser ministry simply does not collect data on micronutrient consumption. However, data collated by industry body Fertiliser Association of India (FAI) shows a puzzling trend. The consumption of zinc, ferrous and copper sulphates showed a modest rise over the last seven years, but that did not hold good for nutrients such as manganese sulphate, borax acid and molybdenum.
5. in other news, dryland areas continue to get ignored — in research, groundwater crisis, soil health…
The green revolution came in the sixties. Tasked with ensuring food security, it pushed high-yielding varieties (HYVs) of wheat and rice over jowar, bajra et al. It began in the floodplains of the north. Where, as canals came up, farmers, realising rainfall risk was a thing of the past, switched to HYVs. In the drylands, the story evolved differently. The green revolution came here in bits and pieces. The seeds and fertilisers reached. So did the exhortations to farmers to adopt ‘modern’ farming. What did not reach was water. Predictable water supply is something the farmers created for themselves. When electricity came, they invested in groundwater pumps.
What followed was transformative . In Malwa (MP), for instance , till the early-1970 s, farmers grew jowar during the rains and Malwi Ghehu , a local wheat variety, after that. Once the pumps came in, farming became a yearlong activity. Cash crops like soya displaced jowar. HYVs of wheat displaced Malwi Ghehu. Below the Malwa plateau, the same set of changes played out more recently, as groundwater pumps came just eight years ago. This is the story across India. Groundwater (tube wells) has been the mainstay of addition to irrigation resources.
It’s a fairytale that is winding down now. India’s dryland areas are seeing soils weaken, groundwater levels collapse and rainfall get increasingly erratic. Worse, farmers cannot go back to the old modes of farming that hedged risk far better than monocropping ever can.
6. and then, there are the market distortions. the story out today gets into some detail on those. last year, et did a quick and dirty story on the onion crises.
This January, the competition regulator sent an independent report to the ministry of agriculture on why onion prices spiked abruptly in 2010, a pattern that is playing out again today, with prices ruling at Rs 60-80 a kg for the last two months. This 86-page report, one of the clearest descriptions of how India’s agricultural markets function, made some stinging observations: traders colluding and acting like a cartel, the unequal relationship between traders and farmers and exports not being calibrated to domestic demand, all being perpetuated by loopholes in the rules.
While this report, titled ‘Competitive Assessment of Onion Markets in India’, studies a crisis that happeend three years ago, it warns of why, unless systemic change is not effected, the spike in onion prices will keep happening in the years to come, especially at this time of the year. This report—commissioned by Geeta Gouri, member, Competition Commission of India, and prepared by researchers at Bangalore’s Institute for Social and Economic Change (ISEC)—has remained in the ministry’s cold storage. “There has been no response from the ministry at all,” rues Gouri.
7. and then, there is agri credit. the puzzle here: in the last ten or so years, agri credit has boomed. but output has not risen proportionately. where has the money gone?
April and May are months of waiting and organising for Indian farmers. As they wait for the monsoon rains to plant a new crop, they are organising money to buy seeds and fertilisers. This suggests that bank loans to farmers should surge during this period. But data shows otherwise.
Between April 2009 and January 2010, for example, loans outstanding to the agriculture sector stood at Rs 3,00,000 crore, according to research commissioned by the National Bank for Agriculture and Rural Development (Nabard). This surged to Rs 8,00,000 crore at the end of March 2010, only to drop back to Rs 3,00,000 crore in April. “We expected farmers to take 50-60% of loans during the kharif (monsoon crop) season,” says Prakash Bakshi, chairman of Nabard. “But neither disbursement nor repayment have any correlation with the normal cropping season.”
There are several such anomalies in farm-sector lending. For instance, between 2000 and 2010, according to the Reserve Bank of India, farm loans increased 755% to Rs 3,90,000 crore. And Budget 2012 has increased the agri-lending target for 2012-13 to Rs 5,75,000 crore, from Rs 4,75,000 crore in the previous year. But productivity gains during the same period-18% growth in farm yields between 2000 and 2010-don’t suggest an increase remotely close to that. Neither do sales of inputs like seeds, fertilisers and tractors.
today marks two years since shashi rajagopalan or, as i called her, dr rajagopalan, passed away.
for more on her and her work on co-operatives, click here.