Farm subsidies account for 21% farm income per hectare with continuing patronage of governments


Successive Governments have been trust worthy for farmers. The prima facie evidence of this trust is the response of farmers to green revolution in crops, white revolution in milk, yellow revolution in oilseeds, silver revolution in eggs carrying India to top rank in milk and second rank in all others in agriculture. It is the responsibility of farm leaders, opinion makers, policy makers to allay fears, apprehensions regarding the aims, objectives and vision of the new farm laws. The main objective is to reduce exploitation of farmers by middleman and traders in APMCs, as farmers are even to this day issued informal ‘white slips’ with no transparent price fixation mechanism, with illegal deductions, under cover sales and usurious interest for cash loans rendering farmers in the web of interlocked produce and credit market.

Still a few farm leaders, economists are airing apprehensions of removal of MSP and entry of corporates, indicative of further exploitation of farmers. The continued trust in Government is established with the ever-increasing support to farmers. The subsidies from the Government of India are Rs. 70,000 crores towards fertilizers, Rs. 20,000 crores towards farm credit, Rs. 6500 crores towards crop insurance, Rs. 24,000 crores towards MSP totalling Rs. 120,500 crores. And a similar support from State Governments of Rs. 90,000 crores towards electricity power subsidies, Rs. 17,500 crores towards irrigation subsidies, Rs, 6500 crores towards crop insurance subsidies totalling Rs. 1,14,000 crores. Public investment in agriculture through major irrigation projects by States, is almost equal to the annual farm subsidies of the Government of India. In addition, 50% of the food subsidies are granted to farmers under National Food Security Mission, as 75% of rural population covered. State Governments also waived farm loans of Rs. 1,22,000 crores. Thus, farm subsidies form about two percent of India’s GDP. The total input subsidy per ha forms 18.17% of the farm income per ha, the price support subsidy per ha forms 2.46% of the farm income per ha and the total subsidy to farmers form about 21% of their farm income. And this will continue.

The prima facie evidence of continued support to farmers since Independence, through MSP, input and power subsidies can be seen for instance in the cultivation of paddy crop by over pumping groundwater leading to over exploitation of Punjab aquifers, creating irrigation for 100% of net area sown, an unique facility. About 70% of the irrigation in India is met by groundwater resource, housing the largest number of irrigation wells (around 30 million), pumping twice that of the USA and six times that of EU is another prima facie indicator of the continuous support of Governments to farming.   

The apprehension of Corporates entering agriculture has no basis. In the US, more than 95% of the farms are still family farms, and corporate farming is yet to significantly enter the world’s most liberal capitalistic society with more than 200 years of existence. Agriculture is still a gamble on the monsoons and a gamble on the markets. Out of 1.26 million registered companies in India, 67 are agricultural companies, forming 0.008%; adding 7,374 FPOs, they still form a mere 0.59%.While farmers are conveniently using without any hesitation creating sizeable market for all products of corporates such as  tractors, power tillers, mixers, grinders, washing machines, refrigerators, motorbikes, sprayers, dusters, combined harvesters, mobile phones, WhatsApp, Google on the one hand, they are being continuously misled by ill informed / misinformed economists, farm leaders that corporates / big agribusiness corporations will exploit them, with no factual basis. When Kentucky Fried Chicken (KFC) entered Bangalore in 1995, the farmers’ associations agitated that KFC will take over the entire poultry industry and poultry farmers have to be subservient to the corporate! However, KFC created market for local poultry farmers. Why are we not wanting farmers to benefit from the technology and capital injection in agricultural markets, such as E-NAM for instance, while other sectors are benefiting

On the other hand, Simply Fresh, set up by two India IT professionals returning from Australia investing Rs. 130 crores are producing 10 tonnes of organic fruit, vegetables, medicinal plants per day in Hyderabad creating local employment; DeHaat is causing for 50% increase in farm incomes in Bihar, UP, Jharkhand and Odisha through access to quality inputs and market linkage to 4 lakh maize, wheat, banana, litchi, vegetable farmers. Stellapps in Bengaluru is digitising supply-chain for 20 lakh dairy small farmers from 33,000 villages, managing 11million litres of milk per day. Mahindra and Mahindra are producing 40% of India’s tractors. In Bidadi, Karnataka, Namdhari’s are extending Contract farming facilitating cultivation of quality vegetables by small farmers to export to EU. In Malur, Karnataka, enterprises such as Y-Look, More, Max-hifer, Future Consumer, Nijna Kart, Big Basket, Farm Fresh, are procuring quality fresh fruits with assured prices based on quality. Here, farmer-sellers are first registered and informed about a certain quantity and quality of vegetables to be supplied to outlets in advance, with cash proceeds deposited in bank account in time. 

India’s agricultural markets need injection of capital and competition with the Governmental commitment to reform benefiting the small and marginal farmers by providing them a voluntary transparent mechanism to choose the buyer of their choice in selling as well as in contract farming. Farmers can and will continue to sell in APMCs and benefit from MSP, and their right to sell outside APMCs and the right of buyers to buy outside APMCs cannot be infringed upon. The Government should accordingly not repeal the farm laws, and instead provide farmers the opportunity to realize greater proportion of consumer rupee which has been abysmally low (below 50%) due to market inefficiencies. 

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Views expressed above are the author’s own.



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