Why do farmers have to die?

December 31, 2009

The agriculture minister told parliament last week that 100,000 farmers had committed suicide from 1998 to 2003, a period for which his government had data. This means 45 farmers killed themselves each day across the country. There is now information that suicides may be on the increase. In the Vidarbha region of Maharashtra, unconfirmed reports talk about three suicides a day among cotton farmers, up from one a day a few years ago. But the matter goes beyond statistics. These are people desperate enough to take their lives simply because they cannot make ends meet and their self-respect won’t let them live.

The minister also told parliament that there were many causes for farmers’ distress — from poor monsoons and natural calamities, to high rates of interest, expenditures in health and education and growing pressures on land — which are making agriculture unviable. All the above may be true. But this enumeration of causes of death is clearly not sufficient. We need to do something. Fast. We need to do something big. Fast.

Cotton farmers took their lives in Andhra Pradesh in 2003 and 2004. Cotton farmers killed themselves in Punjab. Now Maharashtra is re-enacting this deadly drama. This is when cotton production in the country has touched a new high — 25 million bales (roughly 4.2 million tonnes). This is also when the textile industry is booming. In other words, there is no pestilence or natural disaster hitting production and the market is hungry. Then, why?

The answers are complex, varying from region to region. But all the bad things can be simplified into one truth: the cost of inputs has gone up for the farmer but farmers are not getting the price they need.

Are Indian farmers so inefficient that they cannot feed the markets? The National Sample Survey Organisation (nsso) has, in its situational assessment of farmers in 2003, provided possibly the most comprehensive data on farmer spending and indebtedness. This reveals that 81 per cent of the monthly average expenditure of a farmer is on farming operations — land, water, animals, equipment and inputs. It also shows that farmers take loans — mostly from professional moneylenders at ridiculous rates of interest — for capital and current expenditure on farming. The input costs vary from region to region, crop to crop, but are spread over spending on fertiliser and manure (which is substantial), labour (which varies), seeds (which is unreliable), pesticides (which can be substantial) and irrigation, which is impossible to compute.

In the case of cotton, the input costs in different regions are most variable for two things — seeds and water. Seed cost can vary from Rs 1,000 per hectare (ha), for unbranded hybrids, to as much as Rs 7,000 per ha for branded Monsanto-type Bt cottonseeds. In the case of water, canal irrigation costs differ in different states but more importantly, the cost of private capital used to dig wells or to buy diesel is unaccounted for and cripples the farmer. Currently, the economics are such that unless the cost of any one input is substantially reduced — for instance in Gujarat, where farmers buy cheaper but highly productive so-called illegal seeds at Rs 2,000 per ha and so earn profits — cotton is a highly risky business. The economics are tight in any situation — low-input and low-productivity farms in Vidarbha or high-input and high-productivity farms in Punjab. This simply means that there is no margin for anything to go wrong.

Market proponents will tell you this is not a problem. After all, farmers are growing cotton to feed the global textile market. India’s textile industry is upbeat because it can export to the rich world, now that the multi-fibre agreement has been dismantled. In the mid-1990s, the market was opened up — by 2002, duty on raw cotton imports were down to 10 per cent and imports were liberalised so that textile traders can buy raw material from anywhere. This is a sunshine sector and India is shining.

Then why is the sun sinking on the Indian cotton farmer? The cruel fact is that the market is free, but certainly not fair. The us and China are two of the world’s largest cotton producers, sharing roughly half the world’s market. The us government provides huge direct payments to its cotton farmers including a specific subsidy designed to compensate its farmers for the difference between the world price and loan rates. In this way its production costs are us $1.70 per kg, but its cotton is sold at us $1.18 per kg. In the European Union, Greece and Spain produce as little as 2.5 per cent of the world’s production but account for 16 per cent of the world’s subsidies. It is no wonder that they can dump globally. China also provides subsidies to its cotton farmers at us $0.23 per kg, which if you translate into the productivity of Vidarbha would mean roughly Rs 6,500 per ha to each farmer, or literally underwrite the cost of production.

But our China-struck industry and government forgets to emulate this country when it comes to protecting the poor. China also keeps the import tariffs high — at 40 per cent, which in turn forces its growing textile industry to buy domestically. The economics are simple: it subsidises its farmers and earns it back by increasing trade in textiles.

But our farmers face a pincer attack: on the one hand, little is done to invest in rural infrastructure which would reduce costs and increase profits — from water for irrigation to public health care. On the other hand, the market is stacked against them. They have to compete against global prices depressed by subsidies. Their own textile industry prefers to dump them to source this subsidised global cotton. The bitter truth is that farmers, not big textile traders, are killing themselves. The cruelty is that we can do nothing more than count the statistics of death.

— Sunita Narain