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Re: Farm Policy



Hi Friends:
	First of all, my thanks to Sitaramayya Ari for challenging
the group to think about a real life problem. It is indeed very heart-
rending to read the plight of the farmers. But as people trying to 
'solve' this (and many more like this) problem, we need to think 
dispassionately and arrive at viable 'policies.' This needs an unemotional
approach akin to that of a doctor, who is performing a gory surgery.
I hope everyone will continue to raise such issues and give focus to the
group. I tried to write down what came to my mind; please comment. 

>
>Since the govt was not giving loans, the farmers borrowed money from
>private sources at the rate of 30-40%. No, that was not a typo. Most
>farmers do not have anything to put up as a collateral for borrowing
>48,000 rupees (needed for 4 acres, for example). The collateral most often
>used was the land itself, and jewellery from the wife and daughters. 

	We talked on this group ealier regarding effective usury laws;
I guess we never put it on our manifesto. I think a sensible law would
decree that no one can lend money at a rate higher than the existing
market rate plus a couple of percentage points. This should take care of 
this problem. Sanjeev, can you add this to the manifesto at the appropriate
place?

>
>Two major reasons why the farmers were driven to suicides were given as
>follows: (1) the pesticides which were used were ineffective. It is said
>that there was no control on the quality of the sold pesticides. Anybody
>with a white powder in a sac could sell it as pesticide. 

	We have talked on this group ad nauseum why we need effective
institutions that can check on this type of problems. Not only with 
pesticides, but with every product we should make sure that the producer
adheres to strict quality control. I am sure such laws, especially in the
case of pesticides, already exist. If we, sitting in the US know about this,
the farmers who're actually using them ought to have known this truth. Then
why the local officials in the agricultural dept. sat like mummies is not
hard to guess. 

>(2) the price of
>cotton, which was at 2300 rupees per bale, dropped to nearly 1600-1700.
>The average acre of crop was said to bring about 9 bales of cotton
>fetching about 20,000 rupees, and bringing a profit of about 8000 Rs per
>acre. But the dual problems (reduction in yield because of ineffective
>pesticides and lower price for cotton) inflicted losses on nearly ever
>farmer. 

	I am not sure what a policy maker can do about this. We can 
definitely have crop-insurance to take care of such problems, but that
is not to be run by the Govt. 

>
>For a person who lives off the land the ambitions in life are rather
>simple: to pass the land on to the kids, and to keep the family fed. Now,
>the cotton farmer can't look into the eyes of his kids. He lost what he
>was hoping to give them. He can't look into his wife's eyes either. He
>just lost the jewellery her parents gave her. Suicide is not such a bad
>alternative for this guy now.
>
>The guys who gave the loans at 36% are very often the same folks who sold
>pesticides. I don't know for sure but I would not be surprized if they
>were also the cotton merchants who bought the crop. It would not be a
>surprise to find patriotic capitalist NRIs in this bunch.

	I am not sure if the Govt. should take it upon itself to micrmanage
at this level. Markets, if allowed to operate without any meddling, should
determine fair prices for the produce. Based on the projected yield and 
selling price, the farmers would decide what they want to plant and in how
many acres. If the production doensn't match ones expectations due to bad
weather or some such calamity, insurance cover would take care of this 
problem.

>
>Now this is not a story told to gain your sympathy for the farmers. 
>Please tell me what you think is wrong with the system. What would you do
>to solve the problem. One of the lessons I learnt from my argument with
>Sanjeev is that the farmers would have to wait till prosperity tickles
>down from above. Please don't waste my time and yours with that. There
>will be no farmers left by that time. 
>
>Sitaramayya Ari.

Sitaramayya, what more do you think needs to be done at the policy-making
level?

Prem.