Economics India

Saturday, January 28, 2006

Farmer Suicides in India

I propose to shortly put out a brief analysis of the farmer suicide syndrome in India for purposes of discussion in response to Chandra's recent comment on the poverty issue that is being discussed in this blog.

The growing numbers of farmer suicides in India is a tragic topic -- in an environment of a rapidly growing economy, involving complex political, social and economic issues --- especially in the area of rising disparity in incomes in rural India per se and between rural India and Urban India.

There are many reasons that lead farmers to commit suicide but perhaps the most prominant of those are those which affect farmer incomes and increases his indebtedness to money lenders.

These include:

-- crop failures due to irregular and inadequate rains, drought or flooding; lack of crop insurance in terms of coverage and products that are cost effective;

-- lakc of access to working capital due to failure of the formal credit system and/or fully used up credit rating and eligibility with local money lenders and family friends;

-- farmers' resultant inability to buy inputs such as seeds, fertilisers, draft power and water;

-- serious problem of spurious or poor quality seeds and fertilizers that are sold in the market fradulently using brand names; severe land fragmentation and resultant uneconomic farm sizes;

-- slow progress on land reform; large number of land-less labor exacerbated by lack of employment opportunities in rural areas;

-- ineffective implementation of public employment guarantee schemes; and

-- undeveloped and inefficient marketing infrastructure; and government procurement and support price policies though prima facie helping some farmers, leading to serious market distortions and inequalities.

Small and marginal farmers' economic situation is additionally exacerbated by age-old social enviornment that involves payment of huge dowries in marriages of daughters, and huge expenditures on obligatory feeding of village communities in the event of a death in the family. An integrated social safety net for farm households is yet to emerge in India.

Nevertheless, the problem of accurate statistical assessment of farm suicides remains: we really do not know how serious is this problem vs. other suicides in rural areas and those in rural areas vs. urban areas.

Or is there much media hype on this issue -- especially for political reasons? It is well known that the issue of farmer suicides led to the fall of the government of Chandrababu Naidu during AP's last assembly elections -- Mr. Naidu's remarkable work on modernizing the provision of public services did not help.

At the national level, BJP which made a big story of "India Shining" during the last Loksabha (Parliamentary) elections ended up in losing power at the Center on account of farmer perception that they were not getting a fair deal in an otherwise growing economy. All this seems to suggest that India's programs for rural areas are screwed up in many dimensions, excerbated by fast-melting social support framwork at the village level that was in the past readily accessible to farm families. The village communities generally did not allow a hunger death to occur among them.

We need to get back to all these issues but with a constructive effort toward nailing down an approach that is practical and capable of implementation not only with more efficient and effective public sector involvement but with greater community ownership and involvement.

7 Comments:

  • In order to get a bigger perspective about farmer problems in India one should visit farmers in other countries. In one of my visits to the farmers in Iowa State in the US I found that several family farms (less than 150 acres) had difficulties in coping up with the competition created by the corporate farms (as big as 2000 acres). Remove few zeros in the data for developing countries but this picture will not change. The corporate farms we visited were able to face the "Risk Factor" of farming much easily as compared to the family farms. Several farmers told us that the family farms in the US are on the decline while the corporate farms have been flourishing. There is something stikingly painful about globalization and that relates to the issues of the economies of scale corporate farms enjoy. It can be easily shown that the corporate farms in the countries of latin america have different impact on poverty as opposed to the agricultural growth coming from growth of small-holders. The same is the case with large scale plantations in Africa or the Philippines.

    The first green revolution in India and many other countries of Asia was created by small-holders. Are we including them in our present quest for globalization and growth or we want quick fixes at the cost of small-holders? Why there have been more farmer suicides these days while no one talked about this 20 0r 40 years back?

    What policies are needed to keep the ancient culture of farming alive? The government needs to carefully study this and come out with a strategy that maintains both the corporate farms and small holders on a same footing. Otherwise even in the richer farming areas of India we will witness more and more famer suicides.

    By Anonymous Anonymous, at 5:40 PM  

  • Great comments by the Anonymous. Clearly, in India, risk management techniques and systems are very much undeveloped, exacerbated by the lack of well-defined disaster management policies, though India in recent times, is able to better handle emergency situations than before.

    By the way, America's coporate farms are mostly family-owned, they are incorporated mainly for tax reasons and if it becomes unavoidable to declare bankruptcies.

    On economies of scale, there is considerable research work available, which demonstrates that small farms can indeed remain economically and financial viable even if they do not enjoy the conventional economies of scale available to large farms. I will one day present the findings of these studies.

    Globalization is indeed a big challenge for all farms in India, large or small, given that the productivity of Indian agriculture remains low relative to what other countries have achieved including South Korea and China.

    Will small farms survive in the quest of globalization? Yes they probably will, to serve substience and local economies but not necessarily as constituents of global commercial agriculture. We see evidence of this in India as major corporations are now moving into commercial agriculture with potential for exports, especially in horticulture and flowers.

    It will be interesting to watch how India's agricultural and land reform policies respond to emerging challenges of globalization.

    By Blogger Ramesh G. Deshpande, at 8:46 PM  

  • Dear Dr. Deshpande:

    I am surprised that you are dismissing so easily the problems of family farms in this globalizing world. Look at the family businesses too! The concept of "a family" does not exist in the globalized world. Don't you see that globalization is for the corporate sector to become rich, whether it is India or US or UK, it does not matter. In India rich is becoming richer and in the US same is the case. Have you seen the recent report on growing inequalities in the US? If you provide so many broad answers for solving problems of India you are definitely missing the main point.

    A backlash to globalization will occur sooner or later. It will occur not in India or Nigeria but it will occur right here in the US when the traditions will be taken over by the finance and when the American culture will be sold for big businesses who are only worried about buying bigger and bigger houses, may those be for their living, or may those be for their recreation. Are you familiar with the Enron Cases around the world?

    Any way, I would like to suggest to you to be fousssed and do not provide answers to help poor which actually help big houses.

    Anonymous Group

    By Anonymous Anonymous, at 2:59 PM  

  • Dear Dr. Deshpande:

    I am surprised that you are dismissing so easily the problems of family farms in this globalizing world. Look at the family businesses too! The concept of "a family" does not exist in the globalized world. Don't you see that globalization is for the corporate sector to become rich, whether it is India or US or UK, it does not matter. In India rich is becoming richer and in the US same is the case. Have you seen the recent report on growing inequalities in the US? If you provide so many broad answers for solving problems of India you are definitely missing the main point.

    A backlash to globalization will occur sooner or later. It will occur not in India or Nigeria but it will occur right here in the US when the traditions will be taken over by the finance and when the American culture will be sold for big businesses who are only worried about buying bigger and bigger houses, may those be for their living, or may those be for their recreation. Are you familiar with the Enron Cases around the world?

    Any way, I would like to suggest to you to be fousssed and do not provide answers to help poor which actually help big houses.

    Anonymous Group

    By Anonymous Anonymous, at 2:59 PM  

  • The Anonymous & Group: Thanks for your very pertinent comments. At this time, we are articulating issues in Indian agriculture and not necessarily providing answers, which are indeed very complex with social, political, environmental, and economic implications. One of the most important implications is "how small farms or family farming would survive" --- and if small farms must survive, at what cost to the Society? The issue is: how do we make small farms or family farming competitive to face the forces of globalization? or in simple terms of international trade that is free of barriers? Continuinng with existing tarriffs or imposing new ones may be a way out but it is not without costs and it cannot be an unilateral approach. We need to sort out these issues and develop right policy choices that will make small-scale agriculture competitive and reduce social costs involved in protecting it during transition. What do you think? Please keep visiting this blog and contribute your thoughts to the process of developing right policy approaches and choices that will ensure small farms and family farms remain sustainable? I am sure we will get there.

    By Blogger Ramesh G. Deshpande, at 4:46 PM  

  • Please refer to my earlier comment on this post in which I say: "On economies of scale, there is considerable research work available, which demonstrates that small farms can indeed remain economically and financial viable even if they do not enjoy the conventional economies of scale available to large farms. I will one day present the findings of these studies". In Russia, for example, following the privatization of large state farms (which ranged in sizes from 4000 to 6000 ha, several small farms emerged and all of these proved to be economically viable and financially sustainable, even during the difficult macroeconomic environment of 1990s.

    By Blogger Ramesh G. Deshpande, at 5:39 PM  

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