Not in the Interest of Poor
Critique of Christian Aid’s report on the Farmers’ suicides in India

Milind Murugkar
-  India  -
milind.murugkar@gmail.com

 

The release of Christian Aid’s report on the farmers’ suicides in India ‘India: Fields of Despair’   
(www.christianaid.org.uk/indepth/505caweek/index.htm ) has received wide publicity in India. Christian Aid’s reputation as an organization fighting for the cause of the poor and underprivileged is well known. It is welcome news therefore that a Western aid agency as renowned as Christian Aid has decided to investigate the emotionally and politically charged issue of farmers’ suicides. It is with high expectations that I downloaded the report. But it proved to be a great disappointment. There is much rhetoric and little analysis. The report argues that it was the government policy that drove farmers to commit suicides but fails to persuade. The most disturbing fact about the report is that its recommendations will in fact hurt the poor and are thus totally at odds with the noble intentions of Christian Aid.

Quite rightly, the report concludes that the reason for farmers’ suicides lies in their indebtedness. It gives many reasons for indebtedness leading to suicides. Let us consider them one by one.

Shift towards cash crops: Christian Aid’s (CA) report (page17) says "Farmers were encouraged to shift from growing a mixed bag of traditional subsistence crops to concentrating on single cash crops. This was fine while it lasted, but dangerous in the longer term as farmers found themselves competing in a volatile market." The report provides no details of how this might have happened. What is it that encouraged the farmers to shift the cropping pattern? Which crops were they induced to shift to? No information is provided. Farmers do not change their cropping pattern just by the rhetoric of ‘neo liberal’ policymakers. Anyone familiar with agriculture knows that farmers are too practical to change their usual practices unless they sense a potential increase in their incomes. Did government offer any subsidies for those particular cash crops? And if the government has indeed taken such measures in Andhra Pradesh to induce a change in cropping pattern why does not the report provide any particulars?

Cheap imports: The report also blames cheap imports resulting from the tariff and quota protection on food items for farmers’ suicides. It says, "By 2001, India completely removed quantitative restrictions from nearly 1500 items including food. Oilseed production was particularly badly hit by cheap imports…." The whole discussion about oil seeds is misinformed. The increase in imports of edible oil has nothing to do with the curtailment of freedom of Indian government to impose tariffs. It has the capacity to raise the tariffs. But the cost of Indian edible oil production is very high compared to that of Malaysia. If India decides to restrict the oil import completely, the poor consumers would be badly hit. It’s a complex issue and Indian government tries to balance the interests of poor consumers and oilseed producers by increasing or lowering the tariffs from time to time. CA report doesn’t seem to be aware of the policy discourse in India regarding edible oil. The report discusses various issues, which are general in nature with no direct relevance to the suicides in Andhra Pradesh.

It claims that India was forced to remove the quantitative restrictions on food items due to pressure from IMF. This claim is utterly false. As per the provisions of WTO, India had the right to impose quantitative restrictions as long as it faced Balance of Payment difficulties. After the improvement in its BoP position it had to remove quantitative restrictions on imports. But that doesn’t mean it lost its capacity to protect its agriculture through tariffs. It should be kept in mind that India’s average tariff level is one of the highest in the world. And it has protected its agriculture when international prices of agricultural produce collapsed after 1995. But CA report blames the suicides on an increase in cheap imports without naming a single commodity whose increased imports have adversely affected the farmers in Andhra Pradesh.

Avoiding cotton: The single most important cash crop having strong international dimension is cotton. Andhra Pradesh is one of the important cotton producing states. Also, most of the suicides in India have been reported in cotton belt in the country. But CA report maintains silence over the cotton issue. It doesn’t even mention cotton. Cotton prices have collapsed in the international market mainly (if not only) due to huge subsidies in the U.S. The removal of these subsidies would benefit the farmers in Andhra Pradesh through realization of its export potential. CA report however does not touch this issue. Christian Aid should note that this silence could invite a charge of tacitly supporting the unfair subsidy regime in the developed countries that is demonstrably adverse to the interests of the poor farmers in Andhra Pradesh.

Devaluation: According to the CA report, devaluation of the Indian currency is one of the main reasons for the crisis in Andhra Pradesh and elsewhere in India. It says (page 19) " The devaluation of the rupee made exports cheaper..." This sentence demonstrates wrong conceptual understanding of ‘devaluation’. Devaluation doesn’t make export cheaper but it makes exporter competitive in the international market. It also says in continuation that (devaluation thus) " helped lead a change into cash crops and away from traditional farming. Some profited from this, but most were hit hard by the vagaries of a market which saw world agricultural commodity prices halved between 1995 and 2001. Others were hit when India dropped duties and restrictions so that their crop choice was suddenly left at the mercy of cheap imports." None of these unsubstantiated assertions stand up to scrutiny. The report again doesn’t mention the crops whose exports got a boost due to devaluation. It doesn’t mention the commodities that were being exported and then got hit by the fall in international prices. It doesn’t cite any study in this context. It is not true that devaluation gave a boost for exports to an extent that farmers changed their choice of crops. It is also not true that there have been large-scale imports. These unsubstantiated claims make us feel dubious about the credibility of the report.

India’s food grain export: In order to establish the fact that Indian agriculturists shifted to export oriented agriculture in a big way, the report cites Indian environmentalist Dr.Vandana Shiva. "What has still not been truly brought to light is the effect this export-oriented market has had on India’s ability to feed itself. As exports of basic foodstuffs such as rice and wheat increased, stocks for domestic consumption to feed the poor and kept in reserve to meet the contingency of famines have plunged. In September 1996, for example, there was a fall of 10 million tones in the stocks of food and there have been increasing reports of hunger deaths This statement displays a complete ignorance of the situation. India’s mounting food grain stocks (wheat and rice) with the Food Corporation of India (A public sector) has been a serious problem facing Indian government. The only reason for such an excessive build-up is of the government’s misguided support price policies. Wheat and rice are mainly grown in the green revolution belt of Punjab and Haryana. It is only in these two states and (rice) in Andhra Pradesh where central government procures wheat and rice at support price if the market falls below this price. During the decade of 1990s when the process of liberalization was initiated, the state intervention in the food grain market through support price in the green revolution belt in fact increased. This was the result of the political pressure of this relatively well to do farmers’ lobbies to increase the support price every year. This eventually pushed out the private traders and government had to procure most of the food grain produced in the green revolution belt. The trade distorting subsidy in the developed countries which caused fall in price of wheat and rice also frustrated these farmers as these subsidies eroded their export competitiveness. Large food grain stock started rotting in the government’s warehouses. Government could not release this food stock in the market, as it didn’t want to face unrest in the green revolution belt. So Indian government emerged as the biggest grain hoarder while millions continued to suffer because of hunger due to lack of purchasing power. This led to the one of the most tragic decisions in the history of independent India. Indian government exported wheat and rice at a price well below the price at which poor in India purchased it from the fair price shops. In a way it was export subsidy to the consumers abroad. It was inevitable as the international prices were (and still are) well below the domestic prices. So a poor country exported the food grains with subsidy. Dr.Vandana Shiva has maintained strategic silence over this entire episode. Instead she blames the move towards export-oriented agriculture for this export. The export of wheat and rice was not the result of liberalization. It was the result of market distorting state intervention¹. What need to be blamed are the protectionist policies at home as well as in the developed countries. The later strengthened demand for protectionism at home. It is unfortunate that CA report should rely on such ridiculous interpretation of export of wheat and rice.

Credit squeeze: This is cited as another important reason for the crisis in Andhra Pradesh leading to suicides of farmers. The reforms in the banking sector through the Narsimhan committee’s recommendation are held responsible. But here again it is forgotten that reforms in banking sector were carried at national level. Why would it affect credit supply to only the farmers in Andhra Pradesh leading to their indebtedness and then to suicides? What specific policies of the state government were responsible? How did it squeeze the rural credit supply? Was there an increase in the interest rate? Or were the conditions for availing credit made more stringent? The report does not answer any of these questions.

DFID’s role: The main theme of the report is that DFID is ‘selling suicides’ by pushing its ‘neo liberal’ philosophy in Andhra Pradesh. But here again it has failed to mention specific measures affecting farmers and their correlation with farmers’ suicides. However there is one exception. Report points out that Andhra Pradesh’s seeds development corporation was so restructured that several of its seed producing units were closed down. This eroded the supply of quality seeds to farmers.

But it should be noted that during the decade of 90s, many private seed producing firms have appeared on the scene and role of public sector has receded. In fact, this has happened in many parts of the country. And if spurious seeds were one of the main reasons for the farmers’ suicides in Andhra Pradesh, the anecdotal account of farmers’ suicides, which the report carries, has no mention of it.

Subsidy and Indian agriculture:

Throughout the report, it is claimed that during the period of liberalization various subsidies provided to the farmers have been reduced drastically. But once again this claim is patently false. In fact, the subsidies on fertilizer, irrigation, electricity as well as the support prices to farmers in green revolution belt have been ballooning. The only thing on decline has been the public investment in agriculture². All these subsidies are concentrated in the irrigated agriculture of the country, which is a very small part of India. These subsidies have led to the overuse of water and excessive use of fertilizer causing serious environmental problems in the green revolution belt. A strong case can be made to shift the scarce resources away from subsidies towards investment in water shed development creation of rural infrastructure like roads and in pro poor agricultural research. Instead the money is wasted in subsides leaving the dry land agriculturists trapped in poverty. Dry land or rain fed agriculture is where most of the poor in India live. But any policy change in this direction in India is being resisted by the well intentioned but misguided organizations that use the convenient label of ‘neo liberal’ to damn what hey do not understand. Christian Aid’s report is no exception to this practice. On the one hand it absolves the unfair subsidy regime in the developed countries by not touching upon its adverse effects on Indian agriculture and on the other hand it provides political support to the protectionist politics in the country which in the name of poor advance anti-poor politics.

Christian Aid should revisit the analysis and findings of its report.

References:

1. Government Intervention in food grain Markets in the New Context, By Ramesh Chand; Policy Paper No.19. National Centre for Agricultural Economics and Policy Research March 2003.
   
   
   
   
   
2. The Subsidy Syndrome in Indian Agriculture: Ashok Gulati, Sudha Narayanan, Oxford University Press, 2003