BANGALORE - Agriculture experts blame the
crisis faced by India's small farmers on a highly
inefficient supply chain for perishable farm
produce, a situation exploited by traders and
middlemen.
India had targeted a 4% growth
rate in agriculture in both its 10th Five-Year
Plan (2002-2007) and its 11th Five-Year Plan
(2007-12), but the sector instead declined steeply
from the "green revolution" of the 1970s to an
approximate average of 2.6% - 3%.
The
stagnation coincides with a period in which
India's economy has been growing steadily, with
projections of a respectable growth of 7.7%
expected in 2012 despite the prevailing global
downturn.
"It's obvious there is a major
block in the growth of the agricultural
sector in India," says P
G Chengappa, national professor with the Indian
Council of Agricultural Research, "mainly because
of stagnation in productivity and the lack of
market support for perishables."
The
overuse of chemical fertilizers and pesticides -
together with the government's encouragement of
water-intensive crops and related soil-salinity -
has led to the now well-documented environmental
decline in India's farming lands.
India's
current policy is to help farmers by handing out
huge subsidies on fertilizers and agricultural
inputs, estimated to be worth US$25 billion in
2009-2010.
Small farmers, forming over 60%
of India's farming community, have neither the
financial clout nor the access to groundwater or
irrigation, while having to spend large sums on
costly pesticides and fertilizers.
The
government subsidies are cornered by industrial
farming and benefit the fertilizer and chemical
industry leaving smallholders out in the cold. An
estimated 70% of India's 1.1 billion people are
small farmers.
During 1995-2010, over
250,000 poor farmers in India committed suicide,
according to national statistics, mainly
attributed to their inability to pay debts
incurred on agricultural inputs.
While
India's soils are said to be failing due to
continuous use of chemical inputs, small farmers,
desperate to improve productivity, increase the
doses of expensive fertilizers and pesticides and
end up falling further into debt.
The
desperate situation of farmers remains unmitigated
by the demand for fruits, vegetables and grains in
urban India, where increasing incomes have allowed
organized food retail chains to mushroom,
particularly in south India.
Almost
two-thirds of the farmers' suicides were reported
from southern Karnataka, Maharashtra and Andhra
Pradesh states, indicating serious agrarian
distress in the peninsular region.
Direct
dealings with farmers by these food retail chains
are almost negligible, with most chains
outsourcing their daily supply of groceries
through contractors or middlemen.
"Large
retail chains keep a supply of green groceries
only to attract the customer for convenience
shopping," explains B Somesha, chief financial
officer of Sahaja Organics, one company that
serves as a direct marketing chain for its 500-odd
farmer-members in Karnataka.
Set up in
April 2010, Sahaja Organics leaped from a turnover
of $38,732 in 2010-11 to an expected $100,000 in
2011-12. But this growth still does not allow
farmers to cash in on the demand from retail food
chains.
Retail chains "want a listing
[registration] fee of at least $1,000 plus three
months' credit, which is not possible for small
operators," says Somesha. On the other hand, they
skim off high 40% margins.
Professor
Chengappa says India's Agricultural Produce
Marketing Committee (APMC) is actually a barrier
to direct benefit for small farmers through its
myriad bureaucratic clauses that deter retailers
from seeking permission to deal directly with
farmers.
"The APMC allows so many
superfluous middlemen that it has actually
institutionalized commercial agents and traders in
India's agricultural system," said Chengappa.
There are, however, better-run government
ventures such as the $12.25 million turnover
Horticultural Producers Co-operative Marketing and
Processing Society (HOPCOMS), in Bangalore, which
works with 18,000 farmer-members.
HOPCOMS
enjoys the loyalty of farmers who say they are
happy with the assured payments and higher prices
compared with what they are offered by the city's
four major markets.
"We don't need to pay
any commission to the market auction agent," says
35-year-old Shivananda Attibele, who brings leafy
greens to HOPCOMS twice a week from his two-acre
plot at Jigani, 43 kilometer outside the city.
The markets have commission agents,
permissible under the APMC, who fix the day's rate
for vegetables and grains according to the
quantities available for the day and the demand
for particular produce.
The system has
given rise to exploitation and extortion, with
farmers forced to pay commissions to the agent and
are often at his mercy because of credit they may
have taken from him.
"Farmers take loans
from the agents and have no option but to take
whatever the agents give them," says 56-year-old
Muniraj, whose father began dealing with HOPCOMS
40 years ago.
Traders forming cartels that
prohibit small farmers from selling their produce
elsewhere is a countrywide phenomenon in India's
markets.
HOPCOMS managing director,
Shanmugappa, agrees that the situation is bad for
small farmers who are forced to sell their produce
at wholesale auctions in city markets.
"There is a huge middleman lobby that is
cornering very large margins," says Shanmugappa.
"That is why I say that the government should
control the prices of vegetables at the
'end-point', the market, not at the 'source' by
subsidizing fertilizers, water and electricity."
Shanmugappa says the method of government
control of market rates for vegetables and grains
is successful in several countries.
Satish
Natarajan, a director of Sahaja Organics, believes
civil society has been irresponsible about its
link with farmers.
"We have absolutely no
idea about where our food is coming from, or the
plight of the farmers," says Natarajan. "We need
to build community support to ensure a regular
income for our farmers.
Calls to amend
APMC rules have come in from various states in
India, but these have been overshadowed by the
controversy over a plan to introduce foreign
direct investment in the retail sector, that may
finally break the middleman's stranglehold.
India, along with Brazil, Russia and
China, is slated to be among the world's top five
grocery markets by 2015.
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