Agriculture is most profitable and lucrative profession


For the first time in many years, the Indian agriculture received its share of space in mainstream mass media. It’s not that there have been some sea change or transformation but it has suddenly become lucrative and attractive profession (to highlight agricultural distress, farmer’s suicide and off-course Padyatras of Young Emerging Political Scion).

Suddenly all the punditry become expert in agriculture and started to offer their opinions and expert advices on how to improve agriculture and how (illiterate & ignorant) farmers should do the farming.

But if we take critical view and take benefit of hindsight, we can see that agriculture has always been most lucrative profession, after all we are known an ‘Krishi Pradhan Desh’ and it become a instant social media hit when someone put his/her photo in lush green mustard farm. It’s also miracle that most of photos have mustard in background while it’s grown in very small areas and oil-seed are one of agricultural product which India imports.

After a bit of sarcasm, now let’s takes hard look at harsh, brutal and dark realities of agriculture in India:

  1. India’s planner never wanted to promote agriculture. They have same disdain for agriculture as Urban Indian has for people coming from rural areas (normally addressed as ‘Dehati’). This is sole reason that we have always set targets for agricultural growth much lower than manufacturing, services and overall economy. Take example of 12th Five Year plan – The growth target for agriculture is set at 4% while target for overall economic growth is set at 8%. It’s another matter that even these lower targets are rarely met.
  2. This deliberate, planned and sustained efforts to (de)promote agriculture has resulted in reducing share of agriculture in economy from ~50% at time of independence to less than 15% in 2015. Since it has happened by deliberate neglect, we didn’t care to create employment opportunity for populations depended on agriculture which continues to remain almost same (more than half of total population) as at time of independence.
  3. But in democracy, its majority which rules. Why such a large population lost its clout and repeatedly ignored? The reason lies in fragmentation and division among them by identity of region, language, religion and caste.
  4. While we routinely blame the skewed subsidies in form of power, fertilizer and MSP to farmers but don’t see the invisible subsidy provided to urban dwellers in form of assured electricity, piped water supply and transportation facilities. We don’t see and question lakhs of Crore subsidy to Metro rail as subsidy (here urban commuters need not pay full fare. Its infrastructure creation not subsidy!) But power provided to farmers needs to charged at market rate. We blame farmers lobby for all the ills of state distribution boards, power sector and economic woes while ready to elect a government in National capital (having largest per capita income in country) which promise them free water and subsidized power.
  5. Well, these are not double standard! It’s their legitimate right, because urban dweller pay taxes so they must have claim over the resources. Why the hell on earth, we should care for Nange Fakirs living in hinterland. What do they provide for us? Oh yes, we can express solidarity with them when one of them commits suicide. Suicide would make interesting story , especially if it happens in full public view, and we can always find motley crowd of activist who care for global food security & campaign for rights of poor and marginal farmers without even having any iota of understanding about how it feel to remain a hungry even for a day.
  6. Now take a look at some aspects of agricultural economics. We complain about food inflation. Governments have been toppled on this very serious issue. Why the dumb, non-responsive government is doing when onion is sold at Rs 30/kg in urban area? The political class & bureaucratic, mainly coming from this crowd itself, take steps to reduce price. But we ever see the government moving into action when potato are sold at Rs 2/kg by farmers. Where the government did goes? Oh I forgot, the Price stabilization funds are meant only to subsidize urban consumer, not to compensate farmers for their distressed sell.  Stupid they are, as they have produced bumper crop.
  7. Oh, now come to main point of farming being a very lucrative profession. One simple way to measure profitability of any profession is ratio of output/input prices. In farm sector, this is measured by Terms of trade. Here are some sample statistics to see for yourself :  harsish
  8. Very newspaper editorial and economic expert have blamed high MSP for runway food inflation in past year. But have you ever care to read how MSP are calculated? I would just provide some of novel assumptions followed in calculation of MSP
    1. Only the number of hours that bullocks work on farm is used for calculation, as if the animals don’t need to fed on other days of year.
    2. Interest on working capital is calculated for half the cropping season, presuming that farmers would repay the loan when the crop is half grown.
    3. Post harvest expenses are not accounted for
    4. .All members of a family engaged in farming are valued just as non-skilled laborer. No concept of managerial remuneration leaves apart the profit, oh after all what they contribute?  Industry requires manager, not farming.
    5. Cost of factors of production is one essential component. But it is presumed that farmers own hereditary land, so they are not entitled to seek market rent for their land.
  1. Ok well, this is story behind the much celebrated MSP number. Now come to much broader issues of farmer’s subsidy. You must have heard that more than 1 lakh subsidy per year is provided to farmers. Its pure misnomer and deception. When world cotton prices are at Rs 8000/ per tonne, the farmers are paid Rs 4000/tonne. Shetkari Sanghathan has done some background calculation to show that government is extracting lakhs of rupees from farmers and distributing it among affluent urban consumer directly (by suppressing prices of cereals, pulses, vegetables) and indirectly (by ensuring cheaper industrial raw material e.g. cotton for textile industry). By governments own admission (as per submission to WTO), the farm subsidies to wheat are in negative.
  2. It’s not a new story. Farmers are always there to sacrifice for the national development. They should readily provide land for affordable housing and social infrastructure without their consent. They should produce pulses and oilseed, even if they are not remunerative, to meet national demand. Their property rights do not matter. If we adopt non-discriminatory attitude, we should build affordable housing in Lutyens Delhi rather than by acquiring land in NCR periphery.
  3. Come to Economic reform. We demand reform, choice and liberalization in all sector but farming. Farmers are not capable of making independent and informed choice. They needs hand holding. This is reason that they can’t sell outside designated area (due to APMC restrictions) , they can’t sell directly to customers & then can’t share global price rise due to export restriction but need to share losses due to fall in global prices.
  4. Need more proofs on why farming is most profitable and lucrative profession and business? You need to ask this question to our political farmers who have fortunes out of farm land. They can earn crores; yes you heard it right, in between their election cycle from their farming land.
  5. But previous government has not much to alleviate the status of farmers. Oh yes, MNREGA did wonder for farmers as per studies of social scientist and activists. It is responsible for rising farm wages. Oh, then its good na! that a labourer is benefiting from higher wages. But their impact wiped out for laborer by high inflation.
    1. If 100 days of labour has been reserved for 250 days of lean season, it would have doubled the employment generated, without more investment.
  6. Oh if not MNREGA, then Farm Loan waiver was definitely good for farmer. The sad reality is that it helped only those farmers who have defaulted on institutional credit (not the regular payer or nor the non-institutional debtor).
  7. Unfortunately the sad and hard truth is that no one cares for so called Ann Data (grain producer). There is no organized body to represent their interest, they are given short-shrift by political class and bureaucrats are simple unable to comprehend the complex problems due to their elitist background. The same failed policies which haven’t changed anything are advocated by media punditry and social activist.

All these problems ultimately comes to the Niyat’ or Intention of policy makers and other stakeholders. If there is sincere intention, nothing is impossible as being shown by excellent performance of Agriculture in Madhaya Pradesh, Chattisgarh and Gujrat who have delivered more than 7% agricultural growth for more than decade from 2001-02 to 2011-12.

India’s farmers would be better served if they are left to themselves. Yes, there is scope for extending irrigation, providing high yielding seeds. removing restriction on trade of agricultural commodities and creating a national market for them,  extending credit facilities in simple & convenient ways and creating a viable income insurance and weather insurance to reduce unpredictability. But above all , what is require are honest and genuine intention. Political dramabazzi or scoring political points to secure their vote are most fatal for farmers.

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