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November 16, 2005
Cotton farmer suicides in Andhra Pradesh
Overview
Do we really understand the reasons for suicide of cotton farmers in Andhra Pradesh? Do we understand the psyche of the farmer? Is it a political issue or an economic issue or an issue of literacy? Do we understand their plight?
I believe that all of the political parties either have not understood the real causes or are only interested in the causes, which they can exploit politically. Similar to cotton farmer suicides, there had been ginger farmer suicides in Karnataka. What did we learn from them?
Even YS Rajasekhar Reddy's populist measures (like free electricity) in the wake of elections and aftermath did not address the real issue. We need politicians who can sustain the faith that honest & courageous efforts beyond the populist measures do pay off electorally. Populist steps may be what the people ask for; but are they good enough?
Illiteracy & greed are the causes
I am not claiming to understand the whole of the reasons but I believe that the mainstream politicians have not understood them either. The causes are complex. But the illiteracy & greed seem to be the root causes. Illiteracy includes illiteracy of the agricultural & scientific crop techniques, illiteracy of the financial & risk assessment. The greed of the farmer is also another reason. Ofcourse some times the nature (either bad rains or the diseases) also have bad luck with the farmer; but the main reasons seem to be illiteracy & the greed.
Cotton crop is a game of high investments & high returns but also of high risks. If there is a disease during the flowering, it becomes a big investment game. Sometimes costs spiral beyond managing when disease goes out of control.
The small farmers out of greed have taken huge amounts of loans from private lenders to raise the crop. They don't understand how much loan is too much. If the nature (weather & disease) favours, yes, they would be able to pay back all those loans. But what if the nature overruns the farmer's luck? These loans at such compounding interests (50% per annum or even 100% per annum) would snowball into untenable debt in couple of years. The loans now look so oppressive to kill the spirit of even the best optimist.
There are also issues of scale of farm size. There is a critical scale at which these huge investments make sense. If you raise one acre plots of cotton, you are also at the mercy of your neighbour's plot. Even if you do good disease control of your crop, but what if the neighbour did not control his disease? The neighbour's disease can reinfest your crop. There is a minimal size of land, which makes sense for investments and gives a sense of control on your crop.
The greed of the farmer also blinds him. Having seen a bumper cotton crop at a relative's village, he plunges into cotton farming without doing homework. One can do some minimal soil testing to find out if this patch of land is suitable for cotton. There have been instances of even the landless folks plunging into this game by taking huge tracts of land for lease. For the people who take on leases, the risk is more dangerous if the crop fails.
Wrong diagnosis
There have been a lot of wrong diagnoses (as per my opinion) suggesting the bad moneylenders and lack of enough subsidies from the government.
You can't ban private lending. It is not feasible. The business of private lending blooms not because the lender is driving it but because the borrower is so desperate. If the government bans it, the debtors would sustain the business out of their own desperation. So one could argue "why not make government/bank lending so available that there is no necessity for the existence of private lending?". Well, there are lots of limitations for government/bank lending. The banks are concerned about the feasibility of lending, non-performing assets and how much to lend to a farmer. If the farmer resorts to an untenable debt on a certain amount of land, he will be forced to private lender.
Some argue that the government does not subsidize enough support purchase price.
Psyche of the nation
What is the mental health of the average Indian? There are people committing suicide when their movie hero's film fails at box office. In such a nation, how can we accurately pin point the reasons for cotton farmer suicide?
What can be done?
Farmers need education on financial risk & return assessment. How much investment is too much? How does the compound interest work? When to back out? If they borrow at such exorbitant interest rates from private lenders, what happens if the crop fails? When the crop turns out good, they can easily pay off the debts. But if the crop fails, how the compound interest spirals out. There are instances of people borrowing at 100% interest rates. If the crop turns out good, there is no big deal; but if the crop fails, the interest rates compound so badly that they can't imagine recovering for their life.
We have such huge pool of government bureaucracy (including the college lecturers and school teachers). We need to use them to campaign and educate the people. Yes, the results of such campaigns are not easily quantifiable. Nor do such campaigns appease the emotions of the people. But the political parties have to think beyond their *quick* electoral payoffs.
The government can do a lot apart from education. Government can conduct free soil testing and encourage people to go for soil & water testing before planting crops.
Government can put more scientists into service. We need to recruit more agricultural scientists. Even the ones already employed with government are turned into file pushing bureaucrats. Rather we should deploy them in the real fields advising the farmers. Lot of the times, the farmer uses wrong pesticides at the suggestion of the *uneducated & greedy* pesticide seller. We need these pesticides to be prescribed by Government scientists. But we got to make these government scientists roam the villages instead of hoping that the farmer would visit the government offices if he needs the advice.
Government needs to open up the "model farms" in each district and use these model farms to educate the people about scientific techniques.
The summary is that government has to think beyond the electoral payoff of populist measures like free electricity. Yes, we need to give free electricity but something more needs to be done too.
Posted by nachiketa at November 16, 2005 09:26 AM