Large farming cooperatives, a solution to farmers' suicides

According to the National Crime Records Bureau of India, in 2014, a total of 1,31,666 persons committed suicide in India. Of them, 5,650 or 4.29 per cent, were farmers. Of these, 64.5 per cent were marginal and small farmers.

The Bureau also reported that 25.6 per cent of farmers’ suicides were due to ‘bankruptcy and indebtedness’. According to the Niti Aayog head Arvind Panagaria, who conducted a survey in 2008, 20.35 per cent of these suicides were due to ‘drinking and gambling’, 16.81 per cent due to failure of crops, 2.65 per cent due to indebtedness and fall in agricultural prices each.

The remaining 57.54 per cent were due to other reasons like discord in the family etc. In 2014, 4,400 farmers committed suicide due to drinking and gambling and 1,250 due to failure of crops and fall in agricultural prices while 3,672 farmers who committed suicide were marginal and small farmers.

Suicides committed by farmers due to drinking, gambling and family discords
etc, cannot be termed as agriculture related though persons committing suicides were farmers. But suicides due to failure of crops and fall in agricultural prices are farmer-specific.

Farmers are distressed because of three reasons: their landholdings are uneconomic and unviable; failure of crops due to floods and draughts; and fall in agricultural prices. After Independence, the number of marginal and small land holdings has increased due to land reforms. For example, when land reforms were implemented in Karnataka in 1971, the number of land holdings with less than two hectares was 29,22,000. By 2011, it was 59,87,000.

According to the Department of Agriculture in Karnataka, the size of the land holding should be 2.56 hectares to be economically viable. The average size of land holdings of these marginal and small farmers also increased, though marginally, from 0.60 in 1971 to 0.81 in 2011, still leaving the holding economically unviable. It was quite natural that the number of suicides by these farmers also increased.

To alleviate the problems of the marginal and small farmers, some people have suggested providing them with improved inputs. But the proper solution to the problem lies in encouraging cooperative farming. If farmers can pool their land by forming a cooperative, then the problem of unviability of the small holdings can be overcome as they will get the benefit of economies of scale. While a single small farmer cannot on his own dig a borewell or buy a tractor, a cooperative farm can easily do so. This may also to a great extent help the small farmers in overcoming the problem of fall in prices of agricultural produce.

While a single small farmer may not have the capacity to store his produce and sell it only when he gets a better price and, hence, has to opt for distress sale, a farming cooperative can create such storing capacity and sustain itself when the agricultural prices fall. It is only then that a small land holding can become economically viable and prevent the losses.

Since a farming cooperative with large tracts of land in its possession can go for multiple cropping, even if the prices of one or two of its produces fall, no member will be ruined because he will be sharing the profits earned by the cooperative from other produces.

Agricultural prices

Failure of crops, which accounts for 16.81 per cent of the suicides committed by farmer, happens mostly due to floods or droughts which are natural phenomena. While crop insurance can be an answer to floods, irrigation could be the answer to droughts.

The loss to farmers due to fall in agricultural prices is a man-made phenomenon. Since the demand for agricultural produce is by and large stable, the reason for the fall in agricultural prices is over-production.

For example, if tomato fetches a good price in any one year, all farmers opt to grow tomatoes with the result that in the next year, there is over-production and the prices fall. There have been instances when farmers have thrown away their produce on the roads as they could not get a fair price.

Some people have suggested solutions sans markets to this problem of fall in agricultural prices. They suggest that a floor price for agricultural produce should be fixed by law and no one should be allowed to sell his produce at a price lower than the statutory price. But then, the problem of fall in agricultural prices is not legal but an economic one and therefore, a legal solution to an economic problem will not ultimately work.

Some have suggested the solution of a government intervention in the market by fixing support prices. But since the problem is one of over-production, this will only increase the financial burden on the government rather than solve the problem.

The prices of agricultural produce in the markets fall when there is more supply than demand. The demand for agricultural produce, as compared to industrial produce, is more or less fixed. Hence, the demand cannot be reduced. But supply can be regulated to equalise with the demand. In the first instance, supply can be contained at the time of production itself. Since the demand is known, if the farmers can plan their supply, the fall in prices that happens due to over-production can be prevented.

To achieve this, production will have to be meticulously planned at the national or at least at the state level. Secondly, if the far-mers can store their produce when the pri-ces fall and wait till the prices rise, they can overcome the problem of excessive supply.

If large cooperative farms are encouraged and farming cooperatives can form a federation, it should be possible to plan what to produce and how much to produce depending on the demand. Only such solutions can solve the problems of the farmers and prevent them from committing suicides.  

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