Farmers: Pampered vs poor

It is time to pause, and think. India, Europe and America by and large follow the same model of agriculture. The scales may be different, but the farming systems are almost the same. And yet, Indian farmers are either committing suicide or somehow survive under distress. Farmers in the US and for that matter in Europe on the other hand live in luxury and manage to go on a cruise.

If you think it is because farmers in US and Europe are efficient, you are mistaken. Despite large farm size and the use of sophisticated technology, farming in the western countries too is a losing proposition. What actually provides income in the hands of farmers in the richest trading block — the Organisation for Economic Cooperation and Development (OECD) — is the massive government subsidies, including direct income support.

For the sake of comparison, let us look at the fate of farmers in the past 10 years or so. In India, nearly 2,00,000 farmers have taken the fatal route to escape the humiliation that comes along with growing indebtedness between 1997 and 2008. Another 42 per cent want to quit agriculture if given an alternative.

In the US, between 1995 and 2009, almost the same period, farmers have been paid Rs 12,50,000 crore as farm subsidies, including direct income support, which means they receive fat cheque sitting at home. In Europe, on the other hand, farmers receive a per hectare subsidy (in the form of direct income support) of Rs 4,000. In the case of cereals alone, if you multiply Rs 4,000 with 2,20,210 lakh hectares area sown, it comes to Rs 90,40,665 crore.

This is only what they get as direct income support. In addition, they also receive the benefit of ‘counter-cyclic payments,’ ‘market loss payments’ and now subsidies under the crop insurance programme and the bio-fuel programme. No wonder, average farm incomes in many European countries have been ruling nearly 100 to 200 per cent higher than the average of the rest of the economy.

This perhaps clears the mist as to why Indian farmers take to suicide while the US/European farmers quietly proceed on a cruise holiday every year. In some Nordic countries, the government provides subsidy for a one month holiday for a farmer and his family anywhere in Europe. When was the last time you heard a farming family in India travelling on a holiday?

Let me share with you some of the highlights from an interesting study, entitled: ‘Government’s continued bailout for corporate agriculture’ published by the US Environmental Working Group (EWG).

* US paid a quarter of a trillion in farm subsidies between 1995 and 2009.
* Direct payments have averaged around $5 billion every year since 2005.
* Subsidies under the crop insurance programme have tripled — from $2.7 billion in 2005 to $7.3 billion in 2009.
* Since 1995, crop insurance subsidies have crossed $35 billion.
* Between 1995 and 2009, the richest 10 per cent of the farm families pocketed 74 per cent of the entire subsidy.
* On an average, the wealthiest 10 per cent received a total payment of $4,45,127 in the past 15 years.

n Small farmers received an average of $8,862 per recipient in the same period.
Now this should be some form of an eye-opener. We tend to believe that farmers in US/Europe are rich because they have high productivity. This is a big fallacy. And to my understanding, this is the primary reason why Indian farmers are being misled to apply more chemical inputs. The common advice is that the more is the farm productivity, more will be the income. If this was true, farmers in US and Europe, who have almost, double the crop yields than India in case of wheat, rice and soybean should not be requiring agricultural subsidies.

Indian farmers can surely double the crop yields. But the bigger question is who will give them the corresponding subsidy to survive, to remain economically viable? In cotton alone, the 20,000 cotton farmers in America receive an annual subsidy packet of Rs 45.40 lakh crore.

Farm income in the cotton belt of America is higher not because of the higher crop productivity but because of the sustained incomes over the year from subsidies. Before 2005, cotton farmers were getting more than Rs 90 lakh crore every year as direct income support. With such huge federal support, farmers will have enough to sustain them for lifetime.

Let us be clear that in the US and Europe, farmers are surviving because they get direct income support (in various forms) and not because what they earn from the farm gate prices.

America and Europe know the cost of feeding the loss-making farms is much more than what is normally spent on importing food. But it still is willing to take to pump in massive subsidies knowing that food self-sufficiency is fundamental to national sovereignty. In fact, it goes a step further. These countries are making an all out effort to be the food bowl of the world. The more the world depends upon US/EU for food, the more will be the political dominance of these two blocks over the entire world.

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