Indian farmers are neck-deep in debt. Of the 89.35 million farmer households in the country, 43.42 million (48.6 percent) are reeling under the yoke, says a recent survey report of the National Sample Survey Organisation (NSSO), under the Union ministry of statistics and programme implementation. The report was released on May 3, 2005 and discussed in Parliament the next day. The situation is paradoxical, as the Indian economy has recorded a growth rate of over six percent during the post-1991 liberalisation era.

The pro-liberalisation lobby considers this phenomenon insignificant as agriculture's contribution to the gross domestic product (GDP) has fallen drastically in recent years and stands at a mere 24 percent today. So, the economy is largely immune to upheavals in this sector. But what cannot be ignored is the fact that 60 percent of the country's population thrives on agriculture.

The report implies a link between the debt-trap and farmers' suicides. It says Andhra Pradesh (AP) has the highest percentage of indebted farm households (82 percent or 4.9 million households) in the country. By December 2003, when the survey was concluded, at least 3,000 AP farmers had committed suicide. Police records show the numbers to be thrice more. Following AP is Tamil Nadu (74.5 percent), Punjab (65.4 percent), Karnataka (61.6 percent) and Maharashtra (54.8 percent). All these states have also witnessed farmers' suicides in the more recent past. The amount of outstanding loan is very high in Punjab, AP and Karnataka. A study by R M Vidyasagar and K Suman Chandra of National Institute of Rural Development (NIRD), Hyderabad, also suggests the link between debt and farmers' suicides.

But some other economists disagree. Agriculture economist M S Sriram of Indian Institute of Management (Ahmedabad) argues: "Higher indebtedness in these states can possibly be attributed to a larger requirement of working capital. Why should we see indebtedness as something negative? It is also very much a part of the wealthy states. For instance, Punjab's agriculture is capital intensive and guzzles up a lot of working capital."

What makes the debt-trap more dangerous is the heavy dependence on professional moneylenders, who charge annual interest rates as high as 60 percent. The NSSO survey says they comprise the second most important source of loans for farmers (26 percent), after banks (36 percent). Despite their 100-year-old existence and grassroots reach, cooperative institutions are a poor third source (only 19.6 percent). In case of an agrarian crisis, farmers have little access to institutional credit due to their inability to repay and have the only option of approaching moneylenders, explains the NIRD study. Repeated crop failure and the inability to repay moneylenders leads them to suicide. In AP, 57 of every 100 indebted households owe money to moneylenders.

Rajiv Kumar, chief economist, Confederation of Indian Industry, points at another malaise: "Indian farmers suffer from a poor credit delivery system. Since they deal with high-risk farming, proper insurance mechanism is essential; only ensuring credit isn't enough." Eminent economist A Vaidyanathan concurs: "In India, credit delivery is driven by supply, not demand, which forces farmers to enter the debt-trap."

An interesting finding of NSSO's survey is that many of the country's poorest states have a considerably better debt record: Bihar (33 percent), Uttar Pradesh (40 percent), Orissa (48 percent) and Jharkhand (20.9 percent). "A majority of the farmers in these states are involved in survival farming and hence have lesser access to credit. This makes them look debt-free," explains Peeyush Bajpayi of New Delhi-based research firm Indicus Analytics.

The same could be the reason for the people belonging to scheduled castes and scheduled tribes having lower debtburden compared to those from other backward castes and other castes. "The statistics don't indicate the extent of their poverty, which is much more severe. Only because they are not plugged into the credit loop, they are invisible," says Kumar. The size of land is also directly proportional to indebtedness. For indebted farmers owning over 10 hectares (ha) land, the debt load is of Rs 76,232; it lessens gradually to Rs 6,121 for those owning less than 0.01 ha.

"This high indebtedness is due to reduced agricultural investment in the post-reform era," says Kumar. Addressing this concern at the World Social Forum, 2004, development economist Utsa Patnaik pointed out: "Rural development expenditures, which averaged 14.5 percent of GDP during 1985-90, were reduced to eight percent of GDP by the early 1990s as part of the deflationary policies advised by the Bretton Woods institutions [World Bank and International Monetary Fund]. Since 1998, rural development funds have been reduced further, averaging less than six percent of GDP. In real terms, there has been an average annual reduction of about Rs 30,000 crore in development expenditures during the last five years."

Development economists also say the states that have been successful in agriculture were earlier habituated to free power, cheaper inputs and high yielding variety seeds. But with the investment in agriculture declining, the cost of production went up, shrinking profit margins. For example, in AP the power tariff was increased five times between 1998 and 2003. According to New Delhi-based agriculture economist Rahul Sharma, the cost of production has gone up by 300 percent since the 1990s. Private marketing of costly 'wonder' (read genetically modified) seeds and other agricultural inputs also lure farmers into the trap of input traders.

The survey highlights the fact that farmers dependent on crop cultivation are more vulnerable than those involved in other types of farming activities. Of every 100 indebted households, 56.9 percent are involved in cultivation, mainly of staple crops. In contrast, those engaged in animal husbandry and poultry are relatively much better off (3.2 percent of indebted households). Farmers involved in horticulture and plantation activities also comprise a mere 4.1 percent of the indebted households

Food and trade analyst Devinder Sharma draws serious conclusions from these facts. Because of decreasing domestic support, farmers in developing countries will shift to the seemingly more profitable horticulture and plantation crops, while developed countries will continue growing food grain crops with domestic subsidy arrangements. This will again lead to the phase of "ship-to-mouth" existence for developing countries, which will be forced to buy food grains from developed nations.

Though the NSSO survey has not been analysed by economists in detail, the initial conclusions indicate that Indian farmers are one of the biggest causalities of the free economy. The worst is yet to come.

Courtesy: newindpress on sunday, 1^thJuly 2005
(Website : www.newindpress.com)

NEW DELHI, JULY 3: Exports of agricultural and allied products registered over 9% growth at Rs 27,111.41 in 2004-05 as against Rs 24,844.48 crore in 2003-04. In dollar terms the growth was over 11%. India’s overall export target for 2004-05 exceeded by 50%.

According to an official statement, rice, pulses, tobacco, spices, nuts and seeds, cashew, guar gum meal, castor oil and processed food items among others have shown a substantial growth in exports.

In addition, dairy and poultry products also showed a record increase of over 65% in dollar terms in 2004-05 as against the previous fiscal. Gems and jewellery exports increased by over 29% touching $13.7 billion dollar in 2004-05 as against $10 billion in 2003-04. Exports of chemicals and related products registered a growth of more than 27% to touch $12.6 billion in 2004-05 from $9.9 billion in 2003-04.

Exports of petroleum products during 2004-05 touched a level of $6.7 billion, which is an increase of over 90% from $3.5 billion in 2003-04. Similarly, exports of engineering goods increased from $10 billion in 2003-04 to $14.5 billion during 2004-05, registering a growth of 38%. Merchandise exports reached $79.2 billion dollar in 2004-05, a growth of 24.1% in dollar terms. This was the highest since 1974-75. Overall India’s share in world exports showed an increase from 0.66% in 2000 to 0.82% in 2004.

Courtesy: The Financial Express, 4^thJuly 2005
(Website : www.financialexpress.com)

Farmers are likely to harvest a bigger summer crop because of ample soil moisture and an increase in the area under oilseeds cultivation, an industry association said on Monday.

The global vegetable oil industry watches the Central Organisation for Oil Industry and Trade's estimates closely as India’s domestic oilseed output impacts vegetable oil imports, mainly from Malaysia, Indonesia, Brazil and Argentina.

The summer oilseed crops forecast comes after the country harvested a lower winter crop of mainly soyabean and groundnut because of erratic monsoon rains.

Courtesy: Economic Times, 01^st Feb '05
(Website : www.economictimes.com)

After mangoes, Chinese may soon get to taste Indian grapes and pomegranates. India has initiated the process for an agreement on the protocol for the entry of these fruits into China.

The protocol would cover Pest Risk Analysis and agreement on procedures related to inspection, certification, packaging and labelling of consignments. The process is expected to take about six months, official sources said.

India and China had signed an umbrella Memorandum of Understanding during Chinese premier Zhu Rongji's India visit in January ’02.

New Delhi had proposed 17 categories for fruits and vegetables, including mangoes, guavas, grapes, papayas, melons, gherkins, cucumbers, beans, aubergines, capsicums, gourds, for coverage under the MoU.

Courtesy: Economic Times, 28^th Jan '05
(Website : www.economictimes.com)

India, the world's largest importer of edible oils, may allow imports of genetically modified (GMO) oilseeds to meet a domestic shortfall, the country's food minister said on Tuesday.

But any decision on this would be taken keeping in mind the interests of local farmers, Sharad Pawar told an international oilseeds conference.

The country of more than one billion people, which has the world's fourth-largest vegetable oil and oilseeds economy, does not allow imports of GMO seeds. It also imposes a 30-percent duty on non-GMO seeds, which traders say is too high and not viable.

"In order to overcome the shortage of oilseeds and edible oils, there is a need to encourage imports of high oil content oilseeds and to import genetically modified oilseeds, while protecting the interests of Indian farmers," Pawar said.

Courtesy: Expressindia.com, 18^th Jan '05
(Website : www.expressindia.com/)

The National Bank for Agriculture and Rural Development (Nabard), which already has an exposure of nearly Rs 10,000 crore to short-term refinance operations, has urged the Centre to create an exclusive fund at Nabard for such operations involving the rural and agricultural sectors.

Nabard also made out a strong case for enhancing the bank’s regulatory and supervisory powers over cooperatives and regional rural banks (RRBs).

Short term operations are essentially short-term loans extended by banks that have to be repaid withing a year’s time. These include funding farmers for cultivation of crops, irrigation, etc, as also providing working capital to the non-agriculture sector, including weavers, handloom manufacturers, handicrafters, small scale and tiny industries sector etc.

Courtesy: The Financial Express, 11^th Jan '05
(Website : www.financialexpress.com/)

Summer oilseeds crop is expected to bounce back and match a year ago output, after erratic rains caused a drop in the winter harvest, analysts said on Monday.

The country, which imports nearly 40% of its annual needs of 11m tonnes of edible oil, is the world's fourth-largest vegetable oil producer with an annual turnover of about $15bn.

“The rapeseed and mustard crops are developing very well and we may get one of the biggest crop in recent years,” Sandeep Bajoria, president of the Central Organisation for Oil Industry and Trade said.

Courtesy: Economic Times, 10^th Jan '05
(Website : www.economictimes.com)

The central government has launched a new scheme to provide capital investment subsidy on infrastructure projects in agriculture and allied sectors as part of its efforts to encourage private sector investments. "The agriculture infrastructure projects entitled for capital subsidy scheme includes investments in dairy, meat, fisheries and minor forest produce," Radha Singh, secretary, ministry of agriculture and co-operation, said today.

A shift from subsistence farming to enterprise farming can occur only when governments, corporates and banks enter into colloborative partnership for investing in the transfer and creation of technology fuelled by strong markets and effective demand, she added. "Bringing in the private sector both as a competitor and as complementary to the public sector adds greater strength and value for money. Both must work complementarily to benefit farmers and their families as well as make business sense," Singh said.

Large scale investment in agriculture infrastructure projects is needed for the development of post harvest and cold chain infrastructure near to the farmers' fields, she said.

Courtesy: Business Standard, 3^rd Jan '05
(Website : www.business-standard.com/)

The government will soon come out with a WTO-compatible assistance package for cotton exports that are likely to cross 2 million tonne this year. "Cotton export will likely to be around 2-3 million tonne this year. We will not offer any subsidy to cotton export, but would extend assistance as per WTO norms," Agriculture Minister Sharad Pawar said on Tuesday. The minister said a WTO-compatible assistance package for cotton export would be announced soon.

Courtesy: Economic Times, 21^st Dec '04
(Website : www.economictimes.com)

Contract farming in India is set to grow as it has helped reduce market risk associated with crop cultivation. It has potential to be an effective instrument of credit deepening.

According to a recent report by the National Bank for Agriculture and Rural Development (Nabard), poplar cultivation is now a stable, widely accepted agro forestry activity covering over 75,000 hectare per year. Tomatoes are cultivated in Punjab on 25,000 hectare with crop size of five lakh tonne. Tomato contract farmers’ average yield is 25-50% higher than the state average, while their per hectare income was 40% higher than that for the control group. Seeds are the business of over 150 companies, which survive on contracts and have a combined annual turnover of over Rs 2,500 crore. Sugarcane cultivation is based on long-standing relationships between farmers and processors, near contractual relations have led to assured supply and prosperity for all. Sugarcane growers reported higher than average yields, recoveries in contract areas, and bonuses have meant higher incomes.

Courtesy: The Financial Express, 20^th Dec '04
(Website : www.financialexpress.com)

Government has started procuring foodgrains for public distribution from 14 states in the country from November after changing its policy to procure only from Punjab and Haryana, Lok Sabha was informed today. Panchayats have also been empowered to finalise the list of families below poverty line (BPL) so as to cover poorest sections of society, Agriculture Minister Sharad Pawar said during Question Hour.

Observing that procurement had been decentralised, he said foodgrains were being picked up from 14 states, including Bihar, and in most cases, the foodgrain procured from a state was distributed through PDS in the same state.

Courtesy: 123Bharath.com, 13^th Dec '04
(Website : www.123bharath.com)

Biodiesel or Asian soya rust? Neither will save vegetable oil prices from sliding in the next four months as stocks grow from harvests around the world, a leading industry analyst said on Friday.

Soyabean farmers have so far refused to bow to forecasts of lower prices, but that resolve was expected to last only until mid-December, said Dorab Mistry, a London-based director of Godrej International. A softer dollar and huge demand growth from projects using biodiesel — diesel diluted with palm oil — were among the factors holding up prices in the near term, Mr Mistry said.

Malaysian palm oil futures are currently hovering just below 1,500 ringgit, or $385, a tonne. Mr Mistry had predicted in September they could fall to 1,300 ringgit in coming months. Crude degummed soybean oil, palm oil’s main rival, is currently trading at around $480 FOB (free on board) for the months of December through February, ex-Argentina.

Prices could drop further in the first quarter of ’05 as supplies mount from harvests, Mr Mistry said. “The world will be in the process of rebuilding stocks of grains and oilseeds. The first quarter could turn out to be more bearish, because markets tend to discount future production and generally underestimate the demand which prices can stimulate.”

Courtesy: Economic Times, 28^th Nov '04
(Website : www.economictimes.com)

An increase of 11% in post-monsoon rain and new farm technologies are likely to more than make up for drought-hit kharif crop and result in a bumper grain production of about 220m tonnes in ’04-05, according to government estimates. “We are all set to record a bumper foodgrain production this year. We are confident that the shortfall in kharif would be more than compensated in rabi,” Mangala Rai, director general, Indian Council of Agricultural Research, said.

The agriculture ministry expects to record at least 4% higher foodgrain production in the current year than last year’s overall output of 212m tonnes. Mr Rai said the Food Corporation of India (FCI) has procured 1 lakh tonnes more of rice as on date in comparison to the same period last year. Sufficient post-monsoon rain would help in enhancing production of rabi crops like wheat and mustard by providing the much needed moisture to the soil, he said.

Courtesy: Economic Times, 26^th Nov '04
(Website : www.economictimes.com)

In an effort to boost cooperation in agricultural biotechnology research and development, India and the United States have entered into an agreement on Tuesday. A letter of intent to this effect was signed by minister for science and technology and ocean development Kapil Sibal and US ambassador David C Mulford on Tuesday.

Mr Sibal said that the main objective is to develop pest resistant agricultural produce and to improve food production in the country. The critical focus will be on the production of rice and wheat. As per the agreement, the department of biotechnology (DBT) of the government of India and the United States Agency for International Development of the US will coordinate between the two countries.

The programme will encourage the creation of partnership to bring together Indian and US institutions to pursue agricultural biotechnology research projects of mutual interest including technology development, technology diffusion, biosafety and related policy activities.

Courtesy: The Financial Express, 30^th June '04
(Website : www.financialexpress.com)

The World Trade Organisation today said the framework for discussion on agriculture subsidy would be ready by mid-July and the multilateral body is using some unconventional ways to break the deadlock on the contentious issue. WTO deputy director general, Mr Kipkorir Aly Azad Rana said at a CII seminar that the Geneva based organisation has set a new chair on agriculture.

Wide differences between the developed and the developing nations was one of the key reasons for breakdown of the Cancun ministerial conference of the WTO in September 2003. He said that agriculture was the most contentious issue in WTO as the issue of food security was most critical in developing countries. India believed that the issue must be tackled in a holistic manner as there were issues of exports, market access and subsidies.

Courtesy: The Navhind Times, 13^th Apr '04
(Website : http://www.navhindtimes.com)

India's oilseed exports are likely to nearly double in the year to March 2004 on the back of a good quality bumper crop, a top industry official said on Tuesday. Exports of top-quality groundnut and sesame seeds, used by the snack industry, are expected to touch 320,000 tonnes in 2003/04 (April-March) compared with 174,359 tonnes in the previous year.

India's oilseed output is likely to rise to 23.8 million tonnes in 2003/04 (November-October) from 14.9 million tonnes a year ago, according to the Central Organisation for Oil Industry and Trade (COOIT). Good weather and an increase in the area under oilseed cultivation have boosted production.

Groundnut, used in chocolates and to make peanut butter, is sold mainly to Indonesia, the Philippines and Europe. China, the United States, Turkey, Egypt, Taiwan and the Middle East import Indian sesame seed. India, a traditional importer of palm and soybean oils, resumed exports of groundnut oil in October after a gap of about four decades following a surge in world prices.

Courtesy: Reuters, 6^th Apr '04
(Website : www.reuters.com)

Sugar prices have slumped on the back of the announcement by the government for releasing as much as 2 lakh tonne extra free-sale sugar for the month of March. Sugar prices fell by a whopping Rs 800 per tonne following the central government's announcement. The total free sale sugar quota has now reached 12 lakh tonne for March.

Courtesy: Business Standard, 3^rd Mar '04
(Website : www.business-standard.com)