The Gravity of Agricultural Debt- The case of Punjab’s Debt Crisis

There has been an intense attention on improving farmer’s income. Finance Minister Arun Jaitley had in his 2016 budget speech, promised to double farmers’ income by 2022. “We need to think beyond food security and give back to our farmers a sense of income security.” he said. While such a move is is laudable and welcome, let us also see what prompted a countrywide response towards focusing more on income security of farmers.

The Debt Crisis:

Almost 70% of India’s 90 million agricultural households are spending more than they earn each month on average says an IndiaSpend analysis based on various government data. These conditions themselves push the farmers them towards debt, which is the primary cause in more than half of all farmer suicides in the country.

These figures show that the debt crisis is not just a result of some farmers being unsuccessful in their occupation but rather it is a overall vicious cycle gnawing at the whole of agricultural community.

The most affected by it are the marginal farmers. Nearly 62.6 million households which are spending more compared to what they earn have land holdings of one hectare or less. The NSSO data also shows that nearly 85% of all operational farm holdings in the country are smaller than two hectares in size.

What is also noteworthy is that less than a third of Indian small and marginal farmers have access to institutional credit. This indicates that the debt crisis at its core has non-institutional credit.

The Overwhelming Agricultural Debt Crisis of Punjab:

Of all the discussion about agricultural debt the case of Punjab has been the highlight. Punjab has been known for its agriculture and for its glorious share in overall national produce. But in recent years Punjab has been staring at an grave agrarian crisis with vast accumulation of farm debt.

A huge role has also been of inadequately planned policies. In the effort to prioritize short-term food security, it neglected long-term sustainability. Punjab farmers adopted the current mono-culture of rice-wheat cropping pattern having been lured by better MSP for rice and wheat. In the process crop-diversification was abandoned. While MSP for crops have been going down, input costs have only risen, while the soil fertility and productivity has fallen.

Agrarian crisis needs long-term solutions
Farmers from Punjab stage a protest at Jantar Mantar, New Delhi

A recent survey titled ‘Indebtedness among Farmers and Agricultural Labourers in Rural Punjab’, put the debt on the state’s farmers at Rs. 69,355 crore. This survey was conducted for the Indian Council for Social Science Research under Gian Singh of Punjabi University in Patiala. Of this, Rs 56,481 crore was institutional and includes both the borrowings, those of defaulters and those in the process of repayment.

The survey clearly pointed out that marginal farmers and landless labourers have no mortgage assets and are dependent mainly on non-institutional loans.

Here is the brief assessment of average debt for 2014-15:

Per farming household: Rs 5,52,064

Marginal farmers (with up to 2.5 acre land): Rs 2,76,83

Small farmers (up to 5 acre): Rs 5,57,338

Semi-medium farmers (up to 10 acres): Rs 6,84,649

Medium farmers (up to 15 acres): Rs 9,35,608

Large farmers: Rs 16,37,473

Landless Labourers:  Rs. 68,330 per household.

Its important to note the huge amount of debt bore even by landless labourers,its is deep crisis is that 80% of these households are indebted. 92% of them borrowed money from non-institutional sources.

Debt Protection:

According to a survey, 62% of farmers stated that they preferred to quit farming and move to cities. This is result of failed agricultural policies over decades. Steps have to be taken towards Debt Protection and its fallout.

To prevent suicides, farmers must be provided just compensation. Those who get burdened by debt must be given “debt counselling” to prevent possible suicide. There should be a law that would allow a debt-ridden farmer to file for bankruptcy in extreme situations.

Policies such as Pradhan Mantri Fasal Bima Yojana (PMFBY) should be penetrated deeper and farmers must be encouraged to get insurance as protection against losses and resulting debts.

Role of Weather Risk Management System (WRMS) in Debt Protection:

Indian farming has always been heavily dependent on the mercy of nature. Sudden changes bring out a lot of losses, this unpredictability itself is one of the major causes of agricultural losses and debts.

The survey states that approximately 70% of Indian farmers said that their crops got destroyed in the last three years. Primary reasons for which have been uncertain rainfall, drought and
flood, destruction of crop by diseases and birds/animal, and lack of irrigation.

It is to protect against these calamities that having a debt protection  helps immensely. The PMFBY is aimed at aiding farmers do this by massively funding insurance and ensuring that even small farmers get this benefit.

Founded in 2004, WRMS has pioneered the weather insurance industry in India and has already bailed out over 5 lakh debt-ridden farmers. It has taken the quest of debt protection and loss prevention under PMFBY even further.

It seeks to help over 2 crore farmers in its quest to facilitate them through their climatic expertise and provide prior support through innovation and technology.

Why Technological Penetration for Marginal Farmers is crucial?

The Agriculture sector in India is the core basis for food security and poverty alleviation. It also has an important role for nutritional security and sustainable development. The contribution to the GDP although declining is still the largest and 61.5% of the population is dependent on agriculture as the primary means of livelihood. Thus development of this sector has been very crucial.

As a nation we have pursued the development of this sector rigorously.  Some milestones of this development would include:

  • Green revolution,
  • Evergreen revolution,
  • Blue revolution,
  • White revolution,
  • Yellow revolution,
  • Bio technology revolution and the most recent one is
  • Information and communication technology revolution.

IT Technology has immensely aided easy application of precision agriculture. We have computerized farm machinery, better systems, efficient management that applies even for fertilizers and pesticides. Technology has accelerated information sharing,it was become a bridge for everyone. But there is still a long way to go especially when it comes to penetration of technology for marginal farmers.

Image result for penetration of technology

Why is Penetration of Technology so Important?

In his 2016 budget speech, Finance Minister Arun Jaitley promised to double farmers’ income by 2022. He said, “We need to think beyond food security and give back to our farmers a sense of income security.”

An Indian farmers average income over a decade (2003-2013) rolse only 5% according to Indiaspend analysis. Over 70% of farmers spend more than they earn, of which 62.6 million households are marginal farmers with land holdings of one hectare or less. Nearly 85% of all operational farm holdings in the country are smaller than two hectares in size, NSSO data show.

So if there has to be any progress at all in the agricultural sector it will have to start by empowering these marginal farmers.

While modern technology can be easily adopted by big farmers, it is the penetration within marginal sector which will make the difference.

Efforts have already begun.  The Central government as well as  state governments along with private organisations are already on the move. They have deployed Information & Communication Technology (ICT) measures for agriculture extension such as:

  • ITC- e-choupal,
  • e-Krishi,
  • Kisan Kerala,
  • Aaqua,
  • My Farm Info portal,
  • Mahindra Kisan Mitra,
  • Village knowledge centers (VKCs)- M.S Swaminathan Research Foundation (MSSRF),
  • IFFCO Agri-portal,
  • Village resource centres (VRCs)- Indian Space Research Organisation, etc.

The ICT applications meant for rural section can be classified into these three categories:
1.Solutions aimed at empowerment

2.Solutions that would enable.

3.Solutions meant for market expansion.

Image result for ict in agriculture

But there is still a long way to go and efforts have to continue in terms of awareness building and training. Most households even if illiterate do not have that technical grasp yet to effectively use these portals. The technology has to be accessible to everyone and should provide practical solutions.

How does My Farm Info help with penetration of technology? is basically an agriculture information system to aid farmers maximize their income. It does so by providing ways to increase the yield as well as helping them get best price for their produce.

This is an open portal and can be used by anyone with access  to internet. The usage is pretty simple as well. Once you geo-tag your farm the rest of the data is instantly available and does not require special skills of usage.

It helps improve yield by providing information on:

  • Crop Feasibility– Farmers can find out the most feasible crop according to soil type and loss estimates.
  • Crop Management- Here farmers get information to deal with pests & diseases, nutrition, water, weeds, etc.
  • Farm Management- Farmers have access to all details about their farm and use it for planning and crop scheduling, they also have access to weather forecasts, flood risks, wind risks.
  • Services such as Soil Doctor- to improve soil health, Plant Doctor- fighting plant diseases, Crop Secure- Securing your crops with Insurance, Nimbu Mirchee-  High-tech transport and storage services.

It helps farmers get better price for their products by delivering the best prices in nearby Mandis and also shares nearest export points and storage units.

All of these services are based on vast infrastructure spread across the country by Weather Risk Management System (WRMS) over decades. It years of work and technological placement that allows any farmer anywhere in India to access this portal and get such kind of detailed information in the easiest way possible.

This is one of the best examples of taking world class technological infrastructure to the masses and enable and empower them with information.

While big farmers could afford to get some  expensive external help, it is MyFarmInfo that truly empowers the marginal farmers with such penetration of information and technology.




Investments and Innovations in Farming- Irrigation, Seed, Fertilizers and New Technologies

India still is majorly an agrarian economy with an increasing service-sector touch. The agricultural sector is the largest employer, with 49% work-force owing direct dependence on it. With Food security becoming a crucial aspect of policy making, its no doubt that investments in Farming sector look bright.

According to the report over $3.23 Bn was invested in agriculture sector worldwide in 2016. Of this, 53 Indian agritech startups raised $313 Mn. The investments have been across various spectrums. Majority of public sector investment is still captured by Irrigation but we have also seen good development in fertilizer sector.

Then there are developments and innovations such as HVY (High Yield Variety) seeds, the implementation of which largely also depends on effective irrigation practices. There is much needed requirement of wide scale adoption of technology to transform the agricultural sector in India, to blossom it to its full potential.

We at MyFarmInfo have a wide array of technology powered services on our open platform for anyone to use.

Understanding the Agriculture Scenario:

Even though we speak a lot about importance of agriculture and food security, the fact is that the main stakeholders ie farmers are not in a very good state. Poverty and growth aside, a total of 296,438 Indian farmers committed suicide from 1995 to 2013.  According to 2014 National Crime Records Bureau report farmer suicides account for 11.2% of all suicides in India.

If the agriculture is such a lucrative and promising sector, we need to understand what leads majority of those involved to such doldrums. Activists and scholars have offered a number of conflicting reasons for farmer suicides, such as monsoon failure, high debt burdens, government policies, public mental health, personal issues and family problems.

Such has been the sustained continuity of these events, that these problems are now almost internalized and anyone venturing into this sector has the onus to primarily solve these first. While the government has allocated grants of 70,000 crores on fertilizer subsidy, 9000 crores allocated for crop insurance and a mammoth 6,000 crore for electrification for this fiscal year alone, without innovation in crucial sectors not much will change.

As the State of the Indian Agricultural Report points out- There needs to be work to enhance productivity, easy and reliable access to inputs such as quality seeds, fertilizers, pesticides, access to suitable technology tailored for specific needs and the presence of support infrastructure and innovative marketing systems.

Investments in Irrigation Sector:

Irrigation has been a major concern due to unpredictable rains for decades. Although major developments have taken place in tackling it, with initial 5 year plans focusing a lot on this aspect there is still a long way to go.  Only 5 states have 50% or more irrigated area and most specifically, Maharashtra (16% irrigated area) has acute lack even after possessing maximum number of dams. Lack of canal connectivity directly affects the small farmers. 85% of the farmers own less than 2 hectares of land. This further trickles down to low productivity.

This study reports that share of the Indian Government in total investment cost has declined relative to that of the external funding agencies. The role for external agencies is growing. Even Finance Minister Arun Jaitley was quoted “Investments in irrigation leads to social satisfaction and economic prosperity”, while releasing funds for the 16000 cr Polavaram irrigation project. This scoping study by Asian Development Bank highlights the opportunities in detail.

Investments in Seeds, Fertilizers and Technology:

Ram Kaundinya, a founding facilitator of FSII (Federation of Seeds Industries in India) shared in an interview that aggregate research investments by all FSII members is put at ₹550 crore per annum. This is 75% of the total research spend of the seed industry in the country. There is also significant opportunities in HYV seeds.

We already talked about fertilizer subsidies.  In the current scenario there are 57 large-sized and 64 medium- and small-sized chemical fertilizer production units in India. Reports say PSU will invest Rs. 30000 cr to revive 4 mothballed fertilizer  plants.

Technology remains of the most crucial aspects in farming sector. Globally the investment of $405 million in startups of precision agriculture technologies, which include data-capturing devices and farm management software, while investment in Novel Farming Systems was $247 million. India stands second in terms of area of land under agriculture but the productivity levels are comparatively quite low. This is where technology will play a driving role.

Role played by MyFarmInfo:

My Farm Info has steadily evolved as a firm bridge connecting the backward linkages (seeds, fertilizers, irrigation, machinery and credit) with the forward linkages (agro-education/awareness, market information, transport and value addition).

This open platform delivers optimal market place ie. Mandi for farmers, there are avenues for knowing crop feasibility, improving yields. Crop Management options allow for disease prevention along with optimal fertilizer usage information. Farmers can get weather forecast, get better seeds.

This whole technology if utilized well can drastically change the Indian farming scenario and the methods for good.