Aug 27, 2015

When farmer leaders meet. You can't ignore what they say.

Farmer leaders attending a National Convention in Chandigarh, Aug 19-21, 2015

At least for four times during the day, Finance Minister Arun Jaitley on Monday talked to the media to allay any fears arising from the crash of the stock markets, perhaps the biggest fall in seven years. By the evening the nation was informed that the Prime Minister Narendra Modi was personally keeping a watch on the volatile situation.

Some called it heartbreak, others termed it as mayhem. As the Sensex plunged 1,624 points, panic spread, and I heard a number of TV anchors calling it as a ‘bloodbath’. When asked to comment, I said: “The real bloodbath is happening on the farm. As of date, 3.05 lakh farmers have committed suicide in the past 20 years and I have never seen any Prime Minister, what to talk of a Finance Minister, even expressing concern at the continuing serial death dance on the farm.”

Only 1 per cent of India’s population invests in stock markets. And look at the shock that the media – both newspapers and television – are expressing. Look at the way the mandarins in the Finance Ministry go into a huddle to find ways to tide over the crisis, and repeatedly assure the country that all is well. Every hour, two farmers commit suicide somewhere, with the death toll mounting over the years, neither the media nor the mainline economists and planners have ever shown any remote concern.

This dichotomy in thinking – where 99 per cent are ignored at the cost of the privileged 1 per cent – is what brought leaders of 40 farmer organizations across the country for a 3-day intense deliberations at Chandigarh last week. They came from as far as Tamil Nadu, Karnataka, Kerala, Orissa, Chhattisgarh, Madhya Pradesh and Bihar to share and understand the real causes behind the continuing agrarian crisis, and more importantly on how to put agriculture back on the national agenda. The underlying objective being on how to restore the voice of 60-crore farmers and at the same time bring back the pride in farming.

Agriculture has disappeared from the economic radar screen of the country. Over the past few decades, in line with the World Bank directive, farmers are increasingly being pushed out of farming. This is exactly what the World Bank had wanted India to do way back in 1996. It had directed India to move 40-crore people out from rural areas into the cities, by 2015. This is what worries the farming community. Farmers know that conditions are being created by successive governments – both by way of economic policies and by bringing in legislations like the land bill – to force them out of the villages.  

“Farmers are only a political raw material and all political parties have used them time and again for their political gains, to be dumped again,” says Balbir Singh Rajewal, leading a faction of the Bharti Kisan Union. Uttar Pradesh farm leader, V M Singh puts it more succinctly when he says it is an ‘aar par ki ladai’ – political parties lead us across the frontier only to later make money by trading our interests’. While farmers continue to produce for the country year after year, they have been sliding into debt, which has been mounting with each passing year. Farmers realize that they are deliberately not being paid for what they produce. “The Minimum Support price (MSP) we get is not what we deserve but what will keep consumers and industry happy,” lamented Pachhe Nanjudaswamy of the Karnataka Rajya Ryot Sangha. 

Over the years, farmer leaders too have lost credibility among the farming communities. Farmer leader too realize that farmers are increasingly losing faith among farmers. They are divided on lines of ideology, caste, egos and political affiliations. Many believe that farm unions today are explicitly divided on caste lines. The reservation movement in several parts – whether it is Patels in Gujarat, Gurjars in Rajasthan, and Jats in Haryana and Uttar Pradesh actually comprise farmers who have been divided on majority caste basis. While a majority of these agitations draw strength from the farming community of a particular class, farm issues have been pushed to the background. “The farmer movements began to fail after the advent of Panchayati Raj,” said Ajay Vir Jakhar of the Bharat Krishak Samaj. 

Tiding over the internal problems that farmers’ movement across the country faces is one hurdle that the leaders need to cross, but it is the discriminatory economic policies being perpetuated over the years is what angers the farming community most. Farmers are amongst the lowest earning class in the country with the average income per family from farming operations not exceeding Rs 3000 per month. This is because the procurement price has been deliberately kept low. Cotton farmers for instance have been paid 20 per cent less than the market prices simply to keep the textile industry viable. Wheat and rice procurement price are increased by only Rs 50 per quintal this year, which is roughly an increase of 3.25 per cent, simply to ensure that food inflation remains in control. In other words, the burden of keeping food prices low and to ensure cheaper raw material for the industry lies on the farmers.

How to raise farm incomes therefore is becoming a rallying point for farmer organization across the country. Bridging their local and regional differences, farmer organisations are now coming together on three points:

1) An assured monthly take home income package for farmers. If a chaprasi can have a monthly income of Rs 15,000 why should farmers not get an equivalent of what a Class III in the Government gets? In the 7th Pay Commission the demand is to give chaprasi a minimum income of Rs 29,000. Why should a farming family be left to survive on Rs 3,000 a month?

2) Minimum Support Price (MSP) should be extended to all crops and for all regions. At present, MSP is announced for 24 crops but in reality only wheat and rice are procured. The Fair and Remunerative Price for sugarcane is also being dispensed with. Farmers want an assured procurement for all crops for which prices are announced, and at the same time setting up APMC mandis across the country. Against the need for 42,000 market yards, only 7,000 mandis exist at present.

 3) Import tariffs and custom duties to be raised so as to provide protection to the domestic farmers. Importing cheaper and highly subsidized food and food products hit domestic farmers. India at presents imports Rs 60,000-cre of edible oil just because the import duties have been lowered to almost zero. If the duties were kept in place, the oilseed farmers should have gained by Rs 60,000-crore that is spent on importing edible oil. 

Aug 26, 2015

The Onion Game

The recurring onion price rise after every two or three years follows a set pattern. A set of similar measures – raising the minimum export price, announcing imports, and warning the hoarders -- are announced every time to bring down the prices. And the game goes on.

In the past few weeks, onion prices had hit the roof. From Rs 15-20 per kg, prices had gone up to Rs 70-80 per kg in various parts of the country. While the high prices cut a hole in your pocket, the arguments defending the price rise were the same. We are told by the trade that unseasonal weather conditions -- rains in May and June, followed by drought in Maharashtra, Karnataka and Andhra Pradesh – had reduced production and also hit the supplies. Blaming the freak weather in the kharif season has been a set excuse that has been thrown around time and again by unscrupulous traders. This had happened in the past too.  

But what is not being told is that there is no shortfall in onion production this year. Against last year’s harvest of 19.4 million tonnes, onion production this year is 18.9 million tonnes, a drop of just 0.5 million tonnes. With a drop in production by less than one per cent how can the retail prices zoom by 400 per cent or more remains unexplained. There is no plausible justification therefore for the rise in onion prices that we are witnessing except that a well-oiled system of organized hoarding, speculating and black-marketing is ripping us off.

Two years back, in 2013, onion prices had gone on a high. Prices had gone up to Rs 100/kg and the high prices had prevailed for a longer period -- July to September. Again there was no justification for the stupendous price rise. Production had fallen short of the target by just 4 per cent whereas retail prices had jumped by 600 per cent. This is simply not possible unless large scale hoarding had taken place. Such was the extent of price manipulation that an investigation by a newspaper had shown how the traders made a neat Rs 150-crore in just four days when prices peaked at Rs 4,500 per quintal on Aug 13, 2013.

Again, the solutions to address the price rise were no different than what have been spelled out this year. Hiking the minimum export price, placing orders for imports and warning the hoarders of stern action. The government had also promised to streamline the supply chain. You have heard it a number of times.

Let’s now go back to 2010 when onion prices had shot up to Rs 80 per kg rather unexpectedly. Production had exceeded the demand by 20 per cent, and yet a phenomenal price rise was observed. This happened in December, and had the backing of the government which wanted the onion story to justify the approval for FDI in retail. It was said that the prices are zooming because the middlemen were exploiting both the producers as well as the consumers. The entry of big retail like Wal-Mart would remove the middlemen bringing relief to everyone. But what the government did not tell was that Wal-Mart was also a middleman, which would only remove the small players from the game.

If there is no shortfall in production and still the prices go through the roof then there is something more than what meets the eye. Let’s be clear that the onion price raise in 2013 (and also 2015) happened at a time when elections were due. I am not trying to link the onion prices with ensuing elections but it certainly is baffling to find onion prices going up unexpectedly for no reason. Perhaps it is a good research topic for political economy students.

What I am sure is that onion price spike will continue to be a recurring phenomenon in the years to come. Just before or after a major election, you will find your favourite veggie -- onions -- turning into a tear-jerker. Onion is the only veggie which has a long self-life. It is therefore easy to play the onion game. Just be ready to wipe your tears again whenever the same game is played out in the years to come. #

Source: The Onion game: Playing to the rules. Aug 25, 2015

Aug 11, 2015

The great legacy of Abdul Kalam most will not even want to talk about

The other day I was a watching a replay of Shekhar Gupta’s Walk the Talk with the late A P J Abdul Kalam. To a question whether it was right that he had walked into the Rashtrapati Bhawan with just two suitcases and when his term ended he left the sprawling presidential estate with the same two suitcases, Abdul Kalam innocently shared details of what all he carried in those two boxes.

In today’s world, where increasing consumption is the key to economic growth, and especially given the immense popularity of ‘People’s President’ Abdul Kalam, I thought the great legacy left behind by him -- to live within your means -- would leave an indelible mark on this nation’s psyche and perhaps inspire the Gen Next.

It didn’t happen.

For a generation born much after Independence, Abdul Kalam symbolizes simple living and high thinking. As if emerging from the pages of Aesop’s Fables -- the story of a fisherman’s son becoming a nuclear technologist and then going on to occupy the highest office of a President -- would remain part of the public discourse. The only difference being that this is not a story but a reality. Abdul Kalam is certainly the new role model.  

While his life is truly inspiring I doubt if the legacy he left behind in the form of simple living would ever receive as much attention. Keeping your wants to the minimum and reducing your needs is the key to retain the sustainability of the planet. The more we consume, the more we exploit the natural resources, and that leads to an irretrievable damage. If only we were to gradually shift from an ostentatious lifestyle to simple living as Abdul Kalam had remarkably shown, we would have done our bit to save the world.

In a desperate effort to ape the western lifestyle, the burgeoning middle class in India, is on a killing spree. Several studies have shown that if an average Indian household were to consume as much energy as an average American family, the world would have boiled over some 50 years ago. Not only energy, living at a time when the popular slogan is “To Shop, Till You Drop Dead,” the middle class is on a buying spree as if there is no tomorrow. The more you shop, the higher is the GDP growth. So, the Reserve Bank of India’s macro-economic policies are aimed at increasing consumption, industrial growth including the growth in the sale of FMCG products depends upon your capacity to buy. The government creates the enabling environment so as to increase consumption.

Many a times I am reminded that the real cause behind the continuing agrarian crisis is that farmers have failed to reduce the cost of production. At a time when the input prices have been soaring and the output prices have remained almost static – wheat procurement prices have risen by an average of 7 per cent only over the last three years – all hell breaks loose when food inflation inches up. Cut down on wasteful subsidies – which means cutting down on subsidies for the poor -- to reduce the fiscal deficit is the common refrain. But when I ask why middle class can’t be made to reduce their cost of living, which in turn would reduce the massive salary hike bill every year, I am looked upon with a lot of disdain.

Just think. If only the middle class would refrain from replacing electronic gadgets and household goods at the drop of a hat like replacing the 38-inch LED TV with a 68-inch quad pixel version; upgrading from Toyota Innova (selling it on Quickr) to an expensive BMW, and so on, the cost of living would come down. The lower the consumption, the lower would be the cost of living. The responsibility to reduce cost of production should not be left to farmers alone. The middle class too must reduce its cost of living. What you don’t realize is that because the urban middle class is organized they manage to get salary hikes and DA installments that take care of all the luxuries they splurge in.

Abdul Kalam’s pious message is somehow lost in this maddening rat race aimed at making you consume more. 

Source: The great legacy of Abdul Kalam. Aug 5, 2015.

Aug 6, 2015

APMC regulated market network needs to be expanded in India. That will be the true integration of agri-commodities markets.

Here is an interview with the World Trade Centre, Mumbai. 

While India is one of the largest producers of foodgrains, around 194.6 million people are undernourished in the country (according to the latest FAO estimates). What are the fundamental issues ailing the food production and distribution sectors in India?

India faces a shameful paradox of plenty. On the one hand the grain silos/godowns are bursting at the seams and on the other hand India has the largest population of hungry in the world. As far as acute child malnourishment and undernourishment is concerned, India ranks below sub-Saharan Africa. This piquant situation has prevailed over the decades because of gross mismanagement in handling food reserves. Since 2001-03, the average annual surplus food stocks in the country have been around 60 million tonnes and yet millions of people continue to go to bed empty stomach and are faced with household food insecurity. In June 2014, India had a record surplus of 83 million tonnes. In fact, if the surplus food was to be stacked one bag over the other, and stocked like this in a single row, it is possible to walk up to the moon and come back. With so much of food surplus lying around, I don’t see any reason why still one-fourth of the world’s hungry should be living in India. The primary reason for the failure to tackle food insecurity is the inherent limitation in addressing issues related to access and distribution of food. Feeding the country should be the foremost task for any government. In the past two years, India has exported more than 40 million tonnes of foodgrains. I don’t see any economic rationale for any nation to be exporting food when its own population is living in hunger.  

The government is taking several steps to address huge post-harvest losses in fruits and vegetables, and food grains. These include providing infrastructure status to cold chain facilities, Central Sector Scheme of Cold Chain, Value Addition and Preservation Infrastructure, assistance on capital cost for integrated post-harvest management etc. What are your observations on these steps and what more should the government and private sector do to prevent losses?

While it is true that post-harvest losses should be minimized, but in India the losses being projected are simply blown out of proportion. For the past 30 years, I have been hearing that 40 per cent of food goes waste in India. I don’t know from where the figure came around and has been very conveniently used time and again. A study done of the Central Institute for Post Harvest Engineering and Technology (CIPHET) at Ludhiana, on the basis of a countrywide study, worked out looses in cereals at 4.3 to 6.1 per cent; pulses 4.3 to 6.1 per cent; Oilseeds: 6 per cent; meat: 2.3 per cent; milk: zero per cent; wastage n fruits varying between 5.8 per cent (in Sapota) to a maximum of 18 per cent for Guava; and in vegetables cauliflower has the minimum wastage at 6.8 per cent while wastage in tomato is the highest at 12.4 per cent. Compare this with America, where 40 per cent food is wasted before it reaches the table. It is also estimated that roughly 52 per cent fruits and vegetables rot in the supermarkets.

This does not however mean that whatever is being wasted should be allowed at any cost. Infrastructure like cold chains and for minimizing post-harvest losses is certainly needed. It is good that the government has stepped in to provide financial support to the industry. But much of the wastage is at the food processing level which is not at all being talked about. The thrust of food processing in the name of reducing wastage is meaningless till the food industry pulls up its act. For instance, I see no reason why 6 litres of water be wasted to pack one litre of bottled water. Similarly, 75 litres of water goes down the drain to produce 25 litres of drinking water in an RO machine. Why shouldn’t the private industry focus on reducing such gross wastages is something that is not even on the agenda. For the processed foods also, the wastage is enormous. I am equally worried at the growing tendency of the food industry to import fruit concentrates, and then pack them into tetra packs. In case of tomatoes for instance huge quantities of tomato paste are being imported for use in ketchups and other products. This will not reduce the wastage in domestically produced fruits and vegetables. At the same time what is the justification in importing apples from as far as Chile and New Zealand when the domestic supply goes waste. Such unwanted food shipments also add to food miles and of course global warming. 

India’s public distribution system is fraught with numerous issues like poor targeting, leakages, non-transparent administration etc. What is the ideal way to reform the system?

There is no denying that India’s Public Distribution System (PDS) is fraught with leakages. Reaching food to every nook and corner in a big country like India is no easy task. While leakages have to be further curbed to ensure food reaches in time to those who need it, the task of ensuring household food security needs a radical overhaul. I am of the opinion that in a country like India, which has roughly 6.4 lakh villages, the paramount task should be to turn these villages self-reliant in food production and consumption. Each village or a cluster of villages should be in a position to take care of its own hunger and food insecurity. This can only be possible if India shifts to setting up of community foodgrain banks in each taluka or a panchayat. These community foodgrains banks should be managed by women self-help groups or village communities, and should be based on the concept of local production, local procurement and local distribution. This system was prevalent in India before the British came and still exists in several pockets in the country. Ensuring food security at the household level would also mean that an adequate push comes for producing and distributing food locally which would significantly minimize losses in transportation. It would mean that food distribution gets decentralized. This would also ensure that India will not have to worry about WTO obligations, which are aimed at dismantling or severe curtailment of PDS operations. If the villages are able to take care of their own food security needs, it will reduce the dependence on PDS, which can then be effectively targeted for the urban areas.

The government is planning to unify the agriculture markets across the world through the Agri-Tech Infrastructure Fund (ATIF). Under this scheme, a common e-platform would be set up and deployed in 585 selected wholesale regulated markets across the country. Can you share your thoughts on the unification of agriculture markets in India.

It is certainly important to use the latest technology tools in agricultural marketing. Setting up a common e-platform in 55 selected wholesale regulated markets comes from Karnataka which has given the country an idea to integrate the existing APMC markets through a common e-platform. If the establishment of a Rashtriya e-Market Services Private Ltd, a 50:50 joint venture with NCDX Spot Exchange, was helpful indeed I fail to understand why Karnataka farmers are not getting the right price for their produce. Already 55 of the 155 main market yards have been integrated into a single licensing system. And yet, Karnataka is faced with an unprecedented serial death dance on the farm with almost 100 farmers committing suicide since June. In my understanding, the e-platform is nothing more than a spot exchange, which even in Karnataka has performed well only for coconut. To expect this e-platform to be the solution to the existing crisis in agriculture is certainly too far-fetched and has not been well thought off.  What India needs desperately is to make adequate investments in setting up a huge countrywide network of APMC regulated markets. At present, about 7,000 APMC markets exists in the country against the requirement of 42,000 mandis if a regulated procurement centre is to be provided in the range of 5 kms from each village. This will enable not only an assured market for the farmers but at the same time help in the providing an assured procurement price to the farmers.

Since only 6 per cent farmers get the benefit of procurement prices, 94 per cent farmers are already dependent on the markets. If the markets were so effective, farmers wouldn’t have been committing suicides in droves and wanting to quit agriculture if given a choice. Take the case of Punjab and Bihar. Punjab has a widespread network of AMPC markets. Bihar had revoked APMC Act in 2007. The result if while Punjab farmers got a procurement price of Rs 1450 per quintal for wheat this season, Bihar farmers were able to sell their wheat crop at a distress price of Rs 800-900 per quintal. Dismantling APMC markets in Punjab, if successful, would turn Punjab farmers the Bihar way.

Use technology to remove middlemen in the APMC regulated markets, but dispensing with APMC markets would only add on to the prevailing agrarian crisis. The need therefore is to expand the network of APMC markets throughout the country and provide assured purchase of all the 23 crops for which the procurement prices are announced. This will be the true unification of the agricultural markets. This would require investments in setting up warehouses. But if the government can make investments in building panchayat ghar in 2.5 lakh panchayats, I don't see any reason why warehouses cannot be built in these panchayats. It doesn't need a rocket science to build a warehouse.

Is contract farming a solution for some of the problems in the agriculture sector in India? How far has contract farming been successful in India and what can be done to promote it across the country? 

Contract farming has been successful in some crops in some parts of the country. But the experience of contract farming in most staple crops has not been satisfactory. So it has been a mixed experience. There are numerous studies that bring out the flaws in the existing system and also what needs to be done to make contract farming workable for both the farmers as well as for the private companies. Traditionally, sugarcane is a crop which operates under a bonding system with the sugar mills which in many ways is like contract farming. But the recent experiences with the bonding system in sugarcane, where sugar mills are unable to pay the huge cane arrears, shows that not all is well with even the bonding system. I think contract farming should certainly be workable, if the rules under which the contract operates are transparent and are pro-farmer and pro-environment. Since most food industries are keenly looking for short-term profits, a highly intensive cropping system is followed. This results in massive environmental destruction. Precautionary clause must be weaved in the contracts where it must be mandated to maintain soil fertility at an acceptable level. 

Talks on the Doha Round of the WTO has not seen significant breakthrough in the last decade because of diverging positions of different countries on trading in agriculture. What are the flaws in the existing trading regime on agriculture and how can they be rectified?

Ever since WTO came into play, my own studies (available on the web) have shown that more and more developing countries are turning into food importing countries. In fact, 105 of the Third World countries have already become food dependent and if the Doha Development Round goes ahead with the Special and Differential Treatment being withdrawn for the developing countries as being pushed by US/EU, India would be at a receiving end. Already, India’s procurement prices are under a chopping block. While it may not be possible to detail everything that is wrong with the trading regime in agriculture, the main obstacle is the refusal by the rich developed countries to reduce their phenomenal farm subsidies. With agricultural subsidies in rich countries now exceeding $ 500 billion every year, and with the US alone making a provision for $ 960 billion in agricultural support over the next 10 years under the US Farm bill 2014, agriculture of the rich countries remains robustly protected. These countries are wanting the developing countries like India to provide more market access by cutting down on the applicable bound rates, which means further lowering the import tariffs. For a country like India, importing food is like importing unemployment. The more agricultural commodities India imports would mean more small farmers are out of production. Although the Govt so far appears steadfast on not compromising on food security needs, it remains to be seen how will India negotiate at the ensuing WTO Ministerial in December.  

Most of the farmers in India are small and marginal land holders. The greatest challenge is to improve productivity in these small holdings. What is the role of the government, community-based organizations in achieving this?

Yes, most of India’s farmers are small and marginal. The greatest challenge is not only to improve productivity in these small holdings but to provide an economic price to these farmers. All these years, food prices are deliberately being kept low so as to keep food inflation under check. In other words, farmer is carrying the burden of providing cheap food to the consumers. This is grossly unfair. While incomes for all sections of the society have multiplied in the past 45 years, farm output price has been kept artificially low. In 1970, the procurement price for wheat was Rs 76 a quintal. Forty five years later, in 2015, the procurement price for wheat is Rs 1450/quintal. Wheat price has gone up by roughly 19 times. In the same period, the average basic salary plus DA of central government employees have risen by 110 to 120 times; of school teachers by 280 to 320 times; of college/university teachers by 150 to 170 times; and of mid to high class corporate sector employees by 350 to 1000 times. In the same period, school fees have increased by 200 to 300 times; medical treatment cost has gone up again by 200 to 300 per cent; and average house rent in cities has risen by 350 times.

The primary task should be to bring about an income parity between the farming and non-farming class. I find while no one talks of how to provide a remunerative income to farmers, productivity improvement is being talked about simply because it provides a market for input suppliers. More income in the hands of the farmers would be a blessing for the industry which will see a jump in demand for consumer goods. The industry therefore should also support the need for providing a higher assured income to farmers. A National Farmers Income Commission, which is able to work out a minimum take home package for farmers every month, is the crying need.

Agriculture also needs a heavy dose of public investments. In the 11th Plan period only Rs 1 lakh crore was allocated for agriculture. In the 12th Plan, the allocation was increased to rs 1.5 lakh crore. In other words, in 10 years, agriculture received a public sector investment of only Rs 2.5 lakh crore. This bias against agriculture needs to be immediately corrected. #

Source: 'Strengthening APMC network is true integration of agri-commodities markets in India.' WTC website, Mumbai. Aug 2015.

Aug 1, 2015

Tougher laws needed to regulate food industry

Only a few days back, the US government reached an out of court settlement with British Petroleum (BP) for a 2010 oil spill it had caused in the Gulf of Mexico. The oil major will pay $ 18.7 billion in damages.

Spewing 4 million barrels into the sea, the oil spill had caused 11 deaths and led to a massive destruction of the marine ecosystem. Instead of worrying about how the huge penalties will impact future investments, I remember US President Barack Obama saying soon after the oil spill happened: “Will make BP pay.”

And it did. This is how the world’s only superpower means business. 

While it may be perfectly right to feel outraged at the huge BP oil spill penalties when compared with the paltry compensation package of $ 470 million that Union Carbide was made to pay for the Bhopal gas tragedy, in which some 10,000 people had died, I thought over the past three decades India had learnt the lessons the hard way. The desperation of foreign investments will not be at the cost of human lives, food safety and the environment. After all, there had been heated debates on the questionable role of politicians, judiciary and the industry leaders in ensuring justice to the victims.  

But I was wrong. Following the recall of Nestle’s maggi noodles, Food Processing Minister Harsimrat Kaur Badal has accused the food regulator – Food Safety and Standards Authority of India (FSSAI) – for inculcating an “environment of fear” in food industry. Her ire was obviously aimed at the food safety organization which had imposed a ban on maggi noodles in June. Addressing recently the regional CII office in Chandigarh, and later in a detailed interview with a newspaper, she criticized the spurt in food safety tests which she believes is hampering more investments to come in. Her man argument was that there is no testing protocol for quality check on processed food. She also blamed the return of ‘Inspector Raj’ that is haunting the food industry.

Mrs Badal’s outburst against FSSAI comes at a time when a US study has found sugary drinks responsible for 184,000 deaths globally every year. Considering that the consumption of sugary drinks has multiplied in India over years, and knowing the damming health impacts, including fatalities, it leaves behind, I expected the Food Processing Ministry to launch a massive nationwide campaign to educate people about the dangers of consuming colas, and at the same time directing the manufacturers to ensure that the sugary drinks being sold are completely safe for human health. For instance, the well-known food writer Vir Sanghvi has in a recent tweet asked Pepsico to explain why the beverage company is using Aspartme in sugary drinks in India whereas  completely blacking it out in America?

The Diabetes Foundation and the Centre for Nutrition & Metabolic Research has pointed to the continuous rise in consumption of sugary beverages, including energy drinks. With per capita consumption of sugary drinks rising from 2 lit in 1998 to 11 lit in 2014, these sugary drinks are being blamed for an increasing number of deaths and disabilities.  Considering that Swami Ramdev has been repeatedly warning people against using these sugary drinks claiming that these sodas as good as toilet cleaners, I had expected the Food Processing ministry to be extra vigilant.

The task to ensure processed food is undoubtedly safe becomes more onerous and urgent in the light of the report submitted by the US President’s panel on cancer. It estimates that 41 per cent of Americans living today will suffer cancer in their lifetime. The report warns against the pervasive use of chemicals in processed food – including pesticides, insecticides and synthetic ingredients in the processed food. Fighting cancer therefore requires tougher laws and strict implementation of food laws. If the US food industry was responsive enough, the country wouldn’t have faced a cancer epidemic. But still, the food industry does adhere to the quality standards in US/Europe. Much of the problem in the developed countries is because of lax quality standards in view of the aggressive lobbying by the industry.

Following the maggi noodles ban, the FSSAI has drawn samples from some of the major brands like Hindustan Unilever, Britannia, Nestle India, Heinz India, MTR, Haldiram and others. Quality test of food products for safety certainly warrants urgency considering that food adulteration and contamination has become rampant over the years. With nearly 80,000 food processing companies in operation, including Big Food, and with hardly any quality laboratories to check what goes inside, manufacturers have had a field day so far.

It took 16 months from the day the first maggi sample was drawn to the final test report. Woefully lack of adequate testing laboratories all these years has therefore been an easy escape route for the food companies to manage getting Scott free. A Zee Business report showed how 75 per cent companies, whose samples were drawn, escaped being penalized because of gaps in quality testing. In the past five years, only 25 per cent of the 53,406 companies whose samples had failed to conform to quality standards, could be penalized. The penalties of course are too low which does not provide any deterrent.

It is alright to decry ‘Inspector Raj’ but unless the inspectors draw samples regularly how will the food processing industry be made to clean up its act? In China, there exists one food quality laboratory for 0.2 million people. In India, one lab is available for 88 million people. The thrust therefore should be to increase the number of quality testing labs at a phenomenal rate. And I am sure the Chinese labs are not only for decorative purposes but for testing food samples. If the food industry is perfectly comfortable with regular food testing in China why it should cry foul in India?

The need for investment therefore should not be compromised in the name of tougher food safety laws as well as environmental norms. India needs responsive business, and all investments must respect the rights of the people. The food industry must be asked to adhere to the safety laws, and if it is unable to do so, be directed to pull down the shutter. #

Food industry must sticks to safety laws. Hindustan Times. July 16, 2015.

Jul 28, 2015

Rural India has to be the pivot of Skill India. Start with farmers

In the midst of all the excitement generated over the launch of an ambitious ‘Skill India’ initiative, I find two news reports to be particularly disturbing. These reports are a reflection of the worsening job scenario, with or without specially acquired ‘skills’.  

In Madhya Pradesh, 362,685 people applied for the jobs of peon/guards in 58 State Government departments. Of these 14,000 were either post-graduates or engineers. They all sat for a written examination. I wonder what kind of special skills are required to be a peon/guard that they need to go through a written test. Anyway, another news report tells us how a Mumbai-based post graduate, with four degrees in hand, including an MA in globalization and labour from the Tata Institute of Social Sciences, is working with the Mumbai Municipal Corporation cleaning the city’s garbage. An MBA was among those who had recently applied for 26 jobs of peons in the Punjab and Haryana High Court in Chandigarh.

While the ‘Skill India’ initiative to provide particular skills to 400 million people by 2020 is certainly welcome, I don’t know whether we already have an over-skilled work force or we have a long way to catch up with some of the developed countries record in providing skills. For instance, if India were to just categorise its 52 per cent farming population as skilled workforce, it will immediately move into the developed country category with over 50 per cent skilled manpower. Farming being a skilled profession, farmers have been deliberately treated as non-skilled workers. Categorising farmers as skilled workforce has financial implications, including ensuring minimum wages, paying health expenses and also providing post retirement benefits. That’s why farmers are kept out.

Similarly, I find one of the biggest employment generating sectors – temples/churches/gurdwaras – to be outside the purview of skilled workforce. Those who join these religious institutions are also skilled, even if they don’t require an ITI diploma.

The definition of what constitutes a ‘skill’ therefore has to change. I see no reason why farmering, which employs 52 per cent of the population, should not be included as part of the skilled workforce. At the same time there is a dire need to launch a skill improvement programme for young farmers with adequate financial and institutional support to enable them to become start-ups and entrepreneurs. There is a much greater possibility to turn the young workforce in rural areas to learn avocations that can make them self-employed. This is specially required considering that nearly 81 per cent of the land holdings are below 2 acres, which means the young members of the small and marginal farm families need to be trained to supplement their income from non-farm activities.

Besides shifting the thrust of public investments to rural areas, what is also required is to provide proper incentives for bringing about a required change. A poor woman in a village who wants to rear a goat for creating a viable livelihood option too needs to be given incentives that are given to big industrial houses. She needs to borrow Rs 8,000 for buying a goat which comes from a Micro-Finance Institute (MFI) charging 24 per cent rate of interest. On the other hand, big industrial houses are often given credit at 0.1 per cent interest. If only the poor woman was to get the loan for buying a goat at 0.1 per cent I am sure she would be driving a Nano car at the end of two years. Similarly, Farmer Producer Companies, which enables farmers to get into entrepreneurship, have to pay an interest of 30 per cent on the profits generated. Why can’t it be brought down to 15 per cent to begin with? 

Therefore, there is a dire need to change the focus of skill development programme. It cannot be only aimed at meeting the requirement of 30-crore cheap labour -- dhari mazdoors -- that the Confederation of Indian Industry (CII) estimates the construction sector will require by 2022. Only a fraction of the jobs in the construction sector would need the kind of skills that the ITIs are known to train them for. More than 95% jobs in the construction industry are simply of daily wager workers.  Also, an ICRIER study shows that automation and increase in labour productivity destroyed 11.8 million jobs in the manufacturing sector in post reforms period. That’s a warning that cannot be ignored. #

*Rural India has to be the pivot of Skill India: Start with farmers. July 19, 2015

Jul 22, 2015

Farmers suicide statistics is a reflection of the terrible agrarian crisis that prevails in India

Despite all efforts to paint a rosy picture, the latest compilation of farmer suicide statistics for 2014 by the National Crime Record Bureau clearly brings out the dark underbelly of Indian agriculture. With 12,360 farmer suicides recorded in 2014, it only shows that one farmer commits suicide somewhere in the country every 42 minutes.

Although the NCRB has made a valiant effort to segregate the farm suicides figures into two categories – farmer, and agricultural workers -- to show that farm suicides rate has fallen by 67 per cent, the fact remains that historically farm labourers have been counted as part of the farming category. Adding both the figures – 5,650 farmers and 6,710 agricultural workers – the death toll in agriculture for 2014 comes to 12,360, which is higher by 5 per cent over the 2013 farm suicide figures.

The serial death dance on the farm is a grave reflection of the terrible agrarian crisis that continues in farming for several decades now. While every successive government – both at the centre and in the States – have made tall promises to resurrect agriculture, the swing in farm suicide figures shows the callous and deliberate neglect of a sector that employs 60-crore people. Farmers have been very conveniently used for only two political purposes – as a vote bank and as a land bank.

Not showing any signs of petering off, a renewed spurt in suicides is now been witnessed in Uttar Pradesh, Karnataka, Maharashtra, Punjab and Haryana for the past few months.

In 2014, the NCRB data tells us that a third of the total suicides – 4,004 – took place in Maharashtra, followed by Telengana with 1,347 suicides. Reading between the lines, it becomes apparent that there is a visible effort to downplay the suicide figures by almost all states, including Punjab, the food bowl of the country. This follows a trend that Chhatisgarh started in 2011 when it started showing zero farm suicides. After record zero suicides for 2011, 4 in 2012 and again zero in 2013, Chhattisgarh now shows a sudden jump in farm suicides to 755 in 2014.  

In Punjab, as per NCRB data, only 22 farmers committed suicide in 2014. Add agricultural workers, and the final suicide toll comes to 64. This is a gross under-reporting of the real situation that exists. Panchayat records in just four villages of Sangrur and Mansa districts in Punjab show 607 suicides in past five years, with 29 deaths recorded between November 2014 and April 2015. Similarly, in Maharashtra, the Vidharbha Jan Andolan Samiti has contested the NCRB data. Several gaps in the counting methodology, including difficulty in putting women deaths in the farmer category since the in most cases the land is not in their names has time and again been brought out.

Indebtedness and bankruptcy (22.8 per cent) tops the reasons behind these suicides; followed by family problems (22.3 per cent) and 19 per cent because of farming related issues. Growing indebtedness of course has been considered to be the major reason behind the serial death dance being witnessed on the farm. According to a study conducted by Chandigarh-based Centre for Research in Rural and Industrial Development (CRRID) – the average farm debt has multiplied 22 times in the past decade in Punjab. From 0.25 lakh per household in 2004 it has gone upto Rs 5.6 lakh in 2014. Chhattisgarh tops the chart with an average debt of Rs 7.54 lakh, followed by Kerala with Rs 6.48 lakh household debt.

The total debt that farmers carry in Punjab is almost 50 per cent higher than the State’s GDP from agriculture. At the same time, another study by CRRID shows that 98 per cent of rural families in Punjab are indebted, and the average debt is 96 per cent of the total income a household receives. If this is the situation in Punjab, imagine the plight of farmers elsewhere in the country.

Why farm indebtedness has been steadily on a rise has never been studied beyond find out how much lending is coming from the moneylenders who are known to charge exorbitant interests. While lack of institutional finance is a limitation, it is the declining agricultural income that remains the major reason for growing indebtedness. Let me illustrate with a cost analysis of a typical farmers from Uttar Pradesh. As per the latest estimates of the Commission for Agricultural Costs and Prices (CACP), the net return from cultivating wheat in Uttar Pradesh has been worked out at Rs 10, 758. Since wheat is a 6-month crop, sown in October and harvested in April, the per month income for a farm family comes to Rs 1,793. If this is the level of income of a wheat farmer, I wonder what kind of livelihood security we are talking about when it comes to farmers.

I looked for more details. If the other crop farmer is growing is rice, the average net return for it has been computed at Rs 4,311. Add for rice and wheat, the total that a small farmer from a hectare earns is Rs 15, 669 or Rs 1,306 per month. With such meager incomes I can understand why a large number of farmers commit suicide at regular intervals. Those who are not so courageous either sell-off their body organs or prefer to abandon farming and migrate to the cities looking for a menial job as a dehari mazdoor.

This augurs well with the findings of the socio-economic survey which states that 67-crore people in the rural areas are surviving on less than Rs 33 a day. Several other studies have shown that roughly 58 per cent farmers go to sleep hungry, and close to 62 per cent hold a MNREGA card. Instead of pushing under the carpet the grave agrarian crisis that persists, the NCRB data should actually help the government to formulate policies to reverse the suicide trends. If 1,000 suicides in the armed forces could prompt the Defence Ministry to take a series of steps to ameliorate the situation, I wonder why a human toll of close to 3 lakh farmers taking their own lives in the past 20 years has failed to shake up the successive governments? #