Off with the farmer

T K ARUN
TNN, 1 FEBRUARY

Rural distress leading to farmer suicides, alongside breakdown of governance and failure of democracy, is the dark cloud to which a 9% economic growth rate hangs as a silver-lining. What can be done to banish this darkness? The first step is to take a whole lot of farmers off the land, at least half of them. We just have too many farmers.

What right do sundry commentators have to ask farmers to get off the land? Well, farmers are the first ones to opt out. For those who wish to understand rural distress, the National Book Trust has brought out a little green book, in which agricultural economist G S Bhalla summarises the finding of the National Sample Survey Organisation’s Situation Assessment Survey of Farmers. The Survey found that 40% of the country’s farmers have no desire to persist with farming, but do so for want of an alternative. The book is essential reading for all politicians who wish to appreciate the reality behind emotive news reports about distress on the farm. However, the book does not go into what can be done to tackle that distress. Which brings us back to ridding farmland of an excess of farmers. How many farmers do we have?

The number that our trade negotiators cite to stave off opening up the farm sector is 650 million. This is a gross exaggeration, of course. The fact is that only around 58% of our total workforce is dependent on farming, either as cultivators or agricultural workers. Another 3% live on fishing. In fact, 27% of rural workers are engaged in activities other than cultivation.

What needs to be done is to enlarge this pool and shrink dependence on crop husbandry where under-employment is huge and productivity, low.

As per the latest estimates, less than 18% of GDP comes from agriculture and allied activities, which engage 61% of the workforce.

Clearly, productivity per worker in the non-agricultural sectors is, on average, seven times as much as in agriculture. Shifting workers out of agriculture would vastly improve productivity, boost incomes and the rate of growth of the economy. How do we go about shifting workers out of agriculture, that is, farmers off the farm? And how do we raise the incomes of those who remain in agriculture? Urbanisation, agro-processing, organised retail and organisation of farmers into Amul-like cooperatives and companies to give them institutional capability — that is the short answer.

As this column has pointed out repeatedly, India cannot prosper with the size of the urban population limited to 28% of the population as at present. It has been the historical experience, since the times of Sumer and Harappa, that human achievement has been closely linked to the development of cities.

As communities and nations prosper, more and more of the population becomes urban. India would be racing to double the share of urban population, as it continues to grow at 8% to 9% a year. It is neither feasible nor desirable for an additional 30 crore people to crowd our existing towns and cities, already bursting at the seams.

New towns and cities have to be built. For that farmland will need to be converted into urban land. There could be several ways in which farmers participate in such urbanisation. The government could take away their land by force, compensating them at current market rates for land, as happened in Kalinga Nagar, Singur or is happening near Mumbai.

Or savvy farmers could negotiate high prices for their land and position themselves to live profitably off the new urban settlements coming up on their land, as has happened, for example, in the Gurgaon and Noida suburbs of Delhi. Or farmers could proactively pool their land, build a township on it, sell and lease it out to new dwellers, provide services and produce to them, as some farmers near Pune did, setting up the Magarpatta township. Clearly, the last option is the best one.

And the first option, the worst. Where farmers lack sufficient enterprise and initiative, the government could think of setting up companies to own and lease out land being converted to urban use, making displaced farmers shareholders in these companies.

Agro-processing would add value to farm produce. The closer it is done to the farm, the greater the value that would be distributed in the rural areas, to factory hands, loaders, drivers, guards, suppliers of services newly in demand because these agro-processing enterprises have come up. Organised retail would eliminate a series of middlemen and give the farmer better prices, apart from new, high-yielding technologies. It would invest in rural storage facilities induce investment in roads and power, creating many new income-earning opportunities in the rural areas.

Organising farmers into new collective agencies is crucial — whether to take effective part in futures markets or set up wineries or cheese-making units. Urbanisation, agro-processing and organised retail would, together, narrow the rural-urban gap and make a frontal assault on rural distress.