Decoding a farmer's suicide note: Agrarian crisis can put Modi in a tight spot
The government support for the rural sector is waning in the face of a tight fiscal situation. The increase in minimum support price has been modest while the government procurement is also on the decline. On top of this is the weather tantrums.
(The story was first published on 1 April 2015)
C Krishnankutty Nair, a rubber farmer in Kerala with three acres of plantation and an outstanding debt of Rs 8 lakh, committed suicide last week. He travelled 350 km from Kannur to Pala, the constituency of controversial state finance minister KM Mani, to hang himself on a rubber plant, leaving a suicide note that has a message for the government, both state and central.
“I had bought a rubber plantation after selling my home. Due to the fall in rubber prices, I could neither build nor buy a new home. I bought the plantation after taking loans from a bank and individuals. As I cannot clear my liabilities, I have come to the constituency of the finance minister to commit suicide,” he had reportedly written in the letter.
He has also urged Mani to fulfil his promise of giving Rs 150 per kg support price for natural rubber and save other farmers. Rubber farmers in the state are pinning hopes on the minister's promise as the prices of their produce have been on a free fall over the last few years. A kilo of rubber now costs around Rs 125-130, a good 45 percent lower than the record high of Rs 240 it fetched four years ago.
What has aggravated the decline in the prices is the more than 50 percent drop in curde oil prices since June. As the oil prices decline, prices of synthetic rubber, which is a petroleum product, also fall, affecting the demand for natural rubber.
Nair is just one among lakhs of rubber farmers in Kerala who saw their golden dream turn nightmare in about four years.
However, Nair's suicide note has a larger significance. It may seem to be speaking for only rubber farmers but the plight of small and marginal farmers engaged in production of many other commodities is no different. Most of them are reeling under the burden of high supply that is putting downward pressure on the prices and indebtedness.
A research note by Emkay Global notes India's agricultural sector economics is running into trouble due to various reasons, most importantly the fall in global commodity prices.
It notes that IMF food price index has declined 6.5% on year, extending the decline of over 23% since early 2011. The FAO Food Price Index in February stood at 179.4, down 14 percent on year.
"The softening global prices has been on the back of lower demand and favorable production for a number of crops in 2015. World cereal inventories is expected to rise to 630.5m tons (FAO), 8.6% above their opening levels and the largest in 15 years," it notes.
While this is the global scenario, the Indian situation is scarier. The government support for the rural sector is waning in the face of a tight fiscal situation. The increase in minimum support price has been modest while the government procurement is also on the decline. On top of this is the weather tantrums. While the deficient monsoon this year has affected the kharif crops, the unseasonal summer rains are damaging the standing rabi crops too. Clearly, the rural income is falling.
"In the context of the latest NSS survey (2011-12) corroborating the decline in per capita/annum consumption of cereals (wheat, rice & coarse grains) to 128kg, record production, less aggressive procurement, drawdown of buffer and softening global prices it is likely that the terms of trade will decline for a substantial part of the farm economy," says Emkay.
While an urban revival may help the corporate sector offset the impact of the rural demand decline, the situation has the potential to put the NDA government in a tight spot.
This is because a prolonged distress will only strengthen the resistance to any reform involving rural economy.
As Emkay says one of the immediate steps that will see heightened opposition is likely to be the Land Acquisition Bill Amendment.
The Bill is already facing the ire of farmers, including the affiliates of the Sangh Parivar.
A dramatic turnaround is possible only if the rural situation improves. For that, Modi has to act fast on evolving right support measures for farmers.
Data inputs from Kishor Kadam
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