Moneylenders & Indian farmers

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I’ve edited a fairly interesting passage about Indian agriculture on sorghum written by my Father in Law, Ramesh Lalchand, in the course of some import-export correspondence (we work together on Raef LLC):

I must inform you that Indian agriculture is extremely fragmented. Unlike the US or Europe, farming in India is carried out by small and medium scale farmers.

Except of course for rice and wheat, which is an entirely different ball game altogether. Rice and Wheat is consumed by the entire Indian population, hence realising the importance of this we had a Green Revolution organised by the then Indian Prime Minister in 1974, Indira Gandhi. From 1974 and for the next 5 years; the focus was on rice and wheat. This Green Revolution was so successful that from a net importer of Rice and Wheat, we are today one of the exporting forces in the world.

Due to the Green Revolution in rice and wheat other agri-products were neglected. Though we are now self sufficent in most agri-commodities; our other cereals and pulses never received the importance they deserved. As a result of this most other commodities, including sugar cane, is produced by small and medium farmers who not only sell to wholesalers but also to the government.

Sorghum in particular is grown in Maharastra state , Karnataka state and Andhara state, which amounts to 70%  of the sorghum. The balance 30% is grown in various different parts of the country but not in very large quantities

The grains market are normally organised once a week. All farmers literally bring their produce to a huge playground where brokers, wholesalers and other interested parties attend. They bring it in Bullock carts!!! And some have tractors with a trailer attached but mostly it is Bullock carts.

But in the case of rice and wheat is not traded like this. The growers are given govenment warehouses where the grains are given floor space and then it is sold to the government. The biggest buyer of Rice and Wheat is the FOOD CORPORATION OF INDIA, which is a govenment undertaking. What goes on there is another story. That will be discussed some time later. Let us for now focus on sorghum.

These small farmers bring in as little as one ton to max 10 to 15 tons . And payments are on the spot cash payments only.

The suppliers are the farmers, their forefathers were farmers and so are they in farming too. They only have their past performance of growing sorghum and nothing else.

You must also know that the Indian farmers is born in debt, lives in debt and dies in debt. So even he would have to get concurrence from his money lender. Let us say hypothetically even if we are ready to pay the money lender off, he will refuse to let go. Because of this thousands of farmers commit suicide every year due to the abuse they have to tolerate from money lenders. The government knows that and is desperately trying to rectify this problem . That is why over USD 2 Billion dollars in Indian currency loaned to the farmers by the Indian government is written off year after year as bad loans.

India got its independence in the year 1947 . At that time our food grain imports was the biggest bill on our heads in spite of the fact our population was much much smaller then. Today with 1.2 Billion people to feed we export food and food related products including seafood to the tune of 60 billion dollars !!!!!!

China on the other hand with a population of 1.5 billion has a much smaller export of food grains but a very large import bill on its head.

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One Reply to “Moneylenders & Indian farmers”

  1. Farmers and activists have been pushing for sorghum and other millets to be included in the public distribution system (India must run the worlds biggest program by far) for years, but it the rice (coastal AP)/wheat lobby is incredibly influential. Sorghum and millets are comparatively resistant to water stress and are lower risk across other parameters like blight and pest. The government is doing its bit to promote the health and gastronomic appeal of these coarser grains, I saw a “millet experience centre” recently in bangalore. Would be great to see dryland farmers move away from unsustainable non-food cash crops, for which they play a very peripheral and disadvantaged role in the value chain.

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