Stop this tragedy

After a spate of suicides by cotton growers in the state, it is now the turn of onion producers in Maharashtra to take the most extreme step. Wholesale prices have crashed in the intensive onion-growing belt around Nashik, in the wake of a bumper harvest, and growers find that even their input costs cannot be recovered, leave alone recompense for labour or any surplus after that. The growers of many other crops often face a similar situation. As a result, suicides by farmers seem to have become a regular, tragic feature of the Indian agricultural scene. That there should be so much distress in the wake of a bumper crop underlines the need for futures trading, opening up more to export markets, and other elements of an agricultural reform package that helps farmers shift their risk through market intermediation.

That apart, the genesis of the immediate crisis can be traced back to the 1990s, when a high-growth phase in the farm sector gave way to stagnant crop yields, rising input costs and diminishing returns. This, coupled with the high level of risk that farming inherently entails, led to increased and perpetual indebtedness among farmers. It is no surprise therefore that the National Sample Survey (NSS) revealed that as many of 40 per cent of India's farmers would like to quit farming. If matters do not improve, wish will become reality and peasants will land up in urban slums, in the hope that cities will give them a livelihood. What is noteworthy here is that the suicides are no longer confined to any particular segment of farmers (like those with marginal holdings) or to a particular region. Even middle-scale and large farmers in agriculturally progressive states are committing suicide. The underlying cause is usually heavy indebtedness and the growing, indeed progressively unbearable, pressure for repayment. What is equally significant is that, despite perceptible growth in the flow of institutional credit, the share of the informal sector (meaning traditional money lenders and traders) in rural debt remains as high as 43 per cent (NSSO, 59th round data released in 2005). Moreover, the interest charged on such loans is often usurious, ranging from 18 per cent to 36 per cent. It is no wonder then that, once a farmer falls into the debt trap, there is often no escape route available. This is partly true of institutional credit as well. For, such debt relief as is given comes invariably in the form of a moratorium on repayment; it leaves the principal amount intact and the interest burden continues to grow. This makes it even harder for farmers to repay loans after the relief phase is over.

What farmers need in these circumstances is not debt relief so much as avenues for hedging the risks involved in farming, and compensation for cash expenses when a crop fails. Livelihood security can then be taken care of through other means as well. Traditionally, tending livestock and other supplementary occupations used to see farmers through phases of crop failure. The livestock-based rural economy of the arid tracts of Rajasthan, where crop failures are common, bears this out. So it is necessary to encourage farm families to have sources of income that are not linked to any particular cropping activity.