Apr 1, 2013 – A fellow farmer’s message to all organizations reads, “If you have come to help, you may as well leave…but if you see my survival as part of your future we can work together”

The managers of the Indian economy show a strange predilection for rolling out policies to treat the fallout of problems facing the country rather than solving the problems themselves. This would be one clear factor responsible for the current resource crunch and nowhere is it as palpable as in Indian agriculture, where the farmer’s woes seem to be no one’s concerns even while agriculture is everybody’s baby.

It is possibly on account of funding limitations that food processing, extension outreach, irrigation and other critical issues that afflict the farmer do not find a mention in the budget speech. Too much weightage is given to the external factors as being responsible for the mess that the country finds itself in today.

There is, however, one issue around agriculture that draws a lot of attention: farm subsidy, which is one of the most controversial subjects. Every economist under the sun seems to be demanding that farm subsidies be withdrawn or capped. Yet, even as policy influencers want to do away with them, millions of farmers find them grossly inadequate. It is time to explode some of the myths around farm subsidies.

First: Too much is being given to the farm sector. The truth is that farm subsidies come in various forms and, globally, the total subsidy per hectare during 2009 was $988 in the European Union, $190 in the USA but only $149 in India, while per capita farm subsidy was $239 in the E.U., $102 in the USA and a meagre $21 in India.

Second: Policy makers condemn the overuse of fertilizers in India. The reality is that apart from Punjab, Haryana and scattered regions of the country, most parts of India suffer from fertilizer use being much less than the optimum level. China consumed 400 kg/ha of NPK and produced 5,399kg/ha of foodgrain, while India used only 166kg/ha and produced 2,237kg/ha during 2010. Even Bangladesh used 224 kg/ha and Pakistan used 185 kg/ha.

India is faced with the herculean task of doubling food production even with the land man ratio in the country falling from 0.34 in 1951 to 0.15 in 2009. To do so and achieve the targetted four per cent agriculture growth rate, fertilizers consumption needs to be increased by three per cent every year. Reduction in farm subsidies will lead to reduced consumption and complete removal will cause an 18 per cent drop in farm production.

Third: The primary objective of the pricing policy is to promote balanced use of fertilizers. The reality is that the primary objective is to reduce subsidy and nothing else. Nutrient-based fertilizer subsidy was introduced in 2010 followed by a nearly four times hike in the price of potash, a two and a half times increase in the price of phosphate, while that of urea remained constant.

The resultant nutrient imbalance is destroying soils, causing pest infestation, lower yields amongst other problems. The imbalance in fertilizer use cannot be addressed by reduced use of some nutrients but by increasing the use of those that are not being used in their prescribed quantities, supported by extension outreach to farmers and giving them access to better technology. Instead, curious solutions are suggested. Small farmers, for instance, are asked to first buy inputs that they can ill afford and wait to be compensated during procurement. Such an ill-advised move will only sink them further in the quagmire of debt and poverty.

The depreciation of the rupee has compounded the problem and queered perceptions about subsidy. Farm subsidy is not charity or wasted expenditure as many argue. It helps productivity, generates farm employment, ensures low food prices and prevents large-scale exodus of rural masses to cities and ultimately revolting against the establishment. The worry is not that such misconceptions are on account of ignorance at the policy makers’ level but that they realize the truth and choose not to act.

The problem is not funding alone and indeed, the government has made a good beginning allocating Rs 300 crore for crop diversification. The problem is around the allocations achieving their purpose. Conditions all over the country are somewhat similar to Punjab, where there are 167 posts for horticulture development, of which only about 100 are filled and that too mostly with people on desk jobs or senior positions, while there is a need for at least 300 positions.

Admittedly, funding is insufficient but even when central funds are available, there is a delivery problem courtesy agriculture being a state subject. The bottomline is that all states are short of funds and, therefore, cannot fill the posts.

The solution is simple: central funds for this purpose must be allowed to reach their allottees; used for deploying officers on the ground for extension outreach, otherwise farmers and the farm sector are doomed. This is not to suggest a change in the federal structure of the country but to emphasize that the central government is sometimes so disconnected from the masses that they would be better off without the central government appropriating state government powers in any manner.