: THE HARVEST OF TRADE LIBERALISATION POLICIES
By Dr. Vandana Shiva Following Andhra Pradesh and Punjab, agricultural debts and farmers suicides are now knocking on the doors of U.P. especially potato rowers. While the farmers are spending Rs. 255/Quintal on production, potatoes are being sold for Rs. 40/Quintal, leaving farmers at a loss of Rs. 200 for every quintal produced. Per hectare the costs of production are between Rs. 55,000/ha to Rs. 65,000/ha, of which Rs. 40,000 is the cost of seed alone.
That the independent farmer is struggling to survive against immeasurably difficult odds is borne out by the number of suicides by farmers throughout the country. By 2000, more than 20,000 farmers from all over the country had fallen victim to the high costs of production, spurious seed, crop loss, falling farm prices, and rising debt.
The crisis for potato growers, like the crisis for producers of tomatoes, cotton and oil seeds, and other crops is directly related to World Bank and W.T.O. driven trade liberalisation policies, of which the new Agricultural policies is a direct outcome.
The policies of globalisation and trade liberalisation have created the farm crisis in general and the potato crisis in particular at 3 levels.
1. A shift from “food first” to “trade first” and “farmer first” to “corporation first” policies.
2. A shift from diversity and multifunctionality of agriculture to monocultures and standardisation, chemical and capital intensification of production, and deregulation of the input sector, especially seeds leading to rising costs of production.
3. Deregulation of markets and withdrawal of state from effective price regulation leading to collapse in prices of farm commodities.
1. From farmer first to Corporation first
The new agriculture policies are based on withdrawing support to farmers, and crating new subsidies for agro-processing industry and agribusiness. In a debate on the potato crisis, the U.P. Agriculture Minister referred to subsidies given for cold storage and transport. These subsidies do not go to farmers and producers. They go to traders and corporations. Pepsico entry in Punjab was the first example of this trade first policy.
When the market rate of tomatoes was Rs. 2.00 per kg., Pepsico was paying farmers only Rs. 0.80 to 0.50 per kg, but collecting ten times that amount as a transport subsidy from government. Cold storage owners in U.P. have received Rs. 50 crore in subsidies, but this is not a subsidy to farmers. A farmer pays the cold storage owner Rs. 120/sack for storage. Cold storage owners are hiking charges to exploit the crisis. With 1 crore 3 lakh metric tonnes of potato production in U.P., this is a massive drain of financial resources from indebted farmers to traders, from producers to business and industry.
The annual budgets since liberalization having been adding to the subsidies for the corporate sector -tax holidays for building silos and cold storages, incentives for exporting, subsidized transportation to the ports of the trader’s choice. The recently announced 5-year export policy of the government has allocated Rs. 100 crores towards aided corporations transport grain from FIC to the ports. In addition, public money is used to take land away from farmers to build transportation facilities for agri-business to help them transport the grain even faster.
The experience of the 2001wheat export exposes the government’s lack of commitment to its people. As against an economic cost of Rs 8300 per tonne to the FCI and an open market price of Rs. 7,000 per tonne, India was offered a price of Rs. 4,300 per tonne in international open market in May 2001.
Over and above selling the wheat at the BPL rates, the government agreed to bear the freight charge from Rajpura to Jamnagar port in Guarat and pay a commission to Cargill. Thus, wheat whose cost to the government included the MSP (Rs. 580 of 2000) as well as the commission, market charges, levies and cess paid by FCI, increasing the real cost by another Rs. 70 a quintal, was sold at less than Rs 420 a quintal, giving the corporation a subsidy of Rs. 130 a quintal.
In fact, since 2000, Cargill has emerged as the biggest buyer of subsidised Indian wheat for exports.
2. Monocultures and Standardisation
The impact of the new agriculture policy has been to promote a shift from food grains to vegetables and perishable commodities. While grains can be stored and consumed locally, potatoes and tomatoes must be sold immediately. A vegetable centred policy thus decreases food security and increases farmers vulnerability to the market. While this promotes monocultures of perishable commodities, the word used for these monocultures is “diversification” in typical globalisation doublespeak.
Further, the State Minister for Agriculture, Hukam Singh deo Yadav, and the U.P. Agriculture Minister, Hukum Singh, both cited the variability of size and the standardisation of the agro-processing industry as a reason for not procuring potatoes from farmers in spite of the distress. Size does not matter for the Indian kitchen. Our “Aaloo ki sabzi” and “Aaloo paratha” do not need the Russet Burbank that McDonald needs for its French fries (renamed “Freedom Fries” during the Iraq war because of France’s non-cooperation with the U.S.).
The McDonald corporation needed the Russet Burbank because of its size. For example 40% of all McDonald fries must be two to three inches long, another 40% must be over three inches; and the remaining 20% can be under two inches – and the Russet Burbank fits perfectly. The economic forces of food processing push cultivation to a single crop yielding uniformity, threatening the ecological stability of agriculture more than it has been in the past.
Seed monopolies and genetic uniformity go hand in hand. Potatoes for processing are being introduced in the name of ‘diversificaiton’: – but given the experience o potato cultivation in the US from where Pepsico technology is being transferred, it will lead to genetic uniformity and high vulnerability. Today in the US only 12 varieties of the 2,000 species of potato are cultivated. 40% of all potato cultivation is of a single variety – the Russet Burbank. In 1970, only 28% of America’s total potato acreage was planted with this variety. Acres and acres of the same kid of potato is ecologically very vulnerable as the Irish potato famine reminds us.
The introduction of uniformity is justified as a trade-off for raising yields of horticultural crops miraculously. Pepsi’s promotion literature stated that ‘yields of horticultural produce in India are substantially lower than international standards’. The project proposal for Pepsi Food argued that ‘in Mexico, Pepsi’s subsidiary, Sabritas launched a seed programme that increase potato yields by 58% – from 19 to 30 tonnes per hectare in three years.’
In India, comparable yields have been achieved by farmers and agricultural scientists. Potato yields of more than 40 tonnes per hectare have been realised during field trials in Jalandhar by the Central Potato Research Institute. Yields averaging about 50-60 tonnes per hectare are also achieved by Gujarat farmers, who grow their potatoes on river beds in Banaskantha district. Just as in the first Green Revolution, the existence of indigenous high yielding varieties of rice was denied to justify the introduction of high response varieties, costly potato seeds are being introduced under “crop diversification”, locking farmers into dependency and debt.
This link of monocultures and monopolies over seed explains the high cost of production under trade led agriculture policies.
3. Price Regulation
While the government does keep going through the gimmicks of announcing procurement prices and procurement centres, government intervention in price regulation and procurement has all out disappeared under globalization. The government announced Rs. 195/quintal as the procurement price of potatoes, and opening of 8 centres for procurement.
However, no government procurement is being done to support farmers and ensure a fair price. Prices have therefore fallen to Rs. 40-100/quintal, a bonanza for the agro-processing industry which makes even more profits from chips, but a disaster for the grower who is being pushed to suicides in despair. With potatoes at Rs. 0.40 a kg, the agro-processing industry is paying less than Rs. 0.08 to farmers for chips they sell at Rs. 10.00 for 200 gms. For 1,31,00,000 metric tonnes of potatoes this amounts to a transfer of Rs. 20 billion from impoverished peasants of U.P. to global MNCs such as Pepsi and McDonald.
And the plight of potato farmers in Punjab is no different. As the Tribune reports,
Forced to grow potato in the past few years under crop diversification agriculture programme, the farmers have been finding it difficult to earn enough by selling the produce to meet the cost of inputs.
After incurring heavy losses for growing potato, hundreds of farmers have decided to sell their holding to meet liabilities of loans of banks and commission agents.
Mr. Chotta Singh (Name changed) of Gill Kalan village of this district said, “I grew potato in 20 acres, 10 acres owned by me and 10 acres taken on lease. I spent Rs. 12,000 a acre on potato cultivation and today if I sell my entire produce at the prevailing price of Rs. 100 a quintal, I will incur loss of Rs. 1 lakh.” He added that to meet part of his loan liability of Rs. 11 lakh, he had disposed of one acre.
Mr. Shawinder Singh, another farmer pointed out that he took to potato farming hoping that he would replay his entire loan of Rs. 3 lakh in two to three years as potato was considered a “paying crop”. But now he found that his debt had crossed Rs. 5 lakh because he failed to fetch remunerative price and he had to sell it a throw-away price to get cash to meet routine liabilities. (“Traders syndicate exploits farmers”, Chander Prakash, Tribune, 3 Apr 03)
And the plight of potato farmers in U.P. is the same as the plight of wheat and rice farmers in Punjab and Haryana and soya farmers in M.P., cotton and groundnut farmers in A.P.
In October 2000, almost half the 10 lakh tonnes of paddy that arrived at Haryana mandis was sold to private traders because of declining state procurement. Of this, 47% was sold at almost 14% below MSP rates of Rs. 510 for common paddy. Thee were also reports of rice being sold to millers and private procurers at Rs. 400.
In Punjab, farmers, who had already sold their jewelry and livestock to raise money for paddy inputs, were borrowing from commission agents and other moneylenders in order to meet their basic food and shelter needs while waiting for their paddy to be sold at rates far below the MSP. By October 11, the first suicide story came in; Avtar Singh of Kakra village in Samana District committed suicide when he could not sell his paddy at a low or Rs. 400 for more than a week.
In March 2001, Punjab became the first state to admit that fact that farmers, unable to clear their debts, have started committing suicide.
The dysfunctionality of agriculture under globalisation is leading to farmers paying with their very lives. However, this dysfunctionality is beneficial to agri-business which is harvesting the artificially accumulated stocks and artificially manipulated collapse of domestic markets to make super profits.
This policy of “trade first” is suicidal not just for farmers, but for the food security of the country as a whole.