How many farmers are there in India?
Not even the government knows, but it’s estimated to be around 145 million families, with estimates ranging from around 40% to as much as 60% of the population—and even taking the low estimate, that’s more farmers than Europe and all the Americas combined.
But unlike the farming models we find in the West, in India the majority of those farms (85% of them) are what are referred to as “micro farms”. Micro-farms are less than two hectares in size (a hectare is just over the size of a soccer field).
Because of their size, these farms are often worked by one family. This requires an enormous amount of physical labor—and doesn’t generate much profit. Indeed, most of these farmers rarely have access to larger farming equipment that is common in the West. On top of that, a large proportion of these farmers do not own the land they work; they’re tenant farmers. So their overheads are controlled first by the landowners (with little regulation) and then their own cost of living, which eats up the vast share of what income they do earn, leaving them trapped in an endless cycle of poverty from one generation to the next.
Because of the lack of available personal capital, many farmers turn to money lenders in order to purchase seeds and equipment at the beginning of each cycle. Once their crops are planted and harvested (which sometimes involves hired labor if the family cannot do it quickly enough to prevent crop spoilage), they are taken to local, government-controlled markets. The price their goods command at the market is decided by the government, but farmers are rarely able to sell at this price, as the buyers have all the leverage. If the farmers sell their products at lower than the market rate they can then apply for government-guaranteed subsidies.
But here’s the catch.
These subsidies are evaluated according to the lowest median costs as determined by the governing boards. This almost always results in the smallest farmers selling their products for the lowest possible price. In return, however, they get lower subsidies. Because of changing climatic conditions in recent years, which has negatively affected output, productivity per hectare has diminished, though the amount of labor being done has not. Hence a negative feedback loop whereby farmers:
- borrow money at high interest to pay for seeds
- work crops in poor climatic conditions, requiring more work to produce the same (or lower) amount of crops
- harvest and pays their own transport to get crop to market
- are forced to undersell, often receiving less for the crop than they paid to produce it
- pay back debt to lender with interest as well as rent to landlord, leaving money still owed to both parties before starting the next cycle.
It’s not surprising that so many farmers in India are struggle under the weight of of crushing debt. Since 1995, there have been well over 300,000 farmer suicides (the Indian government stopped reporting annual suicide rates since 2015 but the last reported average was over 10,000 suicides annually—the state of Maharashtra sees an average of 10 farmer suicides every day).
So why are they protesting?
The Modi government recently attempted to institute new farming reforms that would negatively impact most of these small-scale farmers even more. With the old system, the government guaranteed farmers a controlled market rates and subsidies which created a low minimum price they could bank on receiving, even if it left them in debt. There were also laws in place against hoarding harvested crops, which prevented larger farmers from storing grains and creating surplus to drive out smaller farmers. What they grew had to be sold in the same season. But one of the new reforms would decriminalize hoarding, allowing larger farms to choke out the micro farmers.
Another of the new reforms proposed would allow each farmer to sell privately to any private buyer they choose. At first glance, to the Western eye this might seem like normal free market capitalism. But these goods have limited mobility because farmers will almost always take them to the closest market. Why? Because they have to pay the cost of transporting their good themselves. So, again, bigger farms could benefit from better pricing and smaller farmers selling locally may have to take even less than before.
Also on the chopping block were the guaranteed subsidy rates. These created a bottom floor for pricing that farmers could rely on as a minimum. Without them, the farmers lose the only safety net they have.
Micro farmers already in debt worry that this would lead to some of the larger farming companies eating them up. Unlike in the West, where a farmer may enter into production contracts or sell their farm to a larger production farm, micro farmers are already in debt, own very little equipment and are tenants of the land they work. Acquisitions and mergers by larger farms would require less people to farm the same acreage too, creating unemployment. And what prospects are there for unemployed farmers entering an already overcrowded labor market with no training in anything but agriculture? Creating tens of millions of newly unemployed farmers would be a social catastrophe in a country where the unemployment rate is already high and growing.
Farmers have spent months flooding the streets in their millions protesting these reforms and the lack of consultation with farmers before they were attempted to be pushed through—perhaps the largest organized protests in world history. The government has insisted that these reforms will modernize the agricultural sector. But “modernizing” may mean increasing the stranglehold on mico farms, destroying the livelihoods of farmers and driving up unemployment. All while doing nothing to support this massive workforce which is already in debt.
So why should we care about the outcome of this struggle, no matter where we are?
This is larger than just India, partly because of what India provides for the rest of us, including a huge proportion of the world’s wheat, basmati rice, barley, lentils, cane sugar, cashews, black tea, cereal, onions, peppers, vegetable oil, kidney beans, apples, chickpeas and oats, as well as spices like black pepper, cinnamon, cloves, black sesame seeds, cardamom, himalayan salt, ginger and cumin.
Simply put: if India isn’t producing, then global supply goes down and prices go up everywhere.
So besides being a major humanitarian issue in India, this a global economic issue that will affect you financially. India’s farmers are some of the world’s most essential food producers. And as explained, they often feed us at a loss, enduring extreme poverty. They deserve our attention and our support in this matter as it evolves and hopefully resolves in their favor.