PM Modi’s Untruths Regarding Kerala

      The BJP and the Prime Minister himself have been campaigning about how the farmers are protesting across the country and sitting on dharna at the outskirts of Delhi have been misled. In his speech on December 25, the PM spoke about the situation in Kerala. He said that there was no APMC system in Kerala and asked why the opposition was “misguiding” the farmers on this issue. Here Dr. Ramakumar addresses this allegation and also talks about the various schemes of the State government. .

1) The Prime Minister effectively accused the opposition of double standards by saying Kerala does not have APMCs and asking why a movement for that was not started in the State. How would you respond to that statement?

Dr. R. Ramakumar: Well, I wish the Prime Minister was better briefed about the history of agricultural development in different States of India. In the 1960s, when other States of India, were considering passing APMC Acts in their legislative Assemblies, Kerala did not do so because at that point, and even now, Kerala’s cropping pattern is largely dominated by commercial crops such tea, coffee, spices like cardamom and other crops such as rubber which came later. So as far as these commodities were concerned, there was surplus production in Kerala and they required regulated wholesale markets. There were already regulated-like markets available in Kerala which were controlled by the Commodity Boards of the Ministry of Commerce of the Government of India. So there was a Tea Board and a Coffee Board. There was a Rubber Board and later came the Spices Board. All these Commodity Boards of the Central Government had already established regulated-like markets in Kerala. For example, the Tea Board conducted tea auctions under its supervision. The Coffee Board had its own procurement scheme. Spices like cardamom, which is the main spice here, have their own e-auction process where only licensed traders can participate. So for these crops, there were already regulated-type markets in Kerala. This was not the case in other States where crops like paddy, pulses, wheat or vegetables are in surplus.

In the case of crops like paddy and vegetables which are outside the commodity board framework, Kerala never had a surplus at any point of time in history. Even today, Kerala produces only about 20-30% of its paddy and vegetable requirement. So the need for a wholesale market for these crops does not rise as there is no surplus. So Kerala did not pass APMC Acts in the 1960s and 70s because its cropping pattern was dominated by commercial crops which are already marketed and regulated by the Commodity Boards of the Government of India.

Now one more point I would like to mention here is that these Commodity Boards have been considerably defunded in the period of liberalization. There has been a sharp fall in the Central government’s budget allocations for Tea Board, Coffee Board, Rubber Board, Spices Board etc. Due to this defunding and also because of conscious neoliberal policies, the Central government and the Commodity Boards have withdrawn from intervening in the marketing of these commercial crops. As a result, farmers cultivating these commercial crops have been in great distress because of the sharp falls and fluctuations in prices, which are now aligned completely with global prices. And this is one important reason why there was considerable agrarian distress in Kerala for a long time in the late 90s and early 2000s. So these two have to be read together. It is the job of the Central government to ensure that there are adequate marketing facilities for commercial crops in Kerala from which it has withdrawn during the period of neoliberal policies and because of which farmers in Kerala have entered into a period of acute distress.

2) In this context, could you give us an idea about how procurement is generally done in Kerala? Is it through private traders as the Prime Minister’s statement implies or are other systems in place?

Dr. R. Ramakumar: One can confidently say that about 80-90% of the total paddy that is produced in Kerala is procured by the State government directly. The role of private trade is considerably limited. It may exist here and there but largely, it is the State government that is purchasing it at Rs. 2700 per quintal. One reason for this is because farmers would like to sell to the government because it is giving them a very good price. It is the highest MSP in the country.

So the state government, through its procurement department, has set up a very solid institutionalized procurement mechanism through, for instance, cooperative societies, which are very widespread in Kerala or through different rice mills. Such procurement reaches every remote village in Kerala. This makes it possible for the State government to procure 80-90% of the production, that too at the highest MSP in the country.

3) Let’s come to the question of cash crops. Could you take us through what are the key cash crops and whether farmers receive any protection or benefits on the lines of what paddy farmers receive?

Dr. R. Ramakumar: Historically, the cultivation and marketing of cash crops like tea, coffee rubber and cardamom were the prerogative of the Commodity Boards of the Central government. What has happened over the years due to neoliberal policies and defunding is that there has been a considerable withdrawal of these boards from marketing. Let us take the case of coffee. Over the years, policy changes have led to many changes to the modes of marketing. Before 1996, the Coffee Board was in charge of what is called pooled marketing of all the coffee produced in India. All the coffee produced was procured through the Coffee Board’s Pool Depots which was then processed and stored in licensed curing factories. But after 1996, complete de-pooling became the norm in the coffee sector. The coffee trade was opened up and the Coffee Board withdrew completely from marketing.

This has meant considerable distress to coffee farmers. In fact, if you see the most important coffee-producing district of Kerala – Wayanad – where it is largely produced by small growers, there were many farmer suicides after 1997. This is the year after the Coffee Board withdrew from marketing. These suicides continued till about 2006 when the LDF government, which came to power that year, took decisive steps to put an end to farmer suicides. It constituted the Farmers Debt Relief Commission which considered farmers’ applications for debt relief and took decisions to waive outstanding loans. This was for farmers in general but particularly coffee farmers. This ensured that by 2007- 2008, farmers’ suicides could be put an end to. This was an extraordinary achievement of the LDF government.

The withdrawal of the Coffee Board, Tea Board etc from management has also put considerable stress on State governments and their finances. There has to be some amount of compensatory activities which would fill the gap that is vacated by the Central government and its Ministry of Commerce, but the state governments are short of funds. They cannot push in enormous amounts of money into promotion and marketing of these crops. So there is considerable distress even now. The State government is trying to help farmers as much as possible but the Boards have to be funded as they used to be in the past. These boards have to intervene in the marketing of these crops to stabilize prices for farmers. That is the only way to rescue this sector from the current level of distress.

4) Coming back to the question of paddy, what price do farmers generally receive for their produce? Is there any kind of guaranteed price or an MSP?

Dr. R. Ramakumar: Kerala assists farmers using a cash transfer program during production, as well as during marketing. For paddy production in Kerala, the State government provides a direct cash assistance of Rs. 5,000 per hectare to every paddy farmer. In addition to that, the panchayats of Kerala, using their own funds, give another Rs. 15,000-17,000 per hectare as additional assistance to paddy farmers (25% of the plan funds in Kerala are given in an untied format to panchayats and they can spend it as they like.).

So if you add these two, you will see that Rs. 22,000 per hectare is given as cash to the farmers during the cultivation period itself.

From this year onwards, the Kerala government, as part of a programme to ensure that there is no fallow paddy land, will institute an additional payment of Rs. 2,000 per hectare. This is on the condition that the paddy land never be left fallow. Thus, Rs. 23,000-24,000 is received by a paddy farmer during the period of cultivation.

Secondly, after harvesting, when the farmer is ready to sell the crop, the State government provides one of the highest MSPs in India. The Central government’s MSP for paddy is about Rs. 1,900 per quintal. The State government tops it up with an additional bonus of Rs. 800 per quintal and purchases paddy from farmers at Rs. 2,700 per quintal or  Rs. 27 per kilogram. So there is substantial cash assistance given to the farmers during the production process and there is a substantial MSP given to the farmers while procuring it from them.

Another important point is that the Commission for Agricultural Costs and Prices (CACP) of the Government of India has been consistently recommending that those States which pay a bonus on top of the MSP declared by the Central government should be penalized and procurement from these States should be stopped. If the government accepts the CACP’s recommendation, it will be a huge blow to the farmers of Kerala. The State government. will have to stop providing the Rs. 800 per quintal bonus to paddy farmers and it will have to procure at Rs. 1,900. This would be a huge loss of Rs. 800 for quintal for the farmers of Kerala. I hope the Central government does not accept this proposal. It has been on the table for many years now, along with the proposal to stop open-ended procurement of paddy and wheat in Punjab and Haryana. Otherwise, the farmers of Kerala will take a huge hit.

5) Moving on to vegetables, is there any MSP or a similar system that is in place for those who are cultivating vegetables?

Dr. R. Ramakumar: As vegetables are perishable, no other State had even sort of announced an MSP for vegetable cultivators. But Kerala’s State government has a major scheme to promote vegetable cultivation and become self-sufficient in vegetable production over the next five to eight years. That is the long-term objective of the LDF government. Already, between 2016 and 2019 and 2020, there has almost been a doubling of vegetable production in the State, according to data that is available from the Department of Agriculture. But this is not adequate. We still need to double once or even twice to ensure that Kerala is self-sufficient in vegetable production.

Towards this purpose, the State government has started two initiatives. One is Fallow-Free Villages. The aim is to ensure that there is no fallow land in any village in Kerala in the next three years or so. This means every inch of land that is cultivable should be brought into cultivation of paddy if it is a wetland, or crops like vegetables or even fruits if it is garden land or a homestead. Considerable assistance in the form of subsidies is also provided to farmers when they enter into vegetable cultivation.

Secondly, in a historic step, the Kerala government has announced base prices for about 15 vegetables. The State government is promising that if the price falls below this base amount, it will buy the produce through government outlets. The first harvest has not come yet and so it has not come into practice yet. But the announcement has been made by the Chief Minister and support prices have been announced.

6) And finally, are there any aspects you would like to mention in terms of the larger policy framework or other subsidies that the state government is offering to farmers?

Dr. R. Ramakumar: The Kerala government has given considerable fillip to agriculture production as a whole in the State through a program called Subhiksha Keralam. Historically, Kerala’s cropping pattern was dominated by cash crops and so the production of paddy or vegetables did not receive the kind of support that it should have. There have been some experiments, some of which were successful too, but they were never upscaled to a State level or even a district level. So the plan of the government now is to ensure that Subhiksha Keralam is instituted across the State and not just for one or two crops, but over a range of crops. In addition to initiatives for paddy and vegetables, there is also a fruit tree planting programme. In every village where there is fallow land, fruit trees will be planted. Seedlings have been supplied by the agriculture department for this purpose.

The government also launched the Coconut Mission. One of the major constraints to increasing coconut productivity in Kerala is that most palms in Kerala are more than 50-60 years old. There is a need for replanting. What the government has done is that in one year, in every panchayat ward in the State, 25-30 new palms will be planted. The old palms will be cut and new palms will be planted. Thus, over a period of 5-8 years, this will cover a considerable part of the State’s coconut cultivation area and this will lead to an increase in productivity.

There are also other schemes to ensure scientific cultivation practices. We are now thinking about schemes related to Precision Farming where you can use advanced methods like Drip Irrigation for coconuts which will reduce the use of water while at the same time maximizing the efficiency of its use. Subsidy schemes for drip irrigation are available for coconut farmers. One particular scheme aims at creating Model Demonstration Precision Farming plots of 50 acres in every district which will have these advanced cultivation practices, including water management practices. Farmers can learn from these models and adopt these practices.

Also, the overall budgetary funding for agriculture and also animal husbandry has increased tremendously over the past four years of the LDF government and the results are showing. However, unfortunately for Kerala, this period saw some terrible natural calamities. In 2018, Kerala experienced massive flooding, and there was flooding in 2019 as well. In both these years, the monsoon or kharif crop over large areas was destroyed. The activities of the Agriculture Department to revive the sector took a hit because of the floods which basically destroyed crops in whole whole districts. This was a major setback although it was not policy-induced. It was a stroke of bad luck.

But this has given the Agriculture Department new energy to actually start efforts with much more vigour to ensure that agricultural growth picks up from the negative growth rates of the previous years. There is considerable budgetary assistance, considerable change in planning and considerable change in the design of schemes. Kerala has been divided into 23 agro-ecological zones. The cultivation practices in each of these zones will be tuned to the ecological requirements of soil, water, climate in these areas.

Kerala sees agriculture as an engine of growth in the next four to five years and it is committed to fund agriculture better. It is committed to providing good prices to farmers. It is committed to providing a stable market to farmers despite all the neoliberal policy efforts to weaken State intervention and price support in agriculture.

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