November 4, 2007

If the government fails to unshackle the imposed market and economic restrictions in agriculture....

If the government fails to unshackle the imposed market and economic restrictions in agriculture, then the day is not far when we would end up farming more corpses than crops ! ! !

At our institute (The Indian Institute of Planning and Management), since its very inception (1973), we have always emphasised the need for the study of marketing. So much so that for the entire two years of the rigorous course, from day one till the day the students are bid farewell, marketing is taught to every student, irrespective of whether the student opted for finance or human resource or technology as a specialisation stream. In fact at IIPM, marketing has been a compulsory specialisation, because not only do we believe, but also propagate the philosophy that ‘Business’ is nothing else but ‘Marketing’. No business can survive in this world – however much the product might be world-class – unless it is marketed well or gets the right kind of avenues to make it marketable. Interestingly, our nation presents a classic dichotomy – on one hand, effective marketing has been reaping dividends for a few sectors; while, on the other hand, lack of marketing has been literally driving a few other sectors towards extinction.

In the last one and a half decade, since liberalisation was ushered into our economy, the Indian market has considerably matured in terms of its ability to market and impress upon customers. As the government reluctantly released its iron-hold over most of the FMCG and Consumer Durables markets, prices came down and many of the products that were exclusive at one point of time, became a necessity for the nation. A glaring example of that is the ubiquitous mobile phone and the colour television. In the late 80s, a 21-inch colour television used to cost around Rs.20,000, while today, the same costs around Rs.7,000. The case is even better for mobile telephony, whose climb-down has been from around Rs.50,000 to even less than a thousand rupees now. These falls in prices and the resultant market expansions have been on account of incredible marketing initiatives, coupled with product innovation.

While all these have been happening in the industry, the scenario on the agricultural front has been a complete disaster. A strict regime of price control, as well as a governmental iron grip on the marketing of almost all agricultural commodities has created mayhem in the sector. No wonder, the contribution of agriculture to GDP has reduced from a whopping 50% to a paltry 20% in the last 60 years. And interestingly, post liberalisation, the contribution of agriculture to GSDP (State GDPs) has dropped in all states across the nation! In fact, amongst scores of problems that our agriculture sector is riddled with, one of the most dominating one had been the Agriculture Product Marketing Control (APMC)

Act. This Act has always prevented farmers from coming in direct contact with the buyers, and instead, makes it mandatory for farmers to sell all the agricultural produce in Mandis (there is only one Mandi in every 400, making accessibility almost impossible for most farmers across the nation). Actually, APMC – or the Essential Commodities Act – was operationalised in an era when severe food shortage was a norm, and it made sense then. But to ridiculously continue with such Acts, which are unwarranted in today’s context, amply vindicates the point that in the name of safeguarding the sector, the loyalties of policymakers are heavily tilted towards the middlemen! Otherwise, how does one justify that in this era of e-marketing and direct marketing, the supply chain in our agriculture sector is ever bulging? Or, how does one justify that farmers end up making a mere 10% to 15% margin (in most cases; up to 50% in some specific cases) from what the end consumer pays, while the mafia of middlemen, starting from whole- sellers, retailers, commission agents, auctioneers, makes a mind-numbing 300% to 1000% margin?

The agony does not end here. With such low margins, coupled with lack of credit infrastructure in rural India, farmers are left with no option but to take loans from Shylockean money lenders at obscene rates. And it is needless to state that when the time for the repayment comes, the farmers indulge in distress-selling to make whatever little money, knowing that the money is just a pittance compared to what the rest would earn. Yet, most of the times, even this distress-selling does not help, as by that time, the exponentially rising interest on the principle throws him into a debt from where there is no return. The net result of all this is – almost 1,50,000 farmers have put an end to their life in the last 8 years, and the numbers are increasing with each passing day. It is appalling that even so many lives lost have not been able to shake up the conscience of the polity, as they still continue to treat agriculture as the ‘holy cow’ of the Indian economy, untouched by any reforms. It is for the polity to realise that if they maintain their conspiracy of silence towards unshackling the imposed market and other economic restrictions, then the day is not far when we would end up farming more corpses than crops!


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