Why Does The Native Perish While His Nation Flourish?adwinvscorp.com/Native_Perish_Nation_Flourish_Final.pdf · Why Does The Native Perish While His Nation Flourish? (As You Hope,

Why Does The Native Perish While His Nation Flourish?

(As You Hope, So You Reap)

L. Radha Krishna Moorthy (Idea System Designer)

Dr. Sushma Kaza (Co-designer, Researcher and Presenter)

H.B. Nayak (Chairman and MD)

Political, Regulatory, Economic, International, Geographic, Technical and Socio-cultural analysis

Being is Becoming!

[email protected]

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Adwin VS Corp

mailto:[email protected]

We Want Political Campaigners,

Social Reformers, Moral Crusaders and Alien Revolutionaries

To Join This Movement,

To Spin-off Spontaneous Consent,

Simultaneous Content,

Instantaneous Connect and

All At Once Choiceless Convergence

Among Seven Levels of People

For Promoting Financial Fraternity - Share Money with Many

And Create Partners of Prosperity Among Farmers, Customers and Employees

Om Ganeshaya Namah; Om Sri SitaRamanjaneyaya Namah; Om Alimelu Manga sametha Sri Venkateswaraya Namah; Om Sri Sai Baba Namah; Om Sri Siva Parvathulane Namah; Om Mahalakshmi Samethat Vishnu Murthine Namah;Om Brahma Saraswathi Namah;

Om Durga Matha Namah; Om Satya Narayan Murthy Namah; Om Suryanarayana Murthy Namah; Om Mopidevi Subramaneyaswara Swami Namah; Om Radha Krishna Murthulune Namah; Om Tulsasi Matha Namah *

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Adwin VS Corp

Now in Cinemas

Kissa Kisan KaIndian Agriculture’s Journey From Hero to Zero

70mm (2 hours 2 minutes) - All Shows(A Story In Pictures)

ONE AND ONLY HERO: INDIAN FARMER

Monsoon

MNCs

Moneylender

Middleman

ACTOR IN UNSUPPORTING ROLE: Indian Govt.

STORY SCREENPLAY AND DIRECTION: WTO(Dolby Home Theater) (Mute Speakers!)

A 3-D Indian Farm Pictures Productions

Note: Pictures used for representation purposes only.3

Table of ContentsS.No. Topic Page Nos.

1 Executive Summary 18-26

2 The Background 27-37

3 Political Analysis 38-45

4 Regulatory Analysis 46-51

5 International Analysis 52-62

6 Economic Analysis 63-120

7 Geographic Analysis 121-165

8 Exports and Imports 166-177

9 Value Chain Analysis 178-192

10 Warehousing Infrastructure 193-200

11 Technological Analysis 201-206

12 Socio-cultural Analysis 207-209

13 Climate Change 210-215

14 The Unprecedented Human Tragedy 216-22315 Bangaru (Golden) Telangana 224-23616 Substantial Synthesis 237-23917 Non-trivial Thesis - Adwin Enterprise 240-24418 Farmers on Warpath 245-25919 References, About Authors 260-266

Disclaimer: The data, graphs and other figures have been adopted from several sources (govt. and non-govt.) The author therefore is not legally or otherwise liable for the use and accuracy of this data. Any errors/omissions/commissions may please be pardoned. Some of the clipart images were created by authors. Some are provided free by EmojiOne and other third party websites. Where stipulated by the providers, the images were properly attributed. 4

TOC - Charts

• Chart 1: What Comprises Indian Agriculture?

• Chart 2: Farmers Keep The Flag Flying High!

• Chart 3: Indian Agriculture - Main Ailments

• Chart 4: The Unacceptable Wealth Pyramid

• Chart 5: The Unfair Food Pyramid

• Chart 6: Food Grain and Horticulture Production

• Chart 7: Irrigation Penetration (‘

• Chart 8: Plan-wise Share of Public Sector Outlays and Expenditure Under Agriculture and Allied Activities

• Chart 9: Share of Gross Capital Formation to Gross Value Added in Agriculture and Allied

• Chart 10: Share of Public and Private Investment in Agriculture and Allied in Total GDPmp

• Chart 11: Agriculture Research & Spending - 2010

• Chart 12: Minimum Support Price Trends – Kharif

• Chart 13: Minimum Support Price Trends - Rabi

• Chart 14: Avg. Mandi Price and MSP

• Chart 15: Wheat & Rice Procurement For the Central

• Chart 16: Rice Production and Procurement

• Chart 17: Wheat Production and Procurement

• Chart 18: Levels of Buffer Stocks vs Strategic Norms for Rice and Wheat

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TOC - Charts• Chart 19: The Centre’s Subsidy Bill

• Chart 20: India Subsidies

• Chart 21: Farm Subsidies – India much lower than US and EU

• Chart 22: India MSP Lags Global Rice and Wheat Prices

• Chart 23: India’s MSP Lowest In South Asia

• Chart 24: US Claims on India’s MPS Subsidies – Rice and Wheat

• Chart 25: India’s Budgetary Agricultural Expenditure

• Chart 26: Global Area Under Cultivation of Biotech Crops

• Chart 27: Top Ten GM Growing Countries – 2017

• Chart 28: Top Six Beneficiaries of Biotech Crops 1996-2016

• Chart 29: Global Biotech Seed Sales 2017

• Chart 30: Global Value of Biotech Crops 1996-2017

• Chart 31 Bt Cotton Cultivation in India

• Chart 32: Cotton Area and Production

• Chart 33: Pros and Cons of Bt. Crops

• Chart 34: India GDP and GDP Per Capita at Constant Prices (base year 2011-12)

• Chart 35: India GVA of Agriculture, Forestry And Fishing at Constant Prices (base year 2011-12)

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TOC - Charts• Chart 36: India’s GDP Growth Rate

• Chart 37: Sectoral GVA Growth Rates

• Chart 38: Agriculture’s Contribution to GDP at a mere 17%

• Chart 39: Sectoral Contribution to GDP vs Employment – 2016-17

• Chart 40: Occupational Distribution of Working Population in Agriculture – 2011

• Chart 41: Agriculture’s Share in GSDP – 2016-17

• Chart 42: Percent hare of Rural Incomes From Farming By State– 2016-17

• Chart 43: Avg. Monthly Household Income By State– 2016-17

• Chart 44: Average Monthly Income of Agricultural Household from Different Sources by Size Class of Land Possessed – 2016-17

• Chart 45: Annual Growth of Farm Incomes – 1993-2016

• Chart 46: Profit From Crops – 2016-17

• Chart 47: Avg. Rural Daily Wage

• Chart 48: Rural Wages

• Chart 49: Income and Consumption of Agricultural Households By Farm Size Class - 2002

• Chart 50: Income and Consumption of Agricultural Households By Farm Size Class - 2013

• Chart 51: Output and Expenses of Agricultural Households By Farm Size Class - 2002

• Chart 52: Output and Expenses of Agricultural Households By Farm Size Class - 2013

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TOC - Charts

• Chart 53: Avg. Annual Surplus Income of Agricultural Households – 2002-12

• Chart 54: What is Required to Boost Farm Incomes – 2001-13

• Chart 55: Rural India: Real Income Vs.Real Indebtedness – 2009-17

• Chart 56: WPI, WPI – Food, CPI, CPI- Core*, CPI – Food Y-o-Y change : 2012-13 to 2017-18.

• Chart 57: Policy Rates and CPI of Major Economies December, 2018

• Chart 58: Mean CPI Inflation by State: 2012-13 to 2017-18

• Chart 59: Contributions of Major Groups to CPI: 2012-13 to 2017-18.

• Chart 60: Food Inflation and Contribution to CPI

• Chart 61: CPI Change of Select Commodities 2016-17 to 2017-18

• Chart 62: World Bank Commodity Price Indices

• Chart 63: India Food Prices vs. Global Food Prices

• Chart 64: Share of Input Costs in Total Cultivation Costs – 2003 & 2014

• Chart 65: MSP vs. Cost of Production

• Chart 66: Institutional Credit Disbursement Targets For Agriculture By GOI: 2013-18

• Chart 67: Percent Share of Institutional and Non-institutional Sources in Agricultural Credit: 1951-2013

• Chart 68: Agency-wise Institutional Credit Disbursements For Agriculture: 2013-18

• Chart 69: Share of Term Loan and Crop Loan in Agricultural Credit: 2008-18

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TOC - Charts

• Chart 70: Sources of Agricultural Credit by Land Size: 2013

• Chart 71: Farmer’s Access to Institutional Credit By Size of Land : 2013

• Chart 72: Agri-credit Growth in SCBs

• Chart 73: Distribution of Loans and Loan amount By Size of Loan : 2017

• Chart 74: Loan Outstanding According to Purpose – 2003 & 2014

• Chart 75: Split of Rs. 10 lakh Crore Agri Loans Outstanding in March 2016 – SCBs

• Chart 76: States With Highest Rate of Indebtedness: 2013

• Chart 77: GNPA Ratio by Sector: 2014-17

• Chart 78: Sector-wise NPAs of Banks: 2017

• Chart 79: India’s Rank in Global Hunger Index : 2014-17

• Chart 80: Trend in Indicator Values : 2000-18

• Chart 81: Per Capita Availability of Cereals and Pulses: 1990-17

• Chart 82: Share of Various Expenditure Items in Family Basket – Rural Vs. Urban: 2011-12

• Chart 83: Percent of Agri HH By Size of Holding

• Chart 84: Agri HH By Size of Holding – 1970-2010

• Chart 85: Avg Size of Operational Holdings as per Different Agricultural Census

• Chart 86: Distribution of Agri HH Over Social Groups-2010

• Chart 87: Agricultural Land By Use in India

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TOC - Charts

• Chart 88: Gross Cropped Area and Gross Irrigated Area

• Chart 89: Major Soil Types in India

• Chart 90: Distribution of Gross Cropped Area: 1950-2015

• Chart 91: Production and Area Share of Major Crops: 2016-17

• Chart 92: Top Ten Rice Producing States: 2014-15

• Chart 93: Top Ten Wheat Producing States: 2014-15

• Chart 94: Top Ten Sugarcane Producing States: 2014-15

• Chart 95: Top Ten Cotton Producing States: 2014-15

• Chart 96: Top Ten Fruit Producing States: 2012-13

• Chart 97: Share of Area Under Major Crops: 2016-17

• Chart 98: Production and Area Share of Rice: 1950-2017

• Chart 99: Production and Area Share of Wheat: 1950-2017

• Chart 100: Production and Area Share of Pulses: 1950-2017

• Chart 101: Production and Area Share of Oilseeds: 1950-2017

• Chart 102: Production and Area Share of Cotton: 1950-2017

• Chart 103: Production and Area Share of Sugarcane: 1950-2017

• Chart 104: Trends in Cropping Pattern – Area Under Production: 1950-17

• Chart 105: Trends in Cropping Pattern – Production: 1950-17

• Chart 106: Production and Area Share of Fruits & Vegetables: 2015-16

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TOC - Charts

• Chart 107: International Comparison of Yield Per Hectare: 2014-15

• Chart 108: Production Share of Various Horticulture Crops: 2012-17

• Chart 109: Area Share Vs. Value Share of Different Agri Commodities

• Chart 110: India's Position in World Agriculture in 2015

• Chart 111: Crops Cultivated in India – 2014-15

• Chart 112: Vegetables Cultivated in India – 2014-15

• Chart 113: Three Largest Producing States of Important Food Crops– 2016-17

• Chart 114: Three Largest Producing States of Important Cash Crops– 2016-17

• Chart 115: Top Ten State Producers of Vegetables: 2016

• Chart 116: Top Ten State Producers of Fruits: 2016

• Chart 117: Top Ten State Producers of Flowers: 2016

• Chart 118: Marketable Surplus Ratio of Cereals

• Chart 119: Marketable Surplus Ratio of Pulses

• Chart 120: Marketable Surplus Ratio of Oilseeds

• Chart 121: Marketable Surplus Ratio of Other Crops

• Chart 122: Growth of Organic Land and Share of Organic Land in Total Agricultural Land

• Chart 123: Top Ten Countries with Largest Number of Organic Producers

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TOC - Charts

• Chart 124: Area Under Organic Farming in India

• Chart 125: Top 10 Organic States in India

• Chart 126: Top 10 Fertilizer Consuming Countries of the World: 2013

• Chart 127: Fertilizer Usage In Countries Ranked By Land Under Cereal Production: 2013

• Chart 128: Consumption, Production and Imports of Fertilizers in India

• Chart 129: Production of Biofertilizers

• Chart 130: Fertilizer Consumption (N,P,K) Per Unit of Gross Copped Area:2017-18

• Chart 131: Central Subsidy on Fertilizers

• Chart 132: Consumption of Pesticides

• Chart 133: Pesticide Perils

• Chart 134: Production of Breeder Seeds (th. qtls.), Foundation Seeds (lakh qutls.) and Distribution of Certified/Quality Seeds

• Chart 135: The Seed Industry Structure

• Chart 136: Decline in Foodgrain Production Due to Adverse Weather

• Chart 137: Rainfall Departure From Long Period Average

• Chart 138: Total Irrigated Area and Groundwater Irrigated Area

• Chart 139: Top Five Countries For Annual Fresh Withdrawals: 2013-14

• Chart 140: Percent of Micro Irrigation in Total Irrigated Area: 2017

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TOC - Charts

• Chart 141: Impact of Micro-Irrigation on Water Saving and Yield of Major Crops: 2013-14

• Chart 142: Per Capita Availability of Water

• Chart 143: Water Requirement By Sector

• Chart 144: Top Ten Exporters of Agricultural Products – 2017

• Chart 145: India’ Foreign Trade: 2010-18

• Chart 146: India’ Agri Exports & Imports: 2010-17

• Chart 147: India’s Principal Agri Commodity Exports : 2012-18

• Chart 148: India’ Principal Agri Commodity Imports : 2012-18

• Chart 149: India’ Agricultural and Processed Food Exports : 2012-18

• Chart 150: India’ Agricultural and Processed Food Exports By Country: 2012-18

• Chart 151: Global Top Ten Producers of Rice: 2017

• Chart 152: Global Top Ten Producers of Wheat: 2017

• Chart 153: Global Top Ten Producers of Sugar: 2017

• Chart 154: Global Top Ten Producers of Cotton: 2016

• Chart 155: Global Top Ten Producers of Fresh Vegetables: 2017

• Chart 156: Global Top Ten Producers of Fresh Fruits: 2017

• Chart 157: India’s Major Export Destinations in Cotton

• Chart 158: International and Domestic Price Movement in Cotton

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TOC - Charts

• Chart 159: India’s Major Export Destinations in Sugar

• Chart 160: International and Domestic Price Movement in Sugar

• Chart 161: Implementation of Model APMC Act, 2003

• Chart 162: Distortions in the Current Market Structure

• Chart 163: Middlemen Price Mark-up

• Chart 164: Middlemen Mark-up In Fruits and Vegetables

• Chart 165: Middlemen Mark-up By Crops

• Chart 166: Key Facts on Agricultural Markets

• Chart 167: Supply Chain Inefficiencies in Paddy

• Chart 168: Price Dispersions At Farmgate - Select Crops

• Chart 169: Price Dispersion – India, USA – 1960 and 2013

• Chart 170: Tomato Mark-up from Madanapalle to Market

• Chart 171: Agricultural Markets with Super Market Intervention

• Chart 172: Post Harvest Losses (PHL) in Major Crops

• Chart 173: Available Storage Capacity in Warehouses

• Chart 174: Supply of Dry Warehouses and Godowns

• Chart 175: Cold Chain Facilities in India

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TOC - Charts

• Chart 176: Cold Chain Facilities By Type- 2015

• Chart 177: Cold Chain Facilities By Type

• Chart 178: Cold Storage By Commodity Use

• Chart 179: Cost of FCI’s Operations

• Chart 180: FCI’s Food Subsidy, Outstanding Bill and Grain Offtakes

• Chart 181: Top State Contributors to Paddy Procurement Drive: 2015-17

• Chart 182: Installed Cold Storage Capacity by State: 2015

• Chart 183: Farm Mechanization vs Population Engaged In Agriculture: 2011

• Chart 184: Farm Mechanization in Various Agricultural Operations: 2011

• Chart 185: Sale of Tractors and Power Tillers: 2004-18

• Chart 186: Trend in Use of Power Sources: 1971-2013

• Chart 187: Type of Households: 2018

• Chart 188: Domestic Consumer Market in India

• Chart 189: Decrease in Tree Cover Extent: 2000-2005

• Chart 190: Average Annual Temperature: 1970-2015

• Chart 191: Average Annual Precipitation: 1970-2015

• Chart 192: Effect of Extreme Temperature on Crop Yield- Kharif

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TOC - Charts

• Chart 193: Effect of Extreme Temperature on Crop Yield- Rabi

• Chart 194: Farmer Suicides in India: 2004-16

• Chart 195: Farmer Suicides By State: 2010-16

• Chart 196: Reasons for Farmers Suicides: 2014-15

• Chart 197: Telangana Area Under Use: 2014-15

• Chart 198: Percent of Irrigated Land By Principal Crops : 2014-15

• Chart 199: GDP Growth Rates of of TS, AP and India: 2015-19

• Chart 200: Percent of Budget Spent on Agriculture and Irrigation of TS, AP and India: 2015-19

• Chart 201: Telangana’s Principal Crops - Area and Production: 2014-15

• Chart 202: Telangana’s Horticultural Crops – Area and Production: 2014-15

• Chart 203: Sources of Irrigation:2014-15

• Chart 204: Composition of Telangana’s Farmers By Size Of Holding:2014-15

• Chart 205: Shifts in Cropping Pattern:2007-15

• Chart 206: Farmers Suicides By Size of Land Holdings: 2014

• Chart 207: Farmer Suicides In Telangana By Party Rule: 1995-2016

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TOC - Tables

• Table 1: Share of Agriculture and Allied In Total GCF (%)

• Table 2: Share of Avg. Monthly Income by Source of Income– 2016-17

• Table 3: WPI, WPI – Food, CPI, CPI- Core, CPI – Food Y-o-Y change : 2012-13 to 2017-18.

• Table 4: Contributions of Major Groups to CPI: 2012-13 to 2017-18.

• Table 5: Costs of Cultivation and MSP proposed by TS Govt.

• Table 6: The Bt. Cotton Dynamics

• Table 7: Split of Agri Loans Outstanding By Accounts in March 2016 – SCBs

• Table 8: India's Position in World Agriculture in 2015

• Table 9: Sources of Irrigation

• Table 10: Major Farm Machinery Used in India: 2013

• Table 11: Agro-Climatic Zones of Telangana: 2014-15

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Om Ganeshaya Namah; Om Sri SitaRamanjaneyaya Namah; Om Alimelu Manga sametha Sri VenkateswarayaNamah; Om Sri Sai Baba Namah; Om Sri Siva Parvathulane Namah; Om Mahalakshmi Samethat Vishnu Murthine Namah;Om Brahma Saraswathi Namah; Om Durga Matha Namah; Om Satya Narayan Murthy Namah; Om Suryanarayana MurthyNamah; Om Mopidevi Subramaneyaswara Swami Namah; Om Radha Krishna Murthulune Namah; Om Tulsasi Matha Namah

EXECUTIVE SUMMARY

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Executive Summary (1/7)

• The nation’s GDP in 2017 was $3 trillion and the share of agriculture in this was 18 percent - i.e. it was $540 billion (declined from 50% of GDP in 1950-51). However, from this GDP share of $540 billion, farmers who constitute nearly 55 percent of this country’s work force, are receiving only an average of 30 percent as their share, because 70 percent is being diverted to the middlemen. That means farmers are in effect receiving only $160 billion i.e. 55% of this country’s population receive only 5% of GDP! Agricultural growth rate was only 3.4% in 2018 compared to 6.3% last year. We want to increase farmer’s share in end-consumer price to 50% through Adwin .

• Throughout the world, in manufacturing industry, in whatever is purchased 50 percent is reaching the producer and 50 percent is the middlemen’s margin. Whereas in Indian agriculture, in whatever is purchased, 30 percent is being paid to the farmer and 70 percent is the middlemen’s margin. That means for every one rupee that the farmer earns, middle men are earning Rs. 2.50, that too without incurring any production risks.

• Further, there is lot of spoilage and wastage which is further eroding agricultural incomes. Moreover, today the demand for credit in the rural markets is Rs 15 lakh crore, whereas the supply is only Rs 11 lakh crore. All these factors are impoverishing the food providers of this nation and pushing them to the brinks of desperation. Adwin is the only way out from the world of woe.

• In a cruel paradox farmers, who are the architects of India’s growth, are left to die in distress and are exposed to the predatory market forces –both domestic and international. We need a policy that cares for the farmers.

• The Govt. spending on agriculture in its various plan outlays as percent of agriculture GDP is stagnating at around 4%. While the Public Sector’s share in Gross Capital Formation (GCF) of Agriculture is declining, Private sector’s share is increasing. However, the overall GCF is stagnant –averaging at 7.7%. While the Public Sector’s share in investment is stagnant, private sector’s share is increasing.

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• While the minimum support price (MSP) mechanism increased production of rice and wheat, however, it has had marginal to nil impact on the production of other crucial agricultural commodities like pulses and oilseeds, the deficit of which is met by expensive imports, due to the virtual absence of the state procurement for these crops. The procurement rates of paddy and wheat are falling in response to rising inflation.

• For instance, in 2018, except for paddy, maize, tur and cotton, mandi price is far lower than the MSP to the tune of Rs. 10 - Rs. 50 per quintal for other crops, again demonstrating the strong bargaining power of the middlemen. Market prices of most kharif crops are well below (10% to 40%) their respective MSPs.

• India is fighting a major battle at the WTO. Treating MSP as an agricultural subsidy, the rich countries have accused India of exceeding the 10 % limit — called de-minimis level — that was imposed way back in 1986-88. But at the same time these countries are not willing to re-open the 2008 revised draft modalities achieved at the WTO that aimed at cutting the massive domestic and export subsidies in the rich countries. According to a study, the average farm subsidy a farmer in India gets is Rs1,000 per month. America on the other hand provides an average monthly farm subsidy of Rs.2.5 lakh.

• India’s subsidies for feeding its hungry are being blamed for distorting trade in agriculture while the US, which provides six times more subsidies than India for feeding its hungry, is seen as doing humanitarian service. The US subsidies are unquestionable, while India’s hungry are being conveniently traded at the WTO.

• In 2014-15, the US provided $140 billion for domestic food aid, including spending on food coupons and other supplementary nutrition programmes to feed 320 millions. In India, the Food Bill costing $42 billion will feed an estimated 850 million people. Agricultural subsidies in the developed countries have more or less stayed stagnant over the period 2011-15.

• Agriculture contributes to 17% of GDP while 55% of India’s population depends on agriculture – down from 50% in 1950. This means that without any change in employment structure, the productivity of agriculture is falling indicating absence of structural changes. That is there is disguised unemployment in agriculture with marginal productivity of labour being negative.

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• Agriculture’s sectoral contribution to GSDP of major agrarian states in India is inline with what one would expect from agriculture. For instance, for MP and AP, agriculture contributed 34% to GSDP, while for Punjab and Odisha it was nearly 28%. Interestingly for agro-based state Gujarat this share is only 19%. For other states in agrarian distress it is - Telangana at 18%, while for Karnataka, Maharashtra and Kerala, it is 13-10%. TN is 21% while Chattisgard stood at 22%.

• Inspite of the fact that 55% of India’s population depends on agriculture, only 50% of rural incomes come from cultivation. The rest 50% came from wage/salary employment, live stock rearing and non-farm business. Only 32% of income came from cultivation. Moreover, rural poverty ratios of 26% are concentrated among small and marginal farmers. Small and Marginal farmers derive 50% of their incomes by working as agricultural labor in other farmers fields, since cultivation is un-remunerative. Also, sadly, the average daily wage for this rural labor is continuously declining and stood at Rs. 272 in December 2015, which could explain the continued impoverishment of the small and marginal farmers.

• The marginal and small farmers consumption exceeds incomes leaving them with deficit family budgets. Larger the farm size greater the amount of surplus incomes. For all farm sizes less than one hectare, consumption exceeds income. That is 90% of farmers (who own less than two hectares) continue to languish in utter poverty and indebtedness.

• The wage- parity ratio between the lowest farmer and highest farmer is 1:5.However, a different picture emerges when we compare it from the perspective of economic costs of cultivation. Here farmers across the board, of all sizes of holdings, are generating a surplus. However, for small and marginal farmer this surplus is coming from working as agricultural labor since their income is more than output value confirming our earlier finding. For medium and large farmers their incomes are lower than value of output.

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• One way of interpreting this could be that though these farmers are generating surplus returns from agriculture, middlemen are appropriating them away, resulting in reduced incomes. Larger the farm size, higher is the quantum of surplus. Further comparing the surplus in terms of value of output and total incomes the gap is on an average 30% confirming our finding throughout the report that the middleman’s margin is around 30-40%. This exposes the powerful role of middlemen and distorted agrarian structure. The negative surplus further reduces the capacity to reinvest in the next round impacting capital formation.

• There are vast inter-state disparities in costs of cultivating major crops reflecting the myriad differences in resource availability, geographic conditions, technology and cost of capital. Also, for instance, it costs Rs. 10 to cultivate one kg of rice in A.P. Even if we add a mark-up of Rs. 10, the farm gate price is Rs. 20. However, the customer is buying rice anywhere between Rs. 50-70, again reiterating that middlemen’s mark-up is nearly 30-40%. Fertilizers, pesticides, seeds and human labor are major cultivation cost

• With regard to inflation, there appears to be some moderation in prices, with 30% reduction in prices. However, vegetables and fruits, which were largely responsible for the food price rise continue to pose concern. It would all depend on how the monsoon plays out in 2019 for them to be tamed.

• For marginal farmers cultivation accounted for merely 7% of the total income, while for the large farmers it contributed more than 50% of the total income. Households with more than 2 ha holding reported 13 times more income than households with less than 0.1 ha of land. This may directly be attributed to economies of scale.

• The targeted agricultural credit in 2017-18 was Rs. 10,00,000 crores while achieved was Rs. 11,79,428 crores. Out of this total agricultural credit, only 45% was actually given for crops. For 2018-19, the target is set at Rs. 11,00,000 crores.

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• The percentage share of crop loan (out of total loan) which has been marginally increasing, stood at 63% in 2017-18 compared to the term loan of 37%. That is, farmers have an overwhelming necessity to meet short-term working capital needs, over-riding long term fixed capital needs. This points the way forward for policy decisions and direction of credit.

• In spite of the fact that it is declining, non-institutional sources with its exploitative practices is still dominant, collapsing the fragile village support structure. For instance between 1951-2013, the share of institutional sources in total credit increased from 10% to 64%, while the share of non-institutional sources declined from 90% to 36%. Among non-institutional sources, money lenders dominate with 30% share in total credit (both - institutional and non-institutional).

• Money lenders charge exorbitant interest rates at 48-60%, and majority of the farmers who are not served by formal sources are forced to use these informal sources, for their credit needs. The banks have reduced their long term and medium term loans to agriculture.

• If we study the proportion of agricultural households indebted within each farm class, in 2012, as the size of holdings increased, the proportion of indebted households also increased. For instance, 47% of farmers with less than 1 hectares holding were indebted; while 67% of farmers with average size holding of 1- to 10 hectares were indebted. That is indebtedness seems to be directly proportional to the size of holding – as size of holding increases indebtedness increases

• The earlier finding of the global inequality principle of 90:10 pervades even the agrarian structure. 90% of the farmers own 10% of farm land while 10% own 90% holdings with it being even more skewed at the top. Moreover, non-viability of farming as a profession is forcing a large number of farmers to sell portions of the land and thus their holdings become smaller.

• In 2014-15, net area sown was only 46% of the total geographic land. Of this net sown area, total area under food grain cultivation was 72%, of which nearly 40% was under rice (23%) and wheat (16%). Fruits share of gross cropped area was 4% while vegetables stood at 5%. Share of pulses was 15%, while area under oil seeds was 14%. Automatically, food grains especially paddy and wheat had lion’s share of production as well. Share of India in world production is stagnant at 9.4%-10.4% in the past 20 years.

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• Encouragingly, our agricultural exports are constantly increasing at 11% for total exports, while our imports are stable at 6% of total imports, creating a current account surplus on the balance of trade account for agriculture. This trend was accentuated throughout the post-1991 reforms period. This debunks the myth that developed countries have used WTO route to dump their goods on us. In fact, we are able to sell better on global markets because of liberalization. However, there are deteriorating terms of trade in agriculture because of declining global commodity prices.

• Various studies have shown that farmers get only 35-40% of the retail price paid by the consumer and rest remained with the middlemen. India has 3,000-4,000 separate agriculture markets. It is estimated that there are around 20,870 rural primary/temporary markets which might supply to the urban wholesale markets.

• 95% of the sale of fresh produce especially in the horticulture sector happens through traditional value chain . The various stakeholders of the agriculture value chain farmers, wholesalers, processors, retailers etc work in silos rather in an integrated or coordinated manner. The concepts of collaborative demand forecasting and production planning in the backend with information sharing is missing in agriculture value chain causing many inefficiencies in the system.

• The eNAM and the model APMC Act of the Govt. is an attempt to link all the country wide mandis on an electronic platform for free trade of agricultural commodities. The market forces of demand and supply will determine the price and not cartels, according to the system’s stated objective. It is supposed to create a spot market for farmers. However, experts believe that eNAM is only going to help large corporations source their products at the cheapest rate from the farm gate at the expense of farmers – so the exploitation will not be by six intermediaries but one intermediary further increasing the wealth inequalities in the is country. For instance, in India, top 1% own $3.6t or 60% of India’s wealth. However, it’s just 119 people who own 73% of wealth – compared to world’s 45%.. This system will now further skew this pyramid so that 25 people will hold 90% of India’s wealth!

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Executive Summary (7/7)• There is an average of 45% mechanization on Indian farms. Only 10% of the farmers can afford farm machinery and so pay-per-use model is

ideal. Since rice and wheat are the principal crops 60-70% of mechanization is for these crops (out of which, 60% is for soil bed preparing and seeding and planting) and less than 5% for others.

• The number of reported farmer suicides decreased 67%, from 17,368 in 2009 to just 11,370 in 2016, according to the NCRB. The caveat here is NCRB in 2014 declassified agriculture professional into two separate groups – cultivators and agricultural labor and that is why the drastic decline. If they are included 12,360 is total suicides. Further, after 2016, NCRB has stopped publishing suicide data on farmers.

• In fact the problem has reached such alarming proportions, that the Supreme Court of India in an unprecedented move, declared it as a violation of human rights and right to life and summoned the central and state govts. To explain what they propose to do on the problem .

• Adwin VS – our proposed solution, is promoted as a world cause for empowerment to create partners of prosperity among farmers, employees and customers against the background of spiraling food prices, where both the farmer and the customer is left impoverished. It’s aim is financial fraternity, to share money for many.

• Adwin VS is the only enterprise in the world which will buy a commodity from the farmer at Re. 5 and sell it to the customer at Rs. 9, as against the current system where it is being sold at Rs. 10. Our greatest contribution to agricultural markets is: In whatever we sell minimum 50 percent will go to the farmer, as opposed to the current 30 percent with zero wastage and financial risk and sell to the consumer at minimum 10 percent less than prevailing price, at highest quality.

Out of a total GDP of Rs. 151 lakh crores (Agriculture’s share is 17% or (26 lakh crores), black economy is Rs. 93 lakh crores (62%), black wealth is Rs. 300 lakh crores (200%),while black money is Rs. 3 lakh crores (2%)

25

Political and Regulatory

International

Economic

Geographic

Value Chain

Technological

Social

Unambiguous Analysis

The Dynamic Dimensions of the Presentation

Unambiguous Analysis

Non-Trivial Thesis

Substantial Synthesis

The 3 Critical Elements of Research

26

THE BACKGROUND

27

• The nation’s GDP in 2017 was $3 trillion and the share of agriculture in this was 18 percent - i.e. itwas $540 billion (declined from 50% of GDP in 1950-51). However, from this GDP share of $540billion, farmers who constitute nearly 55 percent of this country’s work force, are receiving onlyan average of 30 percent as their share, because 70 percent is being diverted to the middlemen.That means farmers are in effect receiving only $160 billion i.e. 55% of this country’s populationreceive only 5% of GDP! Agricultural growth rate was only 3.4% in 2018 compared to 6.3% lastyear. We want to increase farmer’s share in end-consumer price to 50% through Adwin .

• Just like the myriads of pests which attack farms, many more myriads of pests in the real worldattack farmers. These include rains, the pests themselves, middlemen, money lenders and otherfinancial institutions, unsympathetic govt., rising input costs and geophysical challenges to namea few. This report tries to examine the challenges facing Indian Agriculture in all its dimensions tocome to grips with what is exactly going wrong.

H I G H L I G H T O F T H E H Y P O T H E S I S

28

• The nation’s GDP in 2017 was $3 trillion and the share of agriculture in this was 18 percent - i.e. it was $540 billion (declined from 50% of GDP in 1950-51). However, from this GDP share of $540 billion, farmers who constitute nearly 55 percent of this country’s work force, are receiving only an average of 30 percent as their share, because 70 percent is being diverted to the middlemen. That means farmers are in effect receiving only $160 billion i.e. 55% of this country’s population receive only 5% of GDP! Agricultural growth rate was only 3.4% in 2018 compared to 6.3% last year. We want to increase farmer’s share in end-consumer price to 50% through Adwin .

• Throughout the world, in manufacturing industry, in whatever is purchased 50 percent is reaching the producer and 50 percent is the middlemen’s margin. Whereas in Indian agriculture, in whatever is purchased, 30 percent is being paid to the farmer and 70 percent is the middlemen’s margin. That means for every one rupee that the farmer earns, middle men are earning Rs. 2.50, that too without incurring any production risks.

• Further, there is lot of spoilage and wastage which is further eroding agricultural incomes. Moreover, today the demand for credit in the rural markets is Rs 15 lakh crore, whereas the supply is only Rs 11 lakh crore. All these factors are impoverishing the food providers of this nation and pushing them to the brinks of desperation. Adwin is the only way out from the world of woe.

• A recent trend witnessed especially in A.P. and Telangana is the massive influx of farm labor to urban areas and abandonment of farm land to real estate development. This is resulting in fall of food. Food grain production stood at 284mt in 2017; horticulture production 305mt.

Unambiguous Analysis – Central Theme (1/4)

29

• Falling production and increased food prices have the potential to culminate into a food crisis.

• In a cruel paradox farmers, who are the architects of India’s growth, are left to die in distress and are exposed to the predatory market forces – both domestic and international. We need a policy that cares for the farmers.

• Dryland regions which are perennially drought ridden are irrationally adopting yield increasing technology. Inadequate infrastructure is being superimposed on an agrarian structure where land institutions are not rationalized. Further, the implementation of a market driven commercial and mono-cropping culture has led to severe stress on the local resource base. The reforms in the form of declining public investment and declining institutional support in input supply (irrigation, science and technology, rural roads, market yards, lack of breakthrough technology for drought-prone regions) have contributed to rising costs. Trade liberalization under the WTO regime, especially in case of cotton and sugar have exposed the dryland farmers to the volatility of global prices. The volatile prices of commercial crops have suffered ruination because of agricultural trade liberalization.

• At high levels of output, the exploitation of natural resources is even higher (soil nutrients and micronutrients) per unit of output. It led to micronutrient deficiencies of Zinc, Sulphur, Iron, etc. Therefore in order to maintain the yield the farmers have increased fertilizer usage esp. nitrogen, phosphorous and potassium. A classic case is Punjab where after the green revolution such as indiscriminate usage has created an agrarian crisis. Also increasing farm mechanization is pushing up input costs. This is especially true for the cotton farmers.


30

• Only 20% of 500 districts in the country contribute substantially to growth. New technology is biased in favor of the rich who have better command over resources. Gains of large farmers is disproportionately larger.

• Even as the spread of Green Revolution through HYVs showed clear signs of adverse effects on soil degradation, water pollution, and deceleration in growth rate of productivity, there remained a vast population of resource poor farmers in dryland areas to whom this technology was extended without proper judgement. The assumption of Green Revolution Model relies on well irrigated land which was ignored by the policy makers.

• Further, farming is rapidly shifting from HYV to GM crops which carries sui generis kind of intellectual property rights for which farmers end up paying an exorbitant price. However, these necessitate knowledge based practice as well as timely and comprehensive extension systems and services. Organic farming is not easy to adopt especially for small and marginal farmers without adequate institutional support.

• There is an over-exploitation and resulting irreversible depletion of ground water resources especially in dryland areas. Neglect of public investment in irrigation has increased the dependence on ground water. This results in farmer based private investment in bore wells and tube wells obtained at a vey high cost. It is a major cause of indebtedness since due to frequent monsoon failures and consequent absence of water recharge the wells dry up leaving behind debts, dried up crops and deaths. For instance, in the suicide states , ground water irrigation irrigates 93% of the


31

• fields - M.P at 65%, Karnataka 60% and Telangana it is 86%. In the North India, the ground water irrigation does not pose much of a problem because of the presence of perennial rivers. But in South India, where most of the area is rain-fed, absence of monsoon fails to recharge the water bodies. The net irrigated area overall for India is 36% or 1/3rd of land has some kind of irrigation. Further, 70% of this 30% irrigated land is ground water irrigated.

• 55% of farmers do not get MSPs. The worst affected are the small and marginal farmers because they depend on traders for credit not only at high interest rates but also tied up with purchase of output at prices below MSP. Small and marginal farmers have lifted the country’s agriculture to relatively better productivity at a cost they can ill afford. These are essentially social costs including the development of groundwater resources, providing institutional credit etc. Debt relief alone will not bring solace to the farmers – at best it’s a short-term palliative. Govt. must work towards price stability, ecological sustainability of agriculture, increase institutional credit, strengthen support networks and increase incomes in non-farm rural sector. Due to NEP 1991, the priority sector lending has received less focus drying up institutional sources.

• The rapid increase in the demand for credit from all sources can be linked to an unprecedented rise in prices in the case of major crops that flared up the aspirations of households.

• On the other hand, consumers are witnessing a decline in real incomes and purchasing power in the face of increasing food inflation and reduced production – a case of demand-supply mismatch. For instance, during 2018, while CPI stood at 4.2%, CPI food decreased from 11.9% in 2012-13 to 1.2% in 2018 meaning that food is a major contributor for the high inflation rates in the country. WPI was at 1.4%. Supply chain inefficiencies and supply constraints are responsible for food price increase. This is resulting in a hunger crisis for the bottom of the pyramid sections.


32

Indian Agriculture – An Introduction

Cultivation – Food, Commercial and

Horticulture (61%)

Livestock (27%)

Fisheries (5%)

Forestry (8%)

Chart 1: What Comprises Indian Agriculture?

Source: Report of Committee on Doubling Farmer’s Incomes, Ministry of Agriculture and Farmers Welfare, 2017

Chart 2: Farmers Keep The Indian Flag Flying High!

33

• Pulses (25% of global production)

• Jute

• Milk (165 mt)

World’s Largest Producer

• Wheat

• Sugarcane

• Cotton

• Groundnuts

• Fruits and Vegetables

Rice

• 17% of GDP

• 55% of Employment

• 11% of Exports

• 7% Share in total GCF

• Total crop production at 589mt

Role in Economy

Second Largest

Producer

What Ails The Indian Agriculture? –A Drone Camera’s View

• Poor infrastructure

• Lack of grading• No direct links• No price

transparency

• Low processing• Lack of quality

• Poor returns• Low capacity

utilization

• Lack of storage• Poor

transportation• High wastage• Multiple

intermediaries

• Lack of finance• Poor extension

• Low productivity• Non-demand

linked production

Production Supply Chain

MarketingProcessing

Defective Supply Side Structure Further, it is distorted……

Chart 3: Indian Agriculture - Main Ailments

34Farmer Clipart Source: "Man with turban Royalty Free Vector Clip Art illustration " by Cliparthut.com is licensed under CC BY 4.0

436m

(8.7%)

1335m

(27%)

3,546m

(64%)

$6t (2%)

$44t (14%)

$125t (40%)

Number of adults (% of population)

$1m

Wealth range

$142t (45%)

42m (0.8%)

90% of the world’s friends own 10% of the world’s funds, while 10% of the world’s friends own 90% of the world’s funds. Further, top 1% own 50.8% of world’s funds, while bottom 75% own 2.5% of world’s wealth. The Financial Fraternity principle of Adwin aims at addressing this disparity by implementing WITO – Wage Index Ten Order.

Source: Credit Suisse Wealth Report , 2018

The Oxfam Report says that even more startling is the fact that it’s not the top 1% of the world population

(78m). Just 42 billionaires hold 82% of world wealth of $317 trillion! - same as the net wealth of the bottom half of humanity. This wealth is derived through tax evasions, crony capitalism, and denying labor their fair share from revenues. In India, just 119 billionaires own 73% of $6t wealth.

Ch

art

4:

The

Un

acce

pta

ble

We

alth

Pyr

amid

35

Indian Food industry market size $3.5t in 2013

Food service industry market was $48b in 2014

Farmers

receive $115b

Indian Food market is

the world’s 6th largest

Food is 41% perishables

34% staples and

15% beverages

Retail contributes to 70% of the sales.

Food delivery

(including online) is valued at

$15b

Agriculture SuperstructureThe entire nation is prospering depending on

farmers produce while the farmers themselves perish

Ch

art

5:

The

Un

fair

Fo

od

Pyr

amid

36

259 257 265 252 252276 284

257268 277 283

286300 305

0

50

100

150

200

250

300

350

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Food grain Horticulture

Chart 6: Food Grain and Horticulture Production (mt)

Source: Pocketbook of Agricultural Statistics, various years

Chart 7: Irrigation Penetration (‘000 ha)

Source: Ministry of Statistics and Programme Implementation, various years

37

54270

64567

115855

141279

0 20000 40000 60000 80000 100000 120000 140000 160000

2005-06

2010-11

Net sown area Net irrigated area

47%

46%

% of irrigated area

POLITICAL ANALYSIS

38

Political and Regulatory Analysis

• The Govt. spending on agriculture in its various plan outlays as percent of agriculture GDP is stagnating at around 4%. While the Public Sector’s share in Gross Capital Formation (GCF) of Agriculture is declining, Private sector’s share is increasing. However, the overall GCF is stagnant – averaging at 7.7%. While the Public Sector’s share in investment is stagnant, private sector’s share is increasing..

• However, these are essentially social costs including the development of groundwater resources, providing institutional credit, rural infrastructure, etc. which are critical for development of agriculture. Even, R&D expenses on Agriculture as percent of agriculture GDP are one of the lowest in the world at 31% showing the gross apathy towards development of break-through technologies in this sector.

• While the minimum support price (MSP) mechanism increased production of rice and wheat, however, it has had marginal to nil impact on the production of other crucial agricultural commodities like pulses and oilseeds, the deficit of which is met by expensive imports, due to the virtual absence of the state procurement for these crops. The procurement rates of paddy and wheat are falling in response to rising inflation. In paddy and wheat, govt. is procuring 30% of produce, while farmer is retaining another 30% for self-consumption. That means marketable surplus is only 40%. For other crops, govt. only announces MSP but does not procure them. Moreover, the govt. procurement of rice and wheat have been falling in response to rising food inflation.

• MSPs fixed at 50% over cost of production to address the anger brewing in India’s hinterland, the centre in the budget 2018 announced two major policy decisions: Firstly, MSPs fixed at 50% returns on production

Unambiguous Analysis – Political & Regulatory (1/3)

39


• cost to farmers and secondly, to ensure effective price support-based procurement of pulses and oilseeds, going beyond the usual rice and wheat.

• In September 2016, it had introduced an ambitious scheme named Pradhan Mantri Annadata AaySanrakshan Abhiyan, or PM-AASHA, to ensure those growing pulses and oilseeds benefit from higher MSPs announced by the government.

• The new scheme is a mix of sub-schemes, which will involve direct procurement from farmers (price support scheme or PSS), paying them for losses incurred when wholesale market prices are lower than the announced MSPs (price deficiency payment scheme or PDPS), and procurement by private traders at MSP as a pilot. Towards this, the centre allocated ₹15,000 crore, and raised the bank guarantee of state procurement agencies to ₹45,550 to help them make payments to farmers.

• Farmer organizations have criticized the new policy on two fronts. First, they say, the government went back on its promise by using a cost matrix for calculating MSPs which does not include rental value of land owned by farmers, thereby depressing support prices. Secondly, higher MSPs have failed to show results on ground.

• For instance, in 2018, except for paddy, maize, tur and cotton, mandi price is far lower than the MSP to the tune of Rs. 10 - Rs. 50 per quintal for other crops, again demonstrating the strong bargaining power of the middlemen. Market prices of most kharif crops are well below (10% to 40%) their respective MSPs.


40


• The WTO agreement required liberalisation of agricultural trade, but over the 1990s, most policymakers in India seemed to think that this posed no threat to farmers since in the early 1990s most domestic crop prices were well below international prices. The initial round of tariff-binding commitments to the World Trade Organisation (WTO) made by India reflected this misplaced optimism: the country agreed to zero tariff bindings (maximum permitted levels of import tariffs) for a wide range of crops.

• It was only when global prices fell precipitously that the adverse implications for import surges and impact on farmers’ livelihoods became apparent. Then India was forced to go back to the WTO and renegotiate more appropriate tariff bindings for crops such as wheat, rice, sugar and oilseeds.

• However, what this meant was that Indian agriculturists were increasingly exposed to global competition even as the protections they had in terms of support prices, subsidies, etc. were gradually withdrawn.


41

Stagnating Govt. Spending on AgricultureThe 1990s saw an overall decline in per capita government expenditure on rural areas. In addition, there were substantial declines in public infrastructure and energy investments, which affected rural areas. These were especially marked in irrigation and transport, both of which matter directly and indirectly for agricultural growth and productivity through their linkage effects

• The total investment is abysmally low and stagnant due to govt.’s apathy towards this sector. In 2018-19, the Govt.’s allocation for agriculture was Rs. 15 lakh – 63% of total Rs. 24 lakh crores budget .

• In contrast in 2017-18, the Govt.’s allocation for agriculture was just Rs. 48,655 crores (2.7% of our budget and 0.3% of GDP) compared to Rs. 46,000 crores in 2016-17. Crop insurance is Rs. 9,000 crores, while interest subsidy on farmers credit is Rs. 15,000 crores and for agri research it is Rs. 7,000 crores. Agri credit increased by Rs. 1 lakh crores to Rs. 10 lakh crores (shortage of Rs. 50,000 crores).

• Over the past 5 years one accentuated trend is that the actual expenditure under public sector outlay is 50-60% lower than budgeted outlay exposing the govt.’s reluctance to address the agrarian crisis.

• Given the widespread agrarian distress, the government has increasde the outlay for agriculture and irrigation to 10% of GDP in 2018-19, up from 0.19% of GDP in 2015-16 to 0.32% of GDP in 2016-17, to reverse the damage.

4.9

3.9

3.7

4.7

4.5

4.7

2.4

2

4

3.8

4.4

N.A.

5.4

4.8

2.4

1.9

N.A.

0 1 2 3 4 5 6

9th Plan (1997-2002)

10th Plan (2002-07)

11th Plan (2007-12)

12th Plan (2012-17)

Annual Plan (2012-13)





Plan Expenditure Plan Outlay


Chart 8: Plan-wise Share of Public Sector Outlays and ExpenditureUnder Agriculture and Allied Activities (%)

42

Declining Public Gross Capital Formation in Agriculture and Allied Sector (at 2004-05 prices)

While the Public Sector’s share in Gross Capital Formation of Agriculture is declining, Private sector’s share is increasing. However, the overall GCF is stagnant – averaging at 7.7%. This indicates stagnant investments in agriculture.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Public Private

Table 1: Share of Agriculture and Allied In Total GCF (%)

Chart 9: Share of Gross Capital Formation to Gross Value Added in Agriculture and Allied (%, current prices)



11.2

2.6

43

0.4 0.40.3 0.3

0.4 0.4

2.7

2.4

2.6

2.3

1.91.8

0

0.5

1

1.5

2

2.5

3

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Public Private

Chart 10: Share of Public and Private Investment in Agriculture and Allied in Total GDPmp (%, 2011-12 prices)


Low Public and Private Investment in Agriculture and Allied Sector in Total GDP (2004-05 prices)

While the Public Sector’s share in investment is stagnant, private sector’s share is increasing. However, the total investment is abysmally low and stagnant due to govt.’s apathy towards this sector. However, these are essentially social costs including the development of groundwater resources, providing institutional credit, rural infrastructure, etc. which are critical for development of agriculture.

44

Dismal R&D Support of 31% of Agriculture GDP

Chart 11: Agriculture Research & Spending - 2010 (% of Agricultural GDP)

17% 18% 18%20% 21%

25%31%

37% 38%

49%

65%

97%

0

20

40

60

80

100

120

Source: Pocketbook of Agricultural Statistics, various years, Businessline, October 11th, 2018

45

REGULATORY ANALYSIS

46

Chart 12: Minimum Support Price Trends (Kharif, in Rs./Quintal)

The Strange Case of Rising MSP & Lagging Mandi Prices (1)

Source: Ministry of Agriculture and Farmers Welfare, 2018

1750 1770

2430

1700

5675

6975

5600

4890

3399

5150

0

1000

2000

3000

4000

5000

6000

7000

8000

2012 2013 2014 2015 2016 2017 2018 2019

47

Chart 13: Minimum Support Price Trends (Rabi, in Rs.)

Source: Ministry of Agriculture and Farmers Welfare, 2018

1840

4620 44754200

1440

275

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2012 2013 2014 2015 2016 2017 2018 2019

The Strange Case of Rising MSP & Lagging Mandi Prices (2)

In paddy and wheat, govt. is procuring 30% of produce, while

farmer is retaining another 30% for self-consumption. That means

marketable surplus is only 40%. For other crops, govt. only

announces MSP but does not procure them.

48

Fact - Mandi Price for Most Crops Lower than MSP

Chart 14: Avg. Mandi Price and MSP (Rs./Quintal)Except for paddy, maize, tur and cotton, mandi price is far lower than the MSP, again demonstrating the strong Bargaining power of the middlemen. Moreover, 55% of farmers do not get MSPs. The worst affected are the small and marginal farmers because they depend on traders for credit not only at high interest rates but also tied up with purchase of output at prices below MSP.

0

1000

2000

3000

4000

5000

6000

7000

8000

MSP Avg. Mandi price

+10.91+3.00

-42.55

-34.77

-10.86

+0.91-38.55-35.00

Source: Financial Express, 2018 and Agmarknet portal

-10

0

10

20

30

40

50

60

70

India USA China OECD EU28 Norway

Producer Support Estimates (PSEs) as percent of Gross farm receipts are negative in India as producersReceive prices below world market prices

Source: Financial Express, 2018 49

Chart 15: Wheat & Rice Procurement For the Central Pool (million tonnes)

Source: Ministry of Consumer Affairs Food and Public Distribution , 2018

0

5

10

15

20

25

30

35

40Wheat (Apr-Mar)

Rice (October-Sept)

34

32

32

34

38

39

105

107

105

104

109

110

0 20 40 60 80 100 120

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

Rice (Production) Rice (Procurement)

Chart 16: Rice Production and Procurement (million tonnes)

Source: USDA Foreign Agricultural Service, 2018

While the minimum support price (MSP) mechanism increased production of rice and wheat, however, it has had marginal to nil impact on the production of other crucial agricultural commodities like pulses and oilseeds, the deficit of which is met by expensive imports, due to the virtual absence of the state procurement for these crops. However, the procurement rates of paddy and wheat are falling in response to rising inflation. Moreover, only 8% of the farmers benefit from procurement.

50

38

25

28

28

23

31

30

95

94

96

87

87

98

94

0 20 40 60 80 100 120

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

Wheat (Production) Wheat (Procurement)

Chart 17: Wheat Production and Procurement (million tonnes)

Source: USDA Foreign Agricultural Service, 2018

Chart 18: Levels of Buffer Stocks vsStrategic Norms for Rice and Wheat (million tonnes)

35 34 33

21

17

21 22

28

38

4442

40

33 33

22 (mt)

0

5

10

15

20

25

30

35

40

45

50

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Rice - Levels of Buffer Stocks Wheat - Levels of Buffer Stocks

Strategic Reserve Norms

Source: NCDEX, 2016

The Govt. Cup Runneth Over – Huge Backlog Stocks

51

INTERNATIONAL ANALYSIS –IMPACT OF WTO

52

International Analysis – Subsidies

• India is fighting a major battle at the WTO. Treating MSP as an agricultural subsidy, the rich countries have accused India of exceeding the 10 % limit — called de-minimis level — that was imposed way back in 1986-88. But at the same time these countries are not willing to re-open the 2008 revised draft modalities achieved at the WTO that aimed at cutting the massive domestic and export subsidies in the rich countries. According to a study, the average farm subsidy a farmer in India gets is Rs1,000 per month. America on the other hand provides an average monthly farm subsidy of Rs.2.5 lakh. Procurement price system ensures the livelihood of 600m farmers. In the absence of which they would be left at the mercy of the exploitative middle men. Further, it helps regulate prices through govt. fine tuning and buying stocks in times of deflation and selling in times of inflation. This is best illustrated by the fact that MSP and market price are closely locked in a synchronized dance.

• And yet, while the World Trade Organisation (WTO) is quiet on the subsidy being doled out in America for feeding its poor, the US has launched an attack on India for “creating a massive new loophole for potentially unlimited trade-distorting subsidies.” The WTO director general Roberto Azevedo has been openly batting for the US/EU position of capping the Minimum Support Price (MSP) for Indian farmers as well as the need to limit input subsidies being given for fertiliser, seed, pesticides and irrigation to the present level.

• India’s subsidies for feeding its hungry are being blamed for distorting trade in agriculture while the US, which provides six times more subsidies than India for feeding its hungry, is seen as doing humanitarian service. The US subsidies are unquestionable, while India’s hungry are being conveniently traded at the WTO.

• In 2014-15, the US provided $140 billion for domestic food aid, including spending on food coupons and other supplementary nutrition programmes to feed 320 millions. In India, the Food Bill costing $42 billion will feed an estimated 850 million people. Agricultural subsidies in the developed countries have more or less stayed stagnant over the period 2011-15.

Unambiguous Analysis – International (1/2)

53

• This results in the dumping of foodgrains, thereby dampening farm gate prices, and pushing farmers out of agriculture. In India, wheat and rice growers have merely received $9.4 billion as procurement price in 2012. Forcing India to freeze procurement prices means that the WTO is being used to destroy Indian agriculture.

• However, in the union budget, out of the total subsidies, food subsidies are more than 50% while fertilizers are 30% of total subsidies. Fertilizers are 0.04% of GDP!

International Analysis – GMO

• The cultivation of Bt cotton, a genetically modified, insect-resistant cotton variety, is a risky affair for Indian farmers practicing rain-fed agriculture. Annual suicide rates of farmers in rain-fed areas are directly related to increase in Bt cotton adoption. In erstwhile Andhra Pradesh, Gujarat, Karnataka, and Maharashtra during the period 2001–2010, 86,607 of 549,414 suicides were by farmers, and 87 % were males with the numbers peaking in the 30–44 age class. Suicides decrease with increasing farm size and yield but increase with the area under Btcotton establishing a undoubtable link between farmers suicides and Bt. Cotton in the cotton belt.

• This challenges the common assumption in economic analyses, that cotton pests must be controlled to prevent monetary losses, thus encouraging Bt cotton adoption. The annual emergence of the key cotton pest – the pink bollworm in spring, is poorly timed to attack rain-fed cotton and large populations of the pest fail to develop in non-Bt rain-fed cotton. This reduces and usually prevents the need for Bt cotton and disruptive insecticides. Rather, high-density short-season cottons could increase yields and reduce input costs in irrigated and rain-fed cotton. What's more, unlike with traditional seeds, farmers aren't able replant seeds harvested from the crop.

Unambiguous Analysis – International (2/2)

54

The Subsidy Song

2.1

1.9

1.71.6

0

0.5

1

1.5

2

2.5

FY15 FY16 FY17 FY18

Chart 20: India Subsidies (% of GDP)

Source: Union Budget, various years

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Food Fertiliser Petroleum Interest Others

Chart 19: The Centre’s Subsidy Bill (Rs. Crores)

Source: Jagaranjos, 2015 and Livemint, 2018

Food subsidies are more than 50% while fertilizers are 25% of total subsidies. However, fertilizers are just 0.04% of GDP!

55

Source: Livemint, 2018


Chart 21: Farm Subsidies – India much lower than US and EU ($bn)

Chart 22: India MSP Lags Global Rice and Wheat Prices (Rs./tonne)Subsidize The Rich to Punish The Poor

0

20

40

60

80

100

120

140

160

2011-12 2012-13 2013-14 2014-15

India US EU

40 42

140 140

100

84

0

5000

10000

15000

20000

25000

2010-11 2011-12 2012-13 2013-14

Wheat India MSP Wheat Global Price

11000

1350012565

19086

0

5000

10000

15000

20000

25000

30000

35000

40000

2010-11 2011-12 2012-13 2013-14

Rice India MSP Rice Global Price

15000

19650

25784

35777

56

Chart 24: US Claims on India’s MPS Subsidies –Rice and Wheat (% of value of production)

Chart 23: India’s MSP Lowest In South Asia ($/mt)

685.35

580.52

504.95439.8

408.25 388.06330.2

291.02

0

100

200

300

400

500

600

700

800

Thailand Philippines China-Japonica China-Indica

Indonesia Bangladesh India Vietnam

226.59

384.59

319.98

0

50

100

150

200

250

300

350

400

450

India China Pakistan

Rice

Wheat


Source: Financial Express, 2018

0

10

20

30

40

50

60

70

80

90

2010-11 2013-14

Submitted by India

US Claims

Re-calculated US claims (quantity adjusted)

Re-calculated US claims (quantity & exchange rate)

Rice

7.22 5.45

74 77

26 23

7 5

- --10

0

10

20

30

40

50

60

70

2010-11 2013-14

Submitted by India

US Claims

Re-calculated US claims (quantity adjusted)

Re-calculated US claims (quantity & exchange rate)

Wheat

-0.73 -3.53

60.165

16 18

-2.25 -4.35

57

58

Subsidies, welfare programs & investments for Agriculture in Union Budget 2018 are over Rs. 3 Lakh Crores. A Livemint investigation found that, “there are two main reasons behind the discrepancy between the calculations by India and the US on the contentious agricultural subsidies. These are: The choice of the dollar-rupee exchange rates and the choice of quantity considered. Adjusting for these two parameters, we find that there was not much difference between the filings of the two countries.”

Safety Net (Rs. 1,93,339 crores)

•Food Subsidy (Rs. 1,45,339 crores)

•MGNREG (Rs. 94,000 crores)

Input Subsidies (Rs. 94,000 crores)

•Fertiliser Subsidy (Rs. 70,000 crores)

•Crop Insurance subsidy (Rs. 94,000 crores)

•Interest subsidy for short term credit to farmers (Rs. 15,000 crores)

Investment (Rs. 38.903 crores

•Deen daal upadhyayayojana Rs. 4,814 crores

•Sub mission on agriculture extension Rs. 912 crores

•PM Krishni Sichayee yojana Rs. 7,377 crores

•PM Gram sadak yojana Rs. 19,000 crores

•Agriculture research and education Rs. 6,800 crores

Chart 25: India’s Budgetary Agricultural Expenditure (Rs. Crores)

Source: Financial Express, 2018

Green Box

Allowed by WTO

Blue Box

Allowed by WTO

Amber Box

Not allowed by WTO

• Non-distorting; direct payments to producers

• For R&D• Environmental

protection and regional development

• No limit

• Not directly linked to increasing production

• Given for acreage/livestock (reduction)

• No limit

• Directly contributes toincreasing production

• Examples fertilizers and seeds subsidies, govt. procurement etc.

• Most distorting• De minimas for India

is 10% of agricultural production.

The Pandora’s Box!!

Source: WTO, 2018

The GM Genocide!

Source: Indian Express, 2018, ISAAA, 2017

Chart 26: Global Area Under Cultivation of Biotech Crops (million hectares)

Source: IISAAA, 2017

Chart 27: Top Ten GM Growing Countries – 2017(million hectares)

75

50

24

13 11

3 3 2.8 2.7 1.3

0

10

20

30

40

50

60

70

80

17m Farmers

23 Countries

59

1.7

44.2

81

125

170.3

185.1 189.8

0

20

40

60

80

100

120

140

160

180

200

1990 2000 2004 2008 2012 2016 2017

To

tal A

rea

2,3

40

m.h

.! O

r 0.

2% o

f T

ota

l A

rea

!l

Industrialized countries Share-47%

Developing countries Share-53%

51%37%

8%3%

1%

Maize Soybeans Cotton Canola Sugar Beets & Others

Chart 29: Global Biotech Seed Sales 2017 (%)


$17.1b

0

2

4

6

8

10

12

14

16

18

1996 2001 2007 2013 2014 2017

Chart 30: Global Value of Biotech Crops 1996-2017 ($b)


Chart 28: Top Six Beneficiaries of Biotech Crops 1996-2016 ($b)

$80.3b

USA

$24b

Argentina

$21b

India

$20b

Brazil

$20b

China

$8b

CanadaTotal Benefits

$186b


The GM Mayhem!

Case against BTOf the 6,000 plant

species cultivated for food just nine account for

66% of total crop production!! (FAO 2019)

60

Bt. Cotton in India

0

2

4

6

8

10

12

2002 2006 2008 2012 2016 2017

Conventional Cotton IR Cotton

% Adoption of IR Cotton93.4%

0

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Chart 31 Bt Cotton Cultivation in India(MHa)


0

5

10

15

20

25

30

35

40

45

50

2002 2006 2008 2012 2016 2017

Cotton Area Mha) Cotton Lint Production (Million Bales)

8 9 9.411.9 11.8 10.5

14

2830.7

35.3 33.835.1


Chart 32: Cotton Area and Production(Mha and Million bales)

A large number of cotton farmers planted unauthorized stacked trait IR/HT cotton in major cotton growing areas in Central andSouthern zones in Kharif 2017. Cotton farmers in Maharashtra experienced an unusual outbreak of pink bollworm in 2017-2018. BtCompanies refuse to take blame and instead accuse illegal Bt. seeds and other unscientific practices for the resurgence of the problem.

61

Billion Dollar Question To Bt. or Not to Bt.?

Increased Productivity

and Food Secruity

Self-sufficiency

Conservation of Bio-diversity and forests

Minimize adverse impact

of climate change

Economic, health and

social benefits for society

For

Technological Hegemony and

Profiteering

Steep Increase in Input Costs

and loss of resource rights

for Farmers.

Subsequent Resistance of

pests to Bt. Crops. Not for control of

all pests

Threatens Bio-diversity.

Mutant Genes.

Unsuitable for small holdings

Against

Ch

art

33

: Pro

s an

d C

on

s o

f B

t. C

rop

s

62

ECONOMIC ANALYSIS

63

Economic Analysis

• Agriculture’s sectoral contribution to GSDP of major agrarian states in India is inline with what one would expect from agriculture. For instance, for MP and AP, agriculture contributed 34% to GSDP, while for Punjab and Odisha it was nearly 28%. Interestingly for agro-based state Gujarat this share is only 19%. For other states in agrarian distress it is - Telangana at 18%, while for Karnataka, Maharashtra and Kerala, it is 13-10%. TN is 21% while Chattisgard stood at 22%.

• Inspite of the fact that 55% of India’s population depends on agriculture, only 50% of rural incomes come from cultivation. The rest 50% came from wage/salary employment, live stock rearing and non-farm business. Only 32% of income came from cultivation. Moreover, rural poverty ratios of 26% are concentrated among small and marginal farmers. Small and Marginal farmers derive 50% of their incomes by working as agricultural labor in other farmers fields, since cultivation is un-remunerative. Also, sadly, the average daily wage for this rural labor is continuously declining and stood at Rs. 272 in December 2015, which could explain the continued impoverishment of the small and marginal farmers. However, inter-state disparities are wide with the income in Telangana being one of the highest at Rs. 90,000 and Punjab at Rs. 1,50,000. The relatively higher wages in Telangana reflect the economic strain of mass migration to Hyderabad in search of greener pastures, thereby causing a labor shortage crisis in the villages and explaining the higher wage costs. The real annual income for a median farmer is Rs. 44,023. However, compared to service sector and industry, rural incomes are abysmally low. For instance, the country’s real per-capita income in 2017-18 was more than 50% higher at Rs. 87,000.

• The marginal and small farmers consumption exceeds incomes leaving them with deficit family budgets. Larger the farm size greater the amount of surplus incomes. For all farm sizes less than one hectare, consumption exceeds income. That is 90% of farmers (whoown less than two hectares) continue to languish in utter poverty and indebtedness. The lowest income for marginal farmer ( 10 hectares) is at nearly Rs. 5,00,00 which is nearly 250% higher than the per-capita income. On the other hand, his consumption is nearly Rs. 1,75,000 leaving him with a net surplus of Rs. 3,25,000. The wage- parity ratio between the lowest farmer and highest farmer is 1:5.

Unambiguous Analysis – Economic (1/8)

64Images Courtesy: https://olddesignshop.com

Economic Analysis cont’d…..

• However, a different picture emerges when we compare it from the perspective of economic costs of cultivation. Here farmers across the board, of all sizes of holdings, are generating a surplus. However, for small and marginal farmer this surplus is coming from working as agricultural labor since their income is more than output value confirming our earlier finding. For medium and large farmers their incomes are lower than value of output.

• One way of interpreting this could be that though these farmers are generating surplus returns from agriculture, middlemen are appropriating them away, resulting in reduced incomes. Larger the farm size, higher is the quantum of surplus. Further comparing the surplus in terms of value of output and total incomes the gap is on an average 30% confirming our finding throughout the report that the middleman’s margin is around 30-40%. This exposes the powerful role of middlemen and distorted agrarian structure. The negative surplus further reduces the capacity to reinvest in the next round impacting capital formation.

• There are vast inter-state disparities in costs of cultivating major crops reflecting the myriad differences in resource availability, geographic conditions, technology and cost of capital. Also, for instance, it costs Rs. 10 to cultivate one kg of rice in A.P. Even if we add a mark-up of Rs. 10, the farm gate price is Rs. 20. However, the customer is buying rice anywhere between Rs. 50-70, again reiterating that middlemen’s mark-up is nearly 30-40%. Fertilizers, pesticides, seeds and human labor are major cultivation cost components. Between 2003-2012, out of the total input cultivation costs, share of fertilizers increased remarkably from 7% to 24%, while other input cost share either declined or remained stagnant.


65

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UPA Avg. Agri GDP Growth: 4.2%

NDA Avg. Agri GDP Growth: 2.8%

Economic Analysis cont’d…

• With regard to inflation, there appears to be some moderation in prices, with 30% reduction in prices. However, vegetables and fruits, which were largely responsible for the food price rise continue to pose concern. It would all depend on how the monsoon plays out in 2019 for them to be tamed.

• Moreover, rural inflation is much more pronounced than urban poverty revealing the rising stress on rural incomes. However, global commodity prices for important crops such as paddy, wheat, cotton and sugar have only recently trend upward, leaving the farmers dependent on exports of these crops highly vulnerable to external price shocks.

• According to the NABARD 2016-17 Survey, 20% of households earned ₹ 2,500 or lesser per month or Rs. 30,000 Per year which means that they were below poverty line. On the other hand, as confirmed byour earlier findings . There was a sharp increase in the incomes of top 20% households with their incomes rising from Rs. 11,000 to Rs. 48,833 per month. The rise in income was much more pronounced for the top 1% households who earned more than twice of the 95% of households and four times that of 80% of households. This once again exposes the stark reality that 10% of the households own 90% wealth while 90% own 10% of the wealth.

• The 2016-17 NABARD survey confirmed the earlier studies findings that there is a continued heavy dependence on other sources of income like livestock rearing, wage labour, and Govt./ private service, as the income from cultivation alone is not sufficient to meet their livelihood needs. For households in


66


• the size class of less than 0.1 ha of land, wage labour was the most prominent source with the average contribution of ₹ 3,508 to the total income of ₹ 8,136. Government/ private service emerged as next most preferred source with the average contribution of ₹ 2,192, followed by livestock rearing (₹ 1,345). Among other size classes also, wage labour remained as the most prominent source making maximum contribution to the total income for small and marginal farmers. In medium-large farmers, cultivation is as the major source of income. For example, for marginal farmers cultivation accounted for merely 7% of the total income, while for the large farmers it contributed more than 50% of the total income. Households with more than 2 ha holding reported 13 times more income than households with less than 0.1 ha of land. This may directly be attributed to economies of scale.

• The targeted agricultural credit in 2017-18 was Rs. 10,00,000 crores while achieved was Rs. 11,79,428 crores. Out of this total agricultural credit, only 45% was actually given for crops. For 2018-19, the target is set at Rs. 11,00,000 crores.

• The percentage share of crop loan (out of total loan) which has been marginally increasing, stood at 63% in 2017-18 compared to the term loan of 37%. That is, farmers have an overwhelming necessity to meet short-term working capital needs, over-riding long term fixed capital needs. This points the way forward for policy decisions and direction of credit.

• In spite of the fact that it is declining, non-institutional sources with its exploitative practices is still dominant, collapsing the fragile village support structure. For instance between 1951-2013, the share of institutional sources in total credit increased from 10% to 64%, while the share of non-institutional sources declined from 90% to 36%. Among non-institutional sources, money lenders dominate with 30% share in total credit (both - institutional and non-institutional).


67

• Money lenders charge exorbitant interest rates at 48-60%, and majority of the farmers who are not served by formal sources are forced to use these informal sources, for their credit needs. The banks have reduced their long term and medium term loans to agriculture. Priority has shifted from long term to short term loans especially loans with gold as collateral. Under pressure from farmers and organizations, banks have made an attempt to adjust old loans against new loans which is reflected in the banks records as increase in the supply of credit but in reality it does not ease the credit constraints on farmers.

• Share of scheduled commercial banks in institutional credit is increasing to more than 60%, while share of co-operatives is down to less than 15% between 1975-2013. Regional Rural Banks have become redundant spectators with their share stagnating at 10%.

• For 87% of farming households, income is less than their expenditure. This makes them a good hunting ground for money lenders especially in case of marginal farmers with less than 0.01 hectares. These marginal farmers depend on money lenders for 60% of their credit needs.

• If we study the proportion of agricultural households indebted within each farm class, in 2012, as the size of holdings increased, the proportion of indebted households also increased. For instance, 47% of farmers with less than 1 hectares holding were indebted; while 67% of farmers with average size holding of 1- to 10 hectares were indebted. That is indebtedness seems to be directly proportional to the size of holding –as size of holding increases indebtedness increases

• With regard to the purpose for which loan was borrowed, farm business is 29% (down from 58% in 2002), non-farm is 11% and other expenses (child marriage, etc.) is 51%.

• The farming society in India is a three tiered pyramid. At the wide base is the poverty-struck farmers who


68


• hover around poverty line and remain in distress irrespective of the weather and the market. The middle tier is the upwardly mobile farmers engaged in a prolonged and often, frustrating battle with poverty to join mainstream. They choose risky venture with a view to make a quick profits which often turn out to be illusory. At the top, is a small but politically powerful farm lobbies who find it more profitable to enjoy free lunches and free subsidies rather than use their powerful potential for risk-bearing and modernization. A sad feature of the Indian society is that in both rural and urban elites there are more lobbies than honest and hard working entrepreneurs. More elitist the lobby, more dysfunctional and destructive it tends to be in its political and economic role. If the poor and middle tier mobilize themselves and organize themselves to demand and command their rightful share of resources, these dysfunctional lobbies will disintegrate. More respect for genuine hard work, discipline, honesty, love for the society and county is what will bring this country out of its despair.

• The current attitude which seems to pervade our society like a disease of making quick profits at the expense of the country should change. We need the kind of people who were there in the Independence struggle – both leaders and followers. The present society is too mercenary, too greedy, too corrupt and too cruel to bear. There is a political, economic, social and moral corruption which manifest itself in crises of all forms and all shapes. Its time we stopped this nonsense. Its time we rose above our petty selfish selves and engaged in nation building with the spirit with which other countries – Americans, Chinese and Malaysians do it.

• The decadel growth of population in India has been exponentially increasing standing at 18% in 2011. However, the food production has not kept pace, declining to 28%, resulting in India figuring at 103rd

position in the Global Hunger Index in 2018. Further, the proportion of undernourished people in total


69


• population stood at 15% in 2018. Average families spend between 40-50% of their family basket on food. All these points clearly highlight the importance of agriculture in feeding the economy. Any imbalance could quickly morph into a monumental food crisis resulting in widespread poverty and destruction.

• The earlier finding of the global inequality principle of 90:10 pervades even the agrarian structure. 90% of the farmers own 10% of farm land while 10% own 90% holdings with it being even more skewed at the top. Moreover, non-viability of farming as a profession is forcing a large number of farmers to sell portions of the land and thus their holdings become smaller. From 2.28 hectares in 1970-71, the average size of holdings has reduced to 1.15 hectares in 2010-11. OBCs constitute 45% of farmers while SC ST constitute 30%.

• Farmers do not have an option like say, manufacturers who put a price label on goods and negotiate discounts if necessary to push sales. Farmers are price takers and have to sell at whatever price middlemen set. Further, Indian farming is the only sector which does not have a shut-down price – the point at which if prices follow below that minimum level the producer refuses to sell and withdraws goods from the market. This happens when prices do not cover at least fixed costs. Unlike in agriculture,

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