Part two of an article on the new moneylenders in Andhra Pradesh -- the seeds, fertiliser and pesticide dealers, who are at the centre of a growing controversy. This concludes P Sainath's series on farmer suicides in the state
GUNTUR & NALGONDA, July 2004: "The farmers ask us what seeds to use and we advise them," says Nageswara Rao in the district headquarters of Nalgonda. He works in one of the biggest seed and fertiliser stores in town, owned by a relative of his. "We have no scientific qualification," admits the polite Rao. "We only guide them by experience. We ourselves consult the manufacturers."
Seeds, fertiliser and pesticide dealers are at the centre of a growing controversy in Andhra Pradesh. They are the new moneylenders to a peasantry strapped for credit. "The banks have given no loans in the past seven years," says Malla Reddy, general secretary of the Andhra Pradesh Ryuthu Sangham (APRS). "So many farmers are forced to depend on sources like these for credit. The same man advises them on what to buy and then sets the rates for the purchase."
With the seed dealers tacking on hefty interest rates to their credit sales, the problem gets worse. Nageswara Rao admits to a charge of 2% a month on bills, but says there is no choice. Times are bad. "Besides, we are quite lenient as we wish to help the farmer. Sometimes, they agree to pay in 60 days, but may not do so for 90 to 120 days."
Farmers in Nalgonda's villages are sceptical of this altruism. "Each month's delay adds to the interest," points out P Bhiksham in G Edavalli village.
Yet, the farmer often goes by the dealer's advice on what products to buy. "The dealer has emerged an 'expert', because the others have gone," says Malla Reddy. The APRS leader points to "over 2,800 vacancies in the department of agriculture. The last government only appointed 7,000 unqualified people on contract. They had no background in agriculture."
Many of the farmers' suicides in the state have been largely debt driven. Which makes the seed dealer's role even more problematic. Some of those who took their lives did so because of both, huge debts, and crop failures due to spurious seeds and pesticides. But there is little punishment for those selling fake seeds.
"Just Rs 500," says the new agriculture minister, Raghuveera Reddy. He hopes to bring some order to a system that is now out of control. "We have recovered spurious seeds worth Rs 7 crore in raids in only the past month," he told us. But the offenders are people for whom the Rs 500 fine is a joke. So the government intends to bring in a new Seed Act at the state level.
Andhra Pradesh's record of curbing such fraud in the past has been dismal. "Till date, no case filed by the state against a seed or pesticide dealer has ever been won by the government," says Yalamanchili Shivaji. He is a former member of the Rajya Sabha and a well-known farmers' leader here. "In contrast," he claims, "almost no such case filed by the Tamil Government was lost."
Dr Shivaji also points out that Andhra Pradesh has fewer agriculture and extension officers than any southern State. "The Naidu Government was bent on privatising extension work," says Malla Reddy.
The matter gets more complex given the clout the seed dealers have gained. And the alarming rise in the cost of inputs they control. Per acre costs have exploded since 1996.
As farmers in G. Edavalli explain -- the cost of paddy seeds an acre almost tripled from Rs 120 in 1996 to around Rs 350 in 2004. That of urea nearly doubled from around 120 then to nearly Rs 230 now. Pesticide, ammonia phosphate, zinc - all these have more than doubled in cost." A farmer might buy most of these inputs from the same dealer.
Other expenses, too, have risen. Tractors cost a lot more than manual work did. "In 1996," say farmers in G Edavalli, "we could raise an acre of paddy within Rs 3,500. Today that is Rs 7,500 or more." Add higher power tariffs and water costs and people are now paying well over double what they did in 1996. Those who left food crops to experiment with cash crops in this period pay still more.
The 24 % interest per annum that seed dealers tag on makes the burden that much worse. And with seed companies hawking a "germination rate" of only 65 % , farmers get even less value for money.
And this is Telangana. Input costs are higher in the coastal region where, too, suicides have been reported. The use of high-cost items such as fertilisers and pesticides is greatest in Andhra Pradesh. The all-India average for fertiliser consumption per hectare was 88 kg in 2001. In Andhra Pradesh it was almost 180 kg. It is even greater in the coastal region. "Over-use of fertiliser is a huge problem," says Malla Reddy of the APRS.
"At the same time," he says "tenant farmers faced massive increases in the cost of leasing land." Such tenants make up nearly 60 % of all farmers in many parts of the state. More so in the coastal region. From the late 1990s, they were asked by the landlords to pay (as lease cost) between 21 and 25 bags of paddy an acre each year. This, when their output was barely 30 bags an acre. So the tenant farmer is left with five bags of paddy and another three of black gram that he sows after paddy. And that is in a good year!"
By the late 1990s, the farmer was wilting. In 1996, "he was making Rs 5,000 to Rs 6,000 an acre on an input cost of Rs 3,500. Now he is making Rs 1,500 to Rs 2,000 an acre on cost of close to Rs 8,000. Between then and now, productivity has only risen from 25 to under 30 bags an acre. This huge use of fertiliser has not helped much."
"But at the moment when input costs were so high and rewards so poor," says the Nalgonda ex-MLA, Narasimha Reddy, "the banks stopped giving the farmer any credit. And output prices were crashing due to rigged and volatile markets. There was also zero investment in agriculture. This crisis was man-made." That was how the suicides began. "Add drought and crop failure to that," says Reddy, "and the suicides only got worse."
(P Sainath is Rural Affairs Editor of The Hindu. He received the A H Boerma Award, in 2001, for his contributions to the development debate in the Indian media. This article first appeared in The Hindu)
InfoChange News and Features, August 2004