Saturday, December 03, 2005

Farmer suicides in Maharashtra ...

... and cotton subsidies to farmers in the US.

Yesterday's Hindu carried an op-ed by P. Sainath, about the plight of farmers in the Vidharbha region of Maharashtra, that has driven more than 300 farmers to commit suicide in just one of the eleven districts of that region between 2001 and 2005. Not surprisingly, Sainath's op-ed is passionate, vigorously argued, rich with details. Here is a couple of excerpts [with some emphasis added by me]:

Vidharbha's mainly cotton farmers have been hit by rising input costs and the crash of output prices. They have also been ruined by the collapse of rural credit. The banks will simply not help them. So they turn to moneylenders. While 58 per cent of all farm households in the State are in debt, it's a lot worse in Vidharbha. Here, close to 90 per cent of short-term credit needs are met by private loan sharks. Meanwhile, farmers have also been crushed by fake seed dealers. Mindless de-regulation has crippled the sector.


Meanwhile, the State Government has helped boost private traders. Those who exploit this mess to lift the farmer's produce at rock bottom prices. Their parallel markets can now function openly. Also, the State has never pushed the Centre to stop the dumping of highly subsidised cotton from the rich nations. Giant subsidies by the United States to its producers have killed the price of cotton. The duty on cotton imports is just 10 per cent. On sugar — affecting western Maharashtra — it is 60 per cent.

Those sentences in bold point an accusing finger at the rich countries -- in the case of cotton, it is the US -- for the subsidies that they provide to an ever dwindling number of farmers. Recently, Tyler Cowen had a post with this little nugget:

Over 2001 and 2002, America's 25,000 cotton farmers received more subsidies -- about $3 billion -- than the entire economic output of Burkina Faso in a year. Two million people in Burkina Faso live partly or fully from cotton farming.

These subsidies are at the centre of the struggle in WTO between developing and developed countries. Recently, Brazil has threatened to stall the ongoing Doha Round of negotiations until the developing nations' demands on agricultural subsidies are met -- a move that was wholeheartedly supported by the New York Times in an editorial.