Shift from industrial to small-scale farming

Devinder Sharma
Food & Agriculture Specialist

A few weeks ago, French farmers hung suicide dolls on trees outside parliament to draw attention to the devastation brought about by continuously sliding market prices. In a country which follows modern agricultural practices, it is disturbing to know that while three farmers on an average commit suicide every two days, growing indebtedness is resulting in the closure of at least 1,500 farms every year.

That such a grave tragedy should afflict the biggest farm producer in the European Union (EU), and ironically, which also happens to be the topmost recipient from the $100 billion agricultural subsidy kitty that Europe provides for every year, shows clearly how markets are tightening the noose, leaving the struggling farmers exasperated. “How can anyone want to be a farmer today?” Dominique Metenier, a farmer, told the French storytelling platform Narratively, adding: “What is the point to being in debt all the time, and toiling for no reason? We are sacrificed, so the consumer is always happy with low prices.”

With very high crop productivity and market-oriented agriculture expected to provide a higher price to efficient producers, why the French farmers are increasingly in crisis remains baffling. Wonder what has happened to a progressive farming community that has always been at the forefront of adopting high-tech farming practices and innovations. To reiterate what I said earlier: the top 44 per cent of the French farmers are saddled with a bankruptcy of 400,000 euros each. In addition, an estimated 10 per cent of the French farms, carrying a gross debt of 1 billion euros, are fast heading towards closure.

This is despite the huge subsidies French farmers receive year after year; significantly adding to the low incomes that markets otherwise leaves them with. And yet, nearly a quarter of the French farming population is somehow struggling below the poverty line, and in neighbouring Germany, an estimated 1,30,000 farms have closed down since 2005. Surviving literally at the mercy of supermarkets, farming has ceased to be profitable. Ironically, farms are dying at a time when ample capital investments have already been made in modernising agriculture with food processing, building warehouses, creating rural infrastructure like roads, providing Internet connectivity, scientific storage and a chain of cold storages. If the logic is that modernisation boosts farm incomes, then why after such huge farm infrastructure investments should the farmers struggle to survive? It clearly demonstrates that the benefits of modernisation are actually reaped by the agribusiness companies, and of course, the supermarkets.

With farm mechanisation at its peak, and powerful market intelligence solutions available at the drop of a hat, one wonders why the European farmers have failed to take advantage of a policy prescription that is routinely doled out to farmers everywhere, including India. Already, the farming population in France, Germany and elsewhere has come down drastically, and if economists are to be believed, farm incomes should be going up when the number of farmers declines. That didn’t happen. The average farm size in France has grown to 135 acres and farm incomes have still declined.

To add, in Australia, where the average farm size is 4,331 hectares (or roughly 10,827 acres) one would expect farmers to be dictating the prices. Going by the logic of economy of scale, Australian farmers should be super rich. But on the contrary, Australian agriculture too presents a gloomy picture. A report in The Guardian says that the rate of suicide among male farmers is double the national average. In addition, suicide rate among the farm workers is still higher. Economic hardship is among the reasons cited.

Returning back, several studies have shown that European farmers are struggling for survival, the tragedy on the farm being compounded by the devastation and deprivation wrought by free markets. Still, what remains unexplained is the inability of economic leadership (and that includes university professors) to acknowledge that the idea of price discovery by markets has failed miserably. Although the economic textbooks say so, nowhere in the developed world have markets succeeded in turning farming into a profitable venture. Otherwise, I see no reason why subsidies should form 40 per cent of the farm income in America, and 57 per cent in the European Union.

Economists Bruno S Frey and David Iselin have argued in their book Economic Ideas You Should Forget that many of the old theories are outdated and need to be discarded “because they are misleading, or at least no longer fruitful.” This holds true for the outdated belief that markets help in getting the right farm prices. Universities and management schools should make this book a part of the course curriculum to get over the fixation they have with certain failed ideas and concepts. After all, how can economists go on talking about the virtues of free markets in agriculture without ascertaining why the farmers are in misery? It only shows the disconnect economics has with the ground realities.

In another book, Zombie Economics: How dead ideas still walk among us, Australian economist John Quiggin says that the time has come to discard the ‘efficient market hypotheses’, among some other outgrown ideas. I completely agree. Although his analysis was in relation to financial markets collapse, considering that the ‘efficient markets’ in agriculture too have failed to translate into higher farm incomes, the time has come to abandon the ruinous pathway that lazy economists still go on suggesting.

An analysis published in Nature, examining 118 studies conducted in 51 countries over a period of 50 years, demolishes the general perception about the efficiency of modern agriculture, concluding that small farms have higher yields and are ecologically sustainable. This is what India needs, and should call for an immediate policy shift, from environmentally damaging industrial agriculture to an environmentally safe and productive small-scale farming. The new approach for a revitalised agriculture cannot be economically viable till it provides for an assured income by way of an assured price as a fundamental right for farmers. That’s the cardinal rule the world must adopt to move to a new agriculture.