• Agricultural credit

Agricultural credit and insurance

The suicide mortality rate for farmers in the Indian State of Maharashtra has quadrupled in the last decade, according to this research paper. Is agricultural dumping by the United States, declining agricultural investment, and a broader government withdrawal from agriculture driving smallholder farmers into desperation? This timely paper identifies important socio-economic risk factors that contribute to- and possibly trigger- farmer suicides. It explains the regional scenario and agrarian situation in Maharashtra, and provides contextual analysis based on the results of a field survey in three districts.

Traditionally cotton has been the cash crop for farmers in these districts. However, cotton profitability has declined over recent years. Contributing factors were high subsidies by the US leading to price distortions, low import tariffs in India, and failure of the the Monopoly Cotton Procurement Scheme (MCPS), which intended to stabilise prices but quickly became non-functional.

The withdrawal of the State is evident from a declining public investment in agriculture, a poor agricultural extension service, and a diminishing role of formal institutions in rural financial market. Farmers now depend on input dealers for advice, leading to supplier-induced demand. Informal sources of credit mean a greater interest burden. Furthermore, water shortages and increased input quantities and prices (mostly fertilisers and pesticides) have meant many farmers have experienced both yield and price shocks.

The document highlights a socio-economic and agrarian crisis which heavily impacts on some poor farmers. Some important contributing factors are indebtedness, deterioration of economic status, family conflict, crop failure, a decline in social position, suicide in a nearby village, addictions, health problems, a recent death in the family, and a history of suicide in the family. Importantly, the author finds a that a correlation can be drawn between suicide cases and debt, a relatively lower owner ownership of assets and access to basic amenities, a larger family size, and a lower value of produce. These indicate structural factors- a socio-economic and agrarian crisis- is contributing to the observed increased rates of farmer suicide. In summing up, the author directs his attention to policy for dealing with the agrarian crisis. He calls for:

• the revitalisation of the rural credit market- there is a strong case for regulating private and credit and input markets
• risk management should address yield, price, credit, income or weather related uncertainties among others
• improving water availability will facilitate diversification of the cropping pattern, but this should go hand in hand with policies that increase non-farm employment
• improving agricultural extension that addresses deskilling and the advent of new technologies, and also facilitates alternative forms of cultivation
• public health interventions would require improving access to treatment of poisoning cases and psychosocial care
• greater involvement from civil society.

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