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How AP can Reduce Farmer Distress

This article explores how better storage management and stocking of agriculture produce could be key to reduce farm crisis
 
In Andhra Pradesh, promising policies could help to reduce farmer distress. About three-quarters of land holdings are less than two-hectares, meaning farmers cannot reap economies of scale. This exposes farmers to natural disasters, droughts, and price fluctuations.
 
According to research by Professor Nilanjan Banik from Bennett University, the state can bring down farmer distress and lead the way for the country in doing so.
 
Andhra Pradesh has one of the highest national rates of farmer suicides, with 47 self-inflicted deaths per 1000 population between 2010 and 2012. In 2015, Uttar Pradesh, Maharashtra and Punjab undertook large-scale farm debt waivers, costing half a percent of the entire GDP of India, and Andhra Pradesh itself has recently announced a loan waiver costing ₹24,000 crore.
 
Loan Waivers Worsen Farmers’ Crisis
 
However, the research by Professor Banik, supported by other economic studies, finds that a loan waiver scheme costs about as much as it achieves. Moreover, it mostly helps richer and bigger farmers, leaving smaller farmers worse off in the future.
 
Only 15% of the marginal farmers (with less than 1 hectare of landholding) have access to formal credit, so a loan waiver helps them little, and previous waivers have led to banks reducing credit for small farmers.
 
Professor Banik’s analysis for Andhra Pradesh shows that waiv-ing formal loans for land holders with less than two hectares would cost ₹24,860 crores. The benefits will be slightly lower at ₹24,629 crores. Giving out a rupee to achieve just 99 paise of benefit is a poor deal.
 
It also means a 15% reduction in small-holder credit over the following years, cutting revenue for the most vulnerable farmers by 13.5%. And spending thousands of crores on less effective policy leaves less for much more effective ones.
Managing Stocking & Storage Better is Key
 
For Andhra Pradesh, the research suggests that one answer is reducing waste of perishable fruits, vegetables and milk that command a higher market price than staple crops. Most small farmers do not risk growing perishable crops.
 
Nearly 20% of India’s fresh produce is wasted because of storage problems. The National Centre for Cold Chain Development (NCCD) estimated AP’s total requirement for storing milk, fruits and vegetables at 744,650 metric tonnes last year.
 
Meeting this need would help farmers shift to high-return crops, which lowers their likelihood of poverty by 3-7%. Costs, including employees, storage, packhouses, and trucks, come to about ₹11,482 crores annually. The benefits in terms of the reduced wastage in milk, fruits and vegetables, are worth nearly nine-times that figure.
 
Farmer distress requires a serious response — but as in everything, there are choices. Economic analysis clearly shows that each rupee could achieve stronger benefits by focusing on solutions such as improving cold storage.

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