Debt Relief Activities and Farmers: A Report from Kerala

THE ECONOMIC Review 2007, released during the budget session of the State legislature by the Kerala State Planning Board, makes the claim that the GSDP of the State in real terms increased by 8.1 per cent in 2006-07, which is marginally higher than 8 per cent of the previous year. The document says: “What was notable in Kerala during 2007 was that the high growth rate came together with reduced rural distress. The most significant reflection of this was that peasant suicides came to an end in the second half of 2007, Kerala being the first major suicide-affected state to have put and end to this tragic phenomenon.”

The review looks at the first year of the Left Democratic Front Government led by V S Achuthanandan, which came to power in May, 2006. In the previous years the State was reeling under a spate of peasant suicides and according to official figures there were as many as 179 cases reported from the tiny district of Wayanad alone during 2002 to 2006. Two other major districts affected were Palakkad and Kasargode. Hence the first priority of the Government as it took over, was to find a solution to the widespread farmer distress. One of the first steps taken by the Government was to set up a statutory Agricultural Debt Relief Commission, a six-member body with members drawn from peasant organizations, legislative assembly members, judicial officers, etc, empowered to look into the complaints and find redress with the resources made available in the State budget.

The Economic Review noted: Of greater significance is the setting up of a statutory Debt Relief Commission by the State Government, which, brought substantial hope to the distressed peasantry with its formation.

It is a fact that the commission did give rise to a lot of hope among the poor peasants who were reeling under a tremendous burden of mounting debts. In the first few months itself, it had received over 4.76 lakh complaints from peasants all over the State. But the claim that the Government was able to put an end to the suicides among farmers was far fetched, as even during the 2008 summer, a few suicides were reported from Kuttanadu, known as the rice bowl of Kerala. What is distressing about the Kuttanadu suicides is that while so far the suicides were confined to the hill regions, they were now spreading to new areas. (As I finalize this note, a report came from Kasargode that on July 25, 2008, two peasants committed suicide in the district as they were not able to get any support under the government sponsored schemes.)

With a view to keep a tab on the functioning of the Agricultural Debt Relief Commission, this correspondent and a friend, journalist K P Vijayakumar, spent a few weeks monitoring it, during November-December 2007, when the Commission was holding its first sittings. We also checked back with the rural situation, looking at specific cases in order to locate what went wrong in the life of those who were forced to appeal to the Commission. It was a sad spectacle that we witnessed, as the Commission struggled with its limited funds, few staff members and many hurdles of a technical and administrative nature, facing hundreds of highly strung poor peasants waiting for redress of their grievances everywhere they went. The Commission was empowered to write off 75 per cent of the loans amounting to Rs.50,000 taken from cooperative banks, which they had to compensate from funds promised through budgetary provisions. However, they had no authority to provide relief on loans availed from nationalized or private scheduled banks. A large part of the agricultural loans were from the commercial banks and private money-lenders, as the peasants had availed every possible loan from every source available.

Here are a few cases we have studied, watching the Commission’s proceedings, talking to the distressed peasants who came to present their grievances and visiting some of their homes and villages to examine the actual state of affairs that led them to the depths of penury and distress.

The Debt Relief Commission had conducted a series of sittings at the Government Guest House, Kalpetta, headquarters of Wayanad, known as the district that has seen the largest number of peasant suicides during 2002--2007. These sittings were held in the last week of November and the first week of December, 2007.

Annamma Mathai, a 65-year-old woman from Pulpally panchayat in Wayanad, whose husband had died two years ago leaving her a land holding of 2.05 acres and a huge debt, had arrived in the town on the evening of November 29, as she had received a letter from the Commission to be present personally the next day. She was cultivating ginger and pepper in her small holding and as the products normally used to fetch reasonable returns, it was sufficient to keep the family going. Still, it left them nothing as savings because of seasonal fluctuations in prices. However, pepper vines were hit by a fast spreading disease wiping off all the plants. Her husband Mathai took a loan of Rs. 25,000 from the Nadavayal branch of South Malabar Gramin Bank to revive his farming operations. But he was unable to repay the loan and after his death, the total amount she owed to the bank had reached Rs. 42,000 leaving her no way to escape debt trap.

Annamma was the 52nd person in the queue and after a few hours’ waiting on an empty stomach --she had had no breakfast-- she was ushered into the presence of the Commission. Her files were examined and the Commission after consultations with bank officials, gave its verdict: The interest and penalty interest will be waived, she will have to pay the principal amount.

She was standing there thunder-struck, no words coming out of her mouth. Then after the lapse of a few moments, she managed to say through her tears: “Sir, where do I find the money, I have nothing…”

Moments later, she was seen moving out of the building, her head low and her frail figure swaying like a reed in the heavy Wayanad wind blowing outside.

A large number of peasants who came to the Commission were small-holding farmers whose small loans had become huge debts with penal interest as they were unable to repay the loans. But what kept them from repaying these small loans? Expert studies have been made by various agencies which came to the conclusion that non-remunerative agricultural practices, continuous price fluctuations in the market which left farmers with no savings, heavy debts owing to non-farming activities like expenses on weddings, widespread diseases of the plants, etc, as reasons.

We went to a few villages to see what actually took them to debt trap and such deep penury. One of the villages visited was Poozhithode, a small hamlet in the ward four of the eastern hill panchayat of Chakkittappara, in Kozhikode district. It is practically an inaccessible place as there are no roads; one has to walk three kilometres to reach the place. Here we met Vettappala Chinnamma, a 68-year-old woman, who lives in a dilapidated two storey building, with her sister. Chinnamma came almost fifty years ago to this remote village from Ranni in South Kerala as her family came to the north in search of a better livelihood. Land was cheap and plenty and her father had 5.5 acres of forest land converted into farm lands. They had planted areca-nut palms in the land.

Areca-nuts are spices used as an ingredient in many products and hence depend solely on global markets. There were times when it fetched very good prices, but recently there has been a major drop in prices and demand that left many farmers in distress and their plantations remained uncared for. Chinnamma’s was a two-member family with 5.5 acres of rich agricultural land, in which stood 3500 areca-nut palms, all of them headless wonders by then. When diseases hit, they had no resources to care for the palms and with no income from the land, they were almost starving. The areca-nut palms were all destroyed by the disease that had spread in the region making it a graveyard of areca-nut palms. These are long and lean plants which bear gold-colored areca-nuts with minimum care for the palms, but once the disease hits, the only way out is to replant them and for a plant to grew and bear nuts it takes a few years’ time and an infusion of heavy investment.

Chinnamma had the land but no resources to replant them. She was surviving only because of the Pubic Distribution System which is still widespread and quite effective in Kerala. Her ration card entries revealed the story of how misfortune came to take control of her life: Till May and June 2007, she was not lifting any rice from the PDS outlet. Then came the season of plant disease and ever since, from July to November, the time of our visit, the entries said she had received five kg of rice every month.

This village has many such cases of sudden misfortune hitting them like a bolt from the blue. Poovathumalil Kuttappan, an active CPM worker, has five acres of land with 3000 areca-nut palms, but the contagious disease destroyed his entire plantation. He made an effort to revive his fortunes, taking loans from various sources to replant and fight the disease. He had taken a loan of Rs. 15,160 from the Chakkittappara Service Cooperative Bank and another of Rs. 85,000 from the Union Bank of India, and was facing revenue recovery proceedings from both.

Poozhithode is classic case of an entire village going to dogs: It has an area of 88 hectares of land, and there were as many as 29 peasant families with small and medium holdings there. In the last week of November 2007, there were only six families remaining as all others had left the village looking for means for survival elsewhere. It was not lack of hard work, or physical resources or land that made their life miserable. It was the unpredictability of a peasants’ life, its total lack of any social security cover even as they solely depended on the vagaries of a global market and an equally unpredictable climate and spreading plant diseases that made them flee from the place they had lived for generations. Peasants complained that the diseases were now becoming more and more common and frequent, and many suspect it could be the impact of a changing climate patterns, irregular rainfall and excessive dependence on chemical fertilizers and pesticides.

While diseases and poor prices destroyed life in area-nut plantations, it was a global drop in prices that brought hardship to villages in Wayanad where coffee is grown. In the first week of December a visit to Kambalakkadu, a small town that smells of coffee and renowned for its coffee market, gave a picture of what went wrong with this global brand. It was here we met Sarojini, a worker in a coffee plantation at Kozhinjakkadu, in Kaniyampatta panchayat. She lives in a small hut with her two children; her husband had abandoned her two years ago. She had received Rs. 60 for a day’s work in the plantation besides four idlis, three of which she had saved three for her children.

The plantation was in bad days and there were no permanent workers any longer. Sarojini got work for three days a week. In a way, she was lucky compared to Adivasi women who got a pay of only Rs. 50 a day, if at all they had work.

The present economics of coffee production is hopeless for small and medium growers, says James, a small grower here. The coffee prices were falling and expenses for cultivation were growing. He had three acres of coffee but recently had to sell 35 cents of land to meet pressing burdens. His family of four survives on the coffee grown in the remaining 2.65 acres of land. Last year his total yield was 30 bags of coffee, each bag containing roughly 54 kg of beans. Processed, it would yield 30 kg of coffee kernel per bag, which fetches Rs. 70 per kg. Considering the expenses he incurred in maintaining the plants including the manual work, fertilizers, etc, he points out that it works out to a loss of around Rs. 60,000 per acre. At the same time, the Nescafe Classic coffee, a major brand, is sold at Rs. 68 per pouch of 50 grams in the retail outlets.

The Government policy of coffee procurement monopoly for the Coffee Board had done damage to the growers as the prices offered by the Board were quite low compared to open market. After a series of agitations, the growers were allowed to sell in the open market which, during the season of price hike, helped them. In fact in 1994-95, the local prices had touched a record of Rs. 120 per kg, but later on it fell sharply and during 2002-03, it touched the lowest benchmark of Rs.15. Last year it stood at Rs. 70, way below the boom period prices.

A third major crop that was examined during the study was pepper, an important spice grown widely in Wayanad. Pepper is historically known as black gold because of its vast demand in the world market even from the Roman times. Pulpally, known as the base of Pazhassi Raja who resisted the British East India Company in 18th century in a series of heroic battles, has been the centre of pepper trade and till a few years ago, when the plants were hit by a debilitating disease even as the prices started to crash, it was a prosperous area. In its best of times, there were as many as 540 Mahindra jeeps in this small village; one of the largest congregation of such vehicles in a small village in India. However, in the past five years this village had seen as many as 124 farmer suicides, the largest number in any Kerala village.

What brought a spate of misery here is a double tragedy: The crashing prices combined with a sudden spread of new diseases that destroyed not only the pepper vines but its supporting plants like murikku, a local variety of soft wood tree bearing bright red-colored flowers in summer. Pepper can be replanted easily but without the supporting plant, it just can’t survive. The effort by State and Central Government organizations and farm officials to revive the pepper cultivation in Pulpally is yet to take off as the entire village looks like a graveyard of pepper vines, the dried and withered supporting plants remaining like ghosts.

The sudden decline to penury and destitution has had a tremendous psychological impact on the village population, and local doctors say that there has been a sharp increase in the incidence of psychological problems and disorders. Many people have left the village, leaving behind their lands uncared for, in search of jobs in Karnataka, and women have left for the sweatshops in Tirupur and other places.

So what we saw in the villages in the last weeks of 2007 was something dramatically different from the picture described in the Economic Review report, 2007. The Government’s actions had indeed raised high hopes but the limitations imposed by the restricted operation of the Commission had put a brake on its effectiveness.

The Government in its efforts to bring some succour to distressed farmers, had decided to take over debts up to Rs. 100,000 in the case of peasants who committed suicide. It has helped a number of families who were left without any means of subsistence after their breadwinners had taken the easy way out. The Central Government package of taking over loans for agricultural purposes from nationalized and scheduled commercial banks, announced in the budget 2008, has also helped ease the situation to an extent. The Economic Review reveals that as many as 248 loans availed by the deceased farmers with liabilities up to Rs. 100,000 had been written off by commercial banks and the total amount was to the tune of Rs. 76.67 lakh. In addition, the cooperative banks had written off 487 loans of the deceased farmers, worth a total of Rs. 153.26 lakh by May 31, 2007. The total loans taken over in the both categories came to 885 involving a total amount of Rs. 2.30 core.

It is a fact that compared to the gloomiest days in recent past, things seem to be looking up now. There are many factors that helped ease the tensed situation. First, there is a minor revival of world market prices for a variety of cash crops raising hopes once again; secondly, the debt relief efforts by State and Central Government agencies seem to have arrested the trend of mass despair; third, there is a substantial increase in paddy procurement prices from Rs. 6.30 to Rs. 9 this year; and the implementation of the National Rural Employment Guarantee Scheme is somewhat effective in the poorest districts of the State, contributing to this trend.

But these are temporary and piecemeal measures whose effects could be wiped off once the prices dip again and the official aid programmes are withdrawn. What we need urgently to develop seem to be a long-term strategy that will ensue regular, remunerative prices for the farmers, a social security net for those who face sudden reversal of fortunes owing to the over-dependence on global markets, and an effective and farm-based science and technology development programme that would help address the widespread problems of diseases, erratic climate conditions, changing farming practices, etc.

(Courtesy:www.infochangeindia.org, August, 2008.)