High wages and national loss

In certain parts of Tamilnadu, the wages for agricultural and other unskilled workers have increased by about 100% in the last three years. Workers, who used to get Rs.70 per day for 5 hours of work, demand and get Rs.150 per day. Wages for harvesting sugar cane (the process of cutting grown cane) have gone up to over Rs. 350 a tonne. This is more than 25% of the price which farmers will receive for 1 tonne of sugar cane. One would expect that the monthly earning and standard of life of the workers have gone up. But unfortunately it has not. What has happened is that workers who used to go for work for 10 to 12 days a month are now working for only 5 to 6 days a month. Thus the total earnings per month remains more or less the same.

On the other hand farmers have started keeping larger area fallow, for want of affordable agricultural labor which, makes agriculture unremunerative. The overall agricultural production has not gone up. In some cases, production is coming down at such a scale that in the foreseeable future, India may have to import very large quantities of agricultural produce. Keeping agricultural land fallow is a great national loss.

Very often farmers do not harvest the crops and leave the produce in the land. This happens when the prices of vegetables drop to around Rs. 1 per kg but the wages remain at Rs. 150 per day. Classic examples are tomatoes and radish. This is a tragic loss, not only to the farmers but also to the nation.

The prices of agricultural produce and wages for workers should be fixed that one has to work for about 15 days a month for meeting his essential requirements of food, clothing and housing and another 10-15 days for non-essential expenditure like entertainment, electrical household gadgets, mechanized transport, education of children in private schools, medical treatment from private doctors, holiday tours, purchase of jewellery etc. The quality of life of the people will go up and the national income will rise.

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One Response to High wages and national loss

  1. Ritesh says:

    Dear Mr. Govindan,

    Although I am not in agriculture business looking at the slow growth numbers I feel the same that India will soon be importing loads of agriculture produce in the near future. You bring up an interesting point about how high wages are hurting agriculture production. I think there are probably other factors involved in the decline too.

    Based on my observation I feel that agriculture is no longer a viable business for most farming families. This is probably the main reason behind high rural poverty. The central government recently waived agriculture loans worth several thousand of crores but this is clearly unsustainable.

    I wonder what changes can be made to make it a viable business once more. You mention about controlling wages to keep the costs down. But I would argue the opposite – how can the farmers charge enough so that they can pay Rs 150 per day to the labour and still be able to make enough profit from the sale of their produce. The consumers aren’t seeing any let up in the prices of food items and probably are willing to pay whatever it costs so what is keeping the sale price low on the farmers’ end. Is it because they cannot distribute and market their produce properly or fast enough or is it because there are too many middle men eating the bigger pieces of the pie? Why can’t the farmers’ charge what it takes to produce one kg of rice or cotton + a healthy profit margin? If the reason is that the consumers won’t pay that price then it would make be believe that we have a case of supply > demand. But clearly that doesn’t seem to be the case. So what is it that is keeping a farmer’s selling price so low that he is finding it hard to cover the cost.

    Sometimes I feel the food prices have been kept artificially low so that the rest of the country can feed themselves and still have enough purchasing power for the rest of commodities like entertainment/travel/manufactured-goods. Are we a nation that is enjoying life at the expense of its farming community?

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