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Farmer Suicide driven by accumulated debt from failed crops, drought and desertification

43.7 billion RS liability from farmer suicides in India can be prevented.

Farmer suicides in India are well publicized but we have seen similar conditions all over the world including the Nagev desert and Africa.     The underlying debt problem is often aggravated by a combination of soil degradation,  drought, water scarcity,  mono-crops and expensive GMO seeds.

A tragic aspect of these suicides is the wife and children often become refugees loosing their opportunity for schooling. This large group of uneducated children create a substantial welfare liability and represent a much larger loss of future economic production.

Ten years of this problem in India appears to create a 43.7 billion RS welfare liability along with a 1.23 trillion RS lifetime loss of tax revenue from the affected children.  These suicides are largely preventable with new approaches that break the accumulated debt cycle a I explain below. The total impact is likely many times larger than the most direct effects modeled here.

This problem represents a unique opportunity reduce human misery with a solution that can be profitable over the long term.   It will  save the government money in the short term due to reduced welfare costs and reduced risk of social unrest.  It will deliver a significant boost in future tax revenue by keeping the affected children in school so they have much better job prospects and can pay more taxes.

Farmer Suicide’s similar around the world

We hear the same story about farmers all over the world.    Farmers borrow money for seeds and fertilizer.  A drought causes crop failure so the farmer cannot re-pay the loan.  Each failed crop results in additional debt.   Eventually the debt grows so large the farmer ends up bankrupt.  The poor farmer is depressed with no visible route of escape and commits suicide.

The debt problem is compounded by soil degradation and reduced water supply so farmers experience dropping yields and must apply more chemicals at higher costs.   Increased costs relative to crop yield shrinks their profit even during good years.  This makes debt repayment more difficult.  GMO seeds that must be re-purchased every year are more expensive and accelerate debt accumulation during crop failure.

The debt does not die with the husband, unless the wife  can find a way of paying it off, she will not be able to afford the children’s schooling. They will lose their land, joining the hordes seen begging in their thousands by the roadside throughout this vast, chaotic country.   These children represent a welfare burden, face a reduced opportunity for education and are likely to face reduced lifetime incomes.  Many of the affected children end up stuck in city slums where they add to welfare and other social costs.

It appears beneficial to the state and federal governments for these farmers to stay alive,  healthy and in business so they can educate their children.  Well educated children are more likely to become tax paying citizens paying taxes and they will pay tax on larger incomes.  They are also less likely to add to the welfare burden of country.

This problem is actually worse than it appears because for every farmer who commits suicide there are many more who flee their farms and become economic refugees in the city.   Some of these refugees successfully work their way out of poverty but many end up perpetually stuck in poverty.

Grow Dryland (a sustainable solution)

A2W_diagram_AlbiziaLebbeck2

Grow Dryland was invented as a way to break the escalating debt cycle by ensuring farmers have some income even during drought years while reducing the need for expensive chemical fertilizers and GMO seeds.

Grow Dryland technology and micro land profiling helps grow special trees along the edge of fields that capture nitrogen in their leaves.  The foliage can be used as edible fodder or used as nitrogen rich water retaining fertilizer.     It supports trees that would normally be unable to survive at that location while Grow Dryland technology can keep the seedlings alive for years even through the worst drought.

Due to their deep roots the trees will produce a full crop of leaves even during drought years.   During good water years the foliage can be harvested as compost and mixed into the soil. Government studies have demonstrated a 400% increase in legume production on the same water budget when the foliage has been mixed into sandy soil.  The nitrogen rich compost allows a  smaller amount of land to produce larger yields of traditional crops at lower cost which reduces the debt risk for a given amount of profit.   Composting and mixing the nitrogen rich foliage into topsoil reduces the need for commercial fertilizer which can increase net profit from the crops that succeed.

During drought years the tree foliage can be fed directly to sheep, goats and chickens.  These animals can provide an income nearly equal to the net profit from traditional crops.  The drought resistant source of edible fodder means the farmer can retain their heard through droughts that have previously been economically devastating.    A blended model of animals plus traditional crops,  fuel trimmings and timber harvest can deliver sufficient income to allow the farmer to avoid accumulating additional debt even during drought years.    By retaining their animals through the drought it allows the farmer to make a substantially larger profit from those animals since the animal prices often spikes after the drought due reduced supply of animals.

Once every 10 years farmers can harvest the trees for quality lumber they can convert to furniture or valuable lumber using simple tools.   If they learn to produce cabinets and other quality furniture from this lumber it can greatly improve their income stability.    Annual trimmings can produce wood sold for cooking fires.

The trimmings and foliage can be used to produce bio-diesel and alcohol that can be sold as fuel for clean cooking.   This is a very interesting option during drought years because the bio-matter can be stockpiled and prepared for conversion to fuel during good years.  During drought easily available wood for cooking fires is rapidly exhausted so the price of the stored fuel can rise rapidly providing a nice drought related boost of income.      Collaborative village scale ventures can use the foliage and animal waste to produce methane to deliver cooking fuel and electricity for the village.

A single farmer with 5 acres can generally support 210 trees planted around the perimeter of each acre while still retaining a majority of their land  for traditional crops.  High value shade tolerant crops like lettuce and high quality grazing grass can also be grown below the trees.

210 trees can produce  42,000 pounds (2835 cubic foot) dry weight of fodder  This is enough to mix 3 inches of matter into 0.26 acre of soil.  At this rate it will require 4 years to treat one full acre with enough compost to dramatically increase production of nitrogen loving crops like legumes.

Government studies have demonstrated a 300% increase of grass production by weight in volunteer grass growing below the trees.  They also found that higher food value grasses volunteer in the area immediately around the trees.   This increased grass production can be used to feed animals during good water years while the tree foliage acts as an emergency food supply during drought years.

Farmers may gain a larger income increase by using more of their land to support the trees but by using only the perimeter of each acre we minimize impact on traditional farming crop space.  We think this may cause less resistance to adopting the process.

There are several other economic options not quantified here such as where ground cuttings can be used to grow red worms and mushrooms both of which have a high market value.

Paying for a solution

Preliminary analysis indicates that returns from the lumber harvest can pay for the Grow dryland process over a 25 year period with a substantial profit  even before we factor in the other benefits such as increased crop yields at lower costs.     We need a NGO + government approach that will invest in installing the grow dryland system and help support the farmers for long enough for the process to start yielding the benefits.   Re-payment should be based on a portion the farm profit rather than debt.  The NGO should set up a co-op to sell higher value crops to market in cities along.  They also need a co-op to move high value lumber and hand crafted furniture to western markets.  They also need training and audit processes to help the farmers stick with the program.   Additional details listed in NGO help needed section below.

Economic Impact

dying-and-starving-little-boyThe economic impact can be significant.  Using the 2004 rate of 18,241 farmer suicides and assuming these farmers had an average of 3 children.   Over a 10 year period the suicides could impact 547,230 children.

Many of these children will either enter the welfare system or will exist in abject poverty.    We assume the state and national government will spend $200 per year on average to support these children over an average of a 6 year period.   This yields an estimated 656.7 million USD (43.7 billion INR) welfare liability.

A more significant economic impact comes from lost economic productivity from the affected children.    We assume that 5% of the affected children will reach a job that pays $15,000 (998,282 RS) per year.   We assume 35% of well educated children from stable profitable farmers will reach premium jobs.  This yields an increase of 164,169 of premium tax payers.  With a 30% marginal tax rate this yields 49.17 billion RS per year in additional taxes or 1.23 trillion INR across an average 25 year working life.

The actual numbers will change based on assumptions about job income obtained by well-educated children and the success ratio of the affected children.  The net impact of significant losses in economic production coupled with significant welfare costs will remain true.    It seems obvious that it is cheaper to treat this problem at the farm than to wait for the failure.

Additional economic impacts not included here are listed below.

Farmers & Ranchers Impact of drought

A closely related problem is herding farmers and ranchers who spend decades building a herd of animals where their entire life savings are invested.   A multi-year drought occurs so there is less feed is available.  They face the choice between A) selling their animals at deep discounts  B)  Bankrupting themselves buying feed under rapidly escalating prices.  C) letting their animals starve hopping for rain to produce new forage before the animals succumb.   In many cases they spend all their savings and everything they can borrow buying feed then sell most of their herd at distressed prices so they exit the drought with no animals,  no cash and no credit to start over.   We have even seen this kind of failure in the USA where Texas ranchers have lost ranches they had been building  for generations due to a few years of severe drought causing them to miss critical debt payments.

Grow dryland is a process we designed to allow most farmland to produce some income even during drought years.  Grow Dryland can provide food for animals during drought years.   This source of food can help  avoid selling the animals at distressed prices.  During good years it can provide nitrogen rich compost that can be used to dramatically increase yields by providing natural fertilizer and improve water holding capacity.    There is typically a animal price spike after droughts due to a drastically reduced supply of animals.  Farmers who use GrowDryland and are able to retain their herd through the drought can then sell their animals at substantially greater profit.

A critical aspect of this training is to ensure herd growth remains small enough there is enough fodder available to support the animals through a 3 year sever drought.  This means there will be substantial surplus foliage available during good water years when the animals will largely be fed using the dense grass that grows below the trees.   The excess foliage can be converted to compositing fertilizer, bio-fuel, worm beds, etc.    If the good year herds are allowed to grow to large which is possible since the additional foilage dramatically increases the carry capacity of the land it recreates the crisis scenario of disposing of animals at a loss.

Government and NGO help needed

There  are many factors involved and no technology will address them all but GrowDryland is a viable way of addressing some of the critical underlying factors.

We need NGO’s support to test and demonstrate the process in country.    The next critical step is funding demonstration farms in many villages throughout India where we can test, optimize,  document and improve the process.  These demonstration sites along with marketing by the NGO will be essential for helping farmers understand why they should adopt new and different processes.     We will also need training materials that can be used to help new farmers reach success with the process.

We can start with just the demonstration and tests sites and then grow the NGO commitment and involvement as they see the results.

The NGO’s need to create partnerships with local and national government agencies to ensure smooth deployment.   Ideally the NGO’s can partner with the state and national government as investment partners leveraging a portion of the reduced welfare costs and increased future tax revenue to fund large-scale adoption of the program.

We need an alternate funding strategy.  We think it should be based on a share of the farmers profits rather than debt financing to make the process sustainable.  The NGO’s will be essential in developing a self-sustaining finance model the leaves the farmers better off in the long term while yielding a long term net profit that can be used to help fund more farmers.    We have the basic ideas on how this can work but they will need to be refined by the NGO.

A key aspect of success will be training the farmers to diversify their income base as enabled by the grow dryland trees, Animals, timber, etc.   We would ultimately like to see them use the foliage as compost to revitalize their existing land so they can receive higher yields with traditional and indigenous crops while using fewer expensive chemicals and fewer GMO seeds.  Some of the work demonstrated by the Eden foundation for edible perennial plants in Africa has shown the value of this approach.    NGO will need to establish this training with our help but more critical will be the plans so we can be sure every farmer participating in the solution has learned what they need to be successful.

We need NGO’s to  form multi-village farmer co-ops to deliver higher value food crops to city markets where they can be sold at a higher price.  This will be an instrumental part of the solution because it can also be used to encourage farmers to produce a more diverse set of products rather than higher risk mono-crops.   We think it is possible to integrate this with the financing model so the NGO recovers the majority of their investment as a tax against the products sold through the  co-op.   We would like to see the co-op to be staffed by rural villagers from pickup at the farm through retail sale in the cities but acknowledge they may need to sell to retailers in the city.   There should be a plan to allow the villages to buy the NGO out of the co-op over time.    We need the NGO to figure out of governance and management supervisory model to ensure maximum revenue makes it back to the farmers while ensuring the co-op remains financially viable with strong controls protecting against fraud.  They also need measurement and incentives to eliminate laziness within the co-op.    We need the NGO to figure out how to balance co-op size, co-op ownership and the need to accept additional money from western sources as they scale up deployment to more villages.

The NGO’s will ideally establish and fund a credit union style financing co-op for rural farmers who own less than 100 acres with an emphasis on farmers dependent on rain-fed agriculture.   This organization would largely obtain low interest loans from western investors,  bond holders and other NGO.    It would provide loans or profit share investments at the lowest feasible interest rates to the farmers and it would offer a forgiveness program where farmers who can demonstrate participation in the grow dryland program could convert accumulated debt to a profit share. A maximum profit share ratio should protect the farmers but the duration of profit share may be extended.     A culturally compatible administration and management system will be needed.  There  are good models for in some USA credit unions but they would need to be tweaked.   Just like the marketing co-op we would like to see this staffed by rural villagers where possible with a plan to phase NGO ownership out over a period of time.    We think there should be bylaws that prohibit loaning money for chemicals or seeds that will be used with GMO crops unless they are perennial or produce viable seeds.  Similar bylaws should prevent or limit investment in mono-crops especially those that will fail under a severe drought scenario.    In the medium term funding approval should include  a rotating panel of successful farmers who are using the process to review plans from new farmers to ensure funds are going to those farmers willing to execute the plan.      Some of the more lucrative financial returns are from harvesting lumber than can require 10 to 15 years so a profit share plan based on this should be included.   We would like to see all loans and investments made directly by the co-op with no 3rd parties.  Any incentives paid should be based on successful repayment or profitable profit share rather than short term profit or increased rates.

Environmental impact

There are a number of positive environmental impacts from this approach.   It would be difficult to identify all of the impacts but here are some of the more obvious impacts.

  • Timber carbon sequestration.   Any trees harvested as lumber that is used for homes or furniture effectively sequester that carbon indefinitely. Any trees that continue to grow are also sequestering carbon.   This can represent billions of tons of carbon sequestration when implemented at large scale.
  • Reduced chemical fertilizer usage due to the nitrogen rich foilage and compose reduces soil degradation. This reduces residue runoff which reduces salinity and toxicity of the water downstream.
  • Producing a large source of bio-fuel for use in electricity production eliminates a BTU equivalent of fossil fuels burned to produce electricity.  This can reduce net carbon emissions by about 2 pounds per kWh.    This also also facilitates smaller scale regional power plants close to the fuel source that can provide employment opportunities for rural workers while building a more distributed demand responsive grid can deliver high-tech jobs for the city.
  • Providing a planed source of edible fodder for droughts reduces over grazing degradation of surrounding lands.  This can improve recovery after drought, reduce wind storms and restore bio-diversity.
  • Improved water retention by the use of nitrogen rich foliage as compost reduces the amount of water required to deliver viable crops.  It also reduces risk of soil loss due to wind erosion.
  • Water retention in the tree planting micro capture basins retains water on land during rains to recharge local water table.  It also reduces downstream runoff and  soil erosion due to runoff.
  • Water retention in the tree planting micro capture basins slows the discharge of water from the land which can reduce downstream floods.
  • Reduced soil erosion reduces silt loads  downstream reservoirs extending their useful life.
  • Reduced numbers of economic refugees concentrated in city slums and along roads present  less burden for trash disposal and sanitation.  In some instances this can help protect water quality in the areas with fewer refugees.
Total economic impact is larger that what we modeled in this document.
  • We didn’t model the set of farmers and children who abandon their farms without suicide who face similar issues educating their children.
  • We didn’t model the economic impact on the country due to reduced ability to domestically produce their own food which can have profoundly negative economic impact by forcing export of cash for food.
  • We did not model the impact from a very large source of bio-matter that can be used to generate electricity and reduce consumption of imported fuel.  This can have a large impact on import / export balance by reducing cash exported to pay for fuel.
  •  We did not include the impact of Carbon credits from what could be billions of trees planted across the nation.
  • We did not include the impact of carbon credits from buring renewable fuel to produce electricity rather than imported fossile fuels.
  • We did not model the impact from increased water table recharge and reduced flooding from large scale adoption of grow dryland and this impact could be larger than all the other impacts.
  • We did not model the savings from reduced risk of social unrest.   This is significant because many of these families end up existing in extreme poverty at the edge of large cities.   People struggling to survive day to day are more likely to cause social unrest and occupy space in expensive jails than those who have good paying jobs.

 

About the Author:

Joe Ellsworth has worked as an engineer, scientist and enterprise architect who has consistently solved solve of the most difficult problems faced by large companies over a 20+ year career. He is a recognized specialist in identifying the root cause of difficult and complex problems and then identifying cost effective ways to address the problems.     He has invested decades in researching and designing solutions around water scarcity issues.   He invented A2WH and Grow dryland process specifically to address water scarcity, poverty and economic issues common in rural areas of countries like India and Bangladesh.

Thanks Joe Ellsworth
CTO Air Solar Water
http://AirSolarWater.com
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Also published at: https://www.linkedin.com/pulse/debt-driven-farmer-suicides-avoidable-joe-ellsworth?trk=prof-post

 

Desert agriculturedesertificationgrow drylandland degradationMitigate desertificationpoverty

admin • 2016-10-05


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