Game Theory, Problems of Farmers and Suicides

“We found that in many cases, even a loan as small as Rs 10,000 was enough to push the farmer over the edge. This figure says a lot about how little faith farmers have in the ability and willingness of the state to help them”

– Madhukar Gumble, director of Kisan Mitra.

Recently two film actors Nana Patekar and Makarand Anaspure decided to gift cheques of Rs. 15000 to widows of Maharastrian farmers who committed suicide. Inspired by this, noted Hindi film actor Akshay Kumar decided to donate Rs. 90, 00,000 to families of farmers who committed suicide in Maharashtra.

Now question is why Rs.15000?

Of 3000 farmers in Vidarbha region of Maharashtra who committed suicide, nearly 900 had outstanding debt ranging between Rs.10000 to Rs.15000.

While political parties keep debating issues and announce one scheme after another, not much has changed.

Reasons for hopeless condition of farmers are debts on which they pay very high interest rates to money lenders, small size of land holding, lack of good quality of seeds and fertilizers, poor irrigation system, lack of infrastructure to transport and sell their produce at profitable price.

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”The average size of holdings for all operational classes (small & marginal, medium and large) have declined over the years and for all classes put together it has come down to 1.16 hectare in 2010-11 from 2.82 hectare in 1970-71.”

-Agriculture Census 2010-11

One of main reason of small size of land holding is due to large size of family and land getting split between family members. Small size of land holding results in lower productivity as it results in high cost of seeds, fertilizers and agriculture. Solution lies in cooperation, i.e. if each one of them lease their land to bigger farmer, then it becomes economic to mechanize farming and productivity will go up other alternative could be farmers consolidating their landholding and pooling resources to improve productivity.

But cooperation requires trust and faith in each other and in legal system. Unfortunately it is lacking.

 “Substantial chunks of scarce land remain untilled because of landowners’ reluctance to lease out land for fear of losing its ownership.”

-Agriculture Census 2010-11

Those familiar with game theory will not find it difficult to comprehend this situation, lack of faith leads to farmers sticking to Nash equilibrium of Split, Split, while Consolidate, Consolidate will give higher payoffs. Consolidate, Split can give temporary benefit where you can avail of benefit of cooperation and then split, but this strategy will result in retaliation from other player and game will be back to Nash equilibrium.

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China too faces same problem of huge population and small size landholding but their productivity is higher due to leasing of land, use of quality seeds and fertilizers and good infrastructure.

 

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