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Cheap cotton cause of farmers' suicides

Jan '07
During past 18 months more than 1,200 cotton farmers have committed suicide to escape debts to money-lenders in Vidarbha—the north-eastern corner of Maharashtra.

M.S. Swaminathan father of India's green revolution believes farmers borrowed money at high rate of interest to sink wells and buy costly biotech cotton-seeds. But a leap in diesel prices for pumps and seeds proved to be ill-suited for small plots, ruined farmers financially.

Oxfam, a charity organization, published a study last year reported that indiscriminate and forced integration of farmers into a global system that was unfair, made their condition worse.

Besides, State Government reduced the guaranteed price for cotton from about Rs2,000 ($56) per 100kg to Rs1750 last year, notwithstanding low World price of cotton that fell by more than one-third since 1994. This was due to heavy subsidies on cotton by rich countries, especially America.

The Doha round aims to address the issue of subsidies which if solved might add about 13 percent to world prices as per a recent estimate by two World Bank economists.

But a more likely scenario at the Doha round seems cotton subsidies to be cut by a third adding less than 5 percent to the price.

Cheap cotton helps to run Indian textile mills and if subsidies were to be removed then India would stand to lose around $84 million, as per observations of World Bank economists.

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