1. Maharashtra farm crisis: Here is why it is crucial to make farmers market ready

Maharashtra farm crisis: Here is why it is crucial to make farmers market ready

History repeats itself, and does so when it is least expected. In 1979, Maharashtra saw its first farmer movement, led by Sharad Joshi in an area near Pune for a single crop, onion, that then expanded to cotton, sugar and tobacco.

Published: July 11, 2017 6:34 AM
maharashtra, maharashtra farm crisis, farmers market, maharashtra farmers, india, india news Loan waiver contagion after UP: Since the policy announcement by Uttar Pradesh’s Yogi Adityanath government, if anyone thought that the waiver would be UP’s internal affair, he or she was surely mistaken. (Reuters)

History repeats itself, and does so when it is least expected. In 1979, Maharashtra saw its first farmer movement, led by Sharad Joshi in an area near Pune for a single crop, onion, that then expanded to cotton, sugar and tobacco. The recent strike, that subsided after the announcement of the state’s loan waiver, emanated precisely from the same belt of comparatively prosperous western Maharashtra with richer, accessing better irrigation, more market-clued and progressive farmers. The monsoon this year has also been benign. The irony is that it is the better-off farmers that were agitating, not the ones from suicide-stricken Vidarbha.

What has gone wrong? No one can quite put their finger on the right explanatory button, but there were several triggers. A few are discussed here.

Loan waiver contagion after UP: Since the policy announcement by Uttar Pradesh’s Yogi Adityanath government, if anyone thought that the waiver would be UP’s internal affair, he or she was surely mistaken. Farmers across states had been agitating for similar waivers. A leading Marathi newspaper, Loksatta, published an article claiming that tax revenue from Maharashtra is helping UP and implicitly questioned why Maharashtra did not have loan waiver herself. The contagion effect was surely salient as farmers in Madhya Pradesh presented similar demands. The winding up of agitation after announcement of loan waiver highlights this.

The hurt is more intense when things are expected to be good, but they turn out differently: With good rains and record food-grain production, expectations were high. The cobweb model in economics—who all know heuristically, but rarely realise its brutal footprints—then came into play. With a glut in production, prices crashed to levels that seriously threatened livelihoods. That this happened when hopes and aspirations were running high naturally caused immense hurt. Pulses are representative of what went wrong or what can go wrong. In spite of a full-fledged policy on pulse pricing and procurement by ministry of finance, the tur situation in Maharashtra was precarious. The government faltered by starting procurements very late. If the government were to start early, the prices might not have crashed. Note that we use might instead of would because we do not believe MSP to be the panacea. The experience in tur certainly eroded the faith in government machiner

Inept data: Area, production and yield are three levers for advance policy planning in agriculture. Getting these right is the most important task of the statistics office of agriculture department which uses dual sources. For area under the crop, revenue department is the source, and is supposed to validate with Taluka agriculture officer, while yield estimates are obtained from crop cutting experiments (CCE) by the agriculture universities. Overall, a tenuous and error-prone process for advance estimates.

Indeed, the second estimate of tur for 2016-17 spoke of 15.33 lakh hectare under cultivation with associated 11.71 lakh tonne (lt) production. The Maharashtra Economic Survey, released on March 17, 2017, used the second estimate figures. A fortnight later, the state’s agriculture department revised the estimates with March tur yield projection much higher based on CCE. The third estimate showed no change in area, but production projection was revised to 20.35 lt, most likely due to new yield figures. This meant that tur output had nearly doubled, but the government realised this only by March 31, 2017. By not getting the data right and in time resulted in policy ambiguity and reflected in delayed procurement.

Maharashtra’s farmers are more market oriented: Maharashtra might be a victim of its own success. It has become major producer of horticulture crops, and volatility in prices for these have always been more pronounced. A history of cobweb repeats in horticulture crops year after year, as it happened for onions and tomatoes this year, plagues the state.

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What do these stylised facts augur in terms of solutions? There are only three possible ways for escaping the price collapse: a price guarantee system like MSP, market integration linking surplus and deficit areas and processing to prevent distress sale of perishables. The e-NAM was announced recently but progress has been tardy. It is a no-brainer that without a system of gradation and certification, such long-distance transactions would not take off. One should ask how many kilograms of onions were sold on e-NAM portal and how much of it was processed? The answers to these questions provide the key, and the solution need not lie in riding another MSP bus. If MSP were the solution per se, Punjab would not be working on its own loan waiver.

MSP is not a magic wand because there are no magic wands. Yet, if it were to be adopted, we need a proper system of farmer registration for traceability and eligibility. It is informative that agitation was focused on price support (apart from loan waiver). We did not see demands such as set up a processing facility, provide seed capital for transitioning to e-NAM. Unless we help farmers get market-ready that includes getting to produce differentiated products, history would get repeated. Unless each onion is not the same, it would bring tears when squeezed.

By Bhushana Karandikar, Anirudha Morey & Devesh Roy

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