Khanna mandi is a large part of the farm problem
Congress vice-president Rahul Gandhi will, no doubt, be overwhelmed by the damaged wheat he will see at the Khanna mandi in Punjab, and possibly the heartless state procurement officials who will be refusing to buy the wheat blackened by unseasonal rains. But he would have been better off spending time in eastern UP and Bihar where, whether the crop is healthy or damaged, there is no one to procure it, so prices always rule way below the official MSP announced with great fanfare in New Delhi. Indeed, the prosperous Khanna mandi represents all that is wrong with India’s agriculture, from the excessive procurement (2-3 times the buffer norm) to the high taxes (14.5% of all grain sales are pocketed by the government there) and the growing of the wrong crop (wheat and rice are water-guzzlers) in the wrong area (Punjab and Haryana have a huge water problem). Indeed, while it is important for the government to announce sops for damaged crops—it may have to announce more if the monsoon fails—it needs to completely change the way agriculture is run if it wants to offer anything more than lip sympathy for the farmer.
This year, the government plans to spend around R2.3 lakh crore on the food economy, including the food subsidy, and a very small fraction of this is for either crop insurance (imagine what that would do for farmers right now) or for creating irrigation facilities (imagine what that would do when the monsoon fails). Instead, by focusing solely on wheat and rice for ration shops, the government is forced to hike MSPs which, in turn, make it more profitable for farmers to continue to grow these crops. Since both are water-guzzlers, that worsens the Punjab/Haryana water crisis. If, instead, the government moved towards cash transfers for subsidies, it could save R40,000 crore or more each year and use this money to provide direct cash transfers to farmers—since this would be given irrespective of the crop grown, farmers would grow more of fruits and vegetables where prices are high, and grow wheat and rice in places with high water tables like Bihar and eastern UP. If, instead of playing MSP, or SAP politics in the case of sugarcane, the government allowed top seed companies to distribute—after the appropriate level of trials—high-yielding flood/drought/pest resistant seeds, farmers would benefit more. The same would happen if export restrictions were lifted on various crops—high MSPs bother economists because of their inflation-impact, but little is said about the loss to farmers who are stopped from exporting their crops. Or if the government gave subsidies, in the initial years, to develop a modern food processing industry; or if, along with opening up the retail sector to FDI, it allowed bulk buyers to bypass rapacious mandis and buy directly from farmers, and if free movement of farm produce was allowed across state boundaries. Pity, the Congress vice-president won’t see any of this in the Khanna mandi.