Agri distress: post-DeMo, a glut, low prices killing farmers

Vegetable markets in Karnataka are awash with blood-red tomatoes these days that are selling for Rs 5 a kilogram. The retailers might have paid Rs 2 for each kilo to traders who, in turn, have procured them at Re 1 from farmers. But housewives are shedding tears over onions for which they are shelling out Rs 50 a kilo. One would be sadly mistaken to assume that all that money is flowing to the coffers of onion-growers. These were procured by hoarders long ago at, maybe, Rs 5 a kilo.

Elsewhere in the country, potatoes are making news. With no takers even for a rupee a kilo, the farmers have left them in markets to rot. The boom and bust cycle in production and prices is a routine story all across the nation. They make news only when consumers feel the pinch of prices or hear of a glut and steep fall in prices spawn protests by growers. Farmers' share in the prices never rises beyond 5-10% of what the commodities are finally sold to you for.

Karnataka is one among the five states (others being Maharashtra, Telangana, Madhya Pradesh and Chhattisgarh) described as a suicide hotspot for farmers. These states, registering an alarming rate of farmers' suicides in 2014, accounted for 5,056, or 90% of the suicides nationally.

The share of indebted farm households to total farm households was highest at 89% in Telangana, followed by 77% in Karnataka. It was 56%, 46% and 37% in Maharashtra, Madhya Pradesh and Chhattisgarh respectively.  

A study by the Institute for Social and Economic Change (ISEC) in Karnataka says that the Department of Agriculture recorded four farmer suicides per day between July 2015 and June 2016. Out of 1,490 farmer suicides in this period, 80% were committed by marginal and small farmers. Most studies point out that the suicides are triggered by indebtedness stemming from 'unsustainable income', if all reasons are to be clubbed into one. Plausibly, bleak prospects of stable returns on their produce caused despondency. But a more worrisome aspect of the episode is that the crisis is pushing more and more farmers to give up farming.  

The ISEC study says that around 30% of the victim families surveyed by the ISEC field investigators had developed such degree of resentment towards agriculture that they completely stopped agriculture and looked out for other alternatives for livelihood.

The story of tur dal and maize growers is similar to those of tomato-growers. Karnataka is a leading producer of the two crops. Despite a 33% lower arrival in the market in 2017, tur dal prices are 50% lower than what they were last year at this point of time. This is explained by a large inventory of stocks built up due to a cash crunch in the Agricultural Produce Marketing Committees (APMC) due to demonetisation and, still later, the introduction of GST. The state produces around seven lakh tons of tur dal and eight lakh tons of maize annually. Maize prices have crashed to Rs 1,000 a quintal, against the minimum support price (MSP) of Rs 1,350. Off and on, similar crises have haunted farmers engaged in growing Bengal gram, jowar, soyabean and sunflower in the state.

Unremunerative prices cause aversion among farmers to their calling and drive them out of it, although there could also be other contributory factors, such as water scarcity, pestilence, soil salinity and lure of higher returns from turning farms into real estate in urban enfoldments.

According to T N Prakash Kammardi, chairman, Karnataka Agricultural Prices Commission (KAPC), nearly 21 lakh hectares or almost 16% of agricultural land has turned fallow in the state in the last decade, resulting in a loss of Rs 8,000 crore in GSDP. The statistics compiled by the KAPC point out that farming yields very thin margin of profit for farmers. But total returns are negative if input of family labour, etc were to be accounted for. The net losses may range from 7% in commercial crops to 32% in oilseeds and, overall, 24% if average of all agricultural crops is taken.  

Enhancing farm incomes

The larger question that needs to be asked is: should the market alone be the determinant of what is due to farmers for the outcome of their sweat and toil? Needless to say, enhancing the income generation capacity of the basic food growers should be the top priority.

The situation is disheartening for a state that pioneered agrarian reforms as early as in the 1970s. Steps are needed at two levels: increasing productivity as well as managing the surplus in a way that gluts do not erode what is due to the farmers. This calls for envisioning group farming and aggregation of farms as mechanisation of farming - the use of tractors, harvesters, threshers, borewells - requires scale of operations. What AMUL or KMF did to dairy farming, could and should be replicated in agriculture, too. Risks and uncertainties would have to be taken in the stride as the rule rather than an exception.

The farmers' plight is a cumulative result of delay in initiating second-generation reforms in the sector. The state has obviously sat on its laurels for too long. The reforms desired now call for ensuring at least a 50% share for the farmers in every rupee the consumers spend on buying farm produce.

Both the ISEC study and the M S Swaminathan Committee (2007) reports concur on this point, though couched differently. The Swaminathan Committee called for fixing MSP with a margin of 50% over the cost of cultivation. On the legislation front, the purchase of produce at below MSP cost should be made an offence.

(The writer is a Bengaluru-based journalist)

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