The Bounce In Agricultural Growth Is Missing In Farmers’ Lives
Urban middle-class consumers are not restive at this time of the year like they were two years ago. But farmers are. They have forced the Maharashtra government to give them a farm loan waiver. The contagion has now spread to Madhya Pradesh, which has been lauded for achieving the highest agricultural growth of 9.7 percent between 2005-06 and 2014-15. A good harvest this year in most crops and record production in some following copious rainfall last year has sunk prices and the incomes of farmers.
The wholesale price of arhar-tur or pigeon pea was 27 points above the 2011-12 base year price in April 2017. In April last year, it was 117.5 points higher. Pulses production this year was at an all-time high of 22.4 million tonnes, over three million tonnes more than last year.
The price of wheat in the first four months of this year was slightly higher than that of the same period last year. Production, higher by about 1.5 million tonnes over last year, has kept prices in check. The price of rice has behaved likewise because output this year was 2.5 million tonnes higher than last year. Milk prices have also held steady in the first quarter of this calendar year.
Agriculture has bounced back after two consecutive years of deficient rainfall. Growth in the last fiscal is estimated at 4.9 percent. But it brings no solace to farmers.
The experience of pulses farmers has been traumatic. Singed by consumer protests over dal (pulses) prices two years ago, the government had stepped up procurement and offered higher support prices to reflect their social usefulness, as unlike cereals they enrich the soil with nitrogen from the atmosphere and use less subsidised urea.
Though procurement at 2 million tonnes out of a total kharif output of 8.7 million tonnes was substantial, 60 percent of the output was sold below support prices resulting in depressed incomes, said Chief Economic Adviser Arvind Subramanian, who chaired a committee on pulses. Stock limits and export restrictions kept prices low, he said.
The vice-chancellor of an agricultural university in Marathwada who did not want to be named, because of the political sensitivity of the issue, told this correspondent in April that three or four farmers in the region were committing suicide every day. Most of them were young. There were heaps of pigeon pea in the mandi or market, he said, and no takers. There is over-production of chillies too. The price of chilly had declined from around Rs 10,000 a quintal last year to around Rs 3,000. It did not even cover the cost of picking.
Agriculture has become very risky. Farmers have to contend with weather and price risks. They suffer if the weather turns out to be very good for a crop, and also if it is unhelpful. In the two years that this correspondent has been tracking agriculture rather closely, he has seen farmers in Uttar Pradesh lose their wheat crop to hailstorms just at the time of harvesting.
- In West Bengal, a bumper crop of potatoes led to prices slumping and distress sales in 2015, followed by a lean crop and shooting prices in 2016. It went bust once again this year.
- In Punjab, farmers lost their cotton crop to an epidemic of white flies.
- In the Mysuru area, there were no takers for tomatoes around October last year because of overproduction, as farmers had rushed into the crop misreading price signals from flood-hit Chennai the previous season.
- There have been droughts in Marathwada, Bundelkhand and Tamil Nadu.
Farmers need insurance against the vagaries of both nature and the markets.
Policy actions do not reflect the congruence of interests between farmers and urban middle class consumers, Subramanian said in his foundation day lecture of the National Academy of Agricultural Sciences on June 5.
Lower farmer prices today will adversely affect future agricultural supplies (especially in crops that are predominantly produced domestically such as pulses, fruits, and vegetables) which will increase consumer prices tomorrow. So, even over reasonable planning and political horizons, what is good for the farmer is good for the consumer.Arvind Subramanian, Chief Economic Adviser
Farmers need technology that will make their crops resistant to pests and diseases, lower the cost of production through traits like herbicide tolerance and make them resilient to weather changes. But India has kept them from accessing this technology for ideological reasons.
The median household annual net farm income in 2012-13 was Rs 19,250, or Rs 1,600 a month. Agriculture does not pay for most farmers.
The emphasis so far has been on increasing production and productivity. That must continue. More people need to be pulled out of agriculture. But there is also a herd mentality operating among farmers because they misread the price signals. Because of this, a lean crop and high prices in one year results in excess production and price slumps the next year. Unless a way is found to align farmers with markets, their distress will continue.
Vivian Fernandes is editor of www.smartindianagriculture.in.
The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.