What ails the farm sector part-1: Maharashtra farmers angry despite bumper pulse harvest, prices crash on oversupply

India’s biggest-ever farm loan waiver scheme is underway in Maharashtra, more drought-proofing plans are afoot than ever before. But the malaise in the agriculture sector runs deeper, and more wide-ranging, nuanced policy interventions will be needed.

Written by Kavitha Iyer | Mumbai | Updated: July 25, 2017 3:46 am
maharashtra farmers, bumper harvest, pulse harvest, dal crop, harvest price crash, oversupply, agriculture, indian express In the current kharif season, having been hit by the price crash, farmers have reduced acreage of tur, with a 25 per cent dip in Maharashtra, according to pulse and commodities traders. (Representational image)

Just 18 months ago, Jalna farmer Chandrakant Kshirsagar sold the couple of quintals of tur (pigeon pea) he produces at Rs 8,000 a quintal. This year, after waiting months for prices to rise, he finally sold his produce at Rs 4,000 a quintal, making exactly half last year’s earnings even as his input costs have grown.

Other farmers who sold at Rs 3,200 a quintal had fared so much worse, he reasons, explaining why pulse producers, all habituated to volatility in pulse prices, are still the angriest among Maharashtra’s farmers this year. Many of them small and marginal farmers especially in Marathwada where Latur and Nanded districts produce tur, urad and moong in large quantities, pulse farmers fully anticipated a bumper crop in 2016-17.

An excellent monsoon had followed two consecutive drought years, prices were sky-high last year, and there was a government-induced increase in acreage of pulses. “Everybody knew we would have an excellent output. And still, we now have a glut of imports, so much so that the oversupply will not end any time soon,” says Rajan Kshirsagar, a farmer and Left leader from Parbhani in Marathwada, a mostly dryland farming region that produces much of Maharashtra’s approximately 1.5 million tonnes of pulses annually.

Current wholesale rates for tur are still approximately Rs 3,700 a quintal. And to add to farmers’ woes at having to sell way below the MSP of Rs 5,050 a quintal, there are allegations that cartelised traders abused the government’s procurement process by selling to government centres at the MSP, at huge profits. Maharashtra is a major pulse-producing state, among the top four.

While pulse farming across India is largely unirrigated, the problem is more acute in Maharashtra, where only 8.7 per cent of land under pulses is irrigated, making the 16 per cent share of Maharashtra in India’s pulse production especially vulnerable to monsoon shocks. (In Uttar Pradesh, 35.1 per cent of area under pulses is irrigated).

It follows naturally that the plentiful monsoon of 2016-17, and government policy promoting pulse production, saw area under pulses in Maharashtra grow from 20,06,000 hectare in 2015-16 to 25,57,000 hectare – a 28 per cent rise. From 6,11,000 tonnes last year, output ballooned to an estimated 17,51,000 tonnes, a 187 per cent rise.

In the current kharif season, having been hit by the price crash, farmers have reduced acreage of tur, with a 25 per cent dip in Maharashtra, according to pulse and commodities traders. But everybody is unanimous that the reduction in acreage will not help tackle the existing oversupply.

“Maharashtra’s farmers are sowing less tur because of crashing prices, but supply will not come down so soon. The rains are going to be good, so it is a reasonable assessment that prices will remain depressed,” says Dr Dharmakirti Joshi, chief economist at Crisil.

Also, price volatility in pulses, a cyclical problem, is neither peculiar to Maharashtra nor unusual. Dr Joshi says the massive volatility in pulse prices has been a constant phenomenon over the last 15 years or so. “Every third year there is a price spike and then a crash, and the volatility is directly linked to production. Farmers look at experience of high prices and sow more, so prices fluctuate.”

Dr Joshi believes a 10 per cent price increase annually is good incentive from farmers’ perspective, but a mechanism needs to be devised to smoothen prices. “Firstly, you have to de-risk agriculture from rains – irrigation is key. Alongside that, better food management can ensure that volatility is kept under control, through buffer stocks and other measures.”

That import arrivals of pulses continued even as it became apparent that there is a bumper crop locally contributed to the glut. “Structural solutions are needed from a long-term perspective, but in the short term, various devices on imports, buffers and so on are needed.”

Nitin Kalantry, one of Latur’s larger pulse traders, says imports from Africa are at about Rs 3,000 to Rs 3,300 a quintal and from Burma at Rs 3,400 a quintal. “So prices will definitely not rise dramatically in the near future,” he says. In addition, Kalantry says, there’s a 1.10 million tonne buffer stock with the government at the all-India level and traders are wondering how and when this will be disposed of. Also, he says farmers continue to hold about 15 per cent of their stocks, hoping prices will rise.

 

Also, while government buyouts themselves will not suffice to tackle the oversupply, many say the procurement process itself should have been better streamlined. Kshirsagar, the Parbhani leader, says there was negligence and poor planning in procurement. “First there were only 17 procurement centres, and too few were added later. Then farmers were first told to bring their produce, and they waited there while incurring rent for the vehicles, then they were told to take a token and make deliveries later,” he says, adding that thousands of farmers also received delayed payments.

MahaFPC, a consortium of Farmer Producer Companies, which demonstrated a ‘procurement intervention’ in the 2016-17 season in parts of the state with a transparent system for farmers, says there are many policy interventions needed to improve the procurement process. “Inadequate warehousing and procurement infrastructure in the producing states, unpreparedness of the state nodal agencies and political interference in procurement operations created mismanagement and failed to stabilise the markets,” says Yogesh Thorat, MD of MahaFPC, adding that a huge majority of pulse farmers may have sold below MSP.

Thorat adds that while commodity futures markets are in an infancy stage, they may help reduce market risks for pulse farmers despite fears that trading in futures may be highly speculative, without any actual delivery of the commodity. “Recently SEBI allowed NCDEX to launch chana futures. Presently these trading platforms are in the hands of middlemen, hence neither farmers nor consumers are benefitted.”

“Farmer Producer Companies are coming forward to participate in these markets for physical delivery of commodities, a good sign, and futures can be a crucial instrument to regulate price trend. All kinds of marketing avenues should be open for better price realisation and price stabilisation in pulses,” Thorat says.

Tuesday: Sugar, not sweet for farmers

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