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Monday, May 16, 2022

From Plate to Plough: Left behind on the farm

Farmers have suffered in the last three-and-a-half years. For the prime minister and the BJP, agricultural reforms make both economic and political sense.

Written by Ashok Gulati , Siraj Hussain |
Updated: January 2, 2018 12:35:04 am
farmers, agriculture, doubling farmers income, agricultural reforms, Indian farmes, agricultural policy for farmers, pradhan mantri fasal bima yojna, pm narendra modi, BJP, agriculture sector Of the 99 major and medium irrigation projects identified for completion by 2019 through the LTIF, not more than 10 have been completed so far.

The year 2017 has been a great one for the BJP, politically. Under the leadership of Narendra Modi and Amit Shah, the party has scaled new heights by wresting Uttar Pradesh, Uttarakhand, Himachal Pradesh and Manipur, retaining Goa and Gujarat, and luring Bihar into its fold. The only minor setback was Punjab, where the Akalis and BJP lost. The party now rules in 19 states, either on its own or as a dominant partner of the NDA. More than two-thirds of Indians live in these states and this is, perhaps, the best opportunity for the Modi government to carry out agriculture reforms in a synchronised manner, at least in these 19 states. Remember, agriculture is a state subject in the Constitution, and this sector has remained somewhat neglected in the reform process since 1991. This is PM Modi’s moment. If he can reform agriculture, he can not only distinguish the NDA’s policies from UPA-type reforms, but also establish himself as a leader of the masses. This will pay handsome dividends in 2019.

It is not a secret any more that farmers have suffered during the last three-and-a-half years of the Modi government, first from two successive droughts and then from tumbling agri-prices. In the first four years of the Modi government, agri-GDP is going to register an average annual growth rate of around 2 per cent, which is almost half of what was achieved during the 10 years of UPA rule. So, without lifting its performance, and the incomes of farmers, it will not be feasible to achieve either “sabka sath, sabka vikas” or “doubling farmers’ incomes by 2022”, as has been promised by the prime minister.

As one looks back at 2017 with an agri-lens, one finds it a puzzling and painful year for farmers. The monsoon was reasonably good, and so was kharif production. Still, several states saw farmers’ agitations triggered primarily by very low prices for their produce, be it onions, potatoes, pulses, oilseeds or cotton. The profitability of major kharif crops for major producing states, based on market prices and projected costs estimated by the CACP, has gone down dramatically to less than 5 per cent or negative in kharif 2017 (see graph). This has to be measured against the promise of 50 per cent profit over costs, as mentioned in the BJP’s 2014 poll manifesto.

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The worst, however, happened in Madhya Pradesh, where the farmers’ agitation became violent and many farmers died in the ensuing police firing. This led to a knee-jerk reaction in policies, from farm loan waivers in many states to a drastic increase in import duties on pulses and edible oils.

Earlier, the Union budget for 2017-18 had also announced several measures for farmers. For example, the augmentation of the Long Term Irrigation Fund (LTIF) with NABARD by Rs 20,000 crore taking its total to Rs 40,000 crore; the micro-irrigation fund of Rs 5,000 crore, and the dairy development fund of Rs 8,000 crore, all with NABARD. A model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017, was also circulated later. But what has been the progress so far? Very little. Of the 99 major and medium irrigation projects identified for completion by 2019 through the LTIF, not more than 10 have been completed so far and that too many without field channels. The micro-irrigation fund has not taken off yet, and the dairy fund was approved just a few days ago. No wonder, with such a lacklustre performance, one cannot expect much improvement in agriculture or farmers’ incomes.

Now, under duress, MP is undergoing a pilot price deficiency payment scheme under which the difference between MSP and modal prices of eight notified commodities is to be paid directly to farmers. The jury is still out on the project’s performance but at this stage it is clear that it suppressed market prices further, especially of urad, creating a crisis for urad farmers.

In case of trade policy, the government seems to have finally woken up to dovetail it with MSP policy and, accordingly, raised import duties significantly on pulses and edible oils ensuring that the landed prices of these are not below their respective MSPs. Better late than never!

What can be done now as one treads into 2018?

First, expedite the implementation of major flagship programmes by removing glitches, especially in crop insurance (PMFBY), irrigation (LTIF and micro-irrigation), and the dairy development fund. Second, ensure an effective monitoring and dovetailing of agri-trade and tariff policy with MSP policy through a sub-committee of the Cabinet to take quick decisions. Third, give high priority to agri-marketing reforms to create a seamless movement of agri-produce all over India. Don’t hesitate to admit, and correct, the fact that so far e-NAM has not delivered and will not do so unless the basics of agri-marketing from assaying, grading, storage, to dispute settlement are put on track. A major impetus needs to be given to link farmer producer organisations (FPOs) to agri-markets through “Operation Veggies TOP” (tomatoes, onions and potatoes) on the lines of “Operation Flood” in milk, linking FPOs to processors and organised retailers, bypassing the mandi system. NABARD has more than 2,000 FPOs and SFAC has created about 700 FPOs. A beginning can be made with them. With experience, this model can be scaled up to other fruit and vegetables.

If the Modi government can do this, it can certainly improve farmers’ economic condition, who in turn will also reward the BJP in 2019. This is good economics and good politics, something PM Modi can sense well.

Gulati is Infosys Chair Professor for Agriculture and Hussain is Visiting Senior Fellow at ICRIER.

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