The Big Picture: Bumper Crops Expected this Year – Is it a Good News?
Indian farmers are currently facing a new problem as a bumper crop has led to procurement prices plunging which is pushing them deeper into the debts of despair. Ironically, the bumper production which ought to have been a boon is proving to be a bane. The Agricultural Ministry estimates that 273 million tonnes of vegetables will be produced this year but it is unlikely that either the farmers or the consumers will benefit. Only middlemen stand to gain since the Agricultural Produce Marketing Committee laws bar farmers from selling their produce directly in local markets. They can sell only through commissioned agents.
- The traders and nation on the whole might benefit from bumper crops but for the farmers, there will be loss because they will be compelled to sell their whole produce at throwaway price which will make them debt ridden further.
- Bumper crops doesn’t always bring good money to the farmers and even consumers do not get benefit of this. They have to pay a higher price for the produce in general because of the involvement of middlemen and traders.
- There needs to be decentralized storages, cold storage chain and there should be food processing at the village gate level to reduce wastage of food in long term specifically for perishable items like fruits and vegetables.
- Whole agricultural produce marketing system has not kept pace with the way agriculture has changed. Farmers are now investing in new technologies, fertilizers, equipment, different varieties of seeds etc. Basically public procurement is only for 2 crops rice and wheat and that too in a few states. So, other states do not get any benefit from MSPs.
Awareness about the MSP is limited to states such as Punjab, Haryana and Andhra Pradesh where such procurement takes place. According to the National Sample Survey’s (NSS) Situation Assessment Survey of Agricultural Households 2013, for paddy and wheat, less than 1/3rd of farmers were aware of the MSP and for other crops, such awareness was negligible.
- Post harvest infrastructure has to be adequately created. A proper policy framework has to be there to ensure a better coordination between efforts of Central as well as State Governments as agriculture is a state subject. Export import policies have to be in place.
- Milk model can be executed for perishable items in agriculture. SAFL has set an example. Sustainable Agro-commercial Finance Ltd. (SAFL) is the first private sector NBFC in India providing agri-loans with a wide and diverse range of financing options for almost every need of agricultural activity.
Everything is linked to WTO as well. When a commitment is given at international forum that MSPs will not be extended beyond a certain percentage, it affects procurement. 2 years back, 23 million tonnes of wheat was procured rather than 28 million tonnes. Later on, Government had to allow zero duty import of wheat which caused a lot of hue and cry because farmers were saying that there was enough heat in the country and import was not required. Therefore, policies are very skewed in terms of stability. Agriculture and farming cannot be changed according to the whims of the political party in power.
Problem of Indian agriculture is not scarcity. It is the management of the good years in agriculture for future adversaries. There is an urgent need to address the fundamental problems of crop and regional bias of MSP policy, government procurement and access to institutional credit. Merely increasing MSP will not benefit most farmers in the country.