Government's support price turns sour for needy farmers

This year, the buying price of the produce has shot to rock-bottom, since the time of harvest itself. The buyers are showcasing the result of excess rains due to which the quality of the produce is said to be below average and thus the buyers and middlemen quote lowest prices for the produce. Even the ‘Pradhan Mantri Annadaata Aay SanraksHan Abhiyan (PM-AASHA) is not helping much.

Hyderabad: Of late, farmers have been facing losses with the ‘not-so-helpful’ support price of the Central and State Governments. It has been declared by the Central Government that every year, starting from the month of October in the current year to September, the following year, it should be regarded as the ‘New Marketing Year’ for the farmers. However, this year’s marketing and sales of the farm produce did not seem to be quite in favor of the farmers.

This year, buying price of the produce has shot to rock-bottom, since the time of harvest itself. The buyers are showcasing the result of excess rains due to which the quality of the produce is said to be below average and thus the buyers and middlemen quote lowest prices for the produce. Even the GOI Scheme, ‘Pradhan Mantri Annadaata Aay SanraksHan Abhiyan (PM-AASHA), that has been introduced around 2 years ago, aimed towards ensuring remunerative prices to farmers for their product, is also not helping much.

There are about 22,000 Grameen Agriculture Markets of which the Central Government has promised to improvise upon, but which is not materialized till date.

Lack of Funds resulting in everlasting problems

Both the central and state Governments have not budgeted for the guaranteed purchase of farm produce under the Market Price Stabilization, as required for the farmers. The harvested produce in June reaches the market in September, which is the Kharif season. During June itself, the Government declares the market price of such crops. However, the market price is applicable only from the New Marketing Year, which is October. Thus, the farmers are at loss for their initial produce of the year, on an annual basis!!

The Government of Telangana had already proposed to the Central Government on implementing the support price starting from September itself, to which there had been no response from the authorities. The Commission for Agricultural Costs and Prices (CACP) in its recent survey report, had mentioned that during the last year too, quite a number of states have in fact not received the right amount of help in the form of the promised support price.

It further recommended to the Central Government, that agricultural produce like Cotton, Oilseeds, Corn and other millets should also be considered eligible for payment/reimbursement under the Price Deficiency Payment Scheme (PDPS). The State Government of Madhya Pradesh had already implemented this scheme under the nomenclature – ‘Bhavantar Bhugtaan Yojana, (BBY), but the scheme had to be dropped unceremoniously.

Under PDP Scheme, the farmer is paid the deficiency amount between the actual modal / market price at which the produce is sold and the price declared by the Government, if any. However, the middlemen of the Madhya Pradesh agri-markets have misused the BBY scheme, which probably led to the cancellation of the scheme. Keeping in view, these turn of events, the CACP has recommended the implementation of the BBY scheme post required changes, starting this year.

The Commission further recommended that the differential amount after taking into consideration, the previous 3-4 years’ market price and the current year’s support price, may be paid to the farmer directly. Irrespective of all these recommendations, the current marketing year’s sale proceeds have been taking place.

The State Governments have been requesting the central Government to purchase the farm produce, since they are the ones who have been deciding on the sale price of the produce. To this, the central Government has retaliated that they would be able to purchase about 25% each of the total crop pertaining to certain grains like the oilseeds, millets, pulses etc.

The central Government used to purchase almost 40% to 50% of the total crop, however, starting this year, it had declared to purchase just about 25%. The states, during the recent National Agriculture Conference in Delhi, have stated that unless the central Government guarantees purchase of at least 40% of the crop, it would be difficult for the farmers to sustain farming requirements. Other option being that the centre funds each state to purchase the minimum guarantee crop.

Further, if the Government purchases just about 25% of the crop, it is up to the farmer to take pains and sell the rest of the crop in open market, which is totally dependent on the demand of the middlemen. This is pushing the farmer into deep-trouble, time and again. Unless a strong political resolve is taken by the states to help the farmer, a policy can never be put in place to increase the purchase quantity from the farmer.

For instance, as per the survey conducted by the marketing federation of the state, the state Government of Telangana has to incur an additional amount of 2,902 crore rupees that is unbudgeted in order to purchase an additional 15% over and above the 25% already guaranteed to be purchased by the central Government, with regards to the crops like Soybeans, pulses, corn etc.

The state government is in a big dilemma as to the accumulation of such unbudgeted funds, for the additional purchase of the crops that were not provided for, earlier in the state budget. Likewise, many of the state Governments have given up their share of help, unable to stand up to the stringent terms of the central Government in such cases, where the central Government is declaring the support price every year, with regards to crops such as jowar, corn and other millets, after considering them as edible crops. However, of late, it is known that the centre is not doing so in all the states equally.

The central government has declared that a minimum guaranteed purchase shall be made only in those states that have included maize, corn etc., in their list of essential commodities. Since both the Telugu states do not have such a policy, there is not a single purchase of such crops that is happening on account of the Central Government. Hence, the Government had to end up doing the entire purchase. Essentially, the Government is requesting the central government time and again, to make at least 25% of the guaranteed purchase that is being done in the other crops, but with no luck.

Exports only can come to rescue

Of late, imports of food grains into the country have increased while on the other hand, the farmer is not ever able to garner the right price for his inland crop. In the year 2017, India has exported around 2.3% of the total exports, as per the World Trade Organization (WTO), while it has imported around 1.9% of the goods from other countries. It is now the need of the hour that we design policies in such a way that the export policy improves upon the export quality and price, thereby helping the farmers have increased revenues.

This will need for us to improve upon the quality of the seed, storage and other facilities, for being able to get a proper and desired rate for the produce.

We import fruits like Apple from Chile. We have suitable climates to harvest apples in places like Kashmir, but due to unfavourable and low quality of rearing the crop, we are unable to export them to other countries. Likewise, dragon-lichi fruits are being imported from China, however, China and Srilanka are importing Milk from New Zealand, but not from its neighbour, India.

It has been always the case where export revenues are not being targeted and availability of quality seeds, storage facilities and others are not available to our farmers. As a result, it is the middlemen who are getting benefited by purchasing inland crops at lower prices, at the cost of Government institutes and farmers’ livelihoods. The farmers are completely dependent on bank loans to purchase their required raw material like manure and tools, in addition to deficiency price schemes, thereby ending up not just in a pool of loan, but also ending their lives.

Farmers’ / Government Losses - Middlemen Gains – A Case Study

In the year 2017, Governments have purchased Pulses from the farmers on a support price of Rs.5, 450 per quintal. These goods have been stored in the Godowns for over a period of 6 months and then released into the open market through the tendering process. The businessmen/middlemen have thus purchased it back from the Government at a lower price of Rs.3,234 per quintal.

As it is, this was a great deal of loss and inappropriate use of funds on account of Government exchequer. Likewise, since the stocked goods have been released into the market at a time when the fresh crop is harvested, the new crop sale price has also been dropped extensively, thereby causing a huge loss to the farmer community.

This same methodology has been adopted by the Governments even in the current year. Even if the farmers have to sell their produce to the middlemen directly, they will have to do so at a meagre price, owing to the over-supply in the market.

In this way, it is only the middlemen who are getting benefitted on account of the Government policies and farmer helplessness. Unless we relook and revamp the purchase and sale policies to suit the farmer needs, we cannot ensure a fertile country or rather a Haritha Bharata, which so believes in the nara - ‘Jai Jawan Jai Kisan’ !!

(Agriculture Expert, Mangamoori Srinivas)