Nov 5, 2014

The near-freezing of crop prices in India is adding to farm distress

The writing on the wall is loud and clear. For three years in a row, wheat farmers have received a paltry increase of Rs 50 per quintal (100 kg) per year in the form of minimum support price (MSP), which translates to 50 paise per kg every year. This corresponds to an insignificant 3.6 per cent increase in the price being paid to wheat farmers this year.

For the paddy crop too, the price farmers got this year was Rs 50 per quintal more than what they received a year back.

Former Chief Minister Capt Amarinder Singh’s analysis is right on the spot. Accordingly, the average cumulative increase in the paddy and wheat MSP during the Congress-led UPA regime, between 2004 and2014, was Rs 70 per year. Before that when NDA ruled, from 1998 to 2004, it was only Rs 11. While some may say there is no difference between BJP and Congress when it comes to farmers, what is perhaps not being seen as clearly is that the era of price policy for farmers is over. No amount of shouting and sloganeering is going to be of any help now.

Not only have the successive governments for all practical purposes managed to put a cap on the MSP, internationally too there is no support for higher prices to farmers. The World Trade Organisation (WTO) is demanding the withdrawal of the procurement prices in India, and even though India is standing firm on its resolve to protect the interests of domestic farmers but back home the Ministry of Food has already directed the State governments not to provide any bonus over and above the MSP to farmers. The underlying message therefore is absolutely clear. It is only a matter of time before the government abandons the price policy in agriculture. 

These developments are happening at a time when most mainline economists are blaming the hike in MSP as the primary reason for the rising food prices.

So when Punjab chief minister Prakash Singh Badal seeks a revision in wheat MSP asking for another Rs 150 per quintal, he too knows that his plea is going to fall on deaf ears. In fact, he knows it much better than anyone of us. He is under tremendous pressure to do away with massive procurement of wheat and rice that Punjab undertakes every year. Freezing MSP, and amending the APMC Act that allows setting up of private terminal markets, are the immediate steps being suggested to kill official procurement.

While all efforts are on finding ways and means to cut down on the prices that farmers’ get for their produce, compare it with the 7 per cent additional installment of Dearness Allowance (DA) to Central government employees in September over the existing rate of 100 per cent of the basic pay/pension to compensate for price rise, you realize the step-motherly treatment being meted to the majority farming population in the unorganized sector. Employees are getting 107 per cent DA allowance today.

For the government employees, the previous UPA regime had even announced setting up of the 7th Pay Commission. No one blames the rising pay scales to be even partly responsible for rising inflation. It’s only farmers who are blamed.

In addition, as per a Centre government notification, whenever the DA crosses 50 per cent, there will be an automatic increase by 25 per cent in allowance such as Children Education Allowance, Travelling Allowance, Conveyance Allowance, Cash Handling Allowance, Risk Allowance, Bad Climate Allowance, Hill Area Allowance, Remote Locality Allowance and Tribal Area Allowance, among others. Agreed, not all employees get all these allowances but they do get some of these. In other words, the Central and State government employees are completely insured against any and all kinds of price rise.

Interestingly, while the Central Government Employees Federation is demanding a minimum monthly wage of Rs 15,000 for contract workers/other unorganized sector employees; and a minimum monthly salary of Rs 26,000 to the lowest aid employees of the Central Government, there is no talk at all of providing an enhanced minimum monthly package to the farmers. As per answers provided in Parliament, the average monthly income of a farming family is at a pittance -- Rs 2,115 for a household comprising 5 people on an average.

No wonder, several studies show that more than 58 per cent of the 600 million farmers sleep empty stomach. Ironically, the people who produce food for the country themselves go hungry.

It’s therefore time to shift to a more inclusive income policy for farmers. With Jan Dhan Yojna taking the reach of the banks to the poor and unreached, it should be possible to provide direct income support to farmers. Setting up a State Farmers Income Commission, and merging all agricultural subsidies into the monthly income package that a farmer receives, is the only plausible way forward. Farmer organizations as well as political leaders must see the light of the day. I don’t think even a High Court directive to extend procurement to all crops will make any difference to farmers livelihoods. Time for the Court’s too to see beyond the price policy. #

Further reading

Farm distress looms as global crop prices crash after 10-years bull run. Indian Express. Nov 5, 2014

Farmers suffer, others prosper. Orissa post. Nov 5, 2014

समर्थन मूल्य में मामूली वृद्धि Dainik Jagran, Nov 8, 2014 


Anonymous said...

It is scandalous to give pensions even to well-to-do retirees who can be well looked after by their children who are gainfully employed. While poor farmers, temple priests etc. languish in grinding poverty, is it any fair on the part of the retirees(esp. Central Govt ones) to keep enjoying these disproportionate bounties from the Govt. ? These are the kind of people who farcically keep talking, writing, holding seminars about social justice!!! Why can't they save for the rainy day during their service period so that the unnecessary need to pay pensions later be obviated and the money thus spared be spent for the amelioration of the said victims.? Gone are the days when India as the spiritual leader of the world saw it's people of old age(>50 years) give up their professions and wealth and "retire" to some secluded place like forest for leading a spiritual life and also help their progeny with the wisdom of their lifetime. But today there is no such enlightened sacrifice on these people's part either for spiritual advancement or helping the underprivileged or the needy. Only one thing prevails - Just keep on enjoying life with the "free lunch" even if sufficiently wealthy, without any regard for the society! And we keep on talking of Ram Rajya , Gandhi's Bharat etc.!!!! The latter would be weeping in his grave to see the abhorrent path the Govt. is leading our people along!

It only takes a "revolution in the conscience" of the Govt. and it's affluent retirees(the less privileged ones like widows or those who have lost their children may be given accordingly) to phase out this scandal of pensions to save our nation's economy and the poor, apart from the retrieval of Black Money.

Lokaah Samasta Sukhino Bhavanthu (Let the whole world be happy!!)

Sanjeev Sandal said...

The freezing of support price of wheat or rice leads to over-exploitation of natural resources especially ground water since theses crops are grown on large areas in the states like Punjab, Haryana, some part of Uttar Pradesh where farmers are able to met out atleast six irrigations, each of 6 cm irrigation depth (600000 liter per hectare ) i.e. 30 lakh litre water per hectre is utilized by wheat crop. If we multiply the quantity of water per hectare with total cultivated area in wheat during the seasons, the figure will be alarming may be 30000 lakh liter for 1000 ha area. The bore wells / tube wells operate almost daily at different places to irrigate wheat and situation is still alarming when rice is grown in sandy textured soil with low water retention capacity. There is hence a need to calculate support price based on the cost of production including water use. I think it will increase to many folds. The grain bowl of India need special attention w.r.t. support price vs ground water utilization.