May 16, 2016

When stock markets crash, Finance Minister is on his toes; And when onion/tomato prices crash ....


An angry farmers dumps onions onto a street in Gujarat. 

This is a story which rarely gets to the front page headlines. This is a story which does not bring visibly angry TV anchors shout at the ruling party spokespersons for the government’s failure to bring down the soaring prices. This is a story of dried tears, when farmers in distress are left with
only a Hobson choice – to throw away their produce in anger on the roads.

First the story of tomato. Prices of tomato had crashed across the country – from Chhattisgarh and Madhya Pradesh to Maharashtra, to Andhra Pradesh and Karnataka. Reports Financial Express (April 2, 2016): “A bumper tomato crop has led to a fall in the prices of tomato across Nashik and Pune districts in Maharashtra leading to despair among farmers who resorted to dumping the commodity on the roads in protest.” The Hans India published from Hyderabad (Feb 16, 2016) said: “Tomato growers in the Nalgonda district are in distress as prices have plummeted to as low as less than Rs 3 per kg due to a glut in arrivals.” If you noticed, the two news reports are spread over a three month period -- February to April – when the tomato crop hits the market in central and south India.

If you think 2016 has been an unusually bad year for tomato farmers when over-production of tomato led to an unprecedented glut, hold your breath. The story is the same in the previous five years – 2015, 2014, 2013, 2012 and 2011. Let’s first look at a news report from The Hindu (Aug 13, 2015):
Price drop – angry farmers throw away tomatoes. This report was Chikkamagaluru town in Karnataka. A year earlier, in 2014, The Hindu had reported: Crash in tomato prices comes as a shock to farmers ... while farmers in the villages of Tumkur district (in Karnataka) are getting 60 to 80 paise per kg of tomato, consumers in the city are buying it for around Rs 10 per kg. Another report in The Times of India (Oct 30, 2014) stated: Tomato prices have dropped to Rs 2 per kg from Rs 40 per kg in the Nashik (in Maharashtra) wholesale market over the past few days, triggering speculation of a state-wide cascading effect.

Remember the stock markets crash in August 2015 when Finance Minister Arun Jaitley assured the market nerves by saying the government is keeping a close tab, and attributed the crash to global factors. He held a press conference during the day and set up a group to monitor the developments. But when it comes to farmers, and that too when prices have been crashing year after year, I have never seen the Finance Minister step out to help the farmers in distress.

Coming back to tomato prices, I am aware that tomato is not a crop that has the capability to bring down an elected government but that is no reason to remain indifferent to farmer’s sufferings. The hard work a farmer puts in cultivating tomatoes gets ruined by an unexpected crash in prices. Economists may call it as an outcome of supply and demand situation but the question that needs to be asked is where is the fault of farmers who invested in tomato cultivation? This year, a large number of farmers in the tomato growing belt – extending to 10,000 hectares – in Bemetera district
of Chhattisgarh had reportedly left the tomato crop unharvested as it was not even worth it to spend money on plucking and packaging. The story of tomato price debacle was followed by a crash in the prices of onions.

After three tumultuous years when onion retail prices literally shot through the roof forcing the government, following a media outcry, to take a number of steps to bring down the prices, there is no one this year to wipe the tears of the farming community. Even an overtly alert media, which starts screaming every time onion market prices go up by 25 to 30 per cent remained conspicuously quiet when it came to onion prices dropping to as low as 30 paise a kg. The plight of onion farmers wasn’t enough to shake up the media, which otherwise remains hyper-sensitive to anything related to onion prices.

As early as in February, reports of onion prices on the downslide had started appearing. In Feb, The Times of India reported: “The average wholesale onion prices fell to a two-year low of Rs 700 a quintal at the markets of Nashik due to excess production. Prices had been steadily falling for a week now, heightening worries of farmers who cannot hold on to this perishable commodity till prices stabilize.” On April 13, India Today stated that onion prices had crashed to 30 paise a kg in Neemuch in Madhya Pradesh. And a few days back, on May 13, this Time of India had a more heart touching report: “Ravindra Madhikar is yet to get over the shock of earning only Rs 175 after selling 450 kg of small onions in the Lasur wholesale market. “I used to wonder why farmers take the drastic decision of ending their lives. But after Wednesday’s deal, I am also feeling suicidal.” Madhikar is an onion producer in his early thirties from Gangapur taluka of Aurangabad district in Maharashtra.

I can understand that this year onion is not bringing tears in the eyes of urban consumers but is that what the supply demand equation is all about? If the consumers get hit the media goes on an overdrive but when onion farmers suffer the media remains quiet. While this urban media bias is worrying the resulting indifference by the Ministry of Agriculture as well as the Ministry of Consumer Affairs remains baffling. A year before, in May 2015, the government had provided a corpus of Rs 500-crore for setting up a Price Stabilization Fund to support market interventions for price control of perishable agri-horticultural commodities during 2015-2017, I didn’t see any initiative to help the farmers in distress.

Since the Price Stabilization Fund is initially aimed at undertaking price control operations for onions and potatoes, I thought the crash in onion prices was a fit case to help onion farmers to be paid the difference between the selling price and the market price. But I soon realized this is not the intended objective of the Price Stabilization Fund. It’s only objective is to procure onions directly from farmers or farmers organizations at the farm gate or mandi levels at the time when inflation is inching upwards so as to make it available cheaper to the consumers. And what about the organised retail trade like Reliance Fresh and Easy Day? Didn't they promise to remove middlemen? If this was true, Reliance Fresh should have been selling onions at Re 1 to Rs 2 in their stores. After all, with middlemen gone, and farmers selling at 50 paise per kg, the proce advantage should have been passed on to consumers. But it didn't happen. Only to show what i have been saying for long. The organised retail only replaces one set of middlemen with another.

Whether it is the organised retail or the indifferent government, when the prices crash, farmers are left alone so as to allow them to quietly wipe their tears. #

Let the farmers cry. No one is willing to wipe their tears. ABPLve.in May 15, 2016
http://www.abplive.in/blog/let-the-farmers-cry-no-one-is-willing-to-wipe-their-tears 


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