Why Modi govt is handing out a raw deal to small and marginal farmers
Repeated price shocks take the sheen off horticulture crops grown by small and marginal farmers
New Delhi: In the past few years, horticulture crops emerged as a favourite for small growers across the country. 2016-17 marks the fifth straight year when production of fruits and vegetables is estimated to surpass that of foodgrains. This signals a fundamental shift in India’s farm economy towards a growing share of horticulture crops, which now contribute nearly a fifth to the agriculture GDP.
Small and marginal farmers took to horticulture expecting better returns. Vegetables can be grown in small plots of land and being short-duration crops, they ensure a quicker cash flow.
However, farmers have been battered by repeated price shocks and lack of any support system, which are available for traditional crops such as rice and wheat.
The past few months were terrible. Wholesale vegetable prices fell 11% in September (year on year) and 10% in October on the back on higher supplies. The cash crunch in rural India following demonetisation of high value currency notes made it worse. In November, wholesale prices fell by 24% followed by a steeper 33% fall in December, and 32% in January. The price collapse forced farmers in several states to dump their harvest or sell at a loss.
Neither states nor the Union government stepped in to help.
Horticulture crops are not covered under minimum support prices (MSP) available for grains and pulses.
On 7 February, the government told Parliament that crops prices are ‘determined by demand and supply’ and denied that farmers took to distress sale after note ban. It added that for horticulture crops, a market intervention scheme (MIS) is in place to support farmers when prices fall sharply.
In another response to a Parliament question, the government said that no state government approached it for help under the MIS provisions and that lower prices for potatoes and tomatoes are normal during harvest season.
India’s notoriously fragmented agriculture markets only compounded the problem. When farmers in Chhattisgarh were dumping their tomatoes by the roadside and protested by giving away vegetables for free to baffled customers, residents in the national capital of Delhi were purchasing tomatoes at over Rs20 per kg. The electronic national agriculture market, or eNAM, launched by the centre last year as a solution to price risks did not help them.
Trading under the platform is limited to non-perishables and farmers only have access to sellers in the same wholesale market, meaning they are unable to sell their produce to a buyer in a different state at a better rate.
For now, this defeats the purpose with which e-NAM was launched: to give farmers a choice of buyers across the country and better prices.
Will repeated price shocks force farmers to shift to less riskier foodgrains? Data on the just concluded winter sowing shows that farmers have brought in higher area in wheat and pulses compared to five year averages.
Whether this led to a corresponding decline in area under horticulture crops isn’t clear. India’s horticulture statistics is patchy and unreliable and the first advance estimates show a negligible dip in area under horticulture.
“It is difficult to provide price support for horticulture farmers due to the perishable nature of produce but the government has to ensure higher investments in food processing, cold storages and technology to increase shelf life,” said Ashok Gulati, agriculture chair professor at the Delhi-based Indian Council for Research on International Economic Relations.
“Farmers also need information on demand for specific crops. They are clueless now and only depend on price signals while deciding which crops to grow.”