Why Maharashtra’s farm distress is market-driven

Mumbai: After two years of back-to-back drought, rain gods blessed Maharashtra’s farms in 2016. The farmers kept their part of the bargain, turning up a higher agricultural output. However, the beginning of 2017 has seen shrill demands for farm loan waivers, at decibel levels not seen in the drought years.

Why?

For background, the Maharashtra economic survey for 2016-17 says the agriculture and allied sector recorded a growth of 12.5% over 2015-16. The survey also records that the state received 94.9% of its normal rainfall in 2016 which propelled farm sector growth, after droughts in 2014-15 and 2015-16. In 2014, the rainfall was 70% of the normal and the farm sector showed a decline of 8.5% over 2013-14. The actual rainfall in 2015—the year when Maharashtra experienced its worst drought since 1971—was 59.4% of the normal and the agriculture sector saw a further decline of 2.7%. The 12.5% growth in 2016-17, hence, comes on the back of two terrible years for the state farmers, and should have projected a happy farm scenario.

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Experts, government officials and farm activists say the agrarian distress in 2016-17 is not “drought-driven” but “market-driven” and it is the government’s failure to ensure that the farm produce gets good remunerative prices which has caused the distress and pushed farmers to ask for a debt waiver.

“It is rather strange that everybody is talking about farm loan waiver now when the farm sector has registered 12.5% growth. Opposition parties made this demand in the previous two years too but not with the same intensity. The key differentiator between the previous two years, dominated by drought, and 2016-17, is the failure of market this year, especially the government-sponsored market, to buy produce at a good remunerative price,” said a leading agriculture sector expert and a former bureaucrat, seeking anonymity.

He gave two reasons why the demand for farm loan waiver was not at its peak in the years when Maharashtra was reeling under a severe drought. One, drought-relief schemes of the central government kicked in when Maharashtra officially declared drought. “In 2014-15 and 2015-16, farmers in Maharashtra received at least ₹ 0,000 crore from the centre as compensation and insurance. In 2015-16 alone, farmers in Maharashtra were paid ₹ 5,400 crore on account of the crop insurance scheme,” the expert said.

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Two, since 2014 and 2015 were declared drought years, repayment of farm loans due in those two years got rescheduled which provided a big relief to farmers. “Farmers got help from the state and central governments. And they did not have to repay the loans; so, there was no demand for debt waiver. So, the drought-driven distress was mitigated to a great extent,” the former bureaucrat said. “But the monetary relief was enough to help farmers survive drought. It was not enough to help them clear their debt,” the expert pointed out.

He said 2016-17 produced a bumper yield season and created price-related problems for farmers. “Both the centre and state appealed farmers to plant more pulses, oilseeds, and move away from sugarcane and cotton. Farmers responded by producing a bumper crop of pulses, especially tur. But they are not getting even the guaranteed minimum support price (MSP) from the state-operated procurement centres,” the expert said.

Maharashtra is estimated to have produced 1.1 million tonnes of tur this year as compared to only 440,000 tonnes in 2015-16. The MSP for tur has been fixed at Rs5,050 per quintal but farm activists and experts say farmers are being forced to sell for Rs3,000-3,500 to traders since the government procurement agencies claim they do not have the infrastructure to store tur on this scale. An official at the state’s agriculture marketing department said the various government agencies had managed to procure only 340,000 tonnes so far for Rs1,600 crore, of which dues worth Rs300 crore are yet to be paid to farmers.

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“Farmers don’t have holding capacity and so, they are forced to sell to traders at a lower price if the state procurement agencies refuse to buy. That’s a loss-making proposition,” the expert said. He said drought in 2014 and 2015 also brought it with the necessary monetary cushioning that helped farmers survive. “But 2016 was a good monsoon year and the farm situation moved from drought mitigation to market management. The government could have provided the same cushion this year in the form of good minimum support prices and efficient procurement of produce. That has not happened and we have a market-driven distress that has given rise to this sentiment of debt waiver,” the expert said.

Concurring with this view, Vidarbha-based farm activist Vijay Jawandhiya says farmers were not getting the MSP of Rs5,050 per quintal for tur. “What is the big monetary gain for farmers in growing tur? The government asked him to grow tur and he did. Now the government has to at least make sure that the produce is bought at MSP or farm loans are waived off,” Jawandhiya said.