Don’t let exploitative market forces run riot

Devinder Sharma

Food & Agriculture Specialist

AT a time when wholesale price inflation has been the highest in three decades, there is distressing news on the farm front. Within a span of a week, three farmers have burnt their standing crops or the harvested produce at three different locations across the country. The crops are different, but the reason for putting it on fire is the same — failure to get a fair price that covers the actual cost farmers had incurred on its cultivation.

On December 11, an angry Chakalu Venkateswarlu, hailing from Kurnool district in Andhra Pradesh, put on fire the 25 bags of onions (each weighing 50 kg) that he had brought to the Kurnool Agricultural Market Yard, when he found the best price being offered to him was Rs 500 per quintal (Rs 5 per kg). Realising that such a low price did not even cover his cost of production, transportation and the mandi fee, the frustrated farmer preferred to sprinkle petrol on his produce and set it on fire.

Four days later, another farmer from Dhone mandal in Andhra Pradesh, put his 3 acres under banana plantation to fire when the prices in the wholesale market effectively crashed to Rs 2 to Rs 3 per kg. Mallikarjuna claims that he had spent about Rs 5 lakh in cultivating bananas, but when the prices fell so low at the time of the third harvest, he felt defeated. All that he had earned from marketing his crop was not more than Rs 1.5 lakh. Out of exasperation, therefore, he was left with little choice but to burn the plantation.

In Madhya Pradesh, a couple of days later, an irate Shankar Sirfira, a farmer from Deoli, burnt 160 kg of garlic that he had brought to the Mandsaur market yard. In the video clip that went viral on the social media, he was heard saying that he had spent Rs 2.5 lakh on cultivating garlic, but all he got in the market was Rs 1 lakh. This did not even cover the cost of cultivation. He said all he wanted from the government was to ensure a fair price to the farmers.

The three painful incidents that I have highlighted above may appear to be isolated but are a reflection of the deeper agrarian distress that prevails. There are tens of thousands of farmers cultivating the same crops who are lashed with the same ferocious blow from the markets but whose despair, dismay and hopelessness go unrecorded. When prices crash, economists blame it on supply-demand disequilibrium but fail to see the human suffering it unleashes. Not only in India but globally too, the volatility of the markets has destroyed livelihoods, and increasingly forced farmers to abandon farming, sell off their lands and migrate to the cities looking for menial jobs.

This is no less than mayhem. Take the case of America, where the farm gate prices have been on a steady decline since 150 years, thereby gradually pushing farmers out of agriculture. With a hollow disquiet prevailing in the countryside, not only have farm suicides increased but so has mental distress. In the US alone, from where we borrowed the failed market reforms in agriculture, as many as 915,725 farm workers and their families are being treated for depression at the Migrant Health Centres that have been set up nationwide. This is happening at a time when hardly 1.5 per cent of the US population now remains in farming. While there may be complex reasons behind the mental health challenges that farmers and farm workers are faced with, fluctuating commodity prices remain on the top.

But for policy planners and the media, especially business journalists, mayhem occurs only when equity indices plunge, when stock markets end at a lower level. This is how the economic design is cast. While a dominant section of the mainline economists rue the slide in stock markets, they spare no effort in welcoming the low farm prices that eventually leads to increased farm indebtedness, pushing more and more farmers to migrate to the urban centres.

No wonder, the daggers are already out against any possible move to provide farmers with a guaranteed income by way of a legal sanctity for Minimum Support Price (MSP) for 23 crops for which the prices are announced every year. Some senior economists, who themselves get a guaranteed salary packet linked to inflation every month, are the ones to talk about the virtues of free markets for farmers, which they believe would lead to price discovery. Although I have earlier talked in these columns of how the markets in case of highly commercial products like chocolate and coffee have left millions of primary growers of cocoa beans and coffee bean in Africa and Latin America to live in misery, the case of banana value chains squeezing farmers’ income is no less of an eye-opener. A study shows for every euro worth of purchase by the European consumers, banana producers in Latin America, from where the fruit is imported, receive only 5 to 9 per cent of the end price.

It is the primary producers who play a strenuous role, working the hardest, and yet their share of income in the agricultural value chains is the lowest, not even covering the cost of production. And let’s not forget. For the three commercially important crops — coffee beans, banana and cocoa beans — there is no MSP, nor is there any APMC mandis that we can point our fingers to. It is the big multinationals operating in a competitive environment that actually thrive on sucking farmers’ wealth. Imagine, if the global agricultural chains had set an example by guaranteeing a minimum economic price covering the cost of production plus a reasonable share of profits, farming too would have been a profitable enterprise.

Instead of leaving it to exploitative market forces, as the international evidence has conclusively shown, the time is ripe for India to usher in a new set of ingenious farm reforms that begins by first ensuring a living income for farmers. Guaranteeing an economically viable livelihood to 50 per cent of the country’s population is the way to bridge the great economic divide. 

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