Harvest of gloom for farmers as forecast indicates crash in crop prices

Cash crunch following demonetisation has complicated the matter for growers: report

The coming harvest festival, Sankranti, presents a gloomy picture for farmers as Karnataka Agriculture Price Commission (KAPC) has forecast one of the worst seasons in the last several decades as prices of various crops are likely to plummet.

It is a strange phenomenon as prices are likely to crash even when there is a shortfall in production as against the trend of glut in production triggering a fall in prices, said KAPC chairman T.N. Prakash Kammardi. This situation has arisen as there is a bountiful harvest of various crops because of good rains in other States as well as countries. “Either the cheap crops from other States are entering our markets or there is no demand for our produce in other markets because of glut in their own areas,” he said.

“It is like rubbing salt into the wound of farmers who have already suffered crop losses owing to serious drought or floods as they may have to not only suffer reduction in yield, but also crash in the prices,” notes the

The Perspective and Forecasting report by the KAPC.

Demonetisation adds to woes

According to the commission’s report, what has complicated the matter is the impact of demonetisation. “This has prevented the recovery of prices of some crops besides leading to a dip in the price of others owing to poor cash flow in the markets,” Dr. Kammardi said.

The commission’s report has pointed out that the prices of tomato and onion have crashed by 84 per cent and 70 per cent respectively, when compared with the earlier level; and that of copra and arecanut have seen a dip of 47 per cent and 7 per cent respectively after demonetisation.

The commission has suggested to the State government to take up the issue with NABARD as well as the Union government to increase the daily money withdrawal limit for farm traders in agricultural produce marketing committees (APMC) in the interest of farmers.

Pointing out that the norms related to monetary withdrawal limits from banks were relaxed for tea growers of some areas, Dr. Kammardi sought similar benefit to be extended to APMCs as nearly 41 per cent of the trading of farm produce takes place in these markets.

Only 32 p.c. of affected farm land insured

Only 32 per cent of the land where agricultural crops were lost either because of drought or floods has been covered under crop insurance scheme in Karnataka in the present financial year, according to a report by Karnataka Agriculture Price Commission.

Expressing concern over the situation, the commission has stressed the need for increasing the crop insurance coverage to protect farmers against vagaries of nature. The total extent of coverage is even lower as only 14 per cent of the total number of farmers in the State have been covered under the scheme.

The report observed non-compliance of the norm that makes it mandatory for all farmers who have taken farm loans to enrol themselves under the crop insurance scheme.

Of the 46 lakh farmers who have taken loans in the present financial year, only 8.34 lakh have been covered under the insurance scheme, the report notes.