Cobweb phenomenon: how an abundant crop ruins farmers

When prices of a commodity increase during a season of scarcity, more of it is cultivated leading to a problem of plenty

Updated - May 08, 2017 02:25 pm IST

Published - May 07, 2017 09:41 pm IST - CHENNAI

Problem of plenty  Crash in prices have pushed the grape farmers of Maharashtra into deep despair.

Problem of plenty Crash in prices have pushed the grape farmers of Maharashtra into deep despair.

If it is tomatoes in Karnataka, it is red chillies in Andhra Pradesh and Telangana, and tur and grapes in Maharashtra. An abundance of the produce has led to a crash in prices, dashing the hopes of farmers.

While farmers in Kolar, Karnataka, dumped tomatoes on the road after the prices collapsed to a new low of ₹2 per kg last week from ₹10 to ₹15 a month ago, violent protests broke out in parts of Telangana after a good yield of the commodity in the two Telugu-speaking States brought down the prices from a high of ₹10,000 per quintal last year to a measly ₹2,500 this year.

In Maharashtra, the demand for tur, which rode a wave of high prices last year, plummeted after its production went up from 4.44 lakh tonnes in 2015-16 to 20.35 lakh tonnes in 2016-17. So was the case of grapes after a crash in their prices plunged the vineyard owners across the State into despair.

While most farmers complain about the poor remuneration for their produce in comparison to the prices that prevailed in the previous season, agricultural economists have traced the reasons for the glut and the resultant price crash to the “cobweb phenomenon.”

After the prices of a particular agricultural commodity shoot through the roof during a season of scarcity, farmers resort to boosting the production on the premise of the pre-existing demand and prices, leading to a problem of plenty, reasoned Dr. R.S. Deshpande, former Director of the Institute of Social and Economic Change (ISEC), Bengaluru, explaining the cobweb phenomenon.

Most of the agricultural products that have now suffered a price crash due to their abundance had yielded a rich dividend in the previous season.

Chilli woes

A long duration crop, consuming up to eight months for harvesting, red chilli cultivation was expanded in both Telangana and Andhra Pradesh this year after the commodity commanded a good price last year.

However, in the absence of minimum support price for the crop, categorised as commercial, the market dynamics of demand-supply kept the price low from the beginning of arrivals in the market this season from April first week. “As the top quality red chilli yielded a price of even ₹13,000 per quintal last year, the farming community had hopes of good returns this year too”, a senior Telangana Agriculture Department official told The Hindu . But, it was not to be. The Centre has, however, announced a market intervention plan to procure 33,700 tonnes out of the 7 lakh tonnes produced in Telangana with a support price of ₹5,000 per quintal and assistance of another ₹1,250 per quintal for other expenses.

Few takers for grapes

The crash in the prices of grapes not only soured the expectations of the vineyard owners in Maharashtra, but also claimed the lives of at least two farmers.

The suicide of 36-year-old Manik Randive and 25-year-old Chetan Vasal, both from Nashik, has been attributed to the poor price their grapes fetched.

Despite a robust grape production, there were few takers as the prices had collapsed. According to Shriram Gadhave, president, Vegetable Growers’ Association of India, wine manufacturers are contending their stocks are full. The average input cost per acre of grape was ₹3 lakh. Yet farmers were selling their produce at barely ₹2 lakh, he said.

According to him, in April last year, more than 95% of the grape harvest was plucked by wholesalers and wine-makers from farmers’ gardens. Farmers even received a decent rate of ₹40-42 per kg. This year, barely 75% of the picking had been completed while the average rate was a paltry ₹8 a kg.

Dent in tur prices

Tur dal, which hit the headlines last year with its skyrocketing prices, has suffered a dent in its demand this year after large scale production. In Maharashtra, production of tur went up from 4.4 lakh tonnes last year to 20.35 lakh tonnes during 2016-17, bringing down the prices by a huge margin.

The total purchase by the government through its agencies at a Minimum Support Price (MSP) of ₹5,050 per quintal was only around 4 lakh tonnes while another five lakh tonnes had been sold at rates lesser than the MSP through the Agriculture Produce Market Committees (APMC). Several lakh tonnes remain unsold.

But, even during the season of scarcity, rarely do farmers benefit. For instance, even though a consumer paid almost ₹220 for a kg of tur dal last year, the farm gate price was just ₹45 to ₹50, said Dr. Deshpande. “Does it take ₹170 to convert whole tur to edible tur dal”, he wondered.

Echoing Dr. Deshpande’s views on the cobweb phenomenon, Mr. Srinivas, a progressive farmer from T. Narsipura near Mysuru, said he gave up tomato cultivation this year as many farmers began growing the vegetable on a large scale in the region after it realised a good price.

(With inputs f rom Laiqh A Khan in Mysuru, B Chandrashekar in Hyderabad, Shoumojit Banerjee in Pune and Alok Deshpande in Mumbai )

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