Maha farm crisis

Reforms that de-risk agriculture are required for a long-term solution to agrarian distress

A strike by farmers in Maharashtra continues to affect normal life, despite the State government’s announcement of an end to the strike last week. The farmers, whose demands include full waiver of farm loans, hikes in the minimum support price for agricultural produce and writing off of pending electricity bills, have been on an indefinite strike since June 1. As the strike nears the end of its first week, prices of essential goods such as milk, fruits and vegetables have risen steeply, causing distress to consumers. Some farmer groups agreed to call off their strike after Chief Minister Devendra Fadnavis promised that his government would waive farm loans of small and marginal farmers worth about Rs. 30,000 crore, increase power subsidies, hike the price for milk procurement, and also set up a State commission to look into the matter of raising the MSP for crops. He also promised that buying agricultural produce below their MSP would soon be made a criminal offence. Other farmer groups, meanwhile, have stuck to their demand for a complete farm loan waiver and continued with their protest. It is notable that the protests have come soon after the Uttar Pradesh government waived farm loans earlier this year, setting off similar demands in other States. Yet, while Maharashtra’s farmers have caught the attention of the government, the focus on quick fixes has pushed aside the real structural issues behind the crisis.

At the root of the crisis is the steep fall in the prices of agricultural goods. The price slump, significantly, has come against the backdrop of a good monsoon that led to a bumper crop. The production of tur dal, for instance, increased five-fold from last year to over 20 lakh tonnes in 2016-17. Irrespective of price fluctuations, MSPs are supposed to enable farmers to sell their produce at remunerative prices. But procurement of crops at MSP by the government has traditionally been low for most crops, except a few staples such as rice and wheat. This has forced distressed farmers to sell their produce at much lower prices, adding to their debt burden. Not surprisingly, the whole system of agricultural marketing has led farmers to feel cheated, and it was only a matter of time before they organised themselves to protest. Going forward, any long-term, wide-scale procurement of crops at MSPs looks unlikely; even a one-time full loan waiver is considered unrealistic by the Chief Minister, given the State’s finances. The possible ban on buying produce below the MSP would just worsen the crisis by making it hard for farmers to sell their produce even at the market price. The only long-term solution is to gradually align crop production with genuine price signals, while moving ahead with reforms to de-risk agriculture, especially by increasing the crop insurance cover. Expediting steps to reform the Agricultural Produce Market Committee system and introduce the model contract farming law would go a long way to free farmers from MSP-driven crop planning.

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