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Although Indian agriculture suffers from several perennial problems, permanent surpluses have only been a recent phenomena. Instead of ameliorating the condition of the farmers, the phenomena has further hurt the farmers. Traditionally, the supply curve in most crops was near vertical: No matter the price, the quantity harvested and sold remained virtually the same. Take pulses. Through the 1980s and till the 2000s, the country’s output averaged just over 13 million tonnes (mt), falling to 11-12 mt in droughts and short of 15 mt even in the best years.
In 2010-11, pulses production, for the first time, crossed not 15 mt, but 18 mt. Even in 2014-15 and 2015-16, both drought years, it stayed within 16-17 mt. And as farmers ramped up plantings in response to the high prices of 2015 and 2016, output soared to 23.13 mt in 2016-17 and 24.51 mt in 2017-18. The new crop year from July will open with more than four mt of domestically procured pulses stocks in government warehouses — something never seen before.
It isn’t only pulses. In the past, sugar production typically took two years to recover from a drought. But 2017-18 will see output rebound to a record 32 mt-plus, from a seven-year-low of 20.26 mt last season. Thus, the old “sugar cycle”, where three bumper years were followed by two lows, is dead. Now, we have only one-in-five bad years.he same goes for vegetables. Last year, after drought in Karnataka drove up onion prices from July — they went past Rs 30 per kg in Maharashtra’s Lasalgaon market by October — farmers sowed aggressively during the rabi winter season. The result: Average rates crashed to Rs 6-7 this April-May. Farmers did something similar when tomatoes scaled Rs 60-80/kg levels in Kolar (Karnataka) and Madanapalle (Andhra Pradesh) last July. Prices again plunged, to Rs 3-5/kg towards February, and haven’t really looked up even in peak summer this time.
Government push and infrastructure development:-
In short, the farm supply curve has been flattened, both by better seed technology and improved roads, electricity, irrigation and communication infrastructure. Farmers are also more aware about prices and the latest hybrids/varieties, crop protection chemicals, machinery and agronomic practices — from laser levelling and raised-bed planting to seed treatment — than, say, 20 years ago. As a result, they take far less time to respond to high prices. The flip side of a more elastic supply curve, however, is that it makes gluts commonplace and shortages temporary. We have, indeed, entered a regime of “permanent surpluses” in most crops — a reality our policymakers are unable to grasp, stuck as they are in the era of the Essential Commodities Act.
The moment prices now go up, the immediate reaction is to impose stock-holding limits, allow duty-free imports, restrict exports and inter-state movement of produce, and even let loose income tax sleuths on alleged hoarders. These so-called supply-side management measures have acquired legitimacy with the policy of “inflation targeting”, whose success — given the 45.86 per cent weight of food items in the consumer price index — rests disproportionately on reining in farm produce prices. And adding the impact of demonetisation on the predominantly cash-based produce trade — the liquidity crunch in rural areas is far from over — the Great Depression moment in Indian agriculture has truly arrived. There is practically no agri-commodity today that isn’t a victim of “permanent surpluses”. Two years ago, garlic fetched an average Rs 60 per kg rate in Rajasthan’s Kota mandi. Enthused by it, farmers in the Hadoti region planted more area, only to see prices halve last May, thanks to demonetisation. This May, rates at Kota further halved to Rs 14/kg.
First increase productivity through:-
In July 1932, an Iowa farmer named Elmer Powers wrote about hog prices collapsing to a third of their levels five years ago — how it had reduced him to “resharpening old razor blades” and using “any kind of soap instead of shaving cream”. That was at the height of the Depression. Then, too, US farmers dumped truckloads of milk and cream on roads. It led to the Roosevelt administration passing the Agricultural Adjustment Act, whose chief goal was “restoring farm purchasing power”. In India today, Agricultural extension services need strengthening, to impart new scientific knowledge to farmers. This should be facilitated through noted NGOs and companies in agro-business. Further, each district should have 2-3 centres where farmers can meet and exchange knowledge on matters of crop insurance, banking and supply of inputs etc. These centres should assist them to integrate with eNAM for getting better price of their produce. India needs to create centres of excellence in our agricultural universities for preparing region-wise strategies to raise crop yield.
Today, the backward linkages in agriculture are proving resilient even in the face of adversity. The requirement now is to re-calibrate the forward linkages so as to save agriculture from a crisis of success.
By: Abhishek Sharma ProfileResourcesReport error
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