Gluts abound as farmers go crop-hopping

 Business Standard - 3/1/2012

Farmers have begun allowing crop prices, yields & margins to dictate growing patterns

Sreelatha Menon & Sanjeeb Mukherjee / New Delhi January 3, 2012, 0:15 IST

 

Desperate to make money in an increasingly unviable industry, farmers have begun allowing crop prices, yields and margins to solely dictate growing patterns.

If wild weeds were to fetch Rs 6,000 per quintal this year, farmers would instantly abandon all other crops to grow weed next year. Then, if weed prices were to fall the following year, farmers would undoubtedly go bankrupt and look for the next big thing. This has been the ‘hit and run’ story in Indian agriculture, where instead of adopting stable, multi-cropping strategies, farmers have begun putting all their eggs in one crop basket and are going for broke in the hopes of making windfall profits. Invariably, those dreams come down to earth pretty quickly

So widespread is this phenomenon today, that India has begun demonstrating massive gluts in food crops in the last four or five years—not seen in agriculture in recent memory. This year alone, the country has experienced a seven per cent surplus of potatoes, a 15.3 per cent of basmati, an eight per cent surplus in cotton as well as in soybean, ginger and even turmeric. In other words, potato farmers decided to plant an extra three million hectares of the tuber. Cotton farmers opted for an extra million hectares this year, while paddy farmers abandoned non-basmati for basmati with acreage of the latter going up by 15 per cent this year.
Seeds of trouble
One of the biggest culprits for acreage increases has been a much greater proliferation of seeds than ever before. This year, Andhra Pradesh gave licenses to seed companies for sale of 96 lakh sachets of BT cotton seeds, which is equivalent to cotton grown on 50 lakh acres. (The previous year licenses were given only for half that quantity and cotton came up on 25 lakh acres.) The seed companies made a killing as prices had also increased.
For those growing BT cotton, losses were large as this strain of cotton requires a lot of water and therefore not appropriate for the dry areas in Andhra Pradesh and Vidarbha, Maharashtra which grows it. The drought meant certain failure for the crop, says Kishore Tiwari of the Vidarbha Janandolan Samiti.
In fact, availability of hybrid seeds has also become a key determinant of what crop farmers decide to grow, says GV Ramanjaneyalu, agricultural scientist and executive director of the agricultural advocacy body Centre for Sustainable Agriculture. Hybrid seeds generally give more yield—and it is this focus on yield and return on investment that have farmers crop-hopping away. This focus on return on investment and yield in order to maximise profits has meant that farmers have stopped multi-cropping—a vital strategy that helped nourish the soil but also worked as risk mitigation in case a particular crop failed, or its prices crashed that year. For instance, edible oil seeds like safflower, sesame, and pulses that were traditionally grown in AP are no longer grown. Similarly, maize grown on barely a lakh of acres in 2002 in Andhra, now grows on 15 lakh acres thanks to a hybrid seed. The rest of the space goes to paddy, grown on 47 lakh acres, and groundnut on 12 lakh acres.
“The states do have control on the quantity and price of seeds sold by companies. If they use it to ensure a balanced distribution of crops in the state, this kind of mono cropping would not happen”, says Ramanjaneyalu, adding that this control also may soon be history as the Seed Bill now in Parliament looks to remove it from state hands.
Government: sort out pricing
Another key reason why states are responsible for farmers herding after a single crop is the pricing policy. If paddy prices are increased by the government, people would sow paddy as much as they sow cotton, says Ramanjenayulu who adds that “government policies are driving farmers en masse to a certain crop and to their own destruction”. Agrees Vijay Jhawandhia of the Vidarbha Shetkari Sanghatna: “The only way to make farmers diversify sowing is to ensure remunerative prices for 10 major crops, including pulses, oil seeds, millets and cereals,’’ he says.
Now, while the government allows the sale of seeds in such numbers, it does nothing to help farmers deal with the large output especially when prices are low. The Cotton Corporation of India procures cotton for Rs 3,300 per quintal (compared to Rs 6,600 a quintal last year) which is less than even the manufacturing cost, says Jhawandia. The Centre never allowed exports when the prices were at their peak last year, say farmer organisations like Bharat Krishak Samaj and Centre for Sustainable Agriculture. But the same government made 17 policy interventions in cotton to protect consumers and industry last year, they point out bitterly.
The story is the same across various commodities. Silk growers are facing a glut after the government decided to reduce the import duty on silk from 30 to six per cent this year. Now the Indian silk has to compete with cheaper imported silk. Basmati rice, soybean, ginger, and turmeric have seen global prices plummet this year coupled with domestic over-production. In the case of turmeric it’s been a virtual freefall: from Rs 18,000 per quintal last year to Rs 4,000 per quintal this year; ginger farmers in Kerala met with a similar fate as prices went from Rs 3,000 a quintal last year to Rs 500 this year. The ginger produced this year in Kerala is enough for the whole country, says Ramanjaneyulu.
“Why would dry un-irrigated Vidarbha go for cotton that needs so much water? This is because the crops that are suited for Vidarbha like jowar don’t get any support price. So, the farmer goes after what gets an attractive price, even if it means high input costs and high market uncertainties,’’ says Jawandhia, underscoring the basic logic underlying why farmers jump crop with such regularity.
“Farmers can’t be blamed. They get motivated to sow a particular crop when it gets a good price. The farmer is merely chasing the assurance of a good price,” adds Jawandhia who is himself coming to terms with a bad crop of soybean coupled with poor prices it was fetching.
A Haque, former chairman Committee of Agricultural Costs and Prices says that the only way such a crisis can be avoided is to provide an inter-crop price parity. As for the glut of perishables like potatoes, he says that an assured marketing mechanism can sort this out. Such a mechanism—where an organisation can engage in large-scale procurement of an excess crop to be stored and sold later—does exist with Nafed (National Agricultural Cooperative Market Federation). Says Haque: “Nafed has the mechanism but it has no system of intervention. In any case the Agriculture Ministry keeps it starved of funds.’’
The law doesn’t help
Apart from such errors, a glaring hindrance to farmers of perishables is the law itself.
Ajay Jakhar, the farmer-cum-activist director of the Bharatiya Krishak Samaj feels that fruits and vegetables must be removed from the commodities covered by the APMC (Agriculture Producers Marketing Committee) Act to end the crisis of perishables. (APMC Act in some states mandates that farm products produced in a state must be sold in designated markets and to licensed traders, thus curbing the freedom of farmers to sell to outsiders and corporates). “This would enable traders from outside the states to buy and farmers would not be forced to sell to local traders all the time,’’ says Jakhar.
“The states today earn about Rs 700 crore in taxes from these commodities that is seven per cent of the material sold in markets. If the Centre were to compensate states for excluding perishables from the APMC Act, the state of farmers would automatically improve,’’ he adds. Now, farmers would be able to sell to anyone in the country.
As for prices plummeting, Jakhar feels that the government intervenes when prices go up, but remains a mute spectator when they go down. In fact, last year when cotton prices went up, the government made policy interventions 17 times in a year, observes Jakhar. But now, it is silent.
The least that can be done is to have real time intelligence on commodities and their output and prices, he says, echoing what most other industry hands feel as well. The government has no clue as to how much tomatoes or onions or ginger is grown in the country. Unless market data collection is maintained, no solutions can be possible, say activists.
The farmers are usually unable to keep their produce for long as they have to sell to pay off their bills and they seldom have any credit. government can easily provide credit against produce and thus protect farmers from money lenders and from getting into commitments with commission agents who double up as money lenders, says Jakhar.
Global comparisons with China show how the latter went for extensive agrarian reforms for nearly 12 years before looking at industrial expansion. We are going in the reverse direction, says Ashok Gulati chairman of the Commission for Agricultural Costs and Prices (CACP).