"It's my crop. Why are you deciding the selling price?" ask farmers in the Gaon Connection Survey

43.6% respondents said farmers not getting fair price for their crops is a big issue that needs to be addressed. While 19.8% respondents said they are facing many problems due to changing climate, 17% said increasing input costs is giving farmers sleepless nights

Mithilesh Dhar

Mithilesh Dhar   29 Jun 2019 1:25 PM GMT

Sunil Patidar, a farmer, travelled 50 kms to reach a mandi (wholesale market) to sell his produce of onions. However, he came back dejected. Forget about earning a profit, he couldn't even recover his input costs.

This is not just his story. There are many farmers like Sunil in India, who are extremely unhappy. Their biggest grievance is they don't get a fair price for their crops. The primary reason behind this is they don't get minimum support price (MSP) for their produce.

The minimum support prices are a guarantee price for farmer's produce from the government. The government fixes a price to protect the producer -- farmers -- against excessive fall in prices during bumper production years.

"At a wholesale market in Indore, onion was selling at Rs 5-6 a kilo (Rs 500-600 per quintal). Our input cost is more that this. In such a scenario, we often wonder why are we even growing onions," said Patidar, who lives in Harsola village, in Mahu block, 40 kms from Indore in Madhya Pradesh.

Incidentally, Harsola, a nondescript village in Madhya Pradesh -- is famous for producing best-quality, low starch potatoes.

"19.8% farmers said climate change affects them"

After 6 farmers were killed on June 6, 2017, when police opened fire on protesters in Madhya Pradesh's Mandsaur, the state government decided to procure onion directly from farmers at the rate of Rs 8 per kg. However, after the change in regime, onions are not being bought at this rate.

Gaon Connection conducted a survey in 19 states and asked 18,267 respondents to comment on major issues faced by farmers in India. 43.6%, or 4,649 respondents, said farmers not getting fair price for their produce is a big issue that needs to be addressed.

While 19.8% respondents said they are also facing many problems due to changing climate, 17% said increasing input costs is giving farmers sleepless nights.

Based on these findings, we spoke to many experts who said the main reason behind farmers not getting a fair price is because they don't get the minimum support price or their produce.

According to an OECD-ICAIR report, between 2000 and 2017, farmers incurred a loss of Rs 45 lakh crore as they didn't get a fair price for their produce.

In 2015, the high-level committee for restructuring of Food Corporation of India (FDI) chaired by Shanta Kumar in a report mentioned that only 6% farmers get direct benefits of MSP. This implies that 94% don't get any benefit of MSP.

The NITI Aayog, in 2016, published a report which mentioned that 81% farmers were aware that the government provides Minimum Support Price on many crops, but only 10% farmers knew the rates before the harvesting season started. This raises a pertinent question. When farmers in India are not even aware about benefits of MSP, how would they get fair price for their produce?

The report mentioned that 62% farmers got to know about the MSP only after their crop was ready. As per the report, while 32% farmers got paid in cash, 40% farmers received payment through cheque.

"Implementation of MSP an issue"

Minimum Support Price is a price fixed by government to protect the producer - farmers - against excessive fall in price during bumper production years. The minimum support prices are a guarantee price for their produce from the government. The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. The government give MSP on 23 crops to shield farmers. But, implementation of this scheme is a problem.

Swaraj Abhiyan president Yogendra Yadav launched a nationwide MSP satyagraha to expose the ground realities of MSP implementation last year. While talking to a reporter he had mentioned that MSP is a joke and famers are not getting any benefits. There is not a single wholesale market in the county where produce is being bought based on the price set by the government, he had said. He had also added, the government keeps talking about hiking the MSP, but it's pointless unless farmers get it.

Deepak Kurade, a Nagpur-based farmer, who has an orange farm said: "Last year, we sold oranges at Rs 4-5/kilo in Nagpur wholesale market. Unseasonal rain had damaged the crop. Because we didn't get fair price for our Orange crop, we are keeping it as our second option now. We had also started growing BT cotton, but we were spending so much money to buy insecticide for it that we couldn't save anything. In a such a situation, forget about saving anything, we would feel grateful if we manage to recover our input cost."

Chandra Sen, who is an agricultural expert working with Banaras Hindu University, highlighted some other issues plaguing farmers in India. "If we are giving farmers fair price for their produce, we will have to concentrate on food processing as well because lot of fruits and perishable items get damaged because of poor storage and logistics facilities," he said.

He added: "We can make processed food items out of any produce these days. This way we will be providing employment to many youngsters. Every year, crop worth crores of rupees get damaged. The second option is that we have proper storage facilities, So, we must find ways to store food items properly. This way farmers would also get fair price."

India is the second-largest producer of fruits and vegetables

According to a Central Institute of Post Harvesting Engineering and Technologies report, India is the second-largest producer of fruits and vegetables. In spite of this, we have poor storage facilities and not many units for food processing. Fruits and vegetables worth Rs 2 lakh crore get damaged because of this every year. The most common items are potatoes, tomatoes and onions.

In India, fresh produce worth Rs 13,300 crore gets wasted every year because there aren't enough cold storages and refrigeration facilities in our country. The report also mentioned that 10 lakh tonnes onion and 22 lakh tonnes tomatoes get damaged even before the reach the market.

Agricultural expert Devinder Sharma also feels there is a need to improve ways to finalise MSP. "The MSP that farmers get is directly linked to retail price of food items. Ideally, MSP should not have any link with food items. For instance, the government should buy wheat at MSP so that it's retail price is could be finalised in the market."

He further added, "To ensure that the farmers get 50% profit on their C2 crop, the MSP on this profit should be directly deposited in their Jan Dhan bank account. For instance, in case of paddy, the government should buy it from farmers at Rs 1,750 per quintal and the rest Rs 590 per quintal should be directly deposited in their account. This way those farmers who get affected as they don't get retail price would not get affected. This is the only way to rectify the mistake which we made many decades back."

Agricultural economist Chandra Sen said: "There should be no interference when it comes to buying produce. The control mechanism is not right. This way farmers will be free to sell their produce as per their wish."

There are several cost concepts that the Commission for Agricultural Costs and Prices (CACP) considers while recommending MSPs of 23 crops. The cost A2 are the costs the farmer actually pays out of his/her pocket for buying various inputs ranging from seeds to fertilisers to pesticides to hired labour to hired machinery or even leased-in land.

Farmers also use a lot of family labour and if their cost is imputed and added to cost A2, that concept is called cost A2+FL. The comprehensive cost (cost C2), includes imputed costs of family labour, imputed rent of owned land and imputed interest on owned capital.

Geologist and Gaon Connection editor-in-chief Dr SB Misra said: "When demand from farmers goes up, supply goes down. In such a scenario, the government imports stuff to fulfil demands of the urban population. When we have bumper crop, the government is not quick enough to decide on exporting that the bumper produce. If we can fix this, we should be able to fix many loopholes."

He added: "If we fail in striking this balance, farmers will have no option but to keep selling their produce at less price. The government should look at having more storage and refrigeration facilities. It should also look at eliminating middlemen. If we fix these issues only then farmers will get fair price. No government has so much cash to give 1.5 times input costs to farmers."

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