Falling prices and a lack of adequate procurement centres have left tur producers grasping for a way out.
The chief minister of Maharashtra is sending disturbing political signals to dryland farmers in his state. His recent statement, which was aimed at reassuring tur (arhar) producers in the state, says that in order to help farmers who are bearing the brunt of a fall in its prices below the minimum support price (MSP), the state government would seek the Centre’s permission for ‘additional quota’ for tur procurement.
At best, this statement is absurd and at worst it is indicative of how far the state’s commitment towards dryland farmers has eroded.
This statement is absurd because the MSPs announced by the central government are supposed to be price floors. The government is supposed to ensure that the market prices don’t slide below the MSPs. So where does the question of ‘additional’ procurement quota arise? There can be no limit to procurement. The state government has to procure as long as the market prices are below MSPs.
For more than a month now, tur producers in Maharashtra and elsewhere are selling their produce at prices far below the MSP. The MSP for this crop is Rs 5,050 per quintal. But farmers are selling at prices anywhere between Rs 3,500 to Rs 4,000 per quintal. The main reason for this is lack of adequate procurement centres. Tur farmers have to travel a long distance, stand in queues for days before their turn comes up and often they are sent back, as the centres by then are short of space to store the produce. The farmers obviously cannot afford to take the produce back and are hence forced to opt for a distress sale below MSPs. The poorer farmers are worst hit as they cannot hold the stock. Thus, the whole idea of MSP goes for a toss. This demonstrates not just the weak political power of the dry land agriculturists, but the governments’ reluctance to commit to maintaining the price floors.
Are we to interpret the chief minister’s statement as an indication of Centre’s retreat from its commitment? Is it justified to do so? And at a broader level, how should we view this state intervention in the market to protect the price floor?
Dryland agriculturists get the least support from the government. Lack of irrigation keeps their consumption of electricity for pumping and the consumption of fertilisers to a minimum and in many cases it is zero. So they are anyway deprived of subsidies offered for the use of these inputs. Moreover pulses like tur are the main produce of these farmers, who also often face export restrictions. So there is a moral obligation for the government to protect the MSPs. But even if there were no trade restrictions, the government has the duty to offer the price floor. This is because the international prices of agricultural commodities have wide fluctuations and the dryland farmers cannot be expected to withstand such prices shocks. (For example, compared to last year, the prices today have fallen by over 250%.) The MSPs thus should be seen as price insurance for these poor farmers.
It is true that for some crops like wheat and rice, mainly procured in the Green Revolution belt of India, support prices have got converted into procurement prices with the government emerging as the only procurement agency. This situation certainly needs to change not just because this policy is economically inefficient, but also because it incentivises production of water guzzling crops, which come with serious ecological consequences.
The issue of MSPs for dry land crops poses no such threats and they must be protected. Ideally, the government should be able to assure the price floor (as an insurance) without actually procuring the produce by deficiency payments made to the farmers. This practice is followed in some developed countries where the farmers are paid the difference between the market prices and the support price announced by the government, when the market price go below the support prices. But for various obvious reasons such system is impossible to implement in our country, at least in near future.
Protecting MSPs for dry land agriculturist is thus a moral duty of the government. But the chief minister doesn’t seem to think so.