Millennium Post

Structural issues

Structural issues

News publications are rife with news of two debt-ridden farmers in Madhya Pradesh who committed suicide in the span of 24 hours. Their deaths come amid large farmers' protests in the state, during which police had killed five farmers last week. The families of both farmers said that they are crippled by debt. These columns have explained the vicious debt cycle that farmers are subject to in India, and this editorial will not go into further detail. For those who do not closely follow developments in the agrarian sector, recent protests by farmers in the more prosperous agriculture belts of Maharashtra and Madhya Pradesh may seem odd. Official estimates indicate that India's farm output growth will remain stable at 4% in 2017-18. Backed by stable growth, the Centre has set a record production target of 273 million tonnes of grains and pulses during the year. However, experts have pointed out several structural concerns and developments in the agrarian sector over the past few years that have affected the farm sector. In the past few years, many Indian farmers have moved from growing food grains to fruits and vegetables in response to rising demand.

The results have been pretty obvious with the horticultural output going past food grains for the fifth consecutive year. Unfortunately, this shift in farmer preferences has not led to an adequate policy response under both the previous and current government at the Centre. As perishable goods, horticultural products require adequate storage/warehousing facilities, and not enough investment has found its way towards supporting these critical links in the production line. Farmers have also not found proper price support from the government for growing fruits and vegetables. Better warehousing facilities and price support could have minimised the risks emanating out of these price fluctuations.

Unlike food grains, the prices of vegetables and fruits can experience a severe slump in the event of massive production. There are also concerns with the Centre's minimum support price policy. The MSPs for various crops continues to decline—a process that began with the previous incumbent (UPA government). And then there is the impact of demonetisation. Most trade in agricultural produce is made through cash. The inability of formal systems of finance to fill the liquidity vacuum left behind by demonetisation has reportedly hit farmers hard. Of course, a global dip in the prices of agricultural commodities since 2014 has not helped matters.

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