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Budget 2018 and Agriculture: MSP promise fails to cut ice with farmers

For farmers like Bhawane, it’s not the promised MSPs, but the prices for the chana and tur/arhar (pigeon-pea) they would be selling in the next fortnight or so that’s the real concern.

MSP in Agriculture Budget 2018 Navnath Deshmukh, a farmer from Shirdhon village in Maharashtra’s Osmanabad district, with his freshly harvested chana crop (Express Photo/Partha Sarathi Biswas)

Dhananjay Bhawane has little hope of the standing chana (chickpea) crop on eight out of his 10-acre field fetching anywhere near the government’s minimum support price (MSP) of Rs 4,400 per quintal, when it is due for harvest in about two weeks. “I will be lucky to realise even Rs 2,700-2,800. That rate, on a yield of 7-8 quintals per acre, may cover my input costs of around Rs 15,000 per acre. But it’s hardly any return for the work that I and my family (father, brother and their respective wives) have put in. Shouldn’t we also be paid something for our labour?,” asks this 37-year-old farmer from Tandulja village in Maharashtra’s Latur district.

Bhawane’s cynicism is a product of his bitter experience with soyabean. The 70 quintals of this crop that he harvested from his entire 10 acres and sold last November got him a rate of Rs 2,050 per quintal — way below the MSP of Rs 3,050. “Yes, a part of my produce suffered damage from excess rains. But should prices have fallen so much?,” he points out.

Not for nothing, this farmer isn’t impressed with the Union Finance Minister Arun Jaitley’s latest Budget announcement that the MSPs in the next kharif season — for crops to be harvested after September 2018 — would be fixed at 1.5 times the production costs. “Forget higher MSPs, are they implementing even the existing MSPs?,” notes Bhawane, who was among the many who thronged an election rally at Latur in April 2014 to hear the Bharatiya Janata Party’s then prime ministerial candidate Narendra Modi. “The same 50 per cent profit over costs was promised in that rally. What’s new in this budget?,” he adds.

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MSP in Agriculture Budget 2018 Auction of chana crop underway at the Latur APMC mandi (Express Photo/Partha Sarathi Biswas)

For farmers like Bhawane, it’s not the promised MSPs, but the prices for the chana and tur/arhar (pigeon-pea) they would be selling in the next fortnight or so that’s the real concern. Chana and tur are currently quoting at Rs 3,750-3,800 and Rs 4,450-4,500 per quintal in the Latur APMC (agriculture produce market committee) mandi, against their respective MSPs of Rs 4,400 and Rs 5,450. This, even as market arrivals are still to pick up!

At Latur’s APMC, traders don’t expect prices to firm up much in the days ahead. Tur rates are now below MSP, despite the all-India area under this legume crop falling to 43.5 lakh hectares (lh), from 53.2 lh in 2016-17, with Maharashtra farmers alone reducing planting from 15.3 lh to 12.3 lh. Nitin Kalantri, CEO of Kalantry Food Products, a leading Latur-based dal milling and pulses trading firm, attributes this to the huge unsold tur stocks lying with the government from last year’s record procurement. Also, the trade is yet to fully recover from the effects of demonetisation. “Since the withdrawal of the old Rs 500 and Rs 1,000 notes, nobody’s really stocking up. That, by itself, has brought down demand by 10-15 per cent from the earlier normal levels,” he claims.

Festive offer

But more than arhar, it is the expected bloodbath in chana that is a cause for immediate concern. Farmers this time have sown 107.24 lh under the rabi pulse, compared to 99.04 lh in 2016-17, with Madhya Pradesh (MP) and Maharashtra reporting significant increases, from 32.52 lh to 35.90 lh and from 18.68 lh to 19.77 lh, respectively. Once this crop hits the market, a price crash may well be in the offing.

“The only solution is for the Centre to start procurement under the price support scheme (PSS),” feels Kalantri. While PSS procurement — under which government agencies undertake MSP-buying from farmers at designated purchase centres — has begun in tur, no decision has been taken for chana so far. Incidentally, the Budget has earmarked just Rs 200 crore for PSS and Rs 1,500 crore towards PSF (price stabilisation fund) during 2018-19, whereas these two schemes for procurement of pulses (and oilseeds) have received Rs 950 core and Rs 3,500 crore, respectively, in the current fiscal. It obviously, then, raises questions over how the MSP promises are going to be delivered.

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Compounding the problems for Maharashtra’s pulses growers is the MP government’s Bhavantar Bhugtan Yojana (BBY). This scheme, under which the state government does no physical procurement and, instead, pays farmers the difference between the MSP and the average ruling market rate for the crop they sell in the mandis, was first tried out during the recent kharif season.

Following BBY’s implementation, soyabean prices in MP averaged Rs 2,612 per quintal in October, Rs 2,578 in November and Rs 2,797 in December. The corresponding rates for these months in Maharashtra were Rs 2,554, Rs 2,556 and Rs 2,806, with all these below the MSP of Rs 3,050/quintal. But in January — by which time the scheme was not in operation — the average market price had recovered to Rs 3,157 in MP and Rs 3,164 in Maharashtra. Currently, soyabean is selling at Rs 3,500-3,550 per quintal in Latur, well above the MSP. BBY, in other words, led to prices crashing during the peak marketing period. It allowed traders, then, to buy cheap and drive prices up once the scheme had ended.

“BBY is a good scheme, but it is operational in just one state. So, when prices fall in MP, it gets transmitted to other states, whose farmers also don’t benefit from the scheme. Besides, since it is operational even in MP for hardly 2.5 months, farmers are in a rush to sell and claim the price difference. If it is allowed to run for, say, six months, farmers will make staggered sales and prices won’t collapse like they did,” says Sunil Rathi of M/s Ishwarprasad Rathi, a pulses trader at Latur.

Rohit Nanjkar, who had sown soyabean on five out his 14-acre holding in Tandulja village, is one of the many to have sold his crop at far below MSP. “I disposed of my entire 30 quintals in two lots, one in end-October at Rs 2,200 and the second in early-December at Rs 2,400 per quintal. Today, when prices are at Rs 3,500 and the Finance Minister promises MSP at 1.5 times production cost, I feel both sad and angry,” the 43-year-old tells The Indian Express.

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The MP government, on Tuesday, announced the extension of BBY to four rabi season crops, including chana, masur (lentil), mustard and onion. “We fear that unless the government acts fast, chana will go the soyabean way,” warns Rathi.

But it’s not only pulses.

The government is unable to enforce MSP even in sugarcane, where mills are required to pay the Centre’s fair and remunerative price (FRP) within 14 days of purchase from farmers. In Maharashtra, the average FRP for the 2017-18 crushing season is Rs 255 per quintal (linked to a 9.5 per cent sugar recovery), while Uttar Pradesh (UP) has a flat state advised price or SAP of Rs 315/quintal for normal cane varieties. However, as on January 31, Maharashtra mills had paid growers only Rs 8,150.09 crore out of their FRP dues of Rs 10,685.23 crore, while the corresponding figures for UP (against SAP) amounted to Rs 11,481.12 crore and Rs 14,311.18 crore, respectively.

Whether farmers are prepared to wait until October to see MSP promises translate into reality is, indeed, a moot point.

First uploaded on: 08-02-2018 at 01:37 IST
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