Mere tweaks will not help

Agriculture policy flip-flops cost farmers dearly

If measures such as a steep hike in import duties on edible oils and ending export curbs on pulses are intended to prop up the sagging prices of these commodities for the benefit of farmers, the objective is unlikely to be served fully. The bulk of these crops grown in the kharif season has already been harvested and disposed of by the growers at unremunerative prices. The farmers could have gained if these decisions were taken prior to the sowing season to enable them to plant more area under these crops or at least ahead of the harvesting season to help them realise better rates. Any rise in prices at this stage will largely benefit the trade and processing industry, leaving the farmers in the lurch. 

In fact, oilseeds and pulses are not the only crops whose prices have nosedived. Most agri-commodities have been selling at below their minimum support prices (MSPs) since last year’s bumper harvest. In some cases, prices have plummeted below production costs. The price slump has persisted this year as well, although the output of most kharif crops, barring urad (black gram) and cotton, has either remained almost flat or declined. The blame for this rests on the government’s ill-advised agricultural pricing policies that are oriented largely towards managing inflation. This is borne out by the massive imports of about five million tonnes (mt) of pulses despite the last year’s output of 23 mt being quite close to the projected requirement. Oversupply has kept prices depressed.

The coalition of 180 farm unions, which held a Kisan Mukti Sansad (farmers’ parliament) in Delhi on Monday to demand lucrative prices and loan remission, maintains that farmers stand to lose around Rs 36,000 crore due to unremunerative prices. This figure is said to have been computed taking into account the MSPs and the prevailing wholesale prices. However, the actual losses may be more since many farmers had to part with their produce at below the officially recorded wholesale rates to meet their immediate cash needs. It is, therefore, futile to expect the inordinately delayed policy moves to redress farmers’ grievances.

The need really is to have stable policies concerning agricultural pricing and trade, including imports and exports. This is essential to allow production to respond effectively to market demand and prices, which does not happen at present due to policy uncertainties. The Commission for Agricultural Costs and Prices has emphasised this point in several reports and discussion papers. Some hope towards this end emanates from the government’s recent decision to evolve a formula to raise or lower duties on farm imports and exports based on wholesale price benchmarks. This concept is more or less similar to the strategy conceived and implemented by the Oilseeds Technology Mission in the mid-1980s that helped the country achieve self-sufficiency in edible oils by the end of that decade. By abandoning that game plan and resuming the practice of knee-jerk reactions to aberrations in market availability and prices, the government has frittered away the advantage of a transparent policy regime. Little wonder then that India’s import dependence for meeting cooking oil needs has once again swelled to over 70 per cent. Thus, mere tweaking of import and export duties will be of little help to ensure adequate returns on farm produce.