This week, the government decided to remove import duty on cotton to help textile mills, which are finding cotton prices too high. Why don't farmers ever figure in these cuts and raises?
Between 1997 and 1999, the duty was low at 5 per cent. Prices were low globally and imports were flooding the market. About 3,000 cotton farmers killed themselves in Andhra Pradesh in 1998. In 2001, the NDA government raised import duty on sugar to 60 per cent to help sugarcane growers but raised the duty on cotton only by 5 per cent. The cotton farmers kept pleading.
While the government has removed the 15 per cent duty to help the industry, a proposal to increase the minimum support price (MSP) of cotton has been shoved into the backyard. The Commission on Agricultural Costs and Prices (CACP) had recommended Rs 3,000 per quintal MSP for cotton. The current MSP is between Rs 1,900 and Rs 2,000 per quintal, at a time global prices are around Rs 3,500 per quintal.
The National Commission for Farmers, headed by MS Swaminathan, had proposed that the MSP should be 50 per cent more than the cost of production. The current rate is 15 per cent. The proposal has not been accepted in case of a single crop.
The slightest inconvenience to the textile mills seems to move the government into "corrective" action. The import duty is gone, even though a day before the announcement, Commerce Secretary Gopal Pillai said there was no need for such a step or to curb cotton exports. What is the logic behind these actions when they are seen along with the farm loan waivers worth Rs 80,000 crore that the government announced recently? Again, why does the prime minister periodically announce relief packages for farmers after driving them to debts?
Cotton farmers will grow the crop only so long as it is remunerative. And there can be no industry if there is no cultivation.
Vidarbha is a case study in how policies of discrimination against farmers can lead to shrinking of cultivation.
NABARD was as late as last month taking reporters to Vidarbha to show how cotton farmers have switched to soya. It is an example of how the government failed to encourage cotton cultivation, driving the farmers into growing something else.
If the US were to remove all subsidies, cotton would sell at Rs 5,000 a quintal. What will the industry do then? Will it stop making textiles? Remove duties but pay us the MSP is what the farmers say.
This lack of sensitivity extends to other crops. In case of paddy, CACP Chairman Mahendra Dev told this paper that the cost of production of wheat and paddy was the same and there was no reason why their MSPs should be different. He was complaining that the government did not accept the CACP recommendation to raise the paddy MSP to Rs 1,000.
The Left, which breathed fire over the nuclear deal, failed to raise this issue even though the Left-ruled Kerala increased the MSP for paddy to Rs 1,000.
In case of cotton, what farmers fear now is that the government will accept a proposal of the textile ministry to restrict or ban exports in order to keep prices depressed to help the domestic industry. In that case, the government can prepare to invest in another debt relief package.
