Only stringent agri market regulations can bring relief to all stakeholders

Around five years after the earlier march that took them from Nashik to Mumbai, farmers in Maharashtra have once again embarked on a long march to put pressure on the government to yield to their demands. This time their 17-point demand charter also includes a financial relief of Rs 600 per quintal to onion growers.

A few days after an irate farmer had put his onion crop on fire, and farmers across the region had complained of a crash in wholesale prices, with most of them getting less than Rs 300 to Rs 400 per quintal of onion, it was enough of a provocation to hit the streets, all over again. What was being offered in the mandis, wasnot enough to even cover the cost of production. The demand for an additional relief of Rs 600 per quintal I expected to give them a cushion to combat the low market prices.

Travelling through parts of the Nashik district last week, I met a number of farmers who wanted to give up farming if the prices remain despicably low.

“It is better to be a labourer these days,” a visibly upset onion farmer had told me. A day later, addressing a farmers’ convention at Karanjad village in Satna tehsil, I urged them to ask for a guaranteed price for food crops as well as for vegetables, fruits, pulses and oilseeds.

“Imagine if the onion price had an assured MSP, onion farmers wouldn’t have been forced to throw onions in the fields or in nalas as this would have enabled them to recover their cost of production,” I explained.

Farmers need to understand that the illusion of free markets that has been dangled before them for the past 75 years has failed to increase their income. This is essentially because agricultural supply chains are so structured that while all other players in the chain walk away with profits, it is only farmers who are left in misery. This phenomenon is just restricted to Indian farmers but prevails even in the United States and Great Britain. While in America, the share of farmers in the eventual consumer price has been declining steadily, a recent study in UK has shown that farmers received hardly one per cent of the profits that agribusiness companies make in the sale of half-a-dozen products of daily use.

If the onion price in the retail market is hovering between Rs 25 to Rs 30 per kg, I see no reason why farmers should be incurring huge losses given the low wholesale prices. At an average of Rs 3 per kg per farmer and Rs 30 per kg for consumers, what the middlemen walks away with is nothing short of a kill. And onion is not an exceptional case.

Take the case of potato. Right from West Bengal to Punjab, in the entire potato cultivation region, prices have been on a steep decline. This year, farmers are getting an average of Rs 500 per quintal.

So is the case with tomato. Telangana, Chhattisgarh and Uttarakhand farmerslament that a decline in prices is forcing them to abandon the ripened crop in the field. It is no longer economical to go for plucking and transporting the produce to markets!

The price debacle for cauliflower, cabbage, coriander, lady finger and brinjal is no different. Moreover, the slump in prices is not only particular to the 2023 crop harvest season. Every other year, there are numerous reports of farmers throwing their produce in rivulets or leaving it for the cattle.

This reminds me of a study on crop diversification in Punjab conducted by Dr. S.S.Johl, an eminent agriculture economist and formerly chairperson of the Commission for Agricultural Costs & Prices (CACP).

He categorically stated that if the production of fruits and vegetables in Punjab were to go up by a mere one per cent, it could lead to an unmanageable glut. This report was published in the early 1980s. In the past 40 years, while there has been enough talk of crop diversification in Punjab, I don’t think any effort has gone into investing in infrastructure to cater to the anticipated glut in fruits and vegetable production.

Similarly, at the national level too, there has been no tangible improvement in managing surpluses. If it were so, I see no reason why millions of farmers would have suffered (and continue to) the consequences of a frequent crash in farm prices. After producing a record surplus, and that too after incurring huge costs, the severe hit a price crash results on the farm livelihood is something that has never been valued. In reality, the price crash that we are now witnessing is nothing short of bloodbath on the farm.

Although many people believe that the three contentious farm laws that have been withdrawn after the prolonged farmers protest would have addressed the issue, the reality is that the laws if implemented, and if the global experience is any indication, would have further accentuated the farm crisis.

A recent study entitled: “Profiteering across the economy – it’s systemic” by the UK-based Unite Investigates, states that the top eight food manufacturers made a combined profit of 22.9 billion pound sterling in 2021. The top four food manufacturers increased their profit margin by 23 per cent in 2021 over the profits earned in 2019 despite soaring costs and job cuts. This is happening at a time when the farmers’ share in profits is either dipping or remains frozen.

In India, the organised retail promises to provide farmers and consumers a better price by removing several layers of middlemen. But even now when onion prices are so low, the consumer price remains almost equal to what is being sold by hawkers.

What is needed therefore is a two-pronged approach. On the one hand, we need to provide an assured and guaranteed price for the farm produce. This will ensure that the farmers do not suffer when prices dip. Secondly, the time has come to also fix a Maximum Retail Price (MRP) for agricultural trade. This will ensure that the consumers are not cheated. That is why I have been repeatedly asking for developing a mechanism whereby food prices operate within a price band. Farmers should get at least 50 per cent of the end consumer price.

Using technological innovations on the horizon, including digitalisation and artificial intelligence, the time is ripe to bring agricultural markets under a tight regulation.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)