Better prices for their crops is what farmers in Madhya Pradesh want the most (not loan waivers)

Violence continues unabated in Malwa region in western Madhya Pradesh 10 days after farmers went on strike to demand higher prices for their produce and a waiver of their bank loans. On Tuesday, the police had shot dead five farmers at a protest in Mandsaur. Another farmer died in police custody in the same district on Friday. As protesting groups burnt more buses on the Indore-Bhopal highway, Chief Minister Shivraj Singh Chouhan announced that he will fast until peace is restored.

When the strike first began, Chouhan was quick to concede to one of the 13 demands of the farmers: the government promised to procure onions at Rs 8 per kg, above the Rs 6 per kg rate it gave last year, until the end of June.

But the promise is poor solace for Rajneesh Patel, a farmer in Sukliya-Kshipra, a village on the border of Indore and Dewas districts.

Even at Rs 8 per kg, he will still lose most of the Rs 75,000 he had invested in sowing the crop in four acres of land.

Initially, he had held off selling his onion harvest because prices had crashed to Rs 2 per kg. Last week, while the strike was underway, the onions got wet in the rain. “I had to throw away 140 quintals of onions,” Patel said. He has about 45 quintals of onions left, which will fetch just Rs 36,000 at the government price.

All the crops that Patel planted in the 2016-’17 season have failed to get good prices in the market. The price of soyabean, which he planted last June with an investment of Rs 4,500 per quintal, dropped to Rs 3,200 per quintal when he harvested the crop in October. Soyabean prices have been steadily falling for two years now, due to a glut of production in countries such as Argentina and the United States. The market price in India is Rs 2,700 per quintal, which is, for the first time, below the government’s minimum support price of Rs 2,775 per quintal.

Then, in the rabi season in October, the Patels planted potatoes instead of wheat, hoping for a higher profit. The market price of potato turned out to be Rs 3 per kg and they just about recovered their cost, with no profit. The onions also proved to be a losing bet – overproduction both in India and abroad has depressed their prices.

Now, it is sowing season again and Patel does not have any money to buy soyabean seeds. He plans to take a loan.

“There are 12 people in this household and I am the only one who earns,” Patel, whose elder brother passed away some years ago, said. “We don’t even have any wheat in the house to eat because we planted only potatoes and onions. You tell me how we are supposed to manage. The only answer is suicide.”

Key demand: Better prices, not loan waiver

The story of a price collapse in one crop after another echoes across Dewas and Indore – and broadly in the Malwa region. That explains why the topmost concern of most farmers that Scroll.in spoke to was price stabilisation and not a farm loan waiver. Many, in fact, said they did not support the demand for a loan waiver.

“We know a loan waiver can work only once,” said Gaurishankar Chaudhary, who is also a member of the Rashtriya Kisan Sangh, one of the organisations supporting the strike. “We will have to take loans again if we don’t get (good) rates (for the crops).”

The other key demand of the farmers is that traders buying their produce pay them in cash. Modi government’s decision to demonetise high-value currency notes in November led to a liquidity crunch that continues even today, hobbling the efforts of farmers to hire tractors and labourers, to buy seeds and fertilisers for the all-important kharif season that begins with the monsoon.

In fact, the anger of farmers is directed much more at the central government than the state government, even though both are led by the Bharatiya Janata Party. The farmers blame the Centre not just for the ill-effects of demonetisation but also because they believe its decision to allow food imports of soyabean and tur dal led to their price collapse in India.

“The state government is trying hard to provide us with everything, but it is Modiji who is undoing his efforts,” said Roopal Gaud, a farmer from Khatediya village, referring to Prime Minister Narendra Modi.

Rising output, falling prices

Madhya Pradesh boasts of having India’s highest agricultural growth rate. From 3.6% in 2005-’10, the agricultural growth rate in the state jumped to 13.9% in 2010-’15. The production of soyabean rose from 34.125 lakh tonnes in 2015 to 57.168 lakh tonnes in 2016.

The high growth is credited to an improved irrigation network and streamlined procurement system, along with farm diversification into dairy and poultry, said Sudha Narayanan, an agricultural economist at the Indira Gandhi Institute of Development Research in Mumbai.

She pointed out the growth rate is high because of a low base, but added that in recent years the state had shown “an explicit focus on agriculture”. The state is the only one to have an Agricultural Economic Survey, not just an Economic Survey.

Farmers themselves concur that the Bharatiya Janata Party government led by Chouhan, who is currently in his third term as chief minister, has done better than any government before, noting in particular the failure of the Congress government under Digvijay Singh to provide them with any security. “Under Shivraj Chouhan, we now have water, we have electricity,” said Gaud.

This provision of facilities to improve agriculture has resulted in bumper harvests. “There has been good rain and good electricity for the past four to five years which means everyone’s crop is working out well,” said Badrinath Jaiswal, manager of the Dewas Agriculture Produce Market Committee. But with more produce entering the markets, prices have fallen, he said.

Onions were selling at Rs 80 per kg three years ago, said Naran Agrawal, a trader at the APMC. Now their market rate is Rs 3 per kg. Potatoes sold at Rs 20 per kg. Now they are selling at Rs 5 per kg.

The only crop for which prices have risen from last year to this, he added, was dollar chana or kabuli chana – a crop that most farmers did not grow – which is selling at Rs 12,000 per quintal as opposed to the government rate of Rs 7,000.

There is another reason for falling prices, according to Agrawal.

“All these losses are because of imports of soyabean and wheat,” Agrawal said. “At this moment, there is so much grain lying in the ports of India that it won’t get over before the year is out.” Private companies imported 15 lakh tonnes of wheat last year from countries such as Ukraine, Australia and Argentina at considerably lower prices than those prevailing in the domestic market.

“Given the choice, obviously companies will not buy our wheat,” Agrawal said. “It is the same with soyabean. The government could have increased the duty on soya oil, but it has not. That is how private players are selling imported oil so cheaply at our cost. No matter how hard the state tries, it is the central government that ultimately decides what happens.”

A similar trend can be seen in red tuar dal. “Government policy is against our farmers,” said Raviji Munde, a farmer at the Dewas agricultural produce market committee. “Last year, everyone sowed red tuar thinking that the previous year nobody else had and that they would get good prices. Despite knowing this, the central government allowed red tuar to be imported.”

The price shock could have been cushioned had the government entered the market to procure the crops at minimum support prices. But the safety net does not work, explained Himanshu, Associate Professor in Economics in the Centre for Economic Studies and Planning, Jawaharlal Nehru University. “If you see the trend, the procurement has largely happened only in rice and wheat,” he said. “In other commodities, government procurement either doesn’t exist or is very little to effect a major change on market prices.”

An unexpected disruption

Another factor that disrupted the agricultural trade in Madhya Pradesh was demonetisation. It had only a temporary impact on market prices – markets were shut for around nine days after the announcement on November 8. But the cash crunch for banks led to a change in the payment norm at the mandis: the traders now pay farmers by cheque or bank transfers. After reports of traders cheating farmers by misspelling cheques or post-dating them to delay payments, the state government cracked down by suspending the licences of some traders.

But farmers are now demanding that the government should require traders to pay half the amount of bought crops to farmers in cash and the rest in whatever cashless form they choose.

This, traders say, will be a problem for them.

“Say I buy one trolley of dollar chana which is 30 quintal for Rs 3 lakh,” Agrawal explained. “That means I have to give that person Rs 1.5 lakh in cash. I can’t even remove that amount of cash from the bank, let alone if three traders go and demand that much money. The banks themselves plead with us not to take cash from them.”

There is also a rule in Madhya Pradesh that prevents traders from making a payment of more than Rs two lakh in cash to any one person in an entire year, the fine for which is 100% of the total amount given to that person.

“Unless the government gives it to traders in writing that they will not prosecute them for these cash payments, how will traders manage?” Jaiswal asked.

And so for now, the uncertainty will continue.

More losses

Markets across this part of the state remain shut. With gangs attacking vehicles carrying produce on the highways, stocks of vegetables and milk are piling up in people’s homes across Malwa.

A pile of rotting gourds lies in the backyard of Jagdish Varma’s house in Sukliya-Kshipra. In the same village Gaurishankar Chaudhary’s 15 cows continue to produce 100 litres of milk each day, but the milk is rapidly turning rancid as it remains unsold. People are emptying their milk into drains and directly into the Kshipra river that flows adjacent to the village.

Varma, who grows ladies’ fingers, gourds and eggplants on three of his 15 acres of land, said he stands to lose Rs 30,000 in sales in ten days. What is worse, Varma pointed out, was that once the strike ended, all farmers would rush to the markets, resulting in a further drop in prices.

A short-term fix

The only trucks with produce that have been allowed to ply are those carrying onions – since the farmers had asked the government to buy their harvests and the government had agreed to do so.

On Friday afternoon, 450 trolleys had jammed themselves at the Dewas mandi, waiting for officials from the market committee to weigh their onions before selling them to officials from the Madhya Pradesh State Cooperative Marketing Federation.

“Don’t even ask how much onions people here must have planted,” said Mahendra Chauhan, a harried-looking man, one of the five officials of the federation assessing the thousands of quintals being brought in. “Yesterday, at the end of the day we had bought 6,000 quintals. Today, it is only 3 pm but we have already bought 6,700 quintals. Tomorrow we expect to buy even more.”

A farmer walked up to him to enquire about how to get his trolley inside and weighed.

“Your trolley is still on the road outside?” Chauhan asked wearily. “Please take it back and come early tomorrow. You will never get to the front of the queue today.”

The problem with procuring onions from farmers is that the government does not exactly have an action plan for what to do with them – or indeed for any of the other crops that farmers are demanding it buy to stabilise prices. Some of these onions are likely to enter the public distribution system. Most others will go to godowns, Chauhan said.

Does the government have enough warehouses to store them? Unlikely, he replied.

All photos by Mridula Chari.