Behind the farmer unrest in Haryana there is a history of instability in crop prices

At around 10 am on Friday, 58-year-old Devi Dayal Sharma sat on a chair, surrounded by several quintals of sunflower seeds, at the Shahabad mandi, around 20 km from Kurukshetra town in Haryana. Sharma is a sunflower cultivator from a Padlu village in Kurukshetra district. “The market price [of sunflower seeds] has further dropped from Rs 2,800 per quintal to Rs 2,400 per quintal in a week,” said Sharma, his voice filled with anxiety.

That day, in many parts of Haryana, as in Rajasthan, hundreds of farmers parked their tractors across national and state highways and blocked traffic. Like farmers elsewhere in the country, they were demanding loan waivers and a better price for their crops from the government.

Through their protest, Haryana’s farmers were not just showing solidarity with their counterparts in states like Maharashtra and Madhya Pradesh who have been protesting since the beginning of June. After a disastrous market for their previous crop, potatoes – which several farmers in Haryana sold for less than Re 1 per kg in the mandis – the market prices of their current crop of sunflower seeds and maize has also dropped well below the cost of production.

Prices drop

June is the month when sunflower seeds – used in the production of edible oil – and maize arrive at northern Haryana’s markets. Both are popular crops grown in the Kurukshetra, Ambala, Yamunanagar and Panchkula districts in Haryana.

This year, farmer Sharma said that it cost him Rs 3,225 to grow a quintal of sunflower seeds and bring it to the mandi. This included the cost of renting the land (54% of total cost), seeds (11.6%), fuel for sowing (5.8%), labour for sowing (2.7%), pesticides and insecticides (3.4%), urea (2.3%), hiring machinery (5%), labour for cutting (9.6%) and transport (1.1%). The market price, by contrast, is at least Rs 800 lower than this. The same story – a little less grim perhaps – applies to maize. Somnath Singh, 45, another farmer at Sahabad mandi, said that it cost him Rs 1,260 to produce a quintal of maize and bring it to the mandi. “In the market we have to sell it for Rs 1,100,” he said.

It is no wonder then that the ongoing farmers’ protests in Haryana originated in the Kurukshetra-Ambala region.

The demands of Haryana’s farmers are similar to those made by their counterparts elsewhere in India – loan waivers and a slew of other measures, including the expansion of the minimum support price ambit, increasing the minimum support price to at least 50% over the weighted average cost of production of the crops, and higher government procurement for all crops. Most of these demands are listed as recommendations in the Swaminathan reports submitted to the Union government between 2004 and 2006.

Safety net on paper only

For times like this – when market prices drop below the cost of production – the government has a safety net for farmers in the form of a minimum support price. This price is fixed by the Union government and applies to about 20 crops (excluding potatoes). When market prices fall below the minimum support price – as seen in the case of sunflower seeds and maize this year – procurement agencies supported by the government are supposed to buy the crop from farmers at the minimum support price to prevent farmer distress. However, this is on paper. On the ground, it is a different story.

So far, the Haryana government has never procured maize under the minimum support price. It only started procuring sunflower seeds two years ago through the Haryana State Cooperative Supply and Marketing Federation Limited. On June 11, the state issued a notification saying that it would purchase sunflower seeds at the minimum support price of Rs 3,950 per quintal this year. However, there are restrictions. According to market committee officials and farmer leaders negotiating with the government, the government has agreed to 25% procurement of the total sunflower produce, which will again be restricted to 25 quintals per cultivator.

“However, there is no official information on that [the quantity],” said Gurnam Singh, the Haryana chief of the Bharatiya Kisan Union, which is leading the farmers’ protest in Haryana. “As far as maize is concerned, there is no hope.”

The minimum support price for maize is Rs 1,365 per quintal. But as Singh indicated, the government is unlikely to procure this crop under the minimum support price.

According to officers in the National Agriculture Market, an electronic trading portal that links agricultural produce mandi committees across India, over half the total production of sunflower seeds and maize in northern Haryana is traded in the Shahabad mandi. The rest goes to other agriculture markets including Pipli (Kurukshetra) and Mohra (Ambala). So far, this year, the Shahabad market has recorded the arrival of 96,279 quintals of sunflower seeds and 3,424 quintals of maize. The data maintained by the market committee also showed that the market price for sunflower seeds has been below the minimum support price for the past four years. In the case of maize, this has been so in three of the last four years.

Market supervisors and farmers remember that the market price of sunflower seeds coincided with the minimum support price only once, around seven years ago, when it was Rs 2,800 per quintal.

Reason for price collapse

Attempting to explain one possible reason for the price collapse for sunflower seeds and maize, Dalbeer Singh, a supervisor at the Shahabad mandi, said that farmers often failed to ascertain the potential market price of this crop because its price is highly dependent on two factors beyond their control. “First, it is an oil seed and its rate fluctuates with global rates,” said Singh. “The second factor is imports.”

Higher imports may lead to a drop in prices because of an increase in supply of the product.

Government data shows that India has been a steady importer of sunflower seeds for at least three years now, with a year-on-year growth in imports recorded at 14.6% (for 2013-’14), 59.2% (2014-’15) and 28.2% (2015-’16). India also reduced the import duty on sunflower seeds from 30% to 10% earlier this year, a move that would spur further imports.

In the case of maize, there was a 222.3% increase in imports between 2014-’15 and 2015-’16. The next year, 2016-’17, witnessed a dip in imports but that same year, India also approved the import of 5 lakh tonnes of maize to check the increase in domestic prices suspected to be caused by mass hoarding of the crop.

On Friday, as the farmers’ agitation brought traffic in parts of Haryana to a standstill, more farmers joined the Bharatiya Kisan Union. “We will continue the protest until all our demands are addressed by the government,” said Gurnam Singh. “Our members in other states including Rajasthan, Odisha and Telangana have also been asked to show solidarity in their respective states too.”

This report is part of a series on why farmers are protesting across India. Read the other reports here:

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

A collapse in the prices of soyabean led to violent protests by farmers in Madhya Pradesh.