As garlic prices drop, government intervention in Rajasthan, MP brings farmers little relief

Last year, Bunty Rawal planted garlic on six acres of his land in Khardabad village in Rajasthan’s Kota district. He reckoned it was a good decision. High quality garlic was selling for around Rs 12,000 a quintal at the time, he said. However, he managed to make only around Rs 5,000 as the quality of his crop was not good enough.

This year, Rawal got 80 quintals of garlic from his six acres. But garlic acreage has increased across India, particularly in Kota, where the area under garlic cultivation has gone up from 29,000 hectares in 2013-2014 to a little over 1 lakh hectares in 2017-2018, according to the district’s horticulture department. Production in Madhya Pradesh, the largest garlic-producing state in India, has also increased.

Unfortunately for garlic farmers like Rawal, the maximum price for good quality garlic in April hovered at around Rs 1,200 a quintal, a sharp drop from the previous year and not even half of the average production cost of Rs 2,800 a quintal.

As distress set in in the garlic growing areas of Hadoti in Rajasthan and Malwa in Madhya Pradesh, the two state governments swung into action. On April 10, the Madhya Pradesh government announced that it would add garlic to its Bhavantar Bhugtan Yojana, a scheme that promises to compensate farmers by paying the difference between production cost and market sales price.

Two weeks later, the Rajasthan government announced that the Rajasthan State Cooperative Marketing Federation, or Rajfed, would begin procuring garlic under the Centre’s Market Intervention Scheme at Rs 3,257 per quintal.

Two states, two responses

Both schemes have garnered different responses.

In Kota’s Bhamashah mandi, the average modal price of garlic from March to May was Rs 1,495. In Malwa’s Mandsaur mandi, the price hovered at a similar Rs 1,472.

But while arrivals in Kota plummeted from 1.2 lakh quintals between March and May last year to 94,729 quintals in the same period this year, in Mandsaur they went up from 3.8 lakh quintals last year to 10.6 lakh quintals this year.

OP Sharma, secretary of the Agriculture Produce Marketing Committee in Mandsaur, said the increased arrivals in Madhya Pradesh were because of the Bhavantar Bhugtan Yojana. “After garlic was brought into the Bhavantar Bhugtan Yojana, people from other parts of the state [not near Mandsaur] who sold to Kota began to come here instead,” Sharma said.

At the Mandsaur market alone, garlic arrivals touched 33,000 metric tonnes, a big jump from last year. But Sharma said this could not be compared with previous years – of Madhya Pradesh’s 258 large markets, only 51 have been sanctioned for garlic compensation under the scheme, which means that arrivals will be concentrated in these markets.

The opposite has happened in Rajasthan, where procurement is slowly underway and farmers are opting to wait instead of taking a chance on market prices. Rajfed has a target of procuring 12.9 lakh quintals of garlic from 64,756 farmers. As of June 4, it had procured only 1,77,280 quintals from 4,945 farmers, around 13% of the target. Of 22 Rajfed centres in Kota, only 12 are procuring garlic. Under a new registration system, farmers have to register their crops online and then wait for a message from Rajfed before coming to the agricultural mandis. According to a Rajfed official at the Bhamashah mandi, only 40 farmers receive a message instructing them to come to that centre each day.

Neither scheme seems to have been able to arrest the fall in market prices. Instead of bolstering prices for May – a month when the market rate for garlic is usually strong because of lower arrivals – prices continue to drop. In Madhya Pradesh, garlic prices have in fact fallen since it was brought under the Bhavantar Bhugtan Yojana, the Business Standard reported. According to the report, farmers have claimed that traders are unwilling to buy at the state’s guaranteed price of Rs 800 per quintal and are instead buying at Rs 300.

Traders also seem to be earning profits in Rajasthan. Initially, Rajfed sold its procured garlic to Azadpur mandi in Delhi, but found this unprofitable. For about three weeks now, it has been selling its stock to traders in Kota instead at Rs 900 per quintal, which is well below even the current depressed market prices, said Avinash Rathi, head of the Kota Grain and Seeds Merchant Association.

Rathi said the need of the hour was investment in cold storage. This would allow traders to hedge their bets and respond better when market prices are low.

Then there are international factors to consider. China produces around 70% of the world’s garlic, with India coming a distant second. According to the Commerce Ministry, imports from China, which had slowed considerably in 2016-2017, picked up towards the end of 2017-2018 after a large harvest brought down domestic prices there. Meanwhile, India’s exports, which in 2017-2018 were the highest in quantity since 2012 and the highest ever in value, have begun to slow down in response to China’s production.

Uncertain future

Kota farmer Bunty Rawal received his message from Rajfed on June 2 and came to the mandi on June 4. But he was told he would be able to sell only 40 quintals of his 80 quintals.

“Only two people in my village have received the message so far,” he said. “Everyone else is just waiting at home until they too hear from Rajfed.”

As the delay gets longer, farmers face the prospect of their crop withering. Rajfed will only procure garlic with pods that are more than 25 millimetres wide, with a 1% margin of error. Dhulichand Meena, a leader of the All India Kisan Sabha from Kota, pointed out that the norms this year were different from those in 2016-2017, when Rajfed had procured garlic with pods 20 millimetres wide, with a 5% margin of error.

Perhaps the wait proved too long and the Rajfed rates too low for Hukumchand Meena, who committed suicide on May 24. The 38-year-old farmer from Brajnagar in Kota had taken 58 bighas or around 21 acres of land on lease for Rs 6 lakh last May, said his brother Anirudh Meena. He also had Rs 18 lakh in loans to pay, Rs 12 lakh of which he had taken from private moneylenders. He had cultivated garlic on the leased land, hoping to clear his loans for the coming year from his earnings. On his own land, he had planted chana and wheat. The gamble did not pay off.

“This was the first year he planted so much garlic,” said Anirudh Meena. “He had put it hoping for higher prices from the crop. But by the end of last season, prices had already come down to Rs 3,000. And then after that there was not enough rain at the right time.”

By May, the lowest prices hovered around Rs 200 to Rs 300. For the Rs 12 lakh Hukumchand Meena had spent the previous year, he had made Rs 2 lakh from his chana and wheat crops, which had gone towards paying his farm workers. He had registered with Rajfed and was waiting for a message from them. Even if the message had come earlier, he may have at best received no more than Rs 50,000 at the present buying rate.

Hukumchand Meena’s gamble is a reflection of how farmers across India are making similar calculations across agricultural commodities.

“Which commodity has good prices now?” asked Rathi, the Kota trader. “Across India, prices are down for everything.”

He said the demonetisation of high-value currency notes in 2016 had cleared out black money from agricultural markets, reducing the risk capacity of traders across commodities. There was also a temporary slump in the market over lack of clarity on whether the Goods and Services Tax, which was rolled out in July last year, would apply to agricultural traders, he added.

All photographs by Mridula Chari