Improve market linkage: Reducing farm distress requires more than MSP hike

The ongoing 10-day farmers’ strike involving blockage of vegetable and milk supplies to the cities and the mixed response to it from farmers as well as the central and state governments lends itself to two critical interpretations — both of which are fairly disquieting. First, it is yet another manifestation of the lingering unease in rural areas due to low incomes and heavy indebtedness that has remained unaddressed or partially addressed. Not much headway has been made in fulfiling even the promises made to farmers in the recent past. These include the Centre’s pledge to fix minimum support prices (MSPs) at 50 per cent above the paid-out costs and doubling farmers’ income. Several state governments, too, have vowed to remit farm loans, but the modalities of doing so are yet to be worked out. Such nonchalance has political costs. Second, the farmers’ bodies spearheading the stir have erred in choosing market boycott as the mode of protest. Doing so hurts the economic interests not just of consumers but also producers, apart from causing needless wastage of perishables. 

The politicisation of the agitation, too, is fairly apparent as it has been timed to coincide with the anniversary, which fell on Wednesday, of the last year’s farmers’ stir in Mandsaur, Madhya Pradesh, where six farmers were killed in police firing. It has been reported that farmers and milk producers are being forcibly prevented from reaching mandis and are being made to throw away their produce on the roads. Most farmers can ill-afford to forgo regular income, however little it may be. That may, in fact, explain why the impact of the agitation has remained confined only to some parts of a few states. The events have dented the unity of farmers, with several farm unions distancing themselves from this stir. It has also allowed political parties to exploit the situation to their advantage without providing any benefit to farmers.

Nevertheless, the truth that cannot be disregarded is that the profitability of agriculture has been severely eroded. Inflation-adjusted data on gross domestic product, released by the Central Statistics Office last week, clearly shows that the rate of price increase in the industrial and services sectors has far exceeded that in the farm sector. This means farmers’ consumption expenses on goods and services are rising faster than their earnings from farm produce, thus, gradually worsening their economic status. The system of procurement-based market support has failed, except in a few crops such as wheat and rice, and that, too, in a handful of states. Its extension to all the 23 crops for which MSPs are announced seems impractical for want of needed infrastructure for procurement, transportation and storage of the purchased stocks. 

Novel ways and means would, therefore, need to be conceived to ensure remunerative prices to farmers. One way could be to minimise the number of intermediaries in agricultural marketing through direct linkages between producers and end-users, including retailers. Besides, farmers need to be encouraged to form cooperatives or producers’ companies to undertake purchases and sales at the best-negotiated prices. Creation of employment opportunities in the rural non-farm sector can let farmers supplement their earnings. Unless well-advised income-boosting measures are taken expeditiously, the rural unrest is unlikely to abate.