With India’s highest farm growth for a decade, Shivraj Chouhan should’ve been sitting pretty. He’s struggling because our farm economics & politics are broken.
Writings on the Wall’ is a metaphor that emerged from travels across India and the neighbourhood, particularly, but not necessarily, during election campaigns. ‘Writings on the Wall’ because as you zip across the cities and the fast rurbanising countryside, your eyes and ears wide open, it’s what is written on the walls, or echoes off them, that tells you what is changing, and what isn’t. The subcontinent bares its heart on its walls.
And it isn’t the “walls” in a limited physical, literal sense. It could also be the factory skyline along Gujarat’s highways, an inscription under an old bust of Periyar in Kanchipuram, the smiles on the faces of people as they watch an election campaign unfold.
Or, as we find in poll-bound Madhya Pradesh, the mounds of food grain and soybean, bustling mandis with as many tractor trolleys as you might see in the harvest season in Punjab, highways lined with the walls of agricultural warehouses as you might find factories in Gujarat.
Madhya Pradesh is a true Green Revolution state. It has registered the highest agricultural growth of any state in India for 10 years now. Over the past five, it’s been a phenomenal 14 per cent per annum, as the state’s principal secretary, agriculture, Dr Rajesh Rajora tells me. T.N. Ninan wrote in his column ‘Weekend Ruminations’ last year that between 2010 and 2015, Madhya Pradesh’s farm output had grown by 92 per cent.
Two years back, Madhya Pradesh beat Punjab and Haryana to emerge the largest contributor of wheat procured in the country. From wheat, to soybean, to pulses, oil seeds, onion and garlic and of course that special crop, legal opium poppy, Madhya Pradesh has granaries and mandis overflowing with more produce. For a mostly agricultural and 77 per cent rural state where 7 out of 10 people depend on farming, this should bring great prosperity and voter satisfaction. The incumbent chief minister Shivraj Singh Chouhan, who has led the state to this incredible miracle over 13 years, should be sitting pretty as he seeks his fourth term.
But wait. Because that isn’t what’s written on the walls in Madhya Pradesh, 2018. Chouhan is fighting his toughest election yet. Never mind that he won the last one, in 2013, with a 9 per cent lead over the Congress.
The questions we need to explore as we travel through Madhya Pradesh, with Kharif harvest completed and some Rabi sowing underway, are these. Why is farm distress, not boom, the abiding theme in this election? Why does the state now record among the largest number of farmers’ suicides? Why are farmers you meet so furious?
Why has a decade’s agricultural boom become a punishment? Come to this agrarian state with eyes, ears—and mind—open, and it would tell you exactly what is wrong with Indian farming.
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Looking for answers, we go to the grain market in Sehore, about 40 km from Bhopal, and among the largest mandis in the state. The answers would vary depending on whom you ask – the farmer, trader, middleman or the government officer. We speak with Rameshwar Chandravanshi, sitting on his tractor-trolley, his burnished farmer’s face glowing in the setting sun.
“We need nothing else but a good price which, for wheat, should be about Rs 3,000 per quintal (100 kg) and for soybean, 4,000,” he says. I remind him each is more than 30 per cent above today’s market prices. He says: Why should I care? Let the government bear the loss, or export. “We will then ask for nothing more, nor complain,” he says and reminds me that he’s a “saksham” (well-to-do) farmer with 15 acres and not a “BPL (Below Poverty Line) type”.
The Chouhan government has tried addressing this. Minimum Support Prices (MSPs) for wheat and paddy have been increased, and it gives you a bonus on top of it. For produce not under MSP, like soybean, a bonus of Rs 500 per quintal (bhavantar, or the notional difference between market price and what is remunerative) goes into the farmer’s account.
The most important are the pulses: moong and urad. The government procurement prices today, are 60-90 per cent above what the private trader will pay. The crash in pulse prices is a blessing for the consumer and catastrophe for the farmer. Ask an agricultural economist, a reformist, market-oriented one like ICRIER’s Ashok Gulati, and you will learn that the MSP, when nearly twice the market price, still doesn’t pay for the farmer’s costs. So, the more the farmer produces, the more the government pays, the more money both lose.
How did we get here? We actually worked quite hard—and stupidly—for it. You can read the ICRIER Working Paper 339 by Gulati, Pallavi Rajkhowa and Pravesh Sharma, titled ‘Making Rapid Strides: Agriculture in Madhya Pradesh, Sources, Drivers and Policy Lessons’. It tells us just raising production is counter-productive if it isn’t harmonised with the markets.
Pulses are the best example. For years, India’s total production was about 3-4 million tonnes less than our need. The world struggled to grow enough surplus pulses and global prices shot up. As retail prices went into unprecedented high three figures, consumer and media outrage started. The government then upped domestic MSPs, built its technology mission for pulses, and production shot up.
The ICRIER data shows it exceeded domestic demand by 2 million tonnes. In this glut, imports continued because these were old commitments India could not go back on. As a result, India was left with nearly 30 million tonnes of pulses, while just about 22-23 were needed. Since all imports were on zero duty, their landed prices were half of our MSP which, in turn, wasn’t even equal to our farmer’s costs.
If pulse doesn’t open our eyes, check out what goes into it, or in the “tadka” so essential to dal – onion and garlic.
Last year, farmer anger in the western district of Mandsaur hit national headlines as police, unnerved by angry farmers’ mobs, fired and killed six farmers. In the onion bowl, there was fury at the price having fallen to a rupee a kg. In panic after the deaths, the Chouhan government announced it will buy all onion stocks at Rs 8 per kg. A 10-km-long line of tractor-trolleys built up in Mandsaur as word spread and farmers from as far away as Nashik in Maharashtra brought their onion.
Having bought it, the state didn’t know what to do with it. There was no storage, the “mountains” began to rot and stink, so it now offered to dump at Rs 2 per kg. Madhya Pradesh’s taxpayer lost Rs 785 crore in this madness. The same lose-lose movie is about to play out again this year with garlic. Prices have crashed to Rs 7 per kg, it costs the farmer anything between Rs 15-20. We are a unique country where our own garlic prices have crashed and we are importing loads from China. Because one half of our government’s brain looks at farming, the other at consumer prices, and both don’t talk to each other.
Since we are in Madhya Pradesh, we can’t miss its key crop, soybean. In Sehore and other mandis, you find mounds of it and loaded tractor-trolleys parked bumper to bumper. There was a time when India was a major exporter of soybean meal (for cattle-feed). The US, the largest grower, couldn’t compete in most countries as all its soybean was high-yielding, short-duration but genetically modified and most countries didn’t want GM. This was India’s advantage.
Now, barring a few European countries, major soybean meal importers have accepted GM. This includes China, the world’s largest importer. Today, the world’s three largest soybean producers, the US, Brazil and Argentina, grow mostly GM. There is no way the Indian farmer can compete with those prices and the Luddites of our Left and Right won’t allow the “evil shadow” of GM seeds in India. Acreage under soybean is shrinking, price low, exports near-dead. One hope now may be that the government can palm off some to Iran in barter trade for crude oil.
The lesson from poll-bound Madhya Pradesh is, therefore, simple. Politicians won’t be rewarded only because they enable farmers to increase production. Unless they also think good, modern economics and link agriculture to the markets, they will continue to deal with paradoxes like a perilous election in spite of a decade of incredible boom in an agricultural state. Throwing money is no solution. Higher MSPs do not guarantee higher consumer prices. And really, does any government want food prices to go higher? Because, there is the consumer, and the media, hyper-ventilating over dal, onion, tomato, potato prices.
A truly smart politician today will link agriculture to markets, and invest in tools to ensure this: Food processing, retail chains, storage by the private sector (by freeing it from the tyranny of the Essential Commodities Act), opening up the futures markets. This, more than anti-incumbency or ideology, is the message written on Madhya Pradesh’s walls.