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Ahmedab ad THE lNDlA.N EXPRESS, WED NESDAY, 3, 201 8 F arn 1 prices could hold key to several political fortunes "',,j BY H ARTSH DAMODARAN ca PARTHA SARATHI BISWAS EXPRESS EDITORS " INTERPRET 201 7 was agriculture's anntls horribilis. "The reaSOIl wasn't monsoon failure (as in 201 4 and 2015) orunseasOl,al rain and hail (as in M arch 2015 ):· the yearwas, in facr, largely f ree of extreme weather events, resulting in a . record output of wheat. pulses, cotton, po- tato alld a host of other crops. Yet, fanners vented thei r anger in protests in Mah ara shtra, Madhya Pradesh and and in the G uja r at Assemblyelections that saw the BJP suffer heavy reverses in mral a,;eas. The rea- son fortheirdiscontentwaspr:ices. Agricul tura lpr ices cras h ed in A pril -June, just when a bumper ralJi crop had been har- after two years of drough t, and de- spite demonet isati on. The disa ppointment from not seeing incomes grow even as pro- du ct ion increased. sparked unrest barely three months afterthe B]P's l andslide victory iri the Uttar Pradesh elections. Betweeri that resu lt in March and that of Gujarat in December. t he swi ng in the ru rill mood was perceptible. . . Table 1 (right) shows average prices for 10 major crops in the agriculture produce rnandis qflcey growing states. The prices are for November, the month of peak arrivals in most khan/crops. Rates were lower t1lan not only offi ci al minimum support prices (MSf's), but the levels of November 2016, the mon th of demonetisation. Of th e 10 crops, arhar(pigeon pca) is ha rvested mainly injallUJ ry, and potato ill Februa-ry-f\.1arrh. But then' selJing below MSP even before the start of the marketing season tells the story o[the decline of agricultu ral prices. A change to that stoty is currently not in si ght The government, whi ch was slow to respond to the crisjs from depressed duC€' r realisations, tried prices f rom the second halfof2017 - a shift away from the hawkish pol icy on food intlation that marked its first three years. Stockholding limits on pul ses were lifted in May, followed by the imposition of quan- ' titative caps on imports - 200,000 tonnes for or/lOr and 300,000 tonnes for umd (black gram) and moong (greengrarn) per year - in August. In September , export restricti ons on arhar. moong and urad were lifted. 1l1is was extended to other pul.ses in November, al ong with the clampi ng of a 50% import duty on white peas. November also·wit- nessed a doubli ng of tariff on wheat to 20% and simil ar hikes for all edible oils, In December. a 30% duty was levied on chana (chickpea) and maSlJr (lentil) imports. Stockholding and tlJrnover limits on sugar traders, too, were withd rawn. These m eas ures VI/ere ineff ective for two mrlin reJsons. . first. they were rather bel ated. Take, for ins tance. pulses.whose prooucticn rose over 40% to an all-lime-high of 22.9 5 mill io n to nnes{mt} in 2016-17. Tha.t farmers were going to harvest a huge crop was kn own since.Jale-2016, wilen market prices il ad al- ready pLunged below MSPs. But by the government acted. an unprecedented 551 mt of pul ses had already been importee!. It will probably take a drought now to clear the supply overhang. Secondly, overseas s uppli ers reacted to the higher import duties in India by simply slashing prices. Si"nce November J6 - the day before l)?sic CustOlTl S dut ies on crude pal m oil and deguolmed soyabean oi l were raised ta 30%f romI5%and 175%respectively-tbe '" GroundllUt(GuJarat) 3,790-'17 .:: 4;06133 Cotton (Gujarat) 4,475.59 4.912.59 Soy.bean (MP) · 2,57833 2,839,19 8ttjm (Rajasthan) 1.173.36 1,414 .79 Maize(Kaniataka) · 1,17 3211 I, 1,399.&1 jowar(Mahdras htra) 1,621.76 1,62724 UllId(UP) 3,55126 . i 6,435,93 Moong(Rajastban) 4,270.96 · I 4,529,88 .3.946.41 I 6,76122' ·· Potato (UP) '. 433,07 91355 ""Inclusive o!Gujarot government's (SO/quinml bonus: " InclusiVe o!Gloamt gavernment's fS OO/quintal bonus; """Procurement rate under Market I ntervention Schemefor UP. Source:·agmor knet.gov.in. 4,R20" 3,050 1,700 S:40() 5.575 5,450 487"'u TABLE 2: PROFILE O rRURAL HOUSEHOLDS MlD DEPENDENCE ON AGRICULTURE ·T · I rural agrirultural hous eholds households Andhra Pr adesh Assam Bihar Chhattisgarh ' Gujarat Hary? '1a Jharkhaoo Ka rnataka ! I Keral. i Madhya Pradesh ! ·Maharashtra I Od isha Punjab Rajasthan Tamil Nadu Te!angam Ulta.- Pr.1desh inlaldl (1) 86. 76 52,49 '140,6 1 37.47 58,72 25.85 3752 77.43 5138 84.67 125.18 78.12 27.55 82,72 93.61 4931 - 24133 inlakh (2) 35.97 34,23 70,94 25. 61 3.931 15.69 2234 , 42.42 14.04 59.95 70. 97 44.94 14.08 64.84 3244 2539 130,49 (2) as%of (1 ) 415 65.2 505 683 66,9 60,7 59.5 54.8 273 70,8 56.7 57.5 S1.1 78.4 34.7 515 74;8 i % share 'I offann income I fOj . (i)' 5\,8 74.8 i [ i ' 56.0 i ! 643 . 61.4 72.8 56,0 62.6 345 765 595 54,7 693 55,9 43.2 72,9 £9;0 · , i West Bengal ! 141.35 , 63,62 , 45.0 i 30.3 *%shi:!re of income of agricultural households earnedfrom cultivation and animal husb(lJldry. Source: Naaonol Sample Sun",), Office daca!or 2012· 13 crop yearUuly-jllne J. Subrata Dhar E XPLAI NING WHAT TO EXPECT 2018 P,I\RT7:THE FARM SECTOR TOMORROW, SOCIAL ME Di A landed cost of Cl1lde palm oil in Mumbai has falle n from $ 710 to $ 657 per tonne, while ,that of degummed soyabean oil has come down fro m $ 843 to $ 80l Australian chi ck- pea is landing at $ 620 per· tonne today, as against $ 7251evels two months ago. The US Depaltment of Agiiculture is now projecting the highest-ever g!opal cl osi ng stocks of wheat and ri ce fo r 2017-18 UlIne- May), and record production of oilseeds, sugar and mil k. In t his scenario, the chal- lenge of ensuri ng remlH1erative producer prices will be greater. While there is MS P- based proCl1fef(lent of wheat and ri ce, no sllch assurance of pri ce support .exists for other crops. C rops tha t could face price· pressl!res in the coming months incl ude chana and onions. Farmers have this time sown 10.2 million hectares under chana, a 14,I %jump over last year. Whil e this crop is due fo r harves tii1g in FebruarY-March, . prices in Indore, A kola and othermandisare alrea9Y at Rs 3.750-3, 800 per quintal. well bel ow the M SP of Rs 4,400. Asimilar price crash cannbt be ruled out for on ions, when the late-khan} anQ.robi crops start arriving : after mid-JanualY and March r es pectively .. Once again, it is quite l ikely that by the time existing stockholding limits and expOIt re-: : stri ctions are-removed, fa nners would have suffered the conseq uen. ces Qf having planted more area in res ponse to last year's high prices. Sugar, too, saw good prices and timely payments by mi l ls to cane fa rmers last year. But the problem of glut and buil d-up of cane arrears could resurface as Maharashtrasees a production recovery. and as output in Uttar Pradesh crosses the expected 10 mt for the first ti me in this' season. Global oversu pply wi ll not help matterS -which is also the case with milk. SI <i m milk powder quoted at $ 1,675 per ton ne in the NewZealand dai ryg;- ant Fonterra's fortnightly online auction plat- fonn on D ecember 1 9, compared to $ 2,621 a year ago. Withgau rakshak activism at home leading to • virtua l collapse of the cat- tle trade, farmers' worries may oniy grow. The inability to dispose of ani mals that have ceased to be useful, even while feeding on stan ding crops, could well emerge as a polit- ical flas hpoi nt in the days Many believe tha t agri culture's political rel evance may have diminished, especially in St. 1teS wi th relatively large urban shares of population such as Tamil N adu (48.45%), Kerala (47,72%), Maharashtra (4523%) and Guj arat (42.58%). It is "lso argued that "ru- ral".is no longe r just agliculturaL 11,at may, indeed, be true for states where less than 50% of nlral households are "agricultural" (with at least one member employed in farming1 and barely half of their incomes come from cu ltiva tion and animal husbandlY As Table 2 .(left) shows , in I(eral a, Tami l Na du, West Bengal and Andhra Pradesh,agricultureper se generates a small s. l1 are of rural incomes. . However, this does not apply to most other states - i nc1udrng Mad hya Pradesh. Uttar P radesh , Rajas tha n, Ch hatti sgarh, or even Guj ara t.Agrarian distress can be f<.1ctor in these states. as electi on results even in "ur- banised" Guj arat showed, It could be an even bigger factor in fou r major states - MP, Rajasthan, Chhattisga rh and Kamataka - that go to Assembly polls thi s year, harish.damodaran@expressiOdia. com partha.bi s was@expressindi a.com
