Farmers need better prices

The Government move to impose an import duty of 10 per cent on wheat and tur is a timely one. With a bumper harvest likely in wheat this year, market prices have dropped below MSP. Apart from estimates of higher arrivals in mandis , higher imports in recent months too have hit prices. In January alone, 1.13 million tonnes of wheat have come from offshore markets. However, with global prices of wheat ruling almost 30 per cent cheaper to domestic prices, a 10 per cent import duty may not stop imports.

The Government may incentivise farmers to increase acreage by hiking MSP, but such efforts are negated when procurement centres fail to rise to the occasion. If the government wants to reduce farmers’ distress, it should ensure effective procurement at MSP. The NSSO’s 70th round survey data for 2012-13 showed that only 6 per cent of all farmers sold their produce to a procurement agency. Out of the 20-plus crops for which the government fixes the MSP every year, effective procurement takes place only in paddy, wheat and cotton. Even here, procurement is concentrated in a few States, leaving most farmers to the mercy of middlemen. In 2016-17, for instance, only 31.5 per cent of the marketable surplus in wheat was procured by FCI, and 90 per cent of this was in three States — Punjab, Haryana and Madhya Pradesh. Procurement is the responsibility of State governments and local bodies. Village-level co-operatives need to be revived. This newspaper pointed out recently that wheat procurement in UP is just 4 per cent of marketable surplus, despite the State contributing 30 per cent to wheat production. It is just as well that the Chief Minister has doubled the wheat procurement target to 80 lakh tonnes. UP can take a cue from Madhya Pradesh that uses the Primary Agriculture Co-operative Societies’ network for procurement. This has reduced the distance farmers need to travel. The State has ensured that the societies have enough credit to pay farmers expeditiously. Removing curbs on trade, such as limits in the case of pulses on how much private traders can buy and stock, will lift market prices. These limits remain, despite the market overflowing with pulses.

Farmers can take cover under a futures contract before harvest. In the last year, about 16 farmer producer companies that represent 25,000-plus farmers have traded on the platform of NCDEX — hedged or delivered — on contracts of soyabean, maize and mustard. The commodities market regulator should allow exchanges to launch contracts in pulses and other crops. Trade and procurement issues in agriculture need to be addressed at the earliest.

COMMENT NOW