Farm turnaround

The long overdue increase in minimum support prices (MSP) announced for the rabi crops, the highest since 2011-12, is a welcome measure to transfer higher incomes to farmers. Better prices, after a good monsoon, should encourage farmers to bring more acreage under cultivation of winter crops such as wheat, certain pulses and oilseeds. The MSP for pulses and oilseeds have been increased between 10 and 16 per cent, while that for wheat has been raised by 6.6 per cent on the recommendation of Commission for Agricultural Costs and Prices. Assuming sowing happens as projected, a second bumper crop can be expected this agricultural year. Good monsoon rains, increased acreage and high MSP have already led to a record harvest in the kharif season. Two bumper harvests in the same agricultural year can have a transformative effect on the farm economy, which has been suffering for nearly three years due to unseasonal rains and sub-par monsoons. Farmers have also been under stress due to higher production costs and low returns on their yields as MSP has almost stagnated since 2013-14. With food inflation under control, an increase in MSP was probably warranted. Higher MSP, resulting in higher incomes, is also necessary to revive demand from rural areas for manufactured goods.

However, it is not enough to just announce higher procurement prices. The announced prices need to reach the farmers. That will happen only with robust procurement infrastructure. Wheat farmers will have no complaints on that front. However, the government’s record on procurement of pulses has been disappointing. Farmers were forced to sell a lot of their produce below MSP in the last few months due to the failure of procurement agencies to reach out. A repeat of that experience when the rabi crop is harvested could lead to loss of faith in the system and reverse the gains made this year on increasing acreage of pulses. Farmers faced with losses will prefer returning to cultivation of wheat, paddy or sugarcane in the next season. That can prove disastrous for the government’s efforts to reduce pulses shortage and keep prices under control. Increased production of wheat and paddy would also put more strain on the grain holding capacity of the procurement agencies, and once again, foodgrain stored in the open would either rot or get infested.

Many of the calculations for the current rabi season can also go wrong due the ongoing currency crisis caused by the demonetisation of the ₹500 and ₹1,000 currency notes. If changed money does not reach farmers in time, they may not be able to buy enough seeds and fertilisers needed in this current rabi season. Finding labour to work in the farms may also prove to be challenging in the current scenario when farmers do not have money in the accepted denominations to pay wages. The government needs to take cognisance of the ground realities to ensure farmers suffer minimum hardship.

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