Karnataka’s corn growers caught in a maze of low prices, procurement delays, surplus stocks

Shankar, traditionally a paddy grower of Vadnalli village in Karnataka’s Davangere district, shifted to maize this kharif season on his five-acre land. Reason: water scarcity. But the switch didn’t bring him any respite as maize prices dropped due to a surge in output and slack demand from the poultry industry and starch-makers.

The modal prices for maize now range between ₹900 and ₹1,300 a quintal across various markets in Karnataka, the largest producer of the grain during kharif season. In Davangere, the terminal market for the coarse cereal, the modal prices were around ₹1,200 — way below the minimum support price (MSP) of ₹1,425/quintal .

“At these prices, I may get to recover the cost incurred. Nothing more,” he says. Yet, there is no other option for Shankar, who had brought around 15 quintals of maize to the Davangere marketyard to sell. In the previous year, he was forced to leave his land fallow due to a drought in the region.

“There is talk of opening procurement centres, but I don’t have the patience to wait as one doesn’t know how much long it’s going to take. I need money to repay the loan of around ₹50,000 taken from a commission agent so that I can raise a loan again in early January to plant paddy, when water is released in the Bhadra canal,” he adds.

Shankar’s family, which owes ₹5 lakh to a nationalised bank, is unable to raise further credit through the formal channel. “We have a long-standing relationship with the commission agent, who gives us money when required,” Shankar says adding that the cycle goes on.

Fed up with erratic rainfall pattern affecting the field crops, Shankar plans to convert at least 2 acres of his holding into arecanut plantations this year. But the scare of declining watertable in the region is preventing him from taking that risk. “A couple of our neighbouring farmers have sunk borewells that have been a failure. I am a bit hesitant,” he adds.

Similar is the story of Hanumantappa of Nagarkatti village, who had grown maize on about 2 acres. “I was supposed to get an yield of around 25 quintals per acre, but the eventual output was around 14 quintals. A severe attack by armyworms has shrunk yields in the region this year,” he adds.

The rising labour cost has made cultivation of maize expensive, Hanumantappa says estimating the cultivation cost at ₹17,000 an acre, depending upon the quality of seeds used. “At a price of around ₹1,230/quintal, I barely manage to recover the cost,” Hanumantappa adds.

Farmers of the Davangere region are also selling their produce at the farmgate to traders at around ₹1,100 per quintal. APMC officials saydistrict authorities have already made recommendations to the State government to start market purchases, considering the fall in prices.

It’s not just in Karnataka thatmaize prices are ruling below the MSP. Even in Gujarat, Maharashtra, Tamil Nadu, Uttar Pradesh and Telangana such is the case.

As prices have remained below the MSP since the start of the harvest season from mid-October, the demand for purchases by the government, under the price support scheme, is getting louder in Karnataka.

Sporadic protests are becoming common across the growing region, with farmers demanding opening of purchase centres. Karnataka has already approached the Centre seeking its permission for the commencement of procurement operations. However, sources said that the Centre has conveyed to the State government that procurement would be allowed provided maize is used for the public distribution system. With hardly any takers for maize in the PDS, Karnataka wants the Centre to procure and use the grain for distribution in the Central pool.

KT Gangadhar, President, Karnataka Rajya Raitha Sangha (Hasiru Sene), blames the Centre for removal of maize from the PDS, resulting in a price fall. “The Centre is solely responsible for the drop in maize prices. If they are unable to distribute maize under the PDS, they should explore measures to ship-out the grain by subsidising exports,” Gangadhar adds.

Growers are losing up to ₹500 per quintal due to the prevailing low prices. About 30 per cent of the expected arrivals for the season has already happened. “The Centre should immediately step in to start the procurement and bail out growers. If they don’t have an intent to procure, then why announce an MSP for maize at all?,” Gangadhar asks.

According to the first advance estimate, maize production in the country is seen at 18.73 million tonnes (mt) during the kharif season — marginally lower than last season’s 19.24 mt. The higher carry-forward stocks is also weighing on the prices of the cereal, trade sources said. Around Davangere alone, traders estimate that some 5 lakh tonnes of maize are still being held by stockists and traders.

Besides, the slack buying from poultry corporates such as Cargill, Godrej Agrovet, CP Feeds and Suguna is aggravating the troubles. Moreover, the impact of demonetisation on the sentiment is still visible, with only a fourth of the 60-odd traders active this year, sources said.

“The demand is not that great now. It is matching arrivals,” said Srinivas of Srinivas Traders in Davangere, who purchases the grain for companies such as Cargill. The arrivals will pick up in the second week of December “when we expect stockists to enter the markets,” Srinivas said.

“Demand is very poor at this time. Had the government initiated the procurement, things would have stabilised. Private players would have entered the market by now,” a trader in Davangere said.

Also, the easy availabilty of maize from Bihar at relatively lower prices has drawn buyers. Traders point to the rising output in consuming States such as Tamil Nadu, Gujarat and Maharashtra for the slack demand and subsequent fall in prices.

While admitting that cheaper maize from Bihar was available in the southern markets, B Soundararajan, Chairman, Suguna Holdings, underlined the need to boost the productivity of maize growers through better and improved seeds.

TN Prakash Kammaradi, Chairman, Karnataka Agricultural Prices Commission, says that farmers should be organised into collectives so that they can make value-added maize products by themselves and overcome crises as these.

This is the sixteenth in the series on Farm Distress. The first article appeared on November 16. The previous article appeared on December 5, on Maharashtra’s cotton growers.

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