Traditionally, the supply in most crops was like not linked to the price, the quantity harvested and sold remained virtually the same. However, in the recent times,  it has a supply response linked to the price, the ability of farmers to increase production when prices go up is happening. As a result, there are permanent surpluses.

The country’s food production has increased tremendously from just 51 million tonnes in 1950-51 to about 252 million tonnes in 2014-15. The permanent surpluses are due to the following reasons:

• Technology:
  1. Hybrid quality seeds and faster diffusion of technology have made a difference. HD-2967 wheat variety released in 2011, could cover 10 million hectares area in a single season within five years.
  2. Similarly impactful has been Co-0238, a cane variety that not only yields more crop per hectare, but also more sugar from every tonne crushed. First planted in 2013-14, it now accounts for well over half of the cane area in North India.
  3. With planting of hybrids paddy yields have gone up from 15 quintals to 25 quintals per acre even in the Adivasi areas of Jharkhand, Chhattisgarh and Odisha.
  4. The technologies be it hybrid seeds, high-density cultivation using tissue-cultured plants, or drip irrigation have been implemented.
• Infrastructure:
  1. Development of Roads under PM Gram Sadak Yojana to reach the Mandis quicker.
  2. Establishment of Mega Food Parks having storage infrastructure, food processing industries which can directly procure from the farmer.
• Government’s support:
  1. The Operation Flood programme helped boost India’s milk production from 22 mt in 1970-71 to 66.2 mt in 1995-96.
  2. More scientific dairying husbandry practices as investments in infrastructure of especially rural roads and electricity which have enabled milk to be procured from the interiors and chilled at village collection centres.

Due to surplus production, India has food security and increased exports leading to revenue generation ultimately benefitting the whole economy.

However, this has turned out to be anti-climax for the farmers due to the following reasons.

• Aggressive cultivation led to plunge in demand:
  1. Once prices have increased farmers cultivated the crop aggressively leading to plunging of prices.
  2. Two years ago, garlic fetched an average Rs 60 per kg rate in Rajasthan’s Kota mandi. Enthused by it, farmers in the Hadoti region planted more area, only to see prices halve last May.
  3. Similar was the case for other vegetables. Example: Tomato, Toor Dal etc.
• High Input costs:
  1. Land degradation has become a major challenge and cost of farming is constantly rising with usage of fertilizer, pesticides, expensive seed varieties, machinery, labour cost, rise in fuel prices, vagaries of monsoon. This further complicates the livelihood of farmers
  2. In India, farmers are poor due to low productivity (yield per hectare) of all major crops.
• Farmers income remained low:
  1. India had record food production in 2017-18, but farmers income remained low and stagnant.
  2. According to Ashok Dalwai committee, farmer’s income remained about 15-40% of consumer’s price.
  3. Studies conducted by the International Food Policy Research Institute and World Bank have confirmed this.
• Middlemen troubles:
  1. As pointed out by Ramesh Chand, in Punjab, there are as many as 22,000 commission agents and innumerable middlemen in each market.
  2. According to Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices, commission agents in Delhi charge exorbitant fees ranging from 6 per cent to 15 per cent.
• Rigid Market Structure:
  1. Prevalence of APMC markers, trader cartels due to which low price for agri produce is offered specially due to bumper crop production.
• Poor Infrastructure and Logistics:
  1. Lack of diffusion of adequate storage facilities lead to wastage. For instance farmers dump truckloads of vegetables on road.
  2. Food Parks projects concentrated near to cities and poor maintenance leads to spoilage of the crops.
  3. Cold storage units exist in less than one-tenth of the markets and grading facilities in less than one-third; electronic weigh-bridges are available only in a few markets.
• Government Policies:
  1. The government continues to use old draconian measures, including stocking restrictions and bans on exports and futures trading, to even small increase in food prices. Such steps may bring temporary relief to consumers, but end up hurting farmers.
• Pro-Consumer bias:
  1. In most years, for the majority of agri-products, the policymakers used restrictive export policies to keep domestic prices low. This showed the pro-consumer bias in the policy complex.
• Information Asymmetry:
  1. A bumper crop can pull down prices in wholesale markets. Price spikes after a poor crop are inevitably dealt with through cheap imports in a bid to protect consumers. The opposite is done less frequently. This is due to lack of information.
  2. The bountiful rains of 2016 resulted in record farm output. Prices crashed. Farmers are reported to have not been able to even recover the cost for some crops.
  3. The prospects of a good monsoon pushed up rural wages. The reality of rock bottom prices then destroyed profit margins.

Agriculture Marketing can be the solution for the permanent surpluses. It is clear that about 30 -40% of our food crops get wasted due to spoilage and poor storage conditions.  The seasonal spike in prices of perishable commodities that pushes up the food inflation cannot be addressed without market reforms.

The measures needed in the Agricultural Marketing in India are

• It is imperative to bring agriculture marketing into the Concurrent or Union list to benefit farmers. This will guarantee remunerative prices to farmers.
• The Committee on Doubling Farmers’ Income under the chairmanship of Ashok Dalwai justifies the recommendation saying marketing has no boundaries; this necessitates a pan-India operation to meet the demand across the country.
• NITI Aayog’s model Agricultural Produce and Livestock Marketing Act should be implemented by the states. Further the provisions like facilitating single-point levy of taxes, promoting direct interface between farmers and end-users, and give freedom to farmers to sell their produce to whomsoever and wherever they get better prices.
• e-NAM is a good step in this way. Budget 2018 announced developed GRAMS which would be integrated to the e-NAM Structure.
• Promoting warehouse receipts, agro-processing and exports. Warehouse receipts will help framers defer their sale immediately post harvest, when prices are at their lowest level.
• This will require a consolidation of farm produce, which can be successfully done through farmer-producer organisations.
• Agro-processing and trade will require investment in developing infrastructure.
• Existing agri-export zones need to be revisited and strengthened in this changing scenario.
• States alone cannot revamp the agricultural marketing sector, primarily due to paucity of funds and technology.
• Private investment on a massive scale needs to be invited to upgrade and build large storage and warehousing systems that are climate resilient.

Conclusion:

It is time to concede that production and marketing should march together in order to benefit farmers and consumers. Farmers need to be empowered to decide when, where, to whom and at what price to sell.