Agrarian distress, in the present context, is mainly in terms of low agricultural prices and, consequently, poor farm incomes. Low productivity in agriculture and related supply side factors are equally important. An issue that is connected is the declining average size of farm holdings and the viability of this size for raising farm incomes.

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The critical issues associated with Agricultural Marketing:

• Rigid Market Structure:
  • 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:
  • Lack of diffusion of adequate storage facilities lead to wastage. For instance farmers dump truckloads of vegetables on road.
  • Food Parks projects concentrated near to cities and poor maintenance leads to spoilage of the crops.
  • 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:
  • 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:
  • 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.
• Middlemen troubles:
  • As pointed out by Ramesh Chand, in Punjab, there are as many as 22,000 commission agents and innumerable middlemen in each market.
  • 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.
• Information Asymmetry:
  • 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.
  • 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.
  • The prospects of a good monsoon pushed up rural wages. The reality of rock bottom prices then destroyed profit margins.
• Aggressive cultivation led to plunge in demand:
  • Once prices have increased farmers cultivated the crop aggressively leading to plunging of prices.
  • 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.
  • Similar was the case for other vegetables. Example: Tomato, Toor Dal etc.
• Farmers income remained low:
  • India had record food production in 2017-18, but farmers’ income remained low and stagnant.
  • According to Ashok Dalwai committee, farmer’s income remained about 15-40% of consumer’s price.
  • Studies conducted by the International Food Policy Research Institute and World Bank have confirmed this.

Government has set up many committees like Swaminathan committee and the recent Ashok Dalwai committee to give solutions to agrarian distress in India. The measures that can help agrarian distress in the country are as follows:

• Credit, finance and Insurance:
  • Raising the MSP, price deficiency payments or income support schemes can only be a partial solution to the problem of providing remunerative returns to farmers.
  • A functional institutional credit system which is accessible and accountable to all cultivators.
  • This covers not only land-owning farmers but also sharecroppers, tenants, adivasi and women farmers, and animal-rearers.
  • Credit products for agriculture need to be tailor-made based on cropping and rain cycle, specific to a particular region. The regional offices of commercial banks should contribute in this exercise. Registration of all cultivators and providing Kisan credit cards.
  • The period of crop loan should be extendable to four years, given that, on average, every second or third year the spatial distribution of rain pattern is erratic in India.
• Land holdings:
• The average size of farm holdings declined from 2.3 hectares in 1970-71 to 1.08 hectares in 2015-16.
• Policies for land consolidation along with land development activities in order to tackle the challenge of the low average size of holdings.
• Farmers can voluntarily come together and pool land to gain the benefits of size. Through consolidation, farmers can reap the economies of scale both in input procurement and output marketing.
• Input Costs:
  • It is more important to make agriculture sustainable by reducing input costs of seeds, fertilizers and other inputs.
  • Investment in infrastructure and research and development are needed.
  • There is a need for collaboration of industry-academia for coming out with cost-effective solutions to agrarian distress.
  • There is a need to make a shift from rice and wheat-centric policies to millets, pulses, fruits, vegetables, livestock and fish.
• Remunerative Prices:
  • Extending reach of minimum support price which has been dedicated to few crops and in a narrow geographical area is important.
  • Set up of Futures and Trade markets, tie up of farmer and private companies for procurement should be looked into as alternative methods against distress sale.
• Agro- Produce Marketing and Processing:
  • The creation of a competitive, stable and unified national market is needed for farmers to get better prices.
  • For better price for farmers, agriculture has to go beyond farming and develop a value chain comprising farming, wholesaling, warehousing, logistics, processing and retailing.
  • The agro-processing industry and warehousing needs to expand so that agricultural produce can be stored when prices plunge.
  • Promoting viable farmer collectives to act as a “collective voice of marginal and small farmers”.
  • Legislations on the basis of NITI Aayog’s new model law — Agricultural Produce and Livestock Marketing (Promotion and Facilitating) Act (APLM) should be enacted in all states.
  • A sustainable solution is market reforms to enable better price discovery combined with long-term trade policies favourable to exports.
• Technology:
  • Use water-use efficient technologies that can improve significantly the produce like drip irrigation and sprinkler irrigation.
  • Precision agriculture, GM Crops should be encouraged drought prone areas.
  • Space technology and Mobiles should act as “Eyes and Ears” of the farmers to assist in farming.
• Distress Management:
  • Establish farmers’ distress and disaster relief commissions at the national and State levels, based on the model of Kerala Farmers’ Debt Relief Commission.

Conclusion:

Farmers’ distress is due to low prices and low productivity. Limited procurement, measures to improve low productivity, and consolidation of land holdings to gain the benefits of size, can help in reducing agrarian distress. 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.