2016 ends dashing farmers’ hopes: Markets still unfriendly despite good production
by Ashok B Sharma on 04 Jan 2017 0 Comment

India’s exports are facing the challenges of global recession and protectionist measures in the developed world. After two consecutive years of drought, this year’s good monsoon rains came as a blessing to farmers. Farm production revived, but farmers could not get the advantage as the domestic prices of produces have fallen and particularly after government’s demonetization of high value currency notes, traders are reluctant to purchase perishable commodities from farmers at remunerative prices, forcing farmers to resort to distress sales. The recent case of farmers throwing tomatoes in the streets of wholesale markets (mandis) instead of selling their produce to traders is a pertinent case.


On the exports front, the situation is not encouraging for farmers. The exports of many commodities like tea, rice and other cereals, cashew, oil meals, oil seeds, cereal preparations and miscellaneous processed items, meat, dairy and poultry products, leather and leather products, cotton yarn, fabrications, made-ups and handloom products have declined in April-October 2016 over the same period last year.


The export of fruits and vegetables has, however, marginally increased by 0.32%. Despite the prospects of a good wheat crop this season, with area coverage increasing to 256.19 lakh hectare area and a good stock in government holding, import duty has been reduced to zero as prices in the wholesale market increased by 6.88%.


According to data available for the period April-October 2016, the agricultural commodities that have fared well in exports are coffee (4.68%), tobacco (6.51%), spices (6.68%), marine products (19.22%), jute items (14.18%), carpet (2.95%), handicrafts (24.89%).


Marine products have, however, better prospects in export growth as per the study done by Marine Products Exports Development Authority (MPEDA). Though the marine exports had fallen from $5511.12 million in 2014-15 to $4687.94 million in 2015-16, the MEPDA expects marine products exports worth $5.6 billion in 2016-17 pinning hopes on the increased production of L Vannamei and Black Tiger Shrimp diversification of aquaculture species particularly Mangrove Crab and Tilapia. Efforts are on for quality control measures and increase in infrastructure facilities for production of value-added products.  


Japan, US and the European Union are major destinations for India’s marine products exports, where it has to face changing stringent sanitary and phytosanitary norms, most of which are imposed time to time and are politically motivated to deter excess imports. India’s prime marine products for exports are shrimps, fin fish, cuttlefish, squid, dried items, live items.


Owing to two successive years of drought, production of pulses which are already in short supply in the country was adversely affected. This caused sharp rise in the price of pulses in the domestic market. In the current fiscal year, the government made policy interventions to persuade farmers to grow more pulses. Farmers grew more of pulses this year which resulted in a bumper crop and prices came down in the domestic market, but farmers faced the problem of “produce and perish”. The problem is that the government agency, Food Corporation of India (FCI) does not have a dedicated mandate to procure pulses from farmers in pulses-growing areas at declared minimum support prices.


However, the Union Ministry of Food and Consumer Affairs decided to procure 20 lakh tonne of pulses over a period for buffer stocking to meet possible acute shortage and consequent rise in prices. But till date the government could create a buffer stock of 7 lakh tonne only by procuring 3 lakh tonne from farmers and importing 4 lakh tonne. This shows that farmers by resorting to distress sales are causing fall in prices of pulses; in other words farmers are indirectly subsidizing consumers while government is procuring pulses from abroad at high international prices.


This year, the prices of pulses crashed in both the wholesale and retail markets, except that of gram dal. The price of pigeon peas (tur and arhar) declined by 28.65% in retail market and by 31.20% in wholesale market over the year. The prices of black gram (urad) crashed by 21.55% in retail market and by 24.07% in the wholesale market. The prices of green gram (moong) fell by 23.37% in the retail market and by 26.33% in the wholesale market. The prices of lentils (masoor) declined by 9.86% in retail market and by 12.04% in the wholesale market.


Pulses have been imported on government account from Mozambique (arhar, urad), Tanzania, Malawi, Denmark and Australia. Government should firm up its trade diplomacy to procure pulses at reasonable prices on government account for creating buffer stock and procure more from farmers at MSPs. Myanmar is a close neighbour, yet government has yet to work out the modalities for channelizing import of pulses, especially black gram (urad) and pigeon pea (arhar) at reasonable prices on government account.


According to government estimates, pulses production in the current fiscal is likely to be 200 lakh tonne, falling short of growing domestic demand by about 40 lakh tonne. This is a warning bell. The pulses imports both on private and government account till October this year has been less by 0.70% in value terms over the previous fiscal year. The private parties have been able to explore more markets for importing pulses like Canada, Myanmar, Turkey, besides Tanzania, Mozambique, Malawi, Denmark and Australia.


While the price of milk has shown a marginal dip in the wholesale market, the prices of other perishables like potato, onions and tomato have fallen sharply in both the retail and wholesale markets.


Cooking oil is another item which is in shortage in the country. The import of cooking oil has increased marginally by 0.38% by October 2016 over the same period in the last fiscal year. The price of cooking oil has, however, improved except that of sunflower oil which has shown a marginal dip. Our acute dependence on import of pulses and cooking oil is primarily due to the freezing of the Technology Mission on Oilseeds and Pulses that aimed at achieving self-sufficiency in production and government’s relaxation of custom duty to facilitate imports. On the whole, farmers are suffering due to both market forces and government policies.    

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