Earlier this week, even as the fragrance and sights of flowers from the International Horticulture fair was still fresh in the mind, flowers gave way to more earthy matters, and the undersigned was directed to proceed to the Vidharba region to verify if farmers were getting a fair price for their pulses. Of course, the reports received from the regulated markets and the marketing co-ops suggested that the prices were well above the MSP (Minimum Support Price) for the FAQ stocks, but as complaints about pulses having been sold at less than Rs 2000 per MT had been received at the highest levels in government, yours truly stepped in to understand the situation.
A few words about the Vidharba region and Amravati in particular before the main argument is established. Vidharba region has rich black soil, and is known for its cotton and pulses. Some of the best pulses in India are grown in this belt. Like other regions of Maharashtra, it has a strong tradition of co-operatives, even though sugar and milk, the two domains in which co-ops have been very successful are not really pronounced in this region. Amravati is about 150 km from Nagpur, and is home to India’s president, and they are visibly proud of it. Dariyapur is another seventy kilometres ahead. The entire region looks visibly prosperous, the network of roads is quite good, and the co-operative societies have a strong presence in the relevant sectors – banking, insurance, fertilizers supply, and procurement of pulses and cotton. The banking network, including that of the urban co-op banks is both visible and prominent, and the fact that most of the co-op institutions operate from a common campus also gives them the ability to leverage the strengths and resources of each other.
Price support for pulses
As readers are aware, the country faces a major shortage of pulses, oilseeds and sugar – and price signals are being sent to encourage production of these commodities to ensure that local production is enhanced, and the dependence on imports is reduced. Pulses are most critical, for even the global production of pulses is less than the international demand for this commodity, and therefore when India projects a demand for this item, the prices tend to show a steep upward trend. As such, in addition to including pulses under the NFSM (National Food security Mission) an Accelerated Pulses Production Programme, (which is now better known by its acronym A3P) has been launched in sixty thousand villages of the country to ensure that farmers get the best quality seeds, soil nutrients and fertilizer, requisite irrigation, disease surveillance, pest management, and finally price support. As has been pointed out in these columns time and again, it is price support which is the most difficult part of the bargain, and as the FCI (Food Corporation of India) has its hands full on account of the procurement of basic cereals – wheat and rice- the responsibility for procurement of pulses has been given to the National Agricultural Federation of India (Nafed). From this year, CWC (the Central warehousing Corporation) and NCCF (national Consumers Co-operative Federation) have also been assigned this task – but as Nafed is the only agency which has organic links with primary marketing co-op societies through the district and state bodies, for all practical purposes, the PSS (Price Support Scheme) of the government is run through Nafed and its affiliated co-operatives. The announcement of MSP is indeed a positive step – for it sets the prices, and in most cases, the market follows the MSP with respect to FAQ stocks.
The Dilemma
This is where the dilemma starts, and does not end! FAQ is fair average quality, and even though measurements for FAQ have been established, not more than 35-45% of the production from the farmer’s field is FAQ. In some cases, the farmer produces stock which is better than FAQ, and therefore commands a premium price in the market. In both Amravati and Dariyapur, the best quality Moong Dal touched Rs 4000/MT; the poorest grades were sold at Rs 1800/MT. On the day this columnist visited the Amravati Mandi (20/10), the prices were in the range of Rs2200- Rs 3800/MT, and the ‘arrivals’ had been classified into seven grades, of which four were below the MSP, and three were above MSP. It therefore became abundantly clear that unless PSS was available for at least three to four grades, the exercise had no real meaning for the best quality produce, and the sub-prime produce were both outside the ambit of the PSS. Episodic enquiries also revealed that the marginal and smaller farmers faced a greater challenge in marketing their produce as they did not have the storage space, or transportation facility to hedge their crops against the vagaries of nature, especially unseasonal rain. Vidharba region had seen sudden bursts of rainfall over the last few weeks which had played havoc with the quality of the stock.
It must also be mentioned here that FAQ is a rather arbitrary category. The size of the grain or the moisture content in the grain and organic admixtures do not affect the nutritive value of the grain: but because there is no PSS below FAQ, the steep decline in prices can be attributed to the lack of any government guarantee to extend support for this produce. AgriMatters therefore makes a strong case for PSS in categories below MSP as well, especially if the intention is to support the weakest farmers. The other advantage will be that the pressure to procure non FAQ stocks will come down considerably, and if the three or four standards are announced well in advance, it will make the job of the procurement agencies much easier.
Last but not the least is the question of bonus. Farmers are entitled to get a bonus of Rs 500/MT provided the prices are lowers than MSP. This means that as long as the FAQ prices of Moong Dal are Rs 3200/MT, there will be no PSS, and hence no bonus. The intermediaries in the market therefore will ensure that prices do not go below MSP, for in that case the farmer will get Rs3150/MT plus Rs 500, which is higher than the rate at which most procurement is being done by the trader! AgriMatters therefore recommends a merger of the Bonus with the MSP as it would make the transactions more transparent and effective.