Farm-friendly, the US way

After two years of back-to-back drought, a bountiful monsoon in 2016 was expected to bring cheer to farmers. But while foodgrain production certainly increased, the resulting glut in the market, especially for pulses, chillies, mustard, tomatoes, potatoes, onions, and now turmeric, has left farmers high and dry. Prices crashed, and with the government failing to step in to purchase the surplus, farmers were devastated, being forced to dump the harvest on the highways in protest.

While chilli cultivators in Andhra Pradesh and Telangana took the extreme step of putting heaps of chillies in some market yards to light them up, it soon turned into a hot political battle. As YSR Congress Chief YS Jagan Mohan Reddy went on a hunger strike demanding compensation for farmers, Union Information and Broadcasting Minister M Venkaiah Naidu, who hails from the region, met Agriculture Minister Radha Mohan Singh in New Delhi, seeking government intervention.

Attracted by higher prices and favourable weather conditions, farmers put in their best to achieve record production. But their excitement was short-lived. Prices crashed across the country, leaving farmers in the lurch. Ironically, Telangana government itself had advised farmers to shift to chilli, maize, and soya, so as to reduce the acreage under cotton. But against last year’s price of Rs 12,000 per quintal for dry chillies, this year, the prices have crashed to Rs 5,000 to Rs 6,000.

In the case of pulses too, the government had raised the procurement prices to provide an added incentive to growers. But against the procurement price of Rs 5,050 per quintal for tur dal, farmers failed to get anything higher than Rs 4,200. While production touched a record high, unbridled imports exceeding 90 lakh tonnes hit the domestic growers. Not only from Mozambique, with which India has a tie-up to grow and import pulses, Food and Consumer Affairs Minister Ram Vilas Paswan has made it clear that the government intends to import more. “We are talking to all African nations for pulse imports. Other pulse-growing nations are also being contacted,” he recently told newsmen, not realising that an ad hoc food import policy can play havoc with domestic production.

But is this the way the United States, from where we borrow most of the farm policy approaches, operates? Does it leave farmers to face the vagaries of the market? How does the US cope with the situation of farm surpluses?

Are the private markets, and the retail giants like Walmart, so transparent and efficient that they don’t allow farmers to face any situation of distress arising from price crash? In the US, the government invariably steps in when farmers suffer from a slump in market prices. When private markets fail to rescue farmers from a price crash, the US Department of Agriculture (USDA) moves in immediately to manage the surplus. In 2016, when there was a crash in market prices, the USDA procured 11 million tonnes of cheese worth $20 million from farmers.

“This commodity purchase is part of a robust, comprehensive safety net that will help reduce a cheese surplus that is at a 30-year high, while moving high-protein food to the tables of those most in need,” the then Agriculture Secretary Tom Vilsack had said, adding “USDA will continue to look for ways within its authority to tackle food insecurity and provide for added stability in the marketplace.”

Earlier too, the USDA purchased 10 million pounds of strawberries, and directed the procurement to schools as well as to the needy. It purchased $6 million of fresh tomatoes in 2011 to help growers faced with oversupply.

Since 2002, the US Farm Bill provides for income support to farmers under what is called ‘price-loss coverage’ system. In 2014, the income support helped peanut growers emerge out of the crisis emanating from a price crash. Unlike the Market Intervention System in India, which is essentially aimed at consumers when food inflation soars, the US has instead put in a strong safety-net mechanism for farmers.

It is the absence of strong commitment to help farmers at times of glut that is turning out to be the primary reason for the continuing farm crisis. Not being able to manage farm surpluses has been the bane of Indian agriculture.


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