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Calls for farm loan waiver in Haryana as potato prices crash, farmer debt surges

LiveMint logoLiveMint 14-06-2017 Sayantan Bera

Kurukshetra/New Delhi: Next to a sprawling mango orchard, a four-hour drive from the capital, birds peck on worms emerging from rotting potatoes heaped by the wayside. The shade of giant mango trees offers relief from the heat of this hot summer day, but the stench is unbearable.

It is here at Mangoli, in Haryana's Kurukshetra district, that four dejected farmers abandoned over half-a-tonne of potatoes a week ago, unable to find buyers who would pay them a decent price. Some of the tuber has melted into a muddy slush, while the rest decay under stacks of hay.

Sukhpal Singh takes out a sales receipt: The 43 quintals of potatoes he sold at a local mandi (wholesale market) on 25 May got him Rs900, it shows. After paying labour charges and agents’ fees, he was left with Rs380—meaning the potatoes fetched him a paltry 9 paisa per kilo, against at least Rs3 required to grow one kilo. Singh left the rest of his harvest near the Mangoli orchard, never to return to the mandi. 

At the Shahabad mandi some 10km away, another farmer found a more novel use for his unsold harvest. Every morning, Jasbir Singh stations a mini-truck loaded with potatoes at the mandi. On Monday, a political party used it as a prop during its protests, demanding a loan waiver and better crop prices. (Last week, it was a local farmers' union, of which Jasbir Singh is a member, that dumped the potatoes on the road.) Towards the evening, poor women labourers at the mandi forage the heap to take home the tubers for free—a contrast to images from Maharashtra where farmers making a similar set of demands— remunerative prices and a loan forgiveness—spilt milk and threw vegetables on the road earlier this month.

Jasbir Singh, who owns 40 acres in Haryana—the cradle of India’s green revolution, known for its agricultural prosperity—says he lost over Rs10 lakh this potato season. Over the past few years, his debt has grown to Rs58 lakh.

On Monday, a crowd of farmers gathered around Gurnam Singh, a state-level leader of the Bhartiya Kisan Union, a farmers' association. A week ago, they had dumped their produce on the street, to press their demand that the state government purchase all of their sunflower seeds at state-set prices. Today, even as they discuss their next course of action, they point fingers at an array of problems.

A 7% jump in potato output in 2016-17 over the preceding year caused a crash in prices. When the withdrawal of high-value currency notes in November dried up cash, traders negotiated even lower prices. Policies such as allowing cheap edible oil imports hurt domestic prices of sunflower seeds, which sell at Rs2,600 a quintal against state-set prices of Rs3,950.

“Like farmers in other states, we are in dire need of a loan waiver and want higher crop support prices in line with the recommendations of the M.S. Swaminathan commission (at 50% over costs of production),” said Gurnam Singh, the farmers’ association leader. “Instead, banks were pasting photos of defaulting farmers inside their premises. Our prime minister promised a loan waiver in Uttar Pradesh before the elections. Maharashtra has announced one. Why should farmers from Haryana, ruled by the same Bharatiya Janata Party (BJP), be left behind?” he asks.

Singh has other complaints as well. Input-intensive farm practices, he said, have led to rising costs, which are not reflected in the costs calculated by the centre while deciding minimum support prices. Even as ground water levels fall at an alarming rate, there are no incentives for farmers to diversify away from water-intensive rice and wheat to more sustainable pulses, which also nurture the soil.

India's new policy of inflation-targeting—in which the government sets an inflation target and authorises the Reserve Bank of India (RBI) to take steps to meet that target—too comes in for Singh's ire. “The government provides the bare minimum to farmers to continue growing food and does nothing when prices crash, as it wants the food cheap,” Singh complains. Inflation-targeting is denting farm incomes and leading to higher indebtedness, he says.

On 16 June, Singh’s union, along with 62 others from states such as Madhya Pradesh—where five farmers died in police firing on protestors on 6 June—and Uttar Pradesh are planning to block national highways. Singh’s goal is to bring traffic to a standstill on the NH1, a busy route linking Delhi to Chandigarh, the capital of Haryana and Punjab.

Interestingly, the problems in Haryana are strikingly similar to those faced by farmers in Madhya Pradesh, Maharashtra, Karnataka and Tamil Nadu. (Both Karnataka and Tamil Nadu have faced droughts in 2016 while the rest of the country received normal rainfall.)

While some of the problems are due to recent policy decisions—like the note ban depressing crop prices or India importing large quantities of pulses despite a bumper crop—others are more structural.

For instance, potatoes sell below Rs1 per kg in Haryana, while consumers in neighbouring Delhi shell out Rs15-20 per kg. On Monday, wholesale prices of potatoes were Rs5 per kg in Delhi’s Azadpur mandi.

“This means traders and retailers are making merry at the cost of farmers,” said Ramandeep Mann, a Delhi-based engineer-turned-farm activist. “While the centre keeps trumpeting that the electronic National Agriculture Market (eNAM) helped farmers get better prices, it is yet to take off.”

Shahabad mandi in Kurukshetra is among the 417 wholesale markets in 13 states connected to the online eNAM platform which Prime Minister Narendra Modi launched in April last year, promising it would enable farmers to sell anywhere in India and get better prices. 

There has been no inter- or intra-state sale of farm produce through eNAM, said an official at the Shahabad mandi, requesting not to be identified. “We are just uploading physical trade as online entries on the platform. Electronic trade has not kicked off as traders like to physically inspect the produce before they purchase, and farmers are usually reluctant to sell to traders in distant mandis due to fear of payment defaults.”

One way to ensure quality is to set up assaying labs where harvest is graded before it is auctioned online. The Shahabad mandi bought the necessary equipment, after the centre gave each mandi financial assistance of Rs75 lakh. But the mandi has no technical staff to operate it, and the equipment gathers dust in a room, unpacked and unused.

For 55-year-old Karnail Singh, a farmer from Mangoli and a regular at the Shahabad mandi, the National Agriculture Market means nothing more than the giant sign board that came up some months back. A landless farmer, Singh took 10 acres of land on lease at Rs42,000 per acre to grow potatoes, prompted by the higher wholesale prices they fetched last year. By his own calculations, he lost Rs9 lakh in one season. 

“It will take him at least five years of good harvest and reasonable prices—and that is highly unlikely—to go back to the position when he planted his crop last December; that’s about the risk farming entails today,” said Mann, the farm activist who travelled with this writer to Kurukshetra.

Perched on a plank of wood next to the mango orchard in Mangoli, a broken Karnail Singh counts his loans. Being a tenant farmer, all of his Rs10- lakh loan is sourced from local moneylenders. A waiver of bank loans cannot rescue him, Singh knows. “Perhaps taking my own life will.”

This is the third part of Mint’s series, Fractured Farms - II that will capture the ongoing agrarian crisis in the country through a mix of on-ground reports, opinion pieces, and data analyses. It follows Fractured Farms, a similar series Mint ran in 2015.

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