about 1 year ago
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After all this talk about the Budget emptying its coffers to take care of the rural landless and farmers, it makes one stop and think – are they really benefitting? With so many benefits being announced even outside the Budget, why this distress?

There was so much rah-rahing and chest thumping after the Govt hiked the Minimum Support Price (MSP). The Govt hiked MSP of kharif crops and the Pradhan Mantri Annadata Aay Sanrakshan Abhiyaan (PM AASHA), was rolled out in September to ensure that more farmers receive support price for whatever they produce.

Under PM AASHA, to ensure that the benefit of the MSP goes to the farmers, govt agencies under this scheme, buy pulses and oilseeds from farmers if and when the market price falls even below the support price. The scheme also reimburses the difference between the MSP and market price in some states of oilseeds to farmers if the market price is lower than the support price.

The Govt bought 5.9 million tonnes of oilseeds and pulses at MSP; yet all pulses and most oilseeds are ruling well below the MSP. Data from Cogenics showed that out of the 14 key kharif crops whose MSPs were increased, the prices of nine are well below the respective MSPs.

Despite all that which the Govt has proposed to do, farmer distress could rise as agriculture yield has been hit on account of drought during the kharif season and news from the first harvest of rabi is also not encouraging. Rainfall, frost and many such weather vagaries have pushed down the sowing of  rabi crops too.

Rabi crops, which are sown between Oct and March, as at 1st Feb 2019, progress of area coverage under Rabi crops has come down – coarse cereals is down 14% (YoY), oilseeds is down 0.77% and that of total crops is down over 4%.

A laggard sowing, as per Crisil reflects the farm crisis. It has said in its report, “ Lower cash in the hands of farmers has also impacted rabi sowing this year. Even though mandi prices of major crops during this period (1 September to 15 December) have increased, arrivals of these crops have declined. This is despite ~1% rise in kharif production this year (according to the first advanced estimates)."

The water availability scenario is also bleak, especially for Maharashtra, Madhya Pradesh, Karnataka, Gujarat and the Goa-Maharashtra areas. The rainfall distribution has been very uneven and this is perpetuating the agriculture crisis.

A look at the status of the live storage at reservoirs in various states of India show that the Northern region has a higher, 433 more storage compared to an average of last 10 years. The Eastern region , comprising Jharkhand, Odisha, W Bengal and Tripura  has a deficit of 5% while Western region of Maharashtra and Gujarat is 32% deficit. Central India is 6% surplus and South India is 11% deficit. For the entire country as a whole, there is a 5% deficit in storage. And we have not yet even got into the summer months. Rainfall is 4-5 months away.

The next few months look tough, very tough for rural India. And long with them, we in urban India should brace for some rough ride in the summer. Of course there is the election looming large! That’s pretty much the roadmap ahead, for us, farmers and the stock markets too!

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