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Project Report

Agriculture Distress and Farmers’ Unrest in Madhya Pradesh: An Exploratory Study

Dr. Anitha Govindaraj

August 2018

Atal Bihari Vajpayee Institute of Good Governance and Policy Analysis

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AGRICULTURE DISTRESS AND FARMERS’ UNREST IN MADHYA PRADESH: AN EXPLORATORY STUDY iii

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Project Team Under the Guidance of

Akhilesh Argal, Director, AIGGPA. Mangesh Tyagi, Principal Advisor, Centre for Governance, AIGGPA

Project Coordinator & Author

Dr. Anitha Govindaraj, Deputy Advisor, Centre for Governance, AIGGPA Research Associate

Mr. K.S.Sen. Retd. Deputy Collector, GoMP.

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Table of Contents

Executive Summary ........................................................................................................... ix

1. Introduction .................................................................................................................... 1 1.1.Objectives of the study .......................................................................................................... 1 1.2 Research Methodology ......................................................................................................... 2 1.3 Organization of the report ................................................................................................... 2

2. Status of Agriculture in Madhya Pradesh ................................................................. 3 2.1. Type and Size of Landholdings in MP ............................................................................. 4 2.2. Cropping pattern of MP ...................................................................................................... 4 2.2. Changing Cropping Pattern in MP .................................................................................. 5

3. Status of Agriculture in the Sample districts ............................................................ 7 3.1 Socio economic status of farmers in the districts ............................................................ 7 3.2 Cropping pattern in the Study Districts ........................................................................... 9

4. Distress in the Rural Areas ..................................................................................... 11 4.1. Issues faced by the farmers .............................................................................................. 11 4.2. Crucial reasons for farmers’ distress ............................................................................. 12 4.3 Immediate measures to address the farmers’ distress ................................................. 14

4.3.1.Expectations of the farmers ...................................................................................................... 14 4.3.2. Feedback from the Administration & Agriculture department .................................... 15 4.3.3. Feedback from the Mandi officers ........................................................................................ 15

4.4. Violent protests and its trigger factors .......................................................................... 16 6. Distress in MP: An Analytical Evidence .............................................................. 17

6.1 Glut in Production and fall in prices ............................................................................... 17 6.2 Mandi Issues ...................................................................................................................... 21 6.3 Storage Issues ....................................................................................................................... 22 6.4 Analysis on MSP: ................................................................................................................ 22

7. Conclusion and Recommendations .......................................................................... 25

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List of Tables Table 1: Information regarding the sample of the study .......................................................... 2 Table 2: Position of MP in All India Crop Production ............................................................ 3 Table 3: Category of farmers in MP ............................................................................................... 4 Table 4: Major crops grown in MP ................................................................................................. 4 Table 5: Trend in Area under Major Crops in MP .................................................................... 6 Table 6: Socio economic profile of District ................................................................................. 7 Table 7: Price volatility of major crops in MP ......................................................................... 21 Table 8: Mandi infrastructure in MP and affected districts ................................................ 21 Table 9: Depositor -wise Warehousing position of commodities in MP ........................ 22 Table 10: Comparison of MSP and Cost of Production ....................................................... 23

Lists of Graphs Graph 1: Gross Cropped Area and Irrigated area in MP ......................................................... 3 Graph 2: Cropping Pattern in Madhya Pradesh .......................................................................... 5 Graph 3: Average annual rainfall pattern in sample districts ................................................. 7 Graph 4: Average size of land holdings in sample districts .................................................. 8 Graph 5: Percentage of various types of Holdings .................................................................... 8 Graph 6: Cropping pattern in the Districts .................................................................................. 9 Graph 7: Trend in paddy production, mandi arrivals and prices in MP .......................... 17 Graph 8: Trend in Wheat production, mandi arrivals and prices in MP ......................... 18 Graph 9: Trend in Channa production, mandi arrivals and prices in MP ....................... 19 Graph 10: Trend in Production, Mandi arrivals and prices of Soybean in MP ............. 19 Graph 11:Trend in area, production and productivity of onion in MP ............................ 20

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Executive Summary

The violent protests by the farmers in Mandsaur, Neemuch Dewas and Ujjain districts of MP during first week of June in 2016 resulting in loss of lives and property has shocked the entire nation. Farmers protests in a state, which is a recipient of Krishi Karman award for consecutive 4 years presenting the double-digit growth figures has attracted many critics. Many reasons were quoted for the growing farmers’ unrest in the nation. Hence this study was taken up to capture the underlying causes and triggers for the farmers’ unrest in the districts. The study is primarily based on qualitative information collected through Focus group discussions (FGDs) and Interviews conducted with 25 farmers and other stakeholders such as officers of district administration, Deputy director- Agriculture/ Horticulture, a Mandi Secretary and 4-5 traders each, from the affected districts. The sample districts, Mandsaur, Neemuch, Dewas and Ujjain, fall within the agro-climatic zone of Malwa plateau, which receives an average annual rainfall of 800-1200mm. More than 40 percentage of the GCA is irrigated in the sample districts. All the 4 districts suffered drought in 2014 while, Neemuch and Mandsaur suffered consecutive drought in the year 2015 too. Economy of all the four districts is predominantly agriculture based, with the majority of its population dependent on agriculture either as cultivator or as agricultural laborer. The average size of land holdings in Dewas (2.37ha) and Ujjain (2.21ha) are well above the state and the country’s average. The average size of holdings is 1.64ha in Mandsaur and 1.54 ha in Neemuch, which is lower than the state average of 1.78ha. Three fourth of the total holdings in Mandsaur and Neemuch are small and marginal, while 60-64 percent in Ujjain and Dewas. Major crops grown during Kharif season in all the sample districts are Soybean (45-50 % GCA) and during Rabi, Wheat and Gram are the major crops in the region. Apart from these, Mandsaur and Neemuch are also the leading opium producing districts in the country. Onion is grown in less than 2 percent of the GCA in the affected districts. Farmers in the state suffered consecutive crop failures due to drought during the years 2014 and 2015, which was followed by a bumper harvest for many crops in the year 2016. It was widely stated that the farmers were in distress, as they did not get fair price for their produce. The statistics showed that the prices of all the major crops such as Paddy, Wheat, Gram and Soybean have fallen sharply during 2014-15 from 2012-13. Soybean and Onion prices fell steeply in 2016. Soybean productivity has also declined due to erratic rainfall during 2014 and 2015. Hence farmers across the state were in distress due to failed crops in 2014-15.

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Trend analysis of wholesale prices and MSP of the major crops showed that for all the major crops, annual wholesale prices and the wholesale prices during peak harvest seasons were more than the MSP for almost all the years. An analysis on MSP over cost of production of crops revealed that under MSP, farmers were able to receive 112 % margin profit over A2 cost + Family labor. The margin was 44 percent for Soybean and 78 percent for Gram over MSP. Increased supply of agricultural commodities over supply led to a drop-in price for crops in the entire state and this was further exacerbated by the unfavorable regulatory environment in Mandis. Farmers had issues in selling their produce in Mandi due to confusion among the traders over GST and over crowding in Mandi. Cash crunch due to demonetization and Non-cash payments have also created restlessness among the farmers. Onion price fall cannot be associated with the distress in the affected districts as only less than 2 percent of the GCA area is under Onion. It cannot be concluded that the violence in the protests were only due to agricultural distress as these stress factors were not specific only to the affected districts. The role of several other local factors unrelated to agriculture cannot be ruled out in triggering the violent protests in the affected districts. The following recommendations may be considered to mitigate the agricultural distress:

1. Farmers need to be insulated against price risk through effective agriculture price policy, procurement policy and risk mitigation measures such as insurance schemes.

2. Focus should be given to improve the mandi infrastructure in the state. Adequate storage infrastructure accessible for farmers need to be created in the mandi or in the nearby areas and made available at reasonable prices/arrangement to small and marginal farmers. This would include measures such as credit linked storage services, which would cater to the immediate cash requirements of farmers.

3. Introduction of e-NAM in all the mandis would help in increasing transparency and dissemination of market prices to all stakeholders. Modern and scientific methods for grading and weighing of commodities will help in better price discovery for commodities.

4. Banking infrastructure in rural areas needs to be strengthened to handle the high volume of transactions during peak harvesting seasons.

5. Crop insurance scheme offering cover against price risk will help mitigate the problem of uneconomical prices for agricultural commodities.

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1. Introduction With Indian economy gaining momentum of growth in the secondary and tertiary sectors, slow pace of growth in the agriculture sector is a serious matter of concern with about half of our population dependent on farming for their livelihood. Needless to mention that agrarian crisis is deepening across the country which is evident with farmers from many states such as Maharashtra, Madhya Pradesh, Rajasthan, Tamil Nadu, Uttar Pradesh, Andhra Pradesh, Telangana and Karnataka taking onto streets demanding better prices and loan waivers. Moreover, number of farmers’ suicides is also increasing alarmingly to an extent of 42 percent in 2015 (NCRB)1. Seven states of Maharashtra, Telangana, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, Karnataka and Tamil Nadu accounted for 87.5 percent of the total farmers’ suicides in the country in 2015. The major reasons stated for the deaths by the study conducted by Union agriculture Ministry were frequent crop failures, vagaries of the monsoon, pest and disease attacks, Debts and social causes. Farming is becoming less profitable and an extremely risk prone enterprise. A farmer suffers both during crop failures and bumper crops. The agriculture is increasingly becoming unviable due to the shrinking size of the land holdings with about 86% of the land holdings less than 2 hectares. Increasing input costs also add to their agony. It’s a well-known fact that farmers are not protected adequately against the weather and the price risk. The violent protests by the farmers in Mandsaur, Neemuch, Dewas and Ujjain districts of MP during first week of June in 2016 resulting in loss of lives and property has shooked the entire nation. Farmers protests in a state, which is a recipient of Krishi Karman award for consecutive 4 years presenting the double-digit growth figures has attracted many critics. Many reasons were quoted for the growing farmers’ unrest in the nation. The basic reason is that the farmers do not get fair price for their produce especially, during good harvest. Demonetization is also mentioned as one of the reasons for the unrest among the farmers. It is important to understand the ground realities as much as the macro economic indicators for making suitable policy interventions. Hence an attempt has been made under this study to capture the crucial factors that led to violent protests by farmers in the state.

1.1.Objectives of the study

§ To study about agricultural status and socio economic condition of the farmers in Madhya Pradesh and affected districts.

§ To capture underlying causes and triggers for the farmers unrest in the districts.

§ To suggest the policy level recommendations.

1 NCRB-‐ National crime Records Bureau

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1.2 Research Methodology The study is primarily based on qualitative information collected through Focus group discussions (FGDs) and Interviews conducted with various stakeholders in the affected districts of Mandsaur, Neemuch, Ujjain and Dewas. In order to understand the issues and reasons behind the restlessness among the farmers, FGDs and Interviews were held with atleast 25 farmers from the problem spots of each district using structured questionnaires. To identify the causes for the recent farmers’ protests from the point of view of district administration and other stakeholders, one additional collector, SDM, Tehsildar, Deputy director- Agriculture/ Horticulture, a Mandi Secretary and 4-5 traders from each district were also interviewed using predesigned questionnaires.

Table 1: Information regarding the sample of the study

Information Regarding the Sample

S.No Name of the

Sample District

Sample Blocks

Sample Villages

Number of sample farmers

Details of Official and other

stakeholders Interviewed

1 Dewas Bagli Nevri, Arlavda

29 Collector, SDM, Tehsildar, Patwari, Sarpanch, vice Sarpanch, Teacher, Agricultural officer, Mandi Secretary and Traders.

2 Mandsour Neemuch Kuchudodh, Nayakeda

28

3 Neemuch Malhargarh Bhudah, Takravadh

27

4 Ujjain Ujjain Chayan, Pipalia Ragoh

26

The farmers from the villages where the violent protests occurred were chosen to understand the feel at the ground. Information regarding the villages visited is tabulated above. (Table-1)

1.3 Organization of the report The information collected from the field visits were summarized and discussed in chapter 4. Chapters 2 and 3 are targeted to the readers who are not acquainted with the status of agriculture in MP and the affected districts. In chapter-5, facts and issues that emerged during the interviews and FGDs about the violent protests are discussed. An effort is made in chapter-6, to find data based evidences to support the issues that have risen during the field study. Actionable points are recommended in the chapter-7 in recommendations.

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2. Status of Agriculture in Madhya Pradesh

Agriculture is the mainstay of the state economy providing employment and livelihood options to about 70 percent of the population. In this decade, Madhya Pradesh has achieved double-digit growth in agriculture sector since 2010-11 consistently for 5 -6 years with about 14.6 % in 2014-15, while that of entire country is volatile since 2011 from 8.6% in 2010-11 to -0.2% in 2014-15 and 0.8% in 2015-16. The state has been receiving Krishi Karman award for consecutive 5 years since 2011-12 for contributing maximum to the food grain production in the country. Madhya Pradesh is in the list of top 3 producing states in many crops (table-2). Madhya Pradesh is the leading producer of pulses and oilseeds in India contributing to about one-fourth of the country’s production. MP is the leading producer of Soybean contributing to more than 50 percent share in All India production.

Table 2: Position of MP in All India Crop Production

S.No List of crops State Production in MT

% Share in All India production

Rank

1 Wheat 17.9 18.2 2 2 Maize 3.2 12.1 3 3 Chick pea/Gram 3.5 37.0 1 4 Red gram/Tur 1.5 27.0 3 5 Total Pulses 6.3 27.2 1 6 Total Food grains 33.0 12.0 2 7 Rapeseed & Mustard 0.9 11.5 2 8 Soybean 7.2 51.3 1 9 Total Oilseeds 8.7 27.0 1 (Source: Economic Survey, 2017-18)

Graph 1: Gross Cropped Area and Irrigated area in MP

(Data Source: landrecords.mp.gov.in )

220 225 231 240 238 237 242

74 82 90 99 101 100 107

34 37 39 41 42 42 44

0

10

20

30

40

50

0

50

100

150

200

250

300

2010-‐11 2011-‐12 2012-‐13 2013-‐14 2014-‐15 2015-‐16 2016-‐17

GCA (lakh ha) Irri.area ( Lakh ha) % irri. area

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The net sown area is about 50 percent of the total geographical area in the state. The area under irrigation has shown 10 percent increase from 34 percent in 2010-11 to 44 percent in 2016-17 and GCA also has shown an increase of 10 percent in last 7 years (Graph-1). Average rainfall received by the state is about 950mm. With about 56 percent of the gross cropped area under rainfed farming, Madhya Pradesh farmers are highly prone to natural calamities like drought, hailstones and flood.

2.1. Type and Size of Landholdings in MP Average size of holdings in the state is 1.78ha, which is far better than that of country’s average of 1.15ha. Majority of the holdings in the state are marginal holdings (44 %) with around 23 percent of the holdings having a size of less than 0.5 ha. Nearly, one-third of the holdings in MP fall under the category of marginal and small holdings (table-3).

Table 3: Category of farmers in MP

Type of farmer Area in Ha % of Total operational holdings

Number of holdings

Area

Marginal

< 0.5 22.6 3.5 0.5 to 1 21.2 8.6

Small 1 to 2 27.6 21.9 Semi Medium

2 to 3 12.6 16.8 3 to 4 6.1 11.1

Medium & Large

> 4 ha 9.9 38.1

(Source: Agricultural Census 2010-11)

2.2. Cropping pattern of MP Major crops grown in the state are listed in the table-4. Paddy, Soybean, Maize, Jowar, Moong, Urad, Tur and Cotton are the major Kharif crops and Wheat, Gram, Massor, Peas, Linseed and Mustard are the major Rabi crops.

Table 4: Major crops grown in MP

S.No Category Major crops in MP 1 Food grains Wheat, Jowar, Maize & Paddy 2 Pulses Gram, Masoor and Tur 3 Oilseeds Soybean, Rapeseed &Mustard, Linseed 4 Vegetables Tomato, Potato, Onion, Green peas, Cauliflower &

Bhendi, 5 Fruits Guava, Orange, Banana, Papaya & Mango, 6 Spices &

Condiments Chillies, Garlic, Coriander, Ginger & Turmeric

(Source: Annual report of GoMP, 2017)

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Soybean and Wheat are the major crops occupying about 50 percent of the GCA followed by Paddy and Gram (8.8%). Maize and Urad is also grown in about 4 percent of GCA (graph-2). Apart from major producers of Foodgrains, Pulses and oilseeds, MP is also among the leading producers vegetable and fruits in the country. MP is among the top 5 states in the production of Tomato, Onion and potato with about 1.6 percent of GCA under vegetables. In 2016-17, only 0.2 percent of cropped area is under fruits and among the fruits, Citrus, Orange and Banana are the major crops in MP.

Graph 2: Cropping Pattern in Madhya Pradesh

(Data Source: landrecords.mp.gov.in)

2.2. Changing Cropping Pattern in MP During last 7 years, there are changes in the cropping pattern, as farmers tend to grow crops, which have minimum price risk and weather risk coefficients. Various studies also reported that the Minimum support price policy of the Government also influences the cropping pattern. Earlier, MSP was fixed only for the major food grains such as paddy and wheat. But, now as policy planners realizing the impact of MSP on the cropping pattern, have brought pulses such as Arhar, Urad, Moong and Gram also under the MSP net in order to promote pulse cultivation in the country (CACP, 2017). In table-5, the trend in area under major crops during last 7 years shows that area under Urad and Onion has increased significantly to an extent of 84 percent and 105 percent respectively. Area under Gram and Tur (Arhar) has fallen down by 26 percent in this decade. Urad is a safer option than Tur and Soybean as it is hardy crop and requires less moisture. The productivity of the Urad is also good in MP (900 ka/ha) as compared to national average of 680kg/ha in 2016-17.

Wheat, 26.5

Paddy, 8.8

Soybean, 24.9

Gram, 8.8

Maize, 4.2

Urad, 4.3 Tur, 2.0

Vegetables, 1.6

Fruits, 0.2

Spices & Condiments, 1.8

Cotton, 1.4

Rapeseed & Mustard, 1.5

Others, 14.0

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Table 5: Trend in Area under Major Crops in MP

Area under Major Crops in Madhya Pradesh ( 000’ hectare)

Year Paddy Wheat Maize Gram Urad Tur Soybean Onion Veg Fruits 2010-11 1574 4633 838 638 560 2882 5538 56 261 48 2011-12 1693 5248 449 532 606 2624 5772 68 292 49 2012-13 1791 5601 855 455 628 2716 6173 73 306 50 2013-14 1882 6123 852 396 581 2774 6543 79 323 50 2014-15 2058 6351 885 375 665 2446 6167 82 332 54 2015-16 1999 6050 899 384 863 2198 6338 111 382 58 2016-17 2136 6410 1006 474 1032 2127 6035 116 398 59

% change in Last 7 years

36 38 20 -26 84 -26 9 105 52 23

(Data Source: landrecords.mp.gov.in) MSP procurement policy and the bonus price fixed by the government also influence the cropping pattern, as farmers prefer to play safe against high price risk. Madhya Pradesh government has fixed a high MSP rate of Rs 8/kg ie. 30 percent more than the MSP fixed by the GOI for onion. Area under fruits and vegetables has also increased by 52 and 23 percent respectively.

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3. Status of Agriculture in the Sample districts The sample districts, Mandsaur, Neemuch, Dewas and Ujjain, where the violent protests occurred in 2017, fall within the agro-climatic zone of Malwa plateau, which receives an average annual rainfall of 800-1200mm. Malwa region is better positioned in the state in term of status of agriculture as compared to backward Bundhelkhand and Baghelkhand regions. More than 40 percentage of the GCA is irrigated in the sample districts. The rainfall pattern (Graph-3) in the districts shows that there was drought in all the four districts in 2014 while, Neemuch and Mandsaur suffered consecutive droughts in the year 2015 too. Graph 3: Average annual rainfall pattern in sample districts

(Source: cmdashboard.mp.gov.in)

3.1 Socio economic status of farmers in the districts

Table 6: Socio economic profile of District

Particulars Dewas Mandsaur Neemuch Ujjain MP Cultivators 35.0 41.4. 42.0 32.2 31.2 Agrl. labor 41.8 39.2 32.6 33.7 38.6 Literacy rate 69.4 71.8 70 72.3 63.7 SC population 18.7 18.6 13.5 36.4 16.0 ST population 17.4 2.47 8.6 2.5 21.0 (Source: Census 2010-11) The economic status of the farmers in the districts are fairly stable and good in Dewas and Ujjain while in Mandsaur and Neemuch, the economic condition of the farmers was found to be medium as opined by majority of the farmers, officers and mandi

1185 1413

683 1258 924

810

1081 1111

802 901 1037

669

1084 1295

831 742 1113

801

1111 1273

649

1521 1203

874

2011 2013 2014 2015 2016 2017

Rainfall Pattern in mm

Dewas Mandsaur Neemuch Ujjain

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personale interviewed. Economy of all the four districts is predominantly agriculture based, with the majority of its population dependent on agriculture either as cultivator or as agricultural labor (table-6). The average size of land holdings in Dewas and Ujjain are well above the state and the country’s average. (Graph-4). The average size of holdings is 1.64ha in Mandsaur and 1.54 ha in Neemuch, which is lower than the state average of 1.78ha.

Graph 4: Average size of land holdings in sample districts (in Ha)

(Data Source: Agricultural census 2010-11)

Graph 5: Percentage of various types of Holdings

(Data Source: Agricultural census 2010-11) (Note: Marginal; Less than 1ha, Small; 1-2 ha, Semi-medium; 2-4ha, Medium; 4-10ha, Large > 10ha) About 75 percent of the farmers in Mandsaur and Neemuch are small and marginal farmers in which nearly 50 percent of them have marginal holdings with the holding size less than one hectare or 2.5 acres. In Ujjain, there are 20 percent semi-medium (2-4ha), 14 percent medium, 26 percent small and 38 percent marginal holdings. In

Dewas Mandsaur Neemuch Ujjain MP India

2.37

1.64 1.54

2.21 1.78

1.15

Ujjain Mandsaur Neemuch Dewas MP State

38

48 49

31

44

26 27 28 30 28

20 17 16

22 19

14

8 6

14

9

2 1 0 2 1

Marginal

Small

Semi-‐Medium Medium

Large

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Dewas District, small and marginal holdings account for 72 percent of the total holdings.

3.2 Cropping pattern in the Study Districts In all the 4 sample districts, soybean is the major crop during the Kharif season (45-50%) and wheat during Rabi season (15-25%).

Graph 6: Cropping pattern in the Districts (2016-17)

(Data source: landrecords.mp.gov.in) Mandsaur and Neemuch are the leading opium producing districts in the country. It is a Rabi season crop and is cultivated from October to December. Crops such as Gram, Maize, Rapeseed & Mustard, Urad and Cotton. Onion and Potato are also grown in this belt. Garlic and Coriander are the major spices grown in Mandsaur and Neemuch. Major produce traded in the Mandi are:

§ Dewas: Wheat, Maize, Soybean, Chick pea (Gram), Garlic, Black Gram (Urad), Raida, Alsi, Fenugreek ( Methi) and Masoor.

§ Ujjain: Soybean, Chick pea (Gram) and Wheat

Wheat 16%

Maize 4% Urad

3%

Gram 3%

Soybean 46% Rapeseed

& Mustard 6%

Orange 1%

Opium 2% Spices

12%

Others 7%

Mandsaur

Wheat, 15

Maize, 6 Urad, 1

Gram, 2

Soybean, 45

Rapeseed &

Mustard, 5

Onion, 1

Opium, 0.5

Total spices , 11

Gnut, 1

Neemuch

Wheat 29%

Gram 11%

Soybean 52%

Rapeseed &

Mustard 4%

Onion 1%

Potato 1%

Others 2%

Ujjain

Soybean 47%

Wheat 27%

Gram 15%

Maize 2%

Tur 1%

cotton 1% Onion

2%

Potato 1% Others

4%

Dewas

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§ Mandsaur: Wheat, Chick pea (Gram) and Garlic. § Neemuch: Soybean, Wheat, Garlic, Chick pea (Gram), Black Gram (Urad),

Raida, Alsi, Fenugreek ( Methi) and Masoor

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4. Distress in the Rural Areas In this chapter, the major reasons for the distress among the farmers based on the outcome of the focus group discussions and Interviews conducted in the affected districts with various stakeholders such as farmers, district administration, Panchayat secretaries, teachers, mandi officials, Agriculture department officials are discussed.

4.1. Issues faced by the farmers Farmers, when asked about the issues faced in various aspects such as production, marketing, storage etc., their responses are discussed below.

A. Production related Issues: § The cost of cultivation has increased. § Water shortage and Lack of adequate irrigation facilities. § Costly seeds and fertilizers and unavailability of quality inputs in time. § Labor shortage. § Low productivity. § Damage due to wild animals and natural calamities § Electricity problem.

B. Marketing and Mandi related Issues In Mandi, Open auction is done for selling the farmers produce and 2 percent is charged as Mandi fee officially. The quality of the produce is determined through visual observations and there is no scientific means of grading and hence often subjected to bias. Price of the produce is fixed based on the quality of the produce and market rate in Indore Mandi. Following were issues stated by the farmers regarding marketing and Mandi.

• Drastic fall in prices of the produce.

• Farmers are highly dissatisfied with Mandi due to overcrowding in Mandi and hence farmers have to wait in long queues up to 2km for 3-4 days to sell their produce. It is stated that the farmer from other states such as Rajasthan sell their produce in Mandsaur mandi especially garlic. Hence the local farmers have to wait for 3-4 days to sell their produce.

• Weightman (Hammal) in mandi, demand extra charges for weighing to fill his pocket. At times, he even charges double the actual cost during the peak season. If the farmer denies to pay, he will be made to wait for 2-3 more days to weigh his produce.

Prices – Sarpanch, Neemuch Crops 2014-15 2016-17

Soybean Rs. 5,000 Rs. 2,800 Mustard Rs. 4,500 Rs. 3,200 Kalonji Rs. 26,000 Rs. 8,000

Alsi Rs. 9,500 Rs. 4,000

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• Small and marginal farmers are unable to sell in Mandis as the mandi has the capacity to weigh only tractors and trolleys and the marginal farmers cannot afford to hire a trolley/tractor paying Rs. 1500/day and wait for 3-4 days to sell in Mandi and hence they had to sell to private traders at a price (30%) lower than the MSP.

• There is unrest among the Farmers due to non-cash payment and delayed payments through NEFT /cheques and it takes 15 days to 1 month to receive the payment in their account.

C. Storage Issues

In Mandsour and Neemuch, there is no storage facility available in Mandi and the receipts are very high. In Ujjain and Dewas, storage facilities are available in Mandi at free of cost.

§ The storage charges are very high in the private warehouses. § Farmers needs free storage infrastructure in the areas near Mandi premises. § Even if the produce is stored for 3-4 months and then sold, farmers are not

able to get fair price to cover the storage costs.

D. Crop Insurance Farmers have lost their confidence in the crop insurance schemes and they say that they have taken crop insurance, as it is compulsory for loanee farmers. They were unhappy with crop insurance programmes due following issues.

§ The crop loss assessment is not fair and the amount of compensation is too low

§ The compensation is also delayed § The sum insured is 30-35 percent in cooperative banks while it is 10-12

percent in other banks

4.2. Crucial reasons for farmers’ distress Majority of the respondents from all the categories stated that farmers were in distress due to the following prime issues:

§ Farmers were not happy with the government in handling farmer’s

issues and they felt that they were not at all heard. § Farmers did not get fair price for their produce. The price received

could not even cover the cost of production. § Onion being the bumper crop, prices fell drastically even to the extent

of Rs.1/kg. § In Mandi, there were long queues to sell the produce and hence

farmers had to wait for 3-4 days to sell their produce. § Moreover, farmers were highly irritated due the non-cash payment in

Mandi. The payment in banks through Cheques /NEFT was delayed to the extent of 15-30 days.

§ Due to GST, the purchase of produce by the traders has dropped suddenly.

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§ Farmers were disappointed with the government for lack of initiatives on ground after making huge promises such as doubling of farmers’ income in 5 years.

Farmers were already in distress due to drought/insufficient rainfall during 2013-2015 and were debt ridden. With good monsoon and bumper production in 2015-17, they were expecting better returns from agriculture, so that they can cover the previous years losses. Much to their dismay, prices of Gram, Soybean, and Onion etc. fell to the bare minimum and farmers could not even cover their cost of production. Glut in Onion production has led to fall in prices to the extent of 20 Paise /kg in Neemuch Mandi. As per the estimates of National horticultural research and Development board, the cost of production of Onion is around Rs.8.27/Kg.

Figure-‐ 1 Reasons for the Distress among farmers

Inadequate banking infrastructure in rural areas

Farmer already in Debt due to crop failures in previous seasons

Bumper production

Traders clearing stocks in panic due to GST

Cash crunch

Traders stopped purchasing from farmers due to GST

Sharp fall in prices not even to cover cost of production

Farmers unable to buy inputs for the next season crop

Non-‐cash & Delayed Online payments Accumulated

Distress

Farmers Unable to sell the produce in Mandi

Increase in Input prices due to GST

Lack of Demand & Abundant Supply in Mandi

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Demonetization, GST and Digital payments, all in a row, executed at a short span of time from December 2016, have created restlessness among the farmers. Paucity of the funds/cash crunch had upset the lives of rural people largely as they do most of their transactions with cash. Adding to their irony, farmers could not sell their produce in mandi, as they were no takers for their produce due to the GST. Forced Digitization has also irked the farmers. Farmers generally sell their harvested produce and purchase the inputs needed for the next crop using the cash money received from buyers. Every farmer interacted, insisted strongly that they need their payment in cash because, it takes minimum 15 days to get their payments through Cheque/NEFT. Banks in rural areas are also not having adequate infrastructure, funds and staff to handle the rush during the peak seasons. Farmers have to make atleast 2-3 visits to get their money and it certainly hurts the farmers as its cost their labor and transport charges. They also need to make a separate visit to market to buy the inputs for the next crop and other necessities after receiving the money.

4.3 Immediate measures to address the farmers’ distress The immediate measures that are needed to reduce distress in agriculture as per the expectations of the farmers and perceptions of the different stakeholders interviewed are discussed here.

4.3.1.Expectations of the farmers

1. MSP should be announced even before sowing season and the MSP should be more than the cost of production of the produce.

2. Farmers demand immediate loan waiver. 3. The production of crops should be estimated well ahead and necessary

arrangements /infrastructure created for the procurement of crops under the MSP.

4. Farmers need a permanent solution/ pricing policy to ensure fair price for their produce.

5. Marginal and small farmers should be given priority while, procurement under MSP in Mandi.

6. The fertilizer subsidy should be given in cash before sowing. 7. The cash payment should be done for their produce. 8. Electricity bills should be forgiven. 9. Food processing plants needs to be setup for perishable crops and free storage

facilities in mandi should be provided for farmers. 10. Farmers also expect more subsidies for cold storage units for Potato, which is

currently 35 percent.

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4.3.2. Feedback from the Administration & Agriculture department

1. The crop production should be estimated well ahead of harvesting and necessary storage and marketing arrangements should be done. The Minimum support price should be decided well before, based on the cost of cultivation.

2. Immediate cash payment should be made atleast upto Rs. 50,000, as farmers need cash to buy farm inputs. They usually align their purchase schedule after selling their produce.

3. Farmers should be made available easy crop loans, term loans and loans for small-scale industries.

4. Banking Infrastructure in the rural areas should be improved/expanded. 5. Farmers cannot pay in cash and purchase seeds. The earlier seed subsidy

scheme is better than the present scheme of Cash benefit transfer (CBT) now. Government should reconsider the seed subsidy in CBT.

6. Seed subsidy should be given to the farmers before the sowing season. 7. Farmers should be given subsidy on purchasing farm implements from Agro

and also the rate of implements should be lesser than the market rate, which currently is higher than the market rate.

8. Farmers are not happy with Cash benefit transfers. 9. The procedures and processes for availing the benefits of various schemes

need to be simplified. 10. There should be a Krishi/ Agri clinic in every Panchayat for dissemination of

information on technical aspects. Currently, one village extension officer has to cover around 20-35 villages and hence, they are unable to transfer the technology to all the villages.

11. Adequate storage infrastructure for onion needs to be created. Farmers will be encouraged to create more storage structures, if the subsidy for storage structures is increased from 50 percent upto 75 percent.

12. Food processing needs to be promoted especially, for Onion, Tomato and Potato.

13. Farmers should be encouraged to take up allied businesses such as mushroom units, bee keeping etc.

14. Need to give more focus on crop insurance and gradually reduce subsidies and compensations.

15. A separate division for marketing should be created under agriculture department who can address the marketing issues immediately in the districts.

16. Farmers’ commission should be created at the state level to address their issues immediately.

17. The recommendations of the Swaminathan committee report need to be implemented.

18. The pension scheme for farmers should be considered.

4.3.3. Feedback from the Mandi officers

1. Spot cash payment should be done. 2. Necessary arrangements should be made for the procurement at MSP.

Based on the quantum of arrivals in Mandi, the extension of mandi should be done. Tin shade areas should be expanded.

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3. The weighing capacities need to be increased. 4. Adequate number of staff needed in mandi. 5. Neemuch Mandi known for arrivals of Medicinal crops. There is need for

expansion and modernization of mandi. 6. E-NAM should be implemented as early as possible.

4.4. Violent protests and its trigger factors Distressed Farmers across Madhya Pradesh had announced Bandh on 5th June, 2016 protesting for fair price for their produce and waiver of their loans. The initial problem started in Pipalia Mandi between traders and farmers and violence erupted which had spiraling effect across the neighboring districts too. The social media has also played a vital role in the spread of violence. It’s also stated that the Opium mafia also played a huge role in hatching upon the mood of the distressed farmers in triggering the violence in the region. It was also opined that there were political motives behind the violence and it’s is to be noted that the affected districts are dominated by the Patidar community who had actively participated in the farmers agitation. Majority of the stakeholders interviewed stated that 90 percent of the persons involved in protests were unemployed youth. In Dewas and Ujjain, violence was triggered by farmers death due to police firing in Mandsaur. Announcement of Rs. 1 crore compensation to the families of Mandsaur firing victims also boosted the confidence of the youth for rioting. It was stated that, some protesters stood in front of the police and district administration with petrol bombs shouting “shoot us if you have guts, we will get one crore”. There is no particular district specific reason for distress and violent protests in the affected area, because the situation of farmers’ distress is almost the same across the state. The mood of the mob mattered and triggered the violence. It was requested by the officers of the district administration that to handle the law and order situation effectively, the officers should be given special powers to control violence.

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6. Distress in MP: An Analytical Evidence The critical reasons that led to widespread distress among farmers as stated by various stakeholders during the primary survey were glut in production, price volatility and issues related to mandi, marketing and storage. An attempt is made to analyze these factors using the statistical facts in this chapter.

6.1 Glut in Production and fall in prices Successful crop after two successive droughts has been stated as one of the major reasons for the sharp fall in prices, which in turn has resulted in unrest among the farmers. For analyzing this cause for the unrest, four major crops of the state ie. Paddy, Wheat, Gram and Soybean have been chosen for discussion. Through graphical presentation, the trend in production, procurement, Mandi arrivals, wholesale prices (yearly & harvest season) and MSP are compared for the major crops.

Graph 7: Trend in paddy production, mandi arrivals and prices in MP

(Data source: Indiastat & NAN, GoMP) In graph-7, trend in paddy production and prices are illustrated. Though Paddy is not a major crop in the affected districts, it is one of the major crops in the state contributing to 8.8 percent of the gross cropped area. It is obvious from the graph that, there is a decline in production and prices in 2015, followed by the increase in production in 2016 and 2017. It is interesting to note that the though the wholesale

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price of the paddy has increased, the MSP has fallen down from 2014. One of the reasons for the MSP paddy prices much lesser than the wholesale prices may be the quality of paddy traded as the scented varieties like Basmati are purchased by the traders at a good price in Mandi while low quality paddy are procured at MSP. It is to be noted that less than half of the total production is procured under MSP while, major portion of the produce is sold in Mandi.

Graph 8: Trend in Wheat production, mandi arrivals and prices in MP

Data source: Indiastat & NAN, GoMP. In case of wheat (Graph-8), the MSP has declined since 2014-15, while the wholesale prices have increased and also there is increase in wheat production since 2014-15. The whole prices of wheat during the harvest season when most of the small and marginal farmers dispose their produce has fallen below even the MSP in 2014-15. But the situation has improved in 2015-16 and 2016-17. It is also interesting to note that in the total sales in mandi and procured quantity of Paddy and Wheat is more than the total production in the state in 2016, indicating the possibility of produce from other states being traded in Mandis of MP or clearance of old stocks in Mandi. Farmers also stated this issue as one of the reasons for overcrowding in Mandis. Soybean is the major Kharif crop of the state, grown in about one fourth of the GCA. The affected districts are the major soybean-growing belt with more than 45 percent of GCA under this crop. The price and production of soybean (Graph-9) is showing a declining trend since 2014. The area and productivity of the soybean is also varying over the years attributing to erratic rainfall pattern in the state. Soybean is very

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sensitive to drought and temperature changes. In the 2016, the wholesale price during the harvest season has fallen to Rs.2813 from Rs. 3569 in 2015 and has further dropped in 2017.

Graph 9: Trend in Production, Mandi arrivals and prices of Soybean in MP

(Data source: Indiastat & NAN, GoMP)

Graph 10: Trend in Channa production, mandi arrivals and prices in MP

Data source: Indiastat & NAN, GoMP.

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Channa is another important Rabi crop of the state with around 9 percent of GCA under gram in MP and the trend shows that wholesale prices of the Channa has declined sharply in 2013 & 2014 while it has recovered in 2016 and 2017 (graph-10).

Graph 10:Trend in area, production and productivity of onion in MP

(Data source: Indiastat.com & Agmarknet)

Onion is the most important crop, which is posing a huge challenge to farmers and the government of MP due to its extremely high volatile prices. Area under Onion in Madhya Pradesh has increased from 58,000Mha in 2010 to 120,000MHa in 2016 (Graph-11). Apart from the local production of Onion, the mandi arrivals from Karnataka and Maharashtra also influence the price of the onion in the state. The Annual average wholesale price of the Onion has fallen sharply from Rs.1308 in 2015 to Rs.496 in 2016, while the cost of cultivation of onion is about Rs.8.27/kg (NHRDF)2. The area under onion in the affected districts range from 0.5 % to 1.8% of the GCA and hence the data do not support the argument that steep fall in onion prices is the major reason for the widespread violence. The price volatility is also a key reason for distress among the farmers. Farmers generally do not possess the ability to hold/stock the produce and sell the produce during lean season because the prices are usually at a minimum during the peak harvesting seasons. The intermediaries and traders to earn huge profits factor in this price advantage. In table-7, information on price variation within a year is presented and it indicates that coefficient of variation (CV) is very high for the gram crop and was around 28 percent in the 2016 when the price fluctuated between Rs. 4126 to Rs. 9143. Price variation of Soybean, which is the major crop in the affected districts, was high in the year 2016 with the CV of 11%. Minimum price has come down to

2 National Horticulture Research and Development Foundation

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Rs.2787, which is just above the cost of production of Rs. 2661 in 2014-15 (Directorate of economics & Statistics).

Table 7: Price volatility of major crops in MP

Intra year Wholesale Price variations for major crops in MP Crop Year Maximum

price ( Rs/qts) Minimum

Price (Rs/qtl) Range CV (%)

Paddy 2015 1786 1276 510 12 2016 1915 1523 392 7 2017 2343 1625 718 14

Wheat 2015 1627 1438 189 3 2016 1928 1620 308 6 2017 1891 1448 443 6

Soyabean 2015 3782 3084 698 6 2016 3786 2787 999 11 2017 2851 2578 273 3

Gram 2015 4809 3165 1644 14 2016 9143 4126 5017 28 2017 6305 3835 2470 14

Onion 2014 1232 574 658 27 2015 2791 756 2035 50 2016 764 385 379 21

(Source: Nargaric Apurthi Nigam, GoMP) Apart from inter year price volatility, the intra year price volatility for onion also is very high for the onion crop with 50 percent CV in 2015 and 21 percent in 2016.

6.2 Mandi Issues Apart from price crash, farmers were also agitated by the overcrowding in mandis as farmers had to wait in long queues for 3-4 days to sell their produce. The previous graphs (graph7 & 8) indicated that produce from outside state is also sold.

Table 8: Mandi infrastructure in MP and affected districts

Sample Districts/ State

NSA (lakh ha) 2015-16

No of villages

No of Mandis in the district

NSA to be covered by each Mandi (Ha)

Number of villages per Mandi

Dewas 7.36 1,114 7 1,05,143 159 Mandsaur 6.02 933 7 86,000 133 Neemuch 3.06 798 3 1,02,000 266 Ujjain 9.06 1101 7 1,29,429 157 MP state 240.47 51,929 520 46,244 100

(Source: Data compiled from CM dashboard and other sources)

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Mandi infrastructure is very important and varies considerably across the districts both by the volume of transactions and proximity to the villages. Number of villages each mandi has to cover in MP is displayed in table-8 and in the state as whole, there are about 520 mandis and each mandi has to cover 100 villages and handle the produce from 46,244 ha. The situation of mandi infrastructure has improved since 2015 as each mandi had to cover about 239 villages then while mandis in other states such as AP, Punjab, Grarat, Kerala, Haryana, West Bengal and Punjab has to cover less than 100 villages each (Chatterjee & Kapur, 2016). The mandi infrastructure in the sample districts is also displayed in the table-8 and it shows that the mandi infrastructure is not good in all the sample districts with the number of villages to be covered more than the state average. The situation is worse in Neemuch with just 3 mandis, which need to cover about 266 villages each while, in Dewas & Ujjain each mandi has to cater to about 158 villages.

6.3 Storage Issues Storage infrastructure is also an important issue of concern in the state and majority of the officials and the farmers interviewed stated that they need storage structures to store their produce so that they can plan their selling when they get better price in the market and in-turn avoid distress sales. The current infrastructure is inadequate in the districts and farmers demand free credit linked storage facilities targeting small and marginal famers. In MP, there has been steady increase in the average capacity of warehousing services. It has increased from 1.83 lakh MT in 2000-01 to 73.21 lakh MT in 2015-16 (www.mpwarehousing.com). Though the storage capacity has multiplied, the major user of the facility is MP civil supplies corporation.

Table 9: Depositor -wise Warehousing position of commodities in MP

S. No Depositor Percentage of deposits by the depositor (2014-15)

1 Cultivator 0.65

2 Cooperative Societies 8.99 3 FCI 0.04 4 MP civil supplies corporation 87.34 5 Government institutions 1.50 6 Traders 1.41

Source: (www.mpwarehousing.com). It is to be noted in the table-9 that 87 percent of the total deposits is done by the state civil supplies department for storing their procured produce while, farmers share is less than 1% of the total deposits.

6.4 Analysis on MSP: MSP policy of the government is to insure farmers against sharp fall in prices and is fixed by the central government based on the cost of cultivation (C2) calculated by

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Commission for Agricultural Cost and Prices (CACP). Currently, MSP is fixed for 25 crops and is announced at the beginning of each cropping season Viz. Kharif and Rabi. MSP is determined taking into consideration of the cost incurred as C2 cost which includes all expenses in cash and kind including rent of leased land, imputed value of the cost of family labor, rental value of owned land, land revenue, depreciation and interest on the fixed and variable capital. In table -10, MSP prices are compared with the cost of production of major crops in the country. MSP in the table includes the bonus announced for various crops such as Arhur, Masur, Moong, Urad, Sesame and Soybean. Cost A2 includes all the variable costs and rent for leased in land while, imputed rental value of owned land, interest on fixed and variable capital are not included. In our analysis on MSP, Cost A2 + Family labor is taken to compare and derive the margin received by farmers over MSP. The margin received by the famers over MSP is high (112%) for wheat and is only 45 percent for Soybean.

Table 10: Comparison of MSP and Cost of Production

Name of the crops Cost A2+ FL (2017-18)

MSP (2017-18) % Margin

Kharif crops Paddy 1117 1550 38.8 Ragi 1861 1900 2.1 Urad 3265 5400 65.4 Tur 3318 5450 64.3 Maize 1044 1425 36.5 Bajra 949 1425 50.2 Moong 4286 5575 30.1 Soybean 2121 3050 43.8 Groundnut 3159 4450 40.9 Cotton 3276 4020 22.7 Jowar 1536 1700 10.7 Rabi crops Wheat 817 1735 112.4 Gram 2461 4400 78.8 Masur 2366 4250 79.6 Rapeseed & Mustard 2123 4000 88.4 Sunflower seed 3481 4100 17.8

(Source: CACP) Gross margin over MSP is around 78 to 88 percent for the crops such as Gram, Masur, Rapeseed and Mustard while, it is just 39 percent for Paddy.

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7. Conclusion and Recommendations The failure of crops in most parts of the State due to drought during the years 2014 and 2015 was followed by a bumper harvest for many crops in the year 2016 and hence the prices of the . It was widely stated that the farmers were in distress, as they did not get fair price for their produce. The statistics showed that the prices of all the major crops such as Paddy, Wheat, Gram and Soybean have fallen sharply during 2014-15 from 2012-13. Soybean and Onion prices fell steeply in 2016. Soybean productivity has also declined due to erratic rainfall during 2014 and 2015. Hence farmers across the state were in distress due to failed crops in 2014-15 and fall in prices. Onion price fall cannot be associated with the distress in the affected districts as only less than 2 percent of the GCA area is under Onion. Increased supply of agricultural commodities over supply led to a drop-in price for crops and this was further exacerbated by the unfavorable regulatory environment in Mandis. Farmers were unable to dispose their produce in Mandi due to confusion among the traders over GST and over crowding in Mandi. Cash crunch due to demonetization and Non-cash payments have also added fuel to the fire. Though these issues did cause stress on the farming community, it cannot be concluded that the violence in the protests were only due to agricultural distress and the role of several other local factors not related to agriculture cannot be ruled out. The following may be taken up to mitigate the difficulties due to agricultural distress:

6. Farmers need to be insulated against price risk through effective agriculture price policy, procurement policy and risk mitigation measures such as insurance schemes.

7. Focus should be given to improve the mandi infrastructure in the state. Adequate storage infrastructure accessible for farmers need to be created in the mandi or in the nearby areas and made available at reasonable prices/arrangement to small and marginal farmers. This would include measures such as credit linked storage services, which would cater to the immediate cash requirements of farmers.

8. Introduction of e-NAM in all the mandis would help in increasing transparency and dissemination of market prices to all stakeholders. Modern and scientific methods for grading and weighing of commodities will help in better price discovery for commodities.

9. Banking infrastructure in rural areas needs to be strengthened to handle the high volume of transactions during peak harvesting seasons.

10. Crop insurance scheme offering cover against price risk will help mitigate the problem of uneconomical prices for agricultural commodities.

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Documents

Agriculture Distress and Farmers’ Unrest in Madhya Pradesh: An ...aiggpa.mp.gov.in/images/files/pdf/Agriculture Distress and Farmers... · Project Report Agriculture Distress and