We in India are celebrating our seventieth independence day but the biggest producing community of people in this country, farmers, are woefully imprisoned by market economics and faulty science and technology and no one really seems to be bothered. One of the most heart rending sights for me in recent times was this photo of onions thrown on the road in front of the District Magistrate's office in Indore by farmers who were angry with the fact that their wholesale price had dropped to just 25 paise a kilo.
Why did the prices go down so much? Because those who are supposed to plan our agricultural production and draw hefty salaries for doing so are both incompetent and corrupt. Onion is a major component of Indian cuisine and even the poorest of the poor like to have it in their meals as both a part of the cooked dishes and as a raw salad. Thus, even if there is a small short fall in its supply prices tend to shoot up as there are major traders who hoard supplies of onions in cold storages waiting for such an opportunity. The biggest onion producing area in this country is around Nashik in Maharashtra. Over the years whenever there has been a shortfall in production in the Nashik area due to excessive or deficient rains, the price of onions, spurred on by speculation and hoarding, have tended to go through the roof, prompting the Government to take emergency steps like importing onions from abroad and raiding the traders to relieve them of their hoards. In 2014 there was a fall in production of onions in the Nashik region and this was immediately manipulated by the traders through hoarding and speculation to hike up prices. The farmers did not get any of these high prices as all of it was cornered by the intermediary traders. These days through the online trading of agricultural produce the manipulation of prices and the movement of hoarded stocks has become easier. The Government belatedly stepped into the scene to try and control prices by raiding the traders hoards and importing onions but the time lag was enough to send the prices of onions shooting through the roof. Even though shortfall in production over the previous year was just 2 per cent this was against the trend of annual increase in production of about 20 per cent over the past three years or so. Thus, the market expected a similar growth and so the shortfall from expectations was close to 22 per cent and that was a big gap which the hoarders and speculators could exploit. The onion trade is dominated by a few big traders who control the market and the cold storages. Matters are compounded by the fact that storage of onion requires special facilities like cold storages which are accessible only to the big players and not to most of the farmers. Indeed there is a dire need to have decentralised storage options for perishable food items as close Rs 100000 crores of food output is lost every year due to lack of proper storage. So there is a high post harvest loss for the farmers if they cannot sell their harvest in time. Over the past three years or so the traders have been manipulating prices of onions upwards by controlling the storage and despite several investigations, most importantly by the Competition Commission of India having established this, no action has been taken by the Government against this manipulation which has hurt consumers.
This continuous hike in prices of onions over the past few years had a time lag effect on the farmers and they responded by sowing onions in large numbers in 2015 unaware that the hike in prices was a manipulated rise. A bumper crop followed with an increase of about 25 per cent over the 2014 production and this time the big traders allowed the prices to crash instead of buying up the produce and so there were huge unsold onions in the agricultural whole sale markets. Farmers who had been fooled by the big market players let the onions rot in their fields as it was uneconomical even to harvest them and some of the more organised farmers took out rallies and dumped the onions on the roads venting their anger on the Government not being able to understand the market forces at play.
It is indeed perplexing that the Government agencies tasked with regulating the production and marketing of food items can be so cavalier in their job. Food items cut both ways in the Indian economy as higher prices for them lead to inflation which hurts the majority of the poor and lower prices hurts farming which is the biggest employment provider. One would have thought that there would be advance planning in the agriculture department of the government to ensure that agricultural production and marketing of crucial price sensitive food items like pulses, onions and vegetables remain stable so that both farmers and consumers are not hurt. But this is just not happening as the Government fumbles from one crisis to another and farmers remain prisoners of the manipulations of big market players. For instance it was clear many months before that there would be a bumper onion crop because farmers in Madhya Pradesh and Maharashtra had increased the acreage under the crop but there was no plan on the part of the government to prepare for this. Similarly, it has been a few years now that there is an increasing shortage of pulses vis a vis demand and yet the government has not been able to take steps to increase pulses production primarily because various trading lobbies are bent on capitalising on the shortages. Food production in this country has to be made independent of the market through government support because it is the mainstay of the livelihoods of a majority of the population and also it happens to be the determinant of the level of nutrition of the population. Remunerative prices to farmers have to be cushioned by subsidised food to the consumers. Matters have been compounded by the increasing failure of chemical external input agriculture which now dominates the farming landscape and is devastating the economics of food production and the availability of a diverse food basket. The key is to switch to organic diverse and local food production through appropriate subsidies and the strict control of markets and storages to ensure that hoarding and speculation does not take place. We won't have true independence as long as the big traders are free to manipulate agricultural markets.
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