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No Utopia this! Only a Sotheby’s auction of farm prices can save Indian farmers

Ridiculous on part of politicians that enhancing income of farmers would distort markets

No Utopia this! Only a Sotheby’s auction of farm prices can save Indian farmers

For creation of portfolio, various asset classes may be considered which includes, equity, debt, cash and money market, gold, real estate, etc. Some of the asset classes like real estate or gold may require large ticket size which may be difficult for retail customers. First time investors could start building their portfolio by investing in mutual funds

The New York-based auction house Sotheby’s, one of the oldest auction houses in the world, should now consider shifting from paintings, artefacts, iconic jewellery to farm prices. Expanding its portfolio, Sotheby’s may like to bring farm prices too under its hammer.

Why I am suggesting this is because when Sotheby’s auction takes place, it will be keenly watched by millions of farmers, who have never heard of Sotheby’s and therefore implies that the outcome will not be quality but of quantity.

What I gather is that ideally, about 200 to 300 people attend Sotheby’s auctions. If the auction house ventures into getting a higher price for farm produce, and that too at a time when the dance of democracy is in progress, I mean the elections in India, Sotheby’s will emerge globally as a sought after name. Not only in India, but farmers across the world will keep a sharp eye on the auction and endorse the move wholeheartedly.

And more importantly, farmers will have more confidence on the final price that is arrived at, once the auction is over, hoping that the political parties participating in the auction will not go back on their commitment made before a global audience.

As political tempers run high, with pitched battles being fought as the date of polling gets closer, the two main contenders, the Bharatiya Janata Party (BJP) and the Congress, are slugging it out. Both the parties are trying to woo the marginalised sections of voters, making a last-ditch effort to lure them with extravagant poll promises. I say extravagant poll promises because we have seen in the past the ruling party going back on what it promised in some instances. Farmers have often been left high and dry.

Nevertheless, in poll-bound Madhya Pradesh, the Congress manifesto, which was released first, promised to provide a higher price for wheat and paddy. Against the procurement price (already announced) for paddy at Rs 2,040 per quintal, Congress gave an assurance of Rs 2,500 per quintal. The BJP manifesto too has tried to match up or exceed what has been promised by its political rival. In case of paddy, BJP announced Rs 3,100 per quintal, which the Congress, subsequently, matched.

In Chhattisgarh, where the paddy procurement was already high at Rs 2,640 per quintal, the Congress party has assured Rs 3,200 per quintal ensuring that at last 20 quintals per acre will be procured at this price. BJP’s manifesto says that the party, if it comes to power, will procure paddy at Rs 3,100 per quintal with the assurance that it will buy 21 quintals per acre. For tendu leaves collection, it has offered Rs 5,500, while the Congress has announced Rs 6,000 with an annual bonus of Rs 4,000.

With such a close competition in announcing prices, and in what appears to be an effort to show is who is one up, I think Sotheby’s could have done a better job to get a higher bidder. That is why my suggestion is to make the electoral promises a little more organised, and of course coming with a legal commitment that the parties will deliver once they get to form the government. Hope the Election Commission is listening.

Now, why is it that the promises are not being taken seriously? Everyone you talk to says these are just election gimmicks, and once the election results are out, political parties will go back on what they promised and in fact will find an alibi to deny those prices. It will, therefore, be a challenge for the winning party to deliver on its promises. If they fail to deliver this time, election promises will lose its relevance in future elections. It will end up being nothing more than an amusement that is meant for entertainment.

Let us try to understand as to why doubts are being raised. Both political parties have made an electoral commitment to provide farm prices that goes much beyond what was suggested by the National Farmers’ Commission, headed by Dr. M. S. Swaminathan. Against the recommendation of 50 per cent profit over the comprehensive cost (technically called C2+50 per cent), the price announced by both the parties for paddy and wheat actually turns out to be still higher, around C2+62 per cent.

The question that arises therefore is that ever since the Swaminathan Commission submitted its report in October 2006, successive governments have dilly-dallied on implementing the panel’s price recommendations. So much so that while giving farmers a price equivalent to C2+ 50, as suggested by Swaminathan committee, became an electoral promise for the BJP before the 2014 national elections; soon after getting into power the government filed an affidavit before the Supreme Court saying that it is not possible to abide by the Swaminathan formula as it could distort markets.

Will the higher price now being promised not ‘distort the markets’? What has changed all these years that political parties now think that they can go even higher than what Swaminathan had suggested? That is why the promise of providing a higher price, even exceeding C2+50 per cent, is not getting easily palatable. If C2+62 per cent price is alright, will the political leadership, irrespective of the party, strive to make it a uniform farm price across the country?

Further, since the NDA government at the Centre had directed the State governments not to give any bonus over and above the MSP at which the procurement for wheat and paddy is made, saying if they do so the Centre will withdraw procurement support, will the higher price not be seen as a bonus over the procurement price? I don’t think there has been any policy reconsideration on this in recent times.

The race for announcing higher farm prices in Madhya Pradesh and Chhattisgarh at least demonstrates that politicians are much better equipped to understand the pain and agony that farming communities are living with. They can appreciate why farmers are living in distress, and what needs to be done to pull them out of the crisis situation. Given that the average monthly income of farmers in the country (as per the latest Situational Assessment Survey for Agricultural Households) stands at a paltry Rs 10,218, the urgent need is to raise farm incomes. But when the same political leaders form the government, the reality is that they get so much pressurised by the mainline economists and bureaucrats, that any talk of enhancing the income of farmers is seen as a distortion of the markets. In reality, it is a distortion of the mindset that has kept farming deliberately impoverished.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)

Devinder Sharma
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