Why a loan waiver will only solve half the problems of Maharashtra's farmers

Maharashtra's farmers called off their protests after the Bharatiya Janata Party-led state government approved the biggest farm loan waiver in the state's history over the weekend.

The strike by farmers mostly from rural Maharashtra, which lasted more than a week, led to lower supply of vegetables and fruits by Agriculture Produce Marketing Corporation (APMCs) to Mumbai, resulting in a steep rise in the prices of perishable goods.

The farmers went on strike on June 1 demanding a farm loan waiver, interest free-credit, a pension scheme for farmers aged 60 and above, pay higher prices for milk, fully subsidised micro-irrigation equipment and uninterrupted power supply.

By agreeing to a farm loan waiver of Rs 30,000 crore that will be effective from October 31 this year, the government has met one of the farmers' major demands.

The waiver will provide relief to about 31 lakh small and marginal farmers out of 1.34 crore farmers in the state. But it also means that around 77 percent of the farmers in the state are still awaiting relief.

About 400 farmers committed suicide in January this year alone in Maharashtra, according to a government report cited by CNN-News 18.

According to National Crime Report Bureau report in 2015, Maharashtra recorded 4,291 farmer suicides, the highest number of farmers suicide accounting for about 33 percent of total farmer suicide (12,602) in India.

Maharashtra recorded the highest farmer suicides for two consecutive years. Among the causes listed for farmers suicide, bankruptcy and loan debt accounted for 38.7 percent of total cases. Maharashtra state has outstanding farm loans of Rs 1.34 lakh crore, which accounts for about 17 percent of the country's total agriculture outstanding crop loans (Rs 7.75 lakh), as per New Delhi's Minister of State for Agriculture Parshottam Rupala. The total outstanding agriculture loans, including term loans and crop loans, amounts to Rs 12.6 lakh crore, he added. However, the sustained protest by the farmers has highlighted other long-standing areas of concerns like minimum support price (MSP), irrigation, pension and electrification. Even though the state witnessed a normal monsoon in 2016, it was preceded by two years of severe drought that resulted in reduced productivity and increased debt. According to a Livemintreport, the government's decision to demonetise two major denominations in November 2016 added to the continued struggle of the farmers as the prices of goods went down. In some cases, the prices went below the minimum support price (MSP) as the wholesale vegetable prices collapsed due to a severe cash crunch —forcing many to dump their harvest at a cheaper rate. Farmers were also forced to sell their bumper arhar (Tur) crop at wholesale rates substantially lower than government-announced minimum support prices (MSP)—about Rs 4,000 per quintal or lower, compared to an MSP of Rs 5,050 per quintal, the report said.

The farmers are concerned about MSP as prices of pulses, especially tur dal, have fallen sharply in wholesale mandis below the minimum support price (MSP) of Rs 5,050 per quintal due to a record crop this year, according to PTI.

As per the Agricutlure Ministry, pulses output is estimated to be a record 22.40 million tonnes in the 2016-17 crop year ending June, as against 16.35 MT previous year, on account of good monsoon, higher MSP and procurement arrangement, according to PTI.

In its second bi-monthly Monetary Policy Statement of 2017-18, the RBI said, "...the prices of pulses are clearly reeling under the impact of a supply glut caused by record output and imports. Policy interventions, including access to open trade, may be envisaged to arrest the slump in prices."

Until 2010, only about 17.9 percent of cropped area in the state was irrigated.

Following the severe drought conditions across the state, the government launched several irrigation projects including live storage outlets. However, the actual area irrigated is lower than the potential area that was slated to be irrigated under such projects.

The percentage of actual irrigated area to irrigation potential created had been low for the years with normal monsoon.

Farmers have also been demanding for uninterrupted electricity to facilitate the use of electric pumps.

According to Economic Survey of Maharashtra 2016, under Mahavitran project to provide electricity connection to backlog areas, 78,000 agricultural pumps had been energised till December 2016 against the target of 1.30 lakh pumps.

The state has about 39.67 lakh agricultural pumps. However, the lack of electricity is a major hindrance for farmers to irrigate their crops.

The farmers had been demanding increased rates for milk as dairy products are the second important source of income for rural households. It has also played a major role in providing employment and income generating opportunities.

According to Economic Survey of Maharashtra 2016, the state ranks seventh in milk production in India.

Over the past few years, the production of milk has increased from 39.19 lakh litre per day to 51.13 lakh litre per day in 2016.

Farmers feel increasing the price of milk will help them balance the loss incurred to them due to low productivity, low prices of goods or poor harvest due to bad monsoon.