Boom and bust

There appears to be no end in sight to the cycle of boom and bust in the prices of agricultural goods in the state. If it is onion today, it was potato the other day, eggs another day. Over the last few months, onion has been bringing tears to the eyes of common people in the country with its prices hovering over Rs45 per kg in retail markets. The tuber has a notorious history of upsetting kitchen budgets of middle class homes at regular intervals. The state government on its part has made sporadic efforts to find a solution to this nagging issue, but all of them have been knee-jerk and half-hearted with the result that the crisis keeps coming back to haunt us all too often. This time around, onion has been holding on to Rs45 plus per kg for over two months and the state government, like it did in the past, looks awkwardly helpless.

People in India, both end users and producers, are used to wild swings in prices of agricultural commodities. The volatility stems from the fact that we are yet to develop a well-oiled farm infrastructure. This is so although more than 80 per cent of our people depend on farming for their subsistence. The state government is not in a position to preserve whatever we produce in the state, and, needless to say, also what comes from outside. Our government is yet to put in place a mechanism to facilitate inter-state movement of agricultural goods whenever there is a crunch. Take for example the crash in potato prices; prices have come down to as low as single digit figures. At some places in the country, they sell for as low as under a rupee in wholesale markets. Many distressed farmers have left their produce to rot on the road and cold storage facilities. Recently, distressed farmers in Sundargarh dumped tonnes of tomatoes on roads as transporting them to markets proved uneconomical.

Curiously, potato prices were many times higher just months ago owing to poor supply. Last year, the prices of red chilli and tur dal had witnessed similar falls compared with the previous season. Farmers tend to increase acreage of certain crops in response to their high prices in the previous season, which in turn leads to a glut causing prices to crash. The cycle repeats each passing year, with the lag between price and production causing a mismatch between supply and demand. There could be no shortcuts to solving these problems of plenty and scarcity. They could be resolved if farmers can produce more and the government sets up more warehouses and cold storages. This must also be complemented by market linkages and easy movement of goods. The triumvirate can make a difference to such continual crises. The state requires an average of 5 lakh metric tonnes of onions per annum, while its annual output does not exceed 2 lakh metric tonnes. The shortfall is met with onions brought from Maharashtra, Karnataka and Andhra Pradesh. Untimely rains in Nashik, Ahmednagar and Satara in November destroyed standing onion crops, fuelling a shortage in supply of the vegetable. The late arrival of the tuber in Andhra markets will delay quick recovery from the problem.

The soil and climatic conditions of Orissa are suitable for onion farming. Farmers in Bolangir, Kalahandi, Nuapada, Koraput and Nabarangpur districts grow onions in a large scale. They can scale it up if the state government can assure them that it will procure the produce at their farm points without a time lag at market prices. Given the humanitarian and political costs of onion distress, particularly when the state is just a year away from General Elections, the government may turn towards populism. This could come in the form of fiscal measures such as farm loan waivers or a higher minimum support price for farm produce. But such temporary relief for farmers will fail to bring any significant difference in their lives. Any permanent solution to farmers’ distress will depend on addressing the challenge of the boom-and-bust cycle.

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