Farmers in India find rabi sales profitable, despite early market lockdown disruptions


Jeera farmers of Rajasthan

Wheat prices have increased about 3 per cent to nearly Rs 1,900 per quintal during April-June quarter from the year-ago period. Similarly, there has been 25 per cent and 15 per cent increase in prices of masur and mustard respectively during the period, while their corresponding arrivals dropped by 3 per cent and 37 per cent.

The farm-gate prices of chana improved in June after remaining subdued in the previous two months. Though chana harvesting starts early from March, the pan-India market arrivals in April saw a steep 80 per cent drop y-o-y, and last month, the arrivals were up 16 per cent on year.

Mandi rates of wheat only started falling from the first week of July after reports appeared that the government may cut the reserve price of Food Corporation of India stocks for open market sales from current Rs 2,135 per quintal. Official data show that all-India average mandi price of wheat in June was 2.7 per cent lower at Rs 1,855 a quintal from the previous month. Current rates indicate there may be about 2 per cent fall in farm-gate price of wheat in July, month on month.

Going by the official data on mandi arrivals and prices fetched by farmers for key winter crops, rural India should have been under distress since April, but the ground situation is significantly better. Despite the lockdown blues, between April and June, farmers in  India have made money on their winter crops (rabi harvest).

As the lockdown impeded transport of goods and caused labour shortage at mandis, the bulk of government procurement of wheat, the key rabi crop in the case of which minimum support price (MSP) operations are real, happened at ad-hoc purchase centres closer to farm gates. Additionally, direct purchases of crops including wheat and pulses from farmers by food processing firms and retailers saw a big rise in recent months. In other words, the actual sales of crops by farmers are much higher than reflected by official mandi arrivals, especially for the April-May period, when the transport-labour shortage was at its peak. Also, the prices remained particularly firm for most of the winter crops in the April-May period, boosting farmers’ profitability For the April-June quarter as whole, mandi prices of many crops including masur and mustard were higher than the year-ago period, although many crops were still sold below their MSP levels. Since the MSPs under new policy are 50 per cent higher than production cost, even if the actual sale price is marginally lower than MSP, transactions are profitable for the farmers.

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