Thursday, June 08, 2017

Capitalism cannot be fixed

Half of India's people work in farms.

In western Maharashtra state, they have been on strike for a week in some seven districts now, spilling milk on the streets, shutting down markets, protesting on the roads and attacking vegetable trucks. In neighbouring Madhya Pradesh, curfew has been imposed after five farmers were killed in clashes with police on Tuesday. Last month, farmers in southern Telangana and Andhra Pradesh staged protests and burnt their red chilli crop. The farmers are demanding waivers on farm loans and higher prices for their crops. For decades now, farming in India has been blighted by drought, small plot sizes, a depleting water table, declining productivity and lack of modernisation.  The government in Uttar Pradesh has promptly raised the procurement price of potatoes - and announce a controversial farm loan waiver to quell a simmering farmers' revolt. The government in Madhya Pradesh now says it will pay more to buy off the surplus onions.

The present unrest is, however, rooted in a problem of plenty. A bumper harvest has led to a crisis.  More land was actually cropped

In Maharashtra and Madhya Pradesh, the farmers are on the streets because a bumper harvest fuelled by a robust monsoon has led to a crop glut. Prices of onions, grapes, soya-bean, fenugreek and red chilli, for example, have nose-dived.

Traders, Harish Damodaran, rural affairs and agriculture editor at The Indian Express newspaper  believes, possibly did not have enough cash to pick up the surplus crop as a result of India's withdrawal of high-value banknotes - popularly called demonetisation 
"Although the chronic cash shortage has passed, there is still a liquidity problem. I have been talking to traders who say there's not enough cash, which remains the main medium of credit in villages. I suspect the price crash has been caused by a lack of cash."
Others, though, believe the main reason for the ongoing crises actually rooted in India's chronic failure of coping with surplus harvests because of lack of adequate food storage and processing capacity. "If the rains are good, you end up with a glut of crops and prices crash. The glut only highlights the inefficiencies of the farming value chain and hits farmers," Ashok Gulati, an agriculture specialist at the Indian Council for Research on International Economic Relations. Onions, for example, are 85% water and loses weight quickly. Traders buy the crop from farmers and store the onions on concrete in tarpaulin-covered sheds. If the weather stays right, 3-5% of the stored crop is wasted in storage. But if the temperature rises, more onions dry up, lose weight and 25-30% of the stored crop could be wasted. In a modern cold storage, however, onions can be stored in wooden boxes at 4C. Crop wastage is less than 5%. Storage costs about a rupee (less than a US cent) for every kilogram of onion a month. India just doesn't have enough cold storages. Resultantly, fruits and vegetables perish very quickly. Unless India hoards food effectively, a bumper crop can easily spell doom for farmers. "We need to make the supply storage chain so efficient that the customer, farmer and the storage owner are happy. Unfortunately, India hasn't been able to make that happen," Dr. Gulati said.
There's also not enough processing of food happening to ensure that crops don't perish or go waste. Take onions, again. One way to dampen volatility in onion prices is to dehydrate the bulb and make these processed onions more widely available. Currently, less than 5% of India's fruit and vegetables is processed.
Last but certainly not least. The market. Farmers in India plant for new harvest looking back at crop prices in the previous year. If the crop prices were healthy, they sow more of the same, hoping for still better prices. If the rains are good, a crop glut can happen easily and lead to extraordinary fall in prices. Farmers hold on to the crops for a while and then begin distress sales. At a time when India does not suffer food shortages, water-guzzling wheat and rice comprise 80% of its cropped area and deplete groundwater. Rising production of cereals has meant that government has been giving paltry rises to the farmers while buying paddy and wheat.
Those who should be finding ways to grow vegetables, which grow more expensive every year, are instead growing wheat we no longer need," says Mihir Sharma, author of Restart: The Last Chance for the Indian Economy. The best that the governments here do is to quickly raise crop buying prices and alleviate the farmers' suffering. The more things change, the more they stay the same.
Capitalism cannot cope. Change the system. Contact:
The World Socialist Party (India):
 257 Baghajatin ‘E’ Block (East), Kolkata – 700086,
Tel: 2425-0208,

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