Farmers lose, millers gain—not a new game


Unless farmers get gain from competitive edge in market and be able to rein in market trends in their favour, this game of “farmers lose, millers gain” will not see its end. It is nothing new and a repetition of tragedy of our agricultural marketing of staples and that scorch not only macro economy, but our   conscience and media gets flooded with, when our ill fated patriotic farmers responding to the national call to “produce more” fall victim of over production. Taking all farmers’ friendly subsidized facilities provided by government, farmers are king in production, but slaves in marketing, becoming prey to profiteering of millers and owners of “chatals”.

But a part of assured food security denotes keeping high the justified share of all stakeholders from production to marketing and finally reaching to end consumers and for that a due market economy desires a market mechanism with no oligopolistic existents. Side by side there must have an efficiently operational social security programmes and responsibilities. Sorry to say, everything has been done away with for long. Leverage has been broken down. Concerned ministries have been very much loyal to assist producers in production in direct and indirect ways and to that extent oblivion to them to have incentive prices in markets that will stop them thinking twice whether to go for further production with the same zeal. Yes, the need for formation of much talked about “Price Commission” is being echoed in vain.

But what is alarming if farmers at large henceforth produce paddy for themselves only and not for us and if they turn to other commercial cropping instead of paddy and if that Cobweb theory starts practicing? Yes that pay off for farmers’ long deception starts surfacing not in way of their suicide as happened in India, but in their about turning slowly from rice production and switching over to others more profitable. Information says that.

For not so long, various researches have been pointing out a trend that rice production has been on the wane and it corroborates the recent findings and observation of agricultural extension directorate. It says, a silent change has been occurring in cultivation scenario in Northern districts once known as major rice producing areas. Tobacco cultivation has been increased in Rangpur. Vegetables in Bogura and Rajshahi instead of rice production. Farmers in Sirajganj turn off rice to fish cultivation and they are digging ponds in agricultural lands. Naogaon is called the capital of rice and now farmers are tilting more to mango cultivation leaving rice. This trend might have accentuated further due to this year’s depressed price of boro. Agricultural extension directorate anticipates.

For four years only in Naogaon saw 18 thousand and 13 thousand hectares of lands ceased to produce boro and aman respectively. Instead this season used 18 thousand hectares more for mango production as next best alternative (opportunity cost). In Rangpur, mango producing lands has been enhanced from 2 thousand 950 hectares to 3 thousand 125 hectares. In Bagura 1 thousand hectare rice producing land has been squeezed during 5 years.

So statistical munching to understand this year’s screen play is not so relevant now, just will only to cost sleeplessness. It is the very structures and different stages perennially set for ages that are causing harm to farmers and end consumers in paddy and rice marketing and crippling competitive edge in the market mechanism. Food market or rice market is oligopolistic in nature that is being controlled by few millers. So starting from production, storing, government purchase, imports and marketing—all are going uncoordinated and running on adhoc basis. Nearly 18 stages work in rice marketing. But government is diligent in controlling input market in the form of giving subsidy in favour of real farmers and ensuring their easy access to financial flow. But marketing has always been spiking farmers reaping the fruits to their doors. Albeit, there exists oligopoly. Albeit it is hindering formation of “Price commission”.

See the example of this year’s ongoing food grain procurement programme. The government is buying only 1.5 lakh tonnes of paddy from farmers, which makes up less than one percent of the total estimated production of around 1.96 crore tonnes this boro season. Under the same scheme, the government is purchasing 11.5 lakh tonnes of rice ( equivalent to about 20 lakh tonnes of paddy) from millers. Although the primary goal of the procurement programme is to give price support to farmers. But it is not benefitting them much.

On one hand, millers are buying paddy in the open market at low prices and selling rice to the government at high rates. On the other, the government is buying almost 13 times more in terms of paddy from millers than from farmers. This means millers are gaining more both ways. This is the case when farmers are facing losses due to low selling prices in the open market. Moreover, the amount of government procurement from farmers is paltry compared to the amount it would buy from millers. The procurement started on April 25 and will continue till August31.

Just to give a short numerical example of this year and it is symbolic of an endless story of the same repetition with just as varying the number and extent of production but telling the same eternal tragedy of deprivation our farmers. According to government estimates, a farmer had to spend TK.24000 to grow one tonne of paddy. But millers are buying the same amount for TK 15000, inflicting a TK.9000 loss on farmers per tonne. If the government procures directly from farmers at TK 26000 a tonne, the farmers get TK 2000 in profit.

At the same time, under the procurement programme, the government pays millers at least TK21600 for the rice produced from one tonne of paddy. In this case, the millers have to spend only TK15700 including the husking cost of TK750 per tonne. This means, the millers garner about TK 5850 in profit every tonne. In simple terms, while farmers make a profit of TK2000 per tonne from government procurement, the same scheme gives TK 5,850 of profit to millers. This just this year’s example and we again say it is symbolic and repetition of the more or less the same snapshot of the past couple of years.

During harvesting, farmers are bound to depressed selling due to pressure from hired labours, loan from banks and mahajans and their day to day family consumption needs. Notably, at the time of harvesting, government procurement is not started. It is delayed upon cumbersome procedures. So farmers are bound to set off millers’ doors for depressed selling. When government starts procuring, meanwhile farmers’ coffers become empty to sell further. So even paddy procurement, benefit goes to millers.

Mind it farmers never prepare rice for market. Only millers are doing this. So if rice is bought from millers, it would not benefit farmers. Thus millers are benefited from the entire process of procurement.

Now the question, if it is continuing for farmers getting nowhere in their stay in paddy cultivation for decades with some variants and thus they continue switching over to other commercial farming only after producing paddy for themselves without us, are we risking turning to be a big importer of rice? Otherwise how long will they suffer deprivation due to artificially made market failure and be captive in millers’ trickery?  Agriculture minister blamed the entire situation on huge import. Our question, where lies the lack of coordination within inter ministries that results in keeping him in dark? Why we fail to have total boro production planning beforehand taking care of stocks including carry over?

So we propose first to make farmers capable to survive in market. How? On phase wise priority, modern storage systems have to be built up. Here required investment could be harnessed both from public, private and public-private partnership (PPP). Where farmers will keep their paddy immediate after harvest to wait for favourable market. And during that gestation period farmers will be provided for required bank loan to meet their day to day consumption expenditures, production cost including payment of hired labours. Thus they will be saved from depressed selling and depending on millers’ caprices. It is a medium and long term stride but efforts should start from now on and budgetary proposal could be made from coming financial. But immediately “price commission” must be formed as proposed by many including different think tanks.

But for immediate task must be to disburden carryover stocks by invigorating distribution among destitute at low price and enhancing other social net programmes to accommodate procured rice. In addition import is to be reined in and rethink again over 10 to 15 lakhs tonnes of rice export and giving 20 percent incentive to exporters.

Our farmers are real revolutionary and to be acclaimed for once they supported seven and a half crore at Bangabandhu’s time. And now they are supporting nearly 17 crore making the nation self- sufficient in food, thanks to policy support of the present government during their present and their past. We must not clout our farmers to shake our hard earned food security and turning again to be a big food importer.

Writer a retired professor and now a freelance contributor.

  • Farmers lose, millers gain—not a new game
  • Issue 49
  • Haradhan Ganguly
  • Vol 35
  • DhakaCourier

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