Sudhakar Patil, 65, is a farmer in Bhayar Chincholi village in Maharashtra’s Osmanabad district. He cultivates a mix of tur, urad and moong on his 11-acre farm in the kharif season and chana and wheat in winter. In a good year, when there’s water in the wells, he can plant some sugarcane as well. “Tur and sugarcane take a long time to grow but fetch good prices, so when a farmer sows these, it is because these are cash crops,” he explains. “They pay for children’s school fees, a wedding in the family or medical expenses.”

To farmers such as Patel, the nearby Murum mandi is a lifeline: its demand for their crops determines whether their fortunes will rise or fall in any given season, and its prices are a weather vane for the vast international commodities market that lies beyond. Its 100-odd licenced traders purchase grain from nearly 50 villages in the area, forming an important link in the pulses economy of Marathwada. Along with Vidarbha, this region accounts for most of Maharashtra’s production of pulses.

Two consecutive years of drought had caused India’s tur production to drop by 23% to 26 lakh tonnes in 2015. The shortage led to sharp rise in the retail price of tur dal, which at the end of that year was Rs 150-Rs 170, a record high. The farmers’ returns, too, rose as prices in the mandis doubled to Rs 10,000 per quintal ( or Rs 100 per kg). Some farmers got up to Rs 13,000 per quintal. Patil had no tur to sell that season because his crop had wilted on his parched field. In 2016, encouraged by high prices and a good monsoon forecast, a large number of farmers across Maharashtra, including Patil, sowed tur on previously sugarcane and cotton fields.

As a result, the state’s tur production rose over four times to 20 lakh tonnes, nearly half the country’s total output. The glut, however, knocked down prices to under Rs 4,500 per quintal in the mandis. This is lower than even the minimum support price, the rate at which the government is meant to procure produce from farmers to cushion market shocks.

Sudhakar Patil says he was lucky to sell his tur produce at the minimum support price. Photo credit: Manas Roshan

With the farmers’ distress growing, the central government stepped in at the start of 2017, deciding to buy tur at the minimum support price through the National Agricultural Cooperative Marketing Federation of India and other agencies. At least 120 procurement centres were set up in Maharashtra alone, but they were not nearly enough for the sheer amount of produce flooding the market. The Murum mandi, for example, deals with about 50,000 farmers but it has just one procurement centre.

Patil waited, watching the prices, through the New Year. He finally went to sell his tur at the minimum support price in February but had to wait two months for his turn. “At first, the official said I didn’t have the right documents [land deeds and Aadhaar],” he explained the delay. “I came back another day and they didn’t have gunny bags to stock the grain.” After the tur was finally weighed, Patil had to wait another month for the payment to be credited into his bank account. Farmers across the state’s tur-growing areas narrated similar experiences as Patil’s.

In early June, the farm crisis in Maharashtra’s hinterland rocked Mumbai, Pune and other big cities as protesting farmers blocked the supply of milk, fruits and vegetables. “The choice of milk and green vegetables was strategic because these are scarce at this time, it being the end of summer,” said Ashok Pawar, an activist in Osmanabad, who helped organise the protest and mobilise youth on social media. “Prices fell for almost all crops but Maharashtra’s farmers were angry about a few crops in particular, tur being one.”

The Maharashtra government won itself a breather by giving in to the farmers’ demands for an agricultural loan waiver, although the scope of this decision is still being worked out. But it is the farmers’ other key demand – remunerative prices for all crops – which goes to the root of the agriculture crisis. It is also the real test of the government’s ability to solve it.

After the drought, glut

As the tur crisis unfolded, Ashish Salvi, secretary of Murum mandi’s Agricultural Produce Marketing Committee, was intrigued by a discrepancy in the prices. Usually, the more the quantity of grain arriving at the gates, the lower the prices fall. “But the profits of wholesalers and millers remained high irrespective of what the farmers were paid,” he said. At the end of 2016, while farmers were offered less than Rs 50 per kg, tur dal prices in Delhi hovered around Rs 110.

Sources: Retail and Wholesale Prices – Department of Consumer Affairs; MSP – Commission for Agricultural Costs and Prices; Mandi Prices – Murum Agricultural Produce Marketing

For pulses to reach the cities as dal, they follow an intricate marketing chain, changing hands at least six times – farmer to commission agent to trader to mill to wholesaler to semi-wholesaler to retailer. While markups of the kind Salvi described are common for other commodities, it is rare for food grains.

The traders deny their profits are disproportionately high. “A commission agent, who buys from farmers before selling it to me, charges a fee of 3% on every purchase,” said Somnath Parameshwar Chare, who owns one of the bigger trading agencies in the mandi. “The farmer used to pay this but the Maharashtra government changed the rule last year.” Instead of the farmer paying the 3% commission to the agent, under the new rule, the trader pays.

Chare claimed he only charges one per cent extra when he sells to millers in Katni, Madhya Pradesh, and Latur in his own state. But he refused to talk about the millers’ profits. “You ask them,” he said, with a knowing look. “An average consignment from each trader is 250 tonnes and they buy from everywhere.”

In January, when Salvi began to suspect foul play, he demanded account statements and receipts for transactions from the mandi’s traders. He had never before asked for these in his four-year tenure although the Agricultural Produce Marketing Committee’s rules empower him to do so at any time. “But they refused,” Salvi said. “There are people scrutinising the work I do – my superiors and you, the media, but no one can look at the traders’ accounts. It is completely opaque.”

Ashish Salvia (in blue) says the pulses trade is too opaque even for officials like him. Photo credit: Manas Roshan

According to G Chandrashekhar, an agri-business and commodities market expert, there is no way for the government to know the exact pulses stocks in the country. “Pulse trade is predominantly private,” he explained. “Government entities have extremely limited role in relation to the quantities involved.”

In 2015 and 2016, when high prices set off alarm bells within the government, Income Tax investigators raided major grain importers, suspecting them of hoarding. Over one lakh tonnes of pulses was seized. So, in September 2015, a stock limit – the amount of grain a trading agency can store before releasing it into the market – was imposed: 350 tonnes for importers and 200 tonnes for domestic traders. But this did not cool the prices.

Suresh Agrawal, chairman of the All India Dal Millers Association, denied that the mills were hoarding pulses. “Each mill can process anywhere between 400 and 1,000 tonnes in a month, depending on its size and the type of dal,” Agrawal, who owns a mill in Indore, said. “How much can we hoard?”

There are nearly 6,000 dal mills across the country and they process domestic produce as well as imports. “Yes, all the grain finally has to land up in the mills,” Agrawal said. “But on average, we only add Rs 4-Rs 5 to the price of dal per kg. You have to consider our expenses and the value added to the commodity.”

The sole purpose of Agricultural Produce Marketing Committees is to ensure fair prices for farmers and, indeed, the term “competitive bidding” is on every mandi trader’s lips. But both Chare and Salvi admitted that small traders are in no position to demand remunerative prices from powerful wholesalers and millers. “When the mill owners contact us, they tell us how much they are willing to pay,” Chare said. “We bargain accordingly with the farmers.”

Local political equations ensure this balance of power is rarely questioned, though Salvi denies this is the case. “The APMC chairman supported me when I took on the traders,” he said. The chairman, Bapurao Patil, his brother Basavraj Patil, a Congress MLA from Latur, and most traders in the area are Lingayats, a rich and politically influential community.

Since growing tur is no longer remunerative, many farmers in Osmanabad are likely to switch back to sugarcane or cotton. Photo credit: Manas Roshan

Costly trade

Sitting in a tea shop by the highway in Umarga taluka, farmers Dayanand Marge and Khayyum Chakure listed the various inputs that yield a tur crop: seed, fertiliser, pesticide and labour through the multiple stages from sowing to harvest. In all, the input costs add up to about Rs 4,000 per quintal. “The amount does not count many incidentals like the cost of digging a bore well or repairing a damaged water pump,” said Chakure, who cultivates a combination of pulses, soyabean, jowar and wheat on his 10 acres in Dalim village.

Last September, a committee headed by Chief Economic Adviser Arvind Subramanian recommended that the central government start procuring pulses “on war footing” and incentivise their cultivation by significantly raising minimum support prices. It suggested Rs 6,000 per quintal for tur but the government fixed it at only Rs 5,050. “Six thousand would have been enough,” said Marge. “But many farmers didn’t get a chance to even sell at the MSP because they couldn’t wait that long.”

The government’s confused response to the price volatility of pulses was reflected in the haphazard procurement process. Compared to the previous year, tur procurement in 2016-’17 jumped nearly seven times to 14,000 tonnes in Murum mandi but there was no place to store it all. When visited the mandi early this month, the only storage facility on the premises, a 3,600-tonne Maharashtra State Warehousing Cooperation silo, was full and Salvi had asked private traders to store grain procured by the Agricultural Cooperative Marketing Federation in their shops.

“With prices this low, many farmers will switch back from tur to sugarcane or some other crop,” said Sudhakar Patil in Chincholi. He could afford to wait and sell his tur at the minimum support price. Other farmers, such as his nephew Chitanand, who grew tur on his two and a half acres, were more desperate. In January, Chitanand needed Rs 30,000 for his sister’s wedding. Since the payment from the Agricultural Cooperative Marketing Federation would not be released for over two months after the sale, he borrowed money from his uncle. He did get his money eventually but the experience left him troubled. These days, Chitanand, looking haggard and worried, lurks around the mandi, waiting for the right price to sell the few sacks that remain at home.

Many farmers registered with NAFED are yet to sell their tur at the Lohara procurement centre, which has been closed due to rain since the start of June. Photo credit: Manas Roshan

The administration likely anticipated this crisis but did little to proactively mitigate it. As for why, insensitivity to farmers’ distress is a major reason. Here is Arun Jadhav, deputy agricultural officer for Lohara taluka, suggesting ways to tackle the crisis: “It is difficult to control prices when there’s a glut in the market. But there is one thing the farmer can do. See, what’s more expensive than chana? Chana dal. And better than dal? Besan [gram flour]. And after that? Bhajji. So, if tur does not fetch a good price, they [farmers] should open a stall or a restaurant and sell pakodas.”

This report is part of a series on why farmers are protesting across India.

Read the other reports in the series:

Better prices for their crops is what farmers in Madhya Pradesh want the most (not loan waivers).

A collapse in the prices of soyabean led to violent protests by farmers in Madhya Pradesh.

Behind the farmer unrest in Haryana there is a history of instability in crop prices.