When farmers lose

Post Source: Dawn Editorial – Monday, 09 Nov, 2009

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A BUMPER crop is always a problem — for the farmers, that is. They never know how to dispose of it gainfully. In an open market, a good crop means that farmers have more to sell than the traders can, or want, to buy. This results in farmers selling their produce at rates that do not even recover their cost of production thereby increasing the volume of the debts they have to incur to buy inputs like fertilisers, fuel and pesticides. The more they produce the more they get under debt because a bigger crop means a bigger loss for them. With the bumper rice crop now being harvested across Punjab, farmers in the province are paying the price for productivity all over again. Rice is selling in the open market at 60 per cent of its support price. 

The standard solution in Pakistan to such problems is always some kind of government intervention. In this case, the official efforts consist of setting up 50 rice procurement centres mostly in central Punjab. But working through the Pakistan Agriculture Storage and Supplies Corporation, this mechanism is too insignificant and too inefficient to have a pro-farmer impact on market prices. It can reach only a tiny fraction of the millions of farmers in the province and is so prone to corruption and political interference that it seldom, if at all, can help the hapless and not-so-well-connected. With a procurement target of only one million tons, its impact on prices will at best be small. 

The irony is that the market price for rice will recover in the coming months because of less than expected global output of the commodity this season. This means urban consumers will still pay a high price for the same rice that farmers have just sold at throwaway rates. Clearly, the market for agricultural produce is in such a shambles that it benefits few at the cost of many. A long overdue and thorough overhaul of agricultural marketing is the only thing that can deliver in such a situation — not the half-hearted measures the government is undertaking these days.

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