These were launched with a great fanfare. Successive Agriculture Ministers had appreciated the role of Krishi Vigyan Kendras (KVKs). In fact, there was so much of demand for setting up KVKs, that I remember political representatives making a beeline. These farm extension centres, set up in almost all the districts of the country, were expected to be the outreach arms of the State Agricultural Universities.
The first KVK was set up by the Indian Council for Agricultural Research at Pondicherry in 1974. The KVKs had the mandate for on-farm testing to identify the location specificity of agricultural technologies under various farming sustems; frontline demonstration to establish its production potentials on the farmer's field; training of farmers to update their knowledge and skills in modern agricultural technologies and training of extension personnel to orient them in the frontier areas of technology development.
A news report by intrepid journalist S P Singh in the Hindi daily Dainik Jagran (April 28, 2013) exposes the shocking plight and neglect of these important farm extension kendras. The 632 KVKs are not only gasping for breath but for all practical purposes have been left to die. Gung-ho on private agri-clinics, perhaps the government has no space left for the public sector extension outlets. These have been rendered irrelevant.
Consider this:
1) Over 100 KVKs do not have office buildings. Agricultural scientists sit and work from under a tree.
2) 175 KVKs do not have the basic soil testing facilities.
3) 1,500 jobs of KVK scientists are lying vacant.
4) Scientific equipment and machinery is lying unused and rusting at a number of places.
5) 234 KVKs do not have facilities of demonstrate improved technology, and that includes research farms.
6) No KVK has residential facilities for its staff.
7) The annual budget for agricultural extension has been drastically reduced from Rs 10,000-crore to Rs 4,000-crore. This is bare enough to meet the salary requirements.
8) In the name of contingency, each KVK can get only Rs 5 lakh a year.
The modus operandi is the same. To promote privatisation, the first step is to starve public sector institutes/bodies of funds. Once the financial lifeline is disconnected, the end is nearer. It is happening across the board in India, and KVKs are no exception. The death-knell for KVKs is being sounded because the government is keen to pass on farm extension into private hands. Agri-clinics are now being promoted (of course with government subsidies).
While economy falters, British Queen continues to receive massive farm subsidies.
This is the Queen's Sandringham Estate that received £7million in farming subsidies -- Picture in Daily Mail
Some years back I had detailed out the agricultural subsidies that go to the wealthy. It made a very interesting read, and provided an insight into how the rich and powerful in European Union and the United States quietly pocketed farm subsidies. One of the objectives of giving subsidies is to ensure a reasonable standard of living for farmers, and I wonder how the subsidy bonanza to the rich and wealthy in the name of farmers could be justified.
Here is that analysis -- Farm subsidies: The report card (http://www.stwr.org/imf-world-
At a time when the economy is faced with recession, and country after country is resorting to austerity cuts, I find no mention of restricting farm subsidies. Specially after the economic meltdown of 2008-09, I had expected the industrialised countries to cut farm support to the wealthy and divert the precious financial resources to creating employment opportunities. With this intention, I thought of doing a reality check.
No, nothing has changed.
Take the case of Britain. I was reading today that the British economy is growing at a snail pace of 0.3 per cent in the first quarter of this year. And yet the British Queen fails to set an example by walking the talk. According to a news report in Daily Mail (March 5, 2012), the Queen received a subsidy of 7 million British pounds in the past ten years (http://bit.ly/A8TSTw). Earlier, in my report card I had said: "Britain’s Queen Elizabeth II is not a farmer, but she is amongst the highest recipient of agricultural subsidies. In 2003-04, she received nearly US $ 1.31 million in farm payments. Her son and heir apparent to the British throne, Prince Charles, received more than US $ 480,000 as agricultural support for his personal estate, the Duchy of Cornwall, and the Duchy's Home Farm."
One of the richest person in Britain -- Duke of Westminster -- was quite close to the Queen when it comes to subsidies. He received 6 million pounds during the same period. Estimated to be worth 7 billion pounds, Duke of Westminster "owns about 55,000 hectares of farm estates, received a subsidy of US$ 480,000 as direct payments in 2003-04, and in addition gets US$ 550,000 a year for the 1,200 dairy cows he keeps." Among the others receiving the subsidy bonanza is Sir Richard Sutton who features in the Times Rich List, and still got 1.9 million pounds in farm subsidies.
Well, the message is loud and clear. For the rich and powerful, life goes on as usual. Whether it is economic recession or depression, the rich remain untouched. It is only the average citizen who has to bear the brunt and be prepared to rough it out.
India buckles before European Union. Is ready to sign a 'no-win' free trade agreement that benefits EU mainly
Some years back, a top Indian negotiator for the Indo-Asean Free Trade Agreement (FTA) shared with me an interesting insight. As is the normal practice, the negotiating team went to meet Prime Minister Manmohan Singh, before leaving for the talks. The underlying idea being to get the final limit -- where to draw the Lakshman Rekha -- to which India can agree to on several tricky issues during the negotiations.
The Prime Minister listened to them, and finally said: "Just go and sign."
The negotiators were shocked. But I wasn't even surprised. The little that I know of Manmohan Singh, our ever obliging Prime Minister has been too ignorant (or is it deliberate?) about the dangers of acceding India's interests at international trade negotiations. At the time of the Uruguay Round discussions of the World Trade Organisation (WTO), I recall his statement in Parliament (as the country's Finance Minister) that those who are concerned about the negative fallout of WTO have actually not read the WTO documents.
I bet if Manmohan Singh had ever read the WTO papers. I doubt if he even knows what is being negotiated at the FTAs. All he knows for sure is which Head of the State has been wanting what kind of concessions from India. And he has been more than willing to oblige.
We are now in 2013, and the Doha Development Round has failed. Even now, there is so much of mistrust in what is going on at the WTO talks, where the rich industrialized countries have still not given up on the grip, that many believe the talks have reached a dead end. In any case, the United States and European Union, the two prime pushers for an unjust and unequal trade regime, have meanwhile shifted gears to focus on bilateral and regional trade agreements. Free Trade Agreements therefore are part of the Plan B and are being pursued aggressively.
While India is in an undue haste in signing an FTA with European Union, reports have now started appearing that most of the signed FTAs have turned out to be a win-lose proposition -- win for the trading partner, and loss for India. The Economic Survey 2013 observes: "Trade deficit (on customs basis) reached a peak of US$ 184.6 billion in 2011-12 from US$ 118.6 billion in 2010-11 with the highest growth of 55.6 per cent since 1950-51." (Page 156 para 7.18). This itself should be a cause for greater worry.
In a report entitled: Foreign trading partners getting more out of free trade agreements (Times of India, April 15, 2013. http://bit.ly/129rTqO): "Experience with half-a-dozen pacts that India has signed since 2004-05 shows that usually, it is the trading partner that ends up being the winner. Be it Thailand, Asean, South Korea, Japan, Singapore or Malaysia, in almost all cases, imports have grown at a faster pace than exports after the government agreed to slash tariffs. In case of Singapore, where the spurt did not take place in the first year, the growth in imports from the island nation in the second and third years more than made up for the absence of the trend at the start."
The EU-India free trade agreement is no exception. The trade agreement is being signed to boost employment and prosperity in both the EU and in India. But the way the negotiations are going about, with the EU making it abundantly clear that the hiking of FDI in insurance from 26 to 49 per cent is an absolute must, and with the concerns being expressed by the domestic auto industry in India, the Gujarat Cooperative Milk Marketing Federation (GCMMF) and the Indian Pharma Alliance, it is quite clear as to whose interests the EU-India FTA will serve.
In reply to a question (E-009465/12 and E-
The Indian Pharma industry is therefore rightly worried about the introduction of an IPR clause that leads to seizure of a generic manufacturer's bank accounts and immovable property on mere suspicion of a patent infringement. Such a step can imperil local industry. At the same time, imports of highly subsidised and cheaper dairy and poultry products from EU, the Indian dairy industry, employing 3.2 million farmers, will be hurt. India is the biggest producer and consumer of milk and dairy products. So far India has been protecting its dairy industry. But with pressure mounting from European Union, Australia and New Zealand for opening up the dairy sector, India is giving in. Similarly, the sharp cut in import duties for cars will impact job creation in the automobile sector. These are just broad three concerns that India cannot afford to overlook.
The Prime Minister listened to them, and finally said: "Just go and sign."
The negotiators were shocked. But I wasn't even surprised. The little that I know of Manmohan Singh, our ever obliging Prime Minister has been too ignorant (or is it deliberate?) about the dangers of acceding India's interests at international trade negotiations. At the time of the Uruguay Round discussions of the World Trade Organisation (WTO), I recall his statement in Parliament (as the country's Finance Minister) that those who are concerned about the negative fallout of WTO have actually not read the WTO documents.
I bet if Manmohan Singh had ever read the WTO papers. I doubt if he even knows what is being negotiated at the FTAs. All he knows for sure is which Head of the State has been wanting what kind of concessions from India. And he has been more than willing to oblige.
We are now in 2013, and the Doha Development Round has failed. Even now, there is so much of mistrust in what is going on at the WTO talks, where the rich industrialized countries have still not given up on the grip, that many believe the talks have reached a dead end. In any case, the United States and European Union, the two prime pushers for an unjust and unequal trade regime, have meanwhile shifted gears to focus on bilateral and regional trade agreements. Free Trade Agreements therefore are part of the Plan B and are being pursued aggressively.
While India is in an undue haste in signing an FTA with European Union, reports have now started appearing that most of the signed FTAs have turned out to be a win-lose proposition -- win for the trading partner, and loss for India. The Economic Survey 2013 observes: "Trade deficit (on customs basis) reached a peak of US$ 184.6 billion in 2011-12 from US$ 118.6 billion in 2010-11 with the highest growth of 55.6 per cent since 1950-51." (Page 156 para 7.18). This itself should be a cause for greater worry.
In a report entitled: Foreign trading partners getting more out of free trade agreements (Times of India, April 15, 2013. http://bit.ly/129rTqO): "Experience with half-a-dozen pacts that India has signed since 2004-05 shows that usually, it is the trading partner that ends up being the winner. Be it Thailand, Asean, South Korea, Japan, Singapore or Malaysia, in almost all cases, imports have grown at a faster pace than exports after the government agreed to slash tariffs. In case of Singapore, where the spurt did not take place in the first year, the growth in imports from the island nation in the second and third years more than made up for the absence of the trend at the start."
The EU-India free trade agreement is no exception. The trade agreement is being signed to boost employment and prosperity in both the EU and in India. But the way the negotiations are going about, with the EU making it abundantly clear that the hiking of FDI in insurance from 26 to 49 per cent is an absolute must, and with the concerns being expressed by the domestic auto industry in India, the Gujarat Cooperative Milk Marketing Federation (GCMMF) and the Indian Pharma Alliance, it is quite clear as to whose interests the EU-India FTA will serve.
In reply to a question (E-009465/12 and E-
The Indian Pharma industry is therefore rightly worried about the introduction of an IPR clause that leads to seizure of a generic manufacturer's bank accounts and immovable property on mere suspicion of a patent infringement. Such a step can imperil local industry. At the same time, imports of highly subsidised and cheaper dairy and poultry products from EU, the Indian dairy industry, employing 3.2 million farmers, will be hurt. India is the biggest producer and consumer of milk and dairy products. So far India has been protecting its dairy industry. But with pressure mounting from European Union, Australia and New Zealand for opening up the dairy sector, India is giving in. Similarly, the sharp cut in import duties for cars will impact job creation in the automobile sector. These are just broad three concerns that India cannot afford to overlook.
Bitter Politics Of Sugar
A few months ago, Railway Minister Pawan Kumar Bansal was at pains to explain the desperate need to raise rail fares. The hike is expected to raise additional annual revenue of Rs 6,600 crore and reduce fiscal deficit.
Union Finance Minister P Chidambaram has been looking at every opportunity to reduce the burgeoning subsidy bill. The undue haste in launching direct cash transfer, the prolonged calibrations in containing the Food Security Bill, and the failed experiment in promoting balanced use of fertilisers were all aimed at clipping wasteful subsidy expenditure.
The partial decontrol of sugar therefore comes as a surprise. That the mills will no longer be forced to sell 10 percent of their produce at low prices to meet the requirements of the public distribution system, is certainly a sweet decision for the Rs 80,000 crore industry. In addition, as per the recommendations of the Rangarajan Committee, the release order mechanism has been abolished. This means that the mills will no longer have to wait for a direction from the government as to when and how much sugar they will release in the market.
What is baffling is the doubling of the subsidy bill from the existing Rs 2,600 crore to an estimated Rs 5,300 crore. While the sugar industry will stand to gain by approximately Rs 2,700 crore from the abolition of levy sugar quota, Chidambaram has already acknowledged that the annual subsidy bill will now grow by an additional Rs 2,600 crore for the next two years. All that the government has done is free the sugar mills of the financial burden, and take the liability on itself. This is “privatisation of profits, and socialisation of costs”.
The annual increase in the subsidy bill will in turn increase the fiscal deficit. But no questions have been asked. Decibels are only raised when subsidies are doled out for the poor; for the rich it constitutes economic reforms.
Moreover, a day after the decision was announced, sugar stocks of the same “cash-starved” companies jumped. Stocks of Shree Renuka Sugars, Balrampur Chini Mills, Dhampur Sugar Mills, Sakthi Sugars, Bajaj Hindustan and others continue to rally high.
Providing a financial bounty to the sugar industry in an election year has its own rewards. The timing of the crucial decision has to be seen in light of the changing electoral configurations. It has killed two birds with one stone.
First, the decision is certainly aimed at appeasing Sharad Pawar of the NCP and to some extent Mulayam Singh Yadav of the Samajwadi Party (SP). In the wake of the talk over the revival of the Third Front, keeping the sugar barons happy will impact the fortunes of the ruling party alliance. Like the 12,000 crore package expected for Bihar in the 12th Plan period ostensibly to appease Nitish Kumar, keeping the remaining flock together is the immediate priority.
At the same time, the government has refrained from fiddling with the cane pricing formula as per the Rangarajan Committee recommendations. Doing away with the State Advised Price (SAP) for cane, which the industry has always been complaining against, has been kept in abeyance, and rightly so. Price decontrol may help big cane growers who can afford the market risk, but for the small farmers, only SAP provides an assured price. Also, for the time being, the government knows that the sugarcane growers lobby is strong in Uttar Pradesh and Maharashtra. Electoral tremors will also be felt across the country, from Punjab to Tamil Nadu. But this is only a temporary reprieve. Once the impending elections are over, the industry will push for completing the remaining decontrol process.
And this is where a wider consultative process should happen rather than simply going by the recommendations of the Rangarajan Committee. In Punjab, Haryana and UP, for instance, sugarcane cultivation requires 1,60,00,000 litres of water per hectare. Sugarcane is a water guzzler and poses the biggest threat to food production. At the same time, world over, the emphasis is on reducing sugar consumption in wake of the growing awareness about its negative health impacts. It is time India moves away from what is good for the sugar industry to what is good for its people. It is time to make a historic correction.
Source: Bitter Politics of Sugar, Tehelka, New Delhi, April 20, 2013
How Margaret Thatcher destroyed public sector science. The case of Plant Breeding Institute at Cambridge.
The erstwhile Plant Breeding Institute at Cambridge (UK)
Margaret Thatcher, 87, died yesterday. She is being hailed as the Iron Lady who transformed Britain. Every newspaper across the globe has paid rich tributes to her. Some have even carried her obituary on the front page, which is quite a rare honour.
I only know that she had a steely resolve. Whatever she thought of doing, she did it. That's what I have read over the years. And knowing the determination with which she destroyed public sector science, I can understand why and how she earned the title Iron Lady. Nevertheless, let me share this story of how Britain's only woman Prime Minister, the unyielding Margaret Thatcher, eclipsed one of the world's best known research centre in plant sciences, which was emerging as a global leader in plant molecular biology and genomics.
I am talking of the famed Plant Breeding Institute (PBI) at Cambridge.
For any plant scientist, Plant Breeding Institute at Cambridge was a Mecca. As a student of plant breeding I too nourished the desire to make it one day to PBI. But by the time I reached the age to visit PBI as a researcher it had already been sold-off to Unilever. Later, in 1998, Unilever sold it to Monsanto. I remember the controversy over the priceless plant germplasm collections that PBI had at the time it was sold to Unilever. After a lot of public pressure, the plant collections were shifted to another public sector research institute, John Innes Research Centre in Norwich.
The sale of PBI to Unilever was a great loss to independent science, and of course a loss to humanity.
It was in 1996 that I went to Cambridge as a Press Fellow. One fine day I called up Sir Ralph Riley, a very distinguished plant geneticist, who also happened to be the founder director of PBI. He came to see me at the Wolfson College, and very politely offered to give me a detour of Cambridge to show me around some of the better known places for plant genetic research. This was indeed a treat.
After showing me the pub where Watson and Crick had dashed to after discovering the DNA structure, he drove me around to what used to be the PBI. Parked his car somewhere, got out and pointing to the research farm, he said: "This is where plant breeding died."
I can never forget those words.
I asked him whether PBI was incurring losses because that's the only economic reason why a research institute would be sold-off. "On the contrary, he said, when PBI was sold by Margaret Thatcher to MNC Unilever, it was bringing in a revenue of (British) Pound 10 million a year against an expenditure of Pound 4 million/year." I don't know how you would take it, but how can any sane person justify selling-off a profit earning research centre? But then, that was Iron Lady. She earned the title because of her dictatorial role in pushing privatisation.
Not being able to recall certain other notable things that he had shared, I did a quick search today. In one of the Royal Society publications, I find this paragraph: "When Riley became Secretary of the Agricultural and Food Research Council (ARC) in 1978, Shirley Williams, as Secretary of State for Education and Science, had increased the science vote spending and this no doubt encouraged Riley to take the position. However, after the election of the Conservative government led by Margaret (later Baroness) Thatcher (FRS 1983) in 1979, cuts were imposed immediately and further reductions occurred in the years that followed. Throughout his six and a half years in office there were continual major reductions of budget in real terms. This made the job of Secretary difficult, stressful and not a particularly happy one. Whole institutions had to be closed (the Letcome Laboratory and the Weed Research Organisation) and reductions in others led to fewer research sites being sustained.
So the first step before you privatise is to cut the life line. In this case, budget cuts and staff reduction programmes was actually aimed at stifling public sector research and thereby justify the need to bring inn private funding. This is exactly what happens in other parts of the world, including India.
"Reductions in staff numbers were necessary across the service, some by compulsory redundancy and closure of programmes. All this made the planned expansion in molecular and cell biology, the new science, more difficult and controversial."
Subsequently, Sir Ralph Riley wrote: "Unfortunately after I had ceased to have any involvement with the AFRC the government privatised that part of the PBI activity concerned with variety production even though it was generating a return to the Government of about £10 million per year from a total cost in the Institute of about 4 million pounds per year. Thus the work that we had done to bring fundamental and closely applied work together, to permit easy crossfeeding was destroyed. Nevertheless, it may be that it (the former PBI) provides a model that will subsequently be followed by others." (See page 395-396 of this Royal Society publication: http://rsbm.royalsocietypublishing.org/content/49/385.full.pdf).
The rise of market fanaticism
From communalism to economic polarisation, the trend is worrying. While every sensible person decries communalism, I am equally worried at the growing fanaticism not only over political ideologies, but more and more over market fundamentalism. For most economists, academicians, market analysts and business journalists, economic reforms (an euphemism for privatisation) has become a religion. The moment you point to a flaw in the system, you meet an angry uproar that can go to any length to defend the system howsoever flawed it may be.
This is a worrying trend. And it is no less destructive than communalism.
The same happens on the twitter. You say something that is not palatable to the two warring camps -- lead by Rahul Gandhi and Narender Modi -- and be ready to face a volley of well-orchestrated pot shots. Similarly, if you question for instance the motive behind postponing implementation of General Anti-Avoidance Rules (GAAR), which effectively allows tainted money to flow into the country, you are sure to meet an angry (and often illogical) outburst from noted economists and some of the TV analysts you see very often (Read my earlier blog post: GARR deferred. Investors, stock markets, industry and media celebrate induction of black money http://devinder-sharma.
They rise in defence as if their religious feelings have been hurt.
Yesterday, newspapers all over the world carried an exposure on where the world's richest people hide their wealth. In a report, a study by McKinsey was quoted saying an estimated $32 trillion is stacked in offshore havens. The International Consortium of Investigative Journalists (ICIJ), which includes Washington Post, The Guardian, BBC, have unearthed a treasure trove which runs into hundreds of billions. This is obviously the tip of the iceberg. The ICIJ will soon be publishing the details. (This is where the richest people hide their money, The Daily Beast, April 4, 2013. http://thebea.st/10fhEzt).
Reading this news report, I am reminded of a recent lecture delivered by Dr Raghuram Rajan, Chief Economic Advisor to Prime Minister. Speaking at the 38th Convocation of the Indian Institute of Management, Bangalore, he said: "To the extent that the rich are self-made, and have come out winners in a competitive, fair and transparent market, society may be better off allowing them to own and manage their wealth while taking a reasonable share as taxes." The Indian Express had this report on its front page under the headline: Lack of chances can hit free enterprise: Rajan http://www.indianexpress.com/
I thought Rajan should have known that the rich are not the product of a competitive, fair and transparent market. First of all, there is no such thing as transparent markets. Market is not a season that nature has created. It is the outcome of a manipulative system. In all fairness, let us accept that markets are designed. Secondly, and more worrisome is his argument that the society may be better off allowing them to own and manage their wealth while taking a reasonable share as taxes. I wonder what his suggestion will be after reading the latest exposure about the massive wealth stacked in the offshore havens. These super-rich are not even willing to pay the reasonable taxes that he espouses. I don't think the taxes that the super-rich have to pay in India for instance are punitive, and yet we know tens of billions have been stacked abroad.
I had expected mainline economists all over the world to rise in unison demanding the end to tax havens, and asking for retrieving this ill-gotten wealth for the welfare of the society. But did you notice the complete silence, and the calm that prevails across the oceans? Isn't this a conspiracy of silence? Aren't the economists and analysts part of this conspiracy? Shouldn't they be asking for an urgent and massive correction in the way wealth is being generated and then hoarded?
It is therefore quite obvious that mainline economists go to any length to defend the clearly visible wrongs. Well, isn't this what the religious fanatics also do? Why then we only blame them? When will we start questioning market fanaticism?
Another report that I would like to draw your attention is based on a study by the Harvard School of Public Health, and presented by the American Heart Association. Published on March 24, 2013, the report says "soft drinks, sodas, 'sports' drinks and 'fruit juice' are associated with 180,000 deaths every year (Soft Drinks Cause Around 180,000 Deaths Every Year, Research Find. http://bit.ly/YnUGq0). Just because these drinks are the products of business enterprises, some of them too big to be pushed out, no economist or a media house internationally raised concern. Nor did any of the G-20 heads who spare no opportunity to swear in the name of market reforms dared to even mention this report.
A building collapse in Mumbai, burying 52, has evoked anger from all, and rightly so. How come the death of 180,000 people does not even merit a TV discussion or an article by the same breed of economists and analysts who otherwise try to shout down every sensible voice?
No longer the apple of your eye. How the trade exploits the gullible farmers and consumers. And how the Govt turns a blind eye blaming supply constraints for rising prices.
The entire trade of the enchanting Kashmiri apples is in the hands of commission agents. They decide how much the growers need to be paid and how much you need to shell out.
For several years now, food inflation continues to pose a serious headache for the government. Nine year after assuming power, Prime Minister Manmohan Singh appears clueless. He told the Confederation of Indian Industry (CII) a few days back that inflation (along with corruption) remains a big challenge. While it is not that he doesn't know what to do, the fact remains he doesn't want to take steps that can bring down inflation simply because these steps would go against the basic tenants of market economy.
For several years now, in almost all the panel discussions that you get to see on the TV channels and also the articles/analysis appearing in major newspapers, the blame has been on supply-demand constraints. Because that is what the text books say. I have always maintained that there is no constraint at the supply side, and the entire fault is with the wholesale-retail trade. If you were to visit a wholesale market (mandi) in the morning hours when the auctions take place, you will find the prices going up by 300-400 per cent just within an hour. And by the time, the produce reaches your home, you end up paying anything between 500 to 600 per cent more than what the farmers have been paid.
Take the case of apples from Jammu & Kashmir. In an eye-opening report Marketing System and Price Spread of Apple in Kashmir submitted by the National Bank for Agriculture and Rural Development (NABARD) the exploitation of apple growers as well as the consumers by a well-knit network of commission agents has been laid bare. While you end up shelling out anything between Rs 105 to Rs 120/kg for the Kashmir apples, the grower get on an average Rs 26 per kg. The production cost is around Rs 35 per kg.
The exploitative system has been perfected over the years. According to a news report in DNA newspaper entitled Agents decide how much you will pay for Kashmiri apples (DNA April 1, 2013 http://bit.ly/17eeRdD) "Supply is manipulated in artificial manner generally at agents level through hoarding of apple in cold stores for short duration and controlled atmosphere stores (CAS) for long duration up to 6-9 months.” Incidentally, traders gets subsidy and also subsidised loans for setting up cold stores and the controlled atmosphere stores (CAS) which is being used by commission agents to their advantage.
The newspaper further says: "This trend started with Delhi and has spread to all other parts of the country. Though the agents adopted this CAS system in the late 2000s, the scam became big after 2010 when big agents expanded their CAS capacity in Delhi and Kundli (Industrial Growth Center, Sonepat). “Now CAS units are becoming a craze among CAs,” said an area marketing manager of the J&K horticulture marketing and planning department.
It quotes the NABARD study: “The existence of seven cold storages within Azadpur market yard of Delhi and about 100 CAS at Kundli in Haryana (25 km from Azadpur market) is leading to a sort of hoarding’ of Kashmiri apple before it enters Delhi market for auction.” It also blames the banks for extending commercial loans to commission agents instead of growers, who then exploit growers by extending loans at high rates of interest. In 2011-12, apple growers received Rs 1,200-crores of advances of which only Rs 200-crore came from banks. The rest came from the commission agents and others (Agent's apple growers don't get fruit of labour, DNA, Mar 31, 2013, http://bit.ly/16qmEls).
Reading the reports it becomes quite apparent how the scam has been operating. If we take apple as an example, it become obvious that the price rise being witnessed is not because of supply constraints. Neither can apple growers be blamed for the price increase in the markets. It also negates the view that farmers benefit when inflation goes up. What is at fault, and which unfortunately is brazenly defended by analysts, economists and policy makers, is the exploitative trade. It is the trade that is solely responsible. But why is that no regulation as well as deterring action has been initiated against the nexus that operates between the wholesale and retail traders?
I agree that it is primarily the poor implementation of APMC Act (1997). Over the years, traders have formed strong cartels which are very powerful and difficult to break simply because the successive governments have preferred to turn a blind eye. These traders also operate as big money bags for political parties and so no one wants to cut the hands that feeds. But to say that the best way forward is to debunk the APMC Act and allow private markets to be set up which will provide a higher price to growers and a better price to consumers is another flawed hypothesis. The prevailing rotten system needs to be set right, but throwing it away is not the right answer.
It is being suggested that foreign direct investment in retail will set the house in order. It will end the exploitation of the farmers by the middlemen. Many fall for this argument. But in the most recent cases of exploitation of dairy farmers by super markets in UK it has been shown that supermarket giants like Tesco and Sainsbury have pushed prices down to unsustainable levels thereby pushing dairy farmers out of business (Retailer aligned milk contracts -- good or bad. http://fairdealfooduk.com/?p=
Striking at the wholesale-retail trade in India will send a wrong signal for the market economy. The propaganda machinery has so far been telling us that markets correct itself. This is not true. Showing a stick to the trade therefore will go against the fundamental premise of market reforms. Prime Minister is therefore reluctant to discipline the erring trade. He is trying to protect the reforms he unleashed. His commitment is therefore to the market reforms. The nation can continue to suffer and be exploited in the process. #
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