Case Study 1: Madhya Pradesh

Given the effort to shift all the necessary pieces of the water management equilibrium, governments shift what they can – often only one or two pieces. But, moving some, but not other pieces, can have unforeseen consequences. Such was the case in Madhya Pradesh (MP), the poster-child of sound water management.

One of the biggest problems in Indian agriculture is the uneven access to all inputs, especially water. The larger, powerful farmers receive first access from canals and have little reason to optimise their usage. Farmers whose lands lie lower down receive whatever is left over, which is often very little or nothing. But the MP government changed this thinking on the head, by ensuring the tail-end farmers (or those farmers who are farthest away from the canals) got water access first. They ensured this by maintaining a list of over 4000 mobile numbers of tail-end farmers and having the chief engineer call one up at random to check if the water had reached the field! To overcome powerful interests, the government expended political capital – by making administrative changes and by adding the Chief Minister’s personal clout – to help the irrigation department withstand pressure. They further minimised opposition by increasing overall water availability. They did this by completing irrigation projects, by fixing, lining and desilting canals and by practising strict rotation (osarabandi), which allowed farmers to plan on how to maximise water use and which allowed the maximum reach for the same physical canal network. 

MP’s water management efforts did not stop there. Canals fixed water access when it rained, and the rivers were swollen. But what about other times? Here, the state improved both access to, and promoted sustainable use of groundwater by charging farmers for electricity to run their pumps. Again, potential opposition was reduced by providing high quality power that was actually available when the farmers wanted it. Farmers, desperate to grow a winter crop, and having no other water source other than what could be drawn by a tubewell, were only too happy to pay for electricity. Of course, having paid for it meant that the motor use, and by extension, the water use was more judicious than it otherwise might have been.

Predictably, crop yields soared, and farmers rewarded the government by returning the Shivraj Singh Chauhan to power three times (and at the last election, with higher vote share and seats). This speaks well for the political windfall of sound water management. Only now, the “unshifted” pieces of the equilibrium, including crop storage, logistics and access to credit, appear to be biting, with a bumper crop not translating to farmer profits.

Why?

Broken markets.

Why are markets broken?

As I have written earlier, small farmers, with their lack of collateral, often rely on traders for their working capital needs. These traders then exert pressure to lower prices when the crop comes in. While the government has tried to improve agricultural credit conditions, and fix pricing issues, it has not been enough. Take the Bhavantar Bhugtan Yojana (BBY) a scheme which pays the difference between the Minimum Support Price (MSP) and the prevailing mandi (market) price for a registered crop sold at the mandi. This scheme ignores the fact that many small farmers cannot afford bring their crop to the mandis to sell, because they do not have the financial wherewithal to do so. A study by Gulati et al, shows for soybean, one of MP’s main crops, only half the cropped area was registered under the BBY scheme, and less than a fifth of the crop received gap payments under the BBY scheme even though the market prices of soybean, at Rs. 2594 per quintal, were significantly lower than the MSP (Rs 3050/quintal).

Second, the insufficiency of cold storage. In 2013-2014, MP had just 0.8 Million tonnes of cold storage versus a production of vegetables of 14.2 million tonnes. While the cold storage facilities have increased since then, it has not been enough. This means much of the crop must be disposed of immediately after harvest exacerbating price crashes.

Third, is the lack of connectivity with national markets. This is exemplified by garlic prices, where wholesale prices in Tamil Nadu are currently ruling between Rs. 80-100 per kg, while farmers in MP are selling garlic at a mere Rs. 7 per kg (losing about Rs. 12-15 per kg in the process).

Broken markets prevent sound water management translating into record farm profits thereby guaranteeing farmer votes. Ironically, this is especially true after good monsoons, when even states not practising good water management have large crops, leading to an overall surplus, and thus lower prices and profits.

What will other states watching the outcome of the Madhya Pradesh elections take away? Will they see that better water management does not translate to farmer votes? Will they then ask themselves: Why take all this risk, and squander so much political capital, when it does not yield political results? How much easier, and oddly, more elegant, to carve out a quota, which will reach the same political end – victory – at a lower political cost? Or will they see that while water management is long, and risky, it does reap rich political dividend?

To answer this, next time we can consider another state which went to elections at the same time, whose incumbent government adopted a different approach.