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Produce prices surge in India's Maharashtra as farm strike bites
June 2, 2017 / 11:36 AM / 7 months ago

Produce prices surge in India's Maharashtra as farm strike bites

* Prices of vegetables, milk up over 50 percent

* Farmers strike into second day

* Farmers dump produce, block highways

* Demand loan relief and better prices for produce

* Exacerbates rural vs city divide

By Rajendra Jadhav

CHINCHKHED, India, June 2 (Reuters) - Prices of vegetables and milk jumped more than 50 percent in major cities across India’s western state of Maharashtra on Friday, the second day of a strike by farmers demanding debt relief and higher prices for their produce.

The farmers want the government of India’s second most populous state to grant a waiver on their loans, similar to the $5.6 billion in debt forgiveness announced by Uttar Pradesh in April.

“We received just 10 percent of supplies compared to normal. Prices of some vegetables have more than doubled,” said Vilas Bhujbal, a trader based in the information and technology hub of Pune.

Farmers stopped sending fruit, vegetables and milk to cities on Thursday. They set up highway check posts to stop supplies getting through from states bordering Maharashtra, home to some 120 million people.

Police detained around 35 farmers in Nashik district on Friday after clashes in which protesting farmers damaged trucks and beat up some drivers.

In Chinchkhed village, 200 km (125 miles) northeast of Mumbai, Nita Sonawane was harvesting okra, a vegetable also known as lady’s finger. Instead of sending her crop to Mumbai, the state capital and financial metropolis, she was distributing it in her village for free.

“The debt has piled up due to the government’s flawed policies. In the last few years we haven’t been able to make a profit due to drought and low prices,” says farmer Sonawane.

“We will strike until government waives our debt,” she said.

Maharashtra needs to spend 305 billion rupees ($4.7 billion) to write off debt owed by around 3.2 million farmers, Chief Minister Devendra Fadnavis told reporters on Thursday.

Such outbursts of rural discontent in Maharashtra and other states pose a challenge to Prime Minister Narendra Modi, who has promised to double the income of farmers over the next five years.

Two-thirds of India’s 1.3 billion people depend directly or indirectly on farming for their livelihood but only account for 14 percent of gross domestic product, reflecting a growing divide between the countryside and increasingly well-off cities.

NO MILK TODAY

In the neighbouring village of Umerkhed, dairy farmers have stopped sending milk to cooling plants.

“We are giving milk to other villagers who don’t have cattle. We are making milk products as we couldn’t consume large amounts of raw milk,” says young farmer Subhash Shinde.

Nearby Pimpalgaon, one of India’s biggest onion markets, was deserted on Friday morning because no farmers had brought their crop for sale.

“Usually more than a thousand vehicles bring farmers’ crops but today none came,” said Rohidas Kushare, an official on the committee that oversees trading at the market.

Housewives like Manisha Sapte in Mumbai were praying for the strike to end soon after they were shocked by Friday’s leap in prices.

“Traders are speculating on shortages and sharply raised prices of all the vegetables. They are saying it could go up further. I should have stocked up yesterday,” she said.

Although consumer price inflation, at 3 percent, is low by historical standards, any lengthy disruption in food supplies would be a concern for the Reserve Bank of India.

Even in times of social peace, the RBI has to adapt to unpredictable summer monsoon rains that can impact food prices - and broader measures of inflation and growth. The RBI meets next week and is expected to keep its main policy rate unchanged.

“The government won’t allow the strike to go on for long,” said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities in Mumbai.

“The way prices are shooting up, it has to find a solution quickly. The strike will have an impact on inflation numbers if it gets extended.” ($1 = 64.4650 rupees) (Reporting by Rajendra Jadhav; Editing by Douglas Busvine)

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