Yet, the seemingly irrational positions by both farmers are the government are not very difficult to understand.

Barring stray incidents of sharp rise in crop prices, a rise across the board is even rarer, farmgate prices are either non-remunerative or simply devastating for farmers. The only group which is insured against these volatilities are farmers who manage to sell (largely) rice and wheat to the government at Minimum Support Prices (MSPs). While the MSP procurements are disproportionately skewed in north-western states, the announcement of MSPs provide some sort of a floor to market prices for rice and wheat as well.

The share of rice and wheat has been falling in India’s agriculture production basket, which means that more and more agricultural production and farmers are now outside the protection net offered by MSPs. This is exactly why farmers are demanding an expansion of the MSP net. A blanket MSP guarantee is neither fiscally nor logistically possible.

As far as the government is concerned, inflation management is the most important factor which matters for political fortunes. A bit of digression is necessary to explain this point.

Textbook development economics tells us that a country’s economic transformation involves shifting of workers from less productive sectors (such as agriculture) to more productive sectors such as (primarily) industry and services. In India’s case, the transition; at least the part which has played the biggest role in growing GDP, has taken a slightly different route. Agriculture continues to employ more than 40% of the workforce. A lot of the workforce which has moved out of agriculture has moved into urban low-income sectors such as construction.

There is likely an equally large shift of the rural workforce to low-income service sector activities from household work to myriad utilities or simply roadside jobs. What the city really promises these people is not social security or even upward mobility. What they hope to achieve is a steady income stream (unlike farming in the villages) even if it involves bearing a higher cost of living in perhaps worse living conditions (at least in terms of habitations) than villages. It is reasonable to assume that farmers and the footloose urban labour described above sustain at least 80% of India’s population. Because this group has no wage indexation whatsoever, their well-being levels are extremely sensitive to inflation levels. Food is a very big, if not the biggest component of the overall budget for this class.

Governments, especially the current government understand this fact very well. And this is what explains the throwing-the-kitchen-sink-at-food-prices approach. When it comes to ensuring political fortunes against farm anger, governments can always resort to actions which are synced with the election cycle. From the farm loan waiver before the 2009 elections to announcing a retrospective cash transfer scheme before the 2019 elections, there are enough examples of such tactics across the political spectrum.

Is there no other way except this cynical political economy cycle in agricultural markets? Three points can be made to offer an alternative.

If there is one thing which unites the government and the farmers about agriculture in India, it is collective disregard for sustainability in pursuit of a comfortable status quo. There is more than enough evidence to suggest that a business-as-usual cultivation scenario in states like Punjab will inflict irreversible damage on the sustainability of farming in these regions. But neither the farmers nor the government seem to be showing urgency about the crisis. Punjab is an extreme case scenario, but the crisis is widespread. An imbalanced and unguided use of chemical fertilizers and pesticides, mindless exploitation of groundwater for irrigation, growing crops which are unsuited to local agro-climatic conditions and exporting water-intensive crops are a few aspects of this problem. While addressing this will take money, the bigger challenge will be to nudge farmers out of current cultivation practices. The biggest impediment to achieving this transition is the moribund state of agricultural extension services in India.

One of the biggest reasons why horticultural prices are so volatile is that most of these products are still consumed in unprocessed – tomatoes instead of tomato puree, for example – form in India. While this is a cheaper arrangement when prices are lower (and most of the time they are) it takes away the opportunity to build a cushion against a future production shock by using the surplus production in the current period. With extreme weather events becoming more and more likely, this problem is only going to worsen. This makes it all the more important to encourage this practice and make such products more affordable for the non-rich segments of the society.

Economies of scale will clearly help in bringing down prices, but, doing it on a large scale will take nothing short of a complete overhaul of value-added chains in agriculture. This is difficult, but not impossible. The dairy cooperative-driven milk processing model only needs to be replicated. Once again, this will require initial investment by the state.

This brings us to the third point. Indian food markets have seen a rapid pace of formalization and corporate penetration in the last couple of decades. While there is nothing wrong with businesses making profits, one can argue with reasonable confidence that the gains which have accrued to farmers from the corporatization of food markets are significantly less than what businesses have appropriated for themselves. Also, a private corporation can just walk away from food markets with its accumulated profits once things get really difficult (such as when a sustainability crisis erupts).

Is it not possible to envisage an alternative business model for food markets where efficient but more egalitarian cooperatives compete with privately owned food businesses in India? These cooperatives could be given a tax holiday provided their profits are invested in building grassroots physical and human resource infrastructure (not of the often token in nature CSR variety) to solve the sustainability crisis and lack of processing infrastructure.

Will this kind of an approach work? Cooperatives, even the best of them, have been misused in India to perpetuate political power. Caste-based fault lines often overwhelm every other effort to build occupational/class solidarities in India. However, the cost of doing nothing will be even greater chaos in food markets in the not-so-distant future.

Every Friday, HT’s data and political economy editor, Roshan Kishore, combines his commitment to data and passion for qualitative analysis in a column for HT Premium, Terms of Trade. With a focus on one big number and one big issue, he will go behind the headlines to ask a question and address political economy issues and social puzzles facing contemporary India.

The views expressed are personal