Latur, Maharashtra: Nilesh Thakkar, managing director of Maharashtra Biofertilizers India Pvt. Ltd (MBF), has virtually turned the Latur headquarters of India’s top organic fertilizer company into a campaign office.

This is the office from where he runs Jalyukt Latur, a public campaign to revive the Manjra River nearby.

And Thakkar is not the only businessman to have committed resources to this campaign. Representatives from all major industries and retail businesses, commodity markets, educational institutes and cooperative banks have teamed up with social organizations to raise money for the initiative that aims to find a permanent solution to the water scarcity problems of Latur.

With emergency trains ferrying water into the town, Latur has become the most visible symbol of the drought that has struck the Marathwada region of Maharashtra. But underlying this push to find solutions is another factor—while distressed farmers and parched farmland have dominated news about Marathwada, businesses linked to the region’s agricultural economy too have been hit hard.

“The situation has forced us to get involved. All businesses, including my own, are down by at least 50% due to drought over the last three years because the farmer, who is our main consumer has no money to either invest in agriculture inputs or buy consumer goods that are not essential," Thakkar says.

“We felt we could not rely on the government only to revive the sentiment. Solutions have to come from the people and we are doing our bit as businesses which depend on people."

All through the day Thakkar receives donations from businesses, educational institutes, banks, trade and professional associations, and commodity markets.

His company MBF operates in 14 states, including some other drought-hit ones like Karnataka, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, and Jharkhand. “The main consumer of our organic inputs is the farmer. But his purchasing power has been severely hit by drought in all these states, including Maharashtra. Till 2013-14, MBF was registering nearly 50% growth every year but this has dropped to 10% in 2014-15 and 2015-16 as demand has shrunk due to climatic conditions," Thakkar says.

Amit Deshmukh, Congress legislator from Latur, paints a grim picture: “Industry is moving out of Marathwada and that does not make a good statement about the business profile of Marathwada."

The major sectors of industrial and economic growth in Marathwada are automobile, oil seeds and allied industries, construction-industry, steel manufacturing, pharmaceuticals, breweries, and distilleries. Latur is also a major centre for the production of pulses and oilseeds, and the crop yields in Marathwada play a major role in determining retail market prices of pulses elsewhere in the country.

Long-term impact

Ashish Garde, president of the Chamber of Marathwada Industries and Agriculture, says drought has hit all these sectors. “Less than normal rainfall has caused a drop in the yields of major crops in Marathwada including oilseeds and sugarcane. Hence, there is no liquidity with the farmer, who is the main consumer. What normally gets noticed is the extreme scarcity of water during the summer months. But the impact on agriculture, businesses and consumer sentiment that low rainfall has is long-term," Garde says.

Marathwada’s average rainfall is 826 mm, which in itself much less than Maharashtra’s average rainfall of 1,007 mm. Also, nearly 78% of agriculture in Marathwada is rainfall-dependent. In Maharashtra, 75% farming is rain-fed. According to the India Meteorological Department (IMD), Marathwada received 398.8 mm rainfall in 2014 which is 42% less than normal and 412.4 mm in 2015 which is 40% less.

Sharp drops in output

According to the data put out by the state agriculture department for 2014-15, the Kharif season yields of the three major cereals grown in Marathwada—jowar, bajra, and maize—dropped by 56%, 41%, and 38% respectively in 2014-15 over the 2013-14 output.

The sharpest drop was recorded in the tur daal yield in 2014-15 which was nearly 57% less than the 2013-14 output. Overall, the pulses production including tur went down by a nearly 70% in the 2014-15 kharif. Soybean, another major crop in Marathwada, registered a 56% deficit in the 2014-15 kharif season.

View Full Image Sugarcane production, the major cash crop in Marathwada, is estimated to drop by 18-21% in 2015-16. Photo: Aniruddha Chowdhury/Mint

In the rabi season in 2014-15, jowar production was marginally lower than in 2013-14 and wheat yields dropped by 21%. However, the maize output in the rabi season actually registered a growth of 18% in 2014-15.

The agriculture department is yet to put out data on actual yields in 2015-16, but estimates by the state economic survey indicate a steep fall in the production of cereals, pulses, and oilseeds. The survey also blames deficient rainfall for the fall in output. The cereal production in the kharif season is estimated to drop by 20% over 2014-15. While pulses show a very marginal increase, the estimated yield is still 67% less than the 2013-14 production. Oilseeds show a drop of 50% in 2015-16.

Sugarcane, the major cash crop in Marathwada, recorded an 18% rise in yield in 2014-15 but is estimated to drop by 18-21% in 2015-16.

B. B. Thombare, chairman and managing director of Natural Sugar & Allied Industries Ltd, a private sugar mill in Osmanabad district, says the factory has barely crushed about 200,000 metric tonnes of cane this season due to a drop in production. “By this time in 2015, the mill had crushed seven lakh (700,000) metric tonnes. Low yields mean the farmers do not have money that they would have otherwise got by selling the crop to mills," Thombare says.

Pulses

The pulses and oilseeds industry in and around Latur has suffered badly from low rainfall. Nitin Kalantri, owner of Kalantri Food Products which runs 8 daal (pulses) mills in and around Latur, says the rural economy in Marathwada was bearing the brunt of the bad monsoon in 2014 and 2015.

“Tur daal, other pulses, oilseeds, and jowar are the major crops in Marathwada apart from sugarcane. There has been a 20% to 50% drop in their yields in 2015-16. For daal mills, tur daal and pulses are the main raw material which has been in low supply in the last two years. We have had to source it from Vidarbha, Karnataka, and Andhra Pradesh. This has led to cost escalation for us on account of transportation and higher margins to traders," Kalantri says.

It’s no surprise therefore that the commodity market in Latur has contributed so much to the river revival campaign—hoping it would also revive the business sentiment. “The local mandi (market) association has contributed ₹ 20 lakh to Jalyukt Latur," Nilesh Thakkar says.

Automobiles

In Latur city itself, dealerships of major automobile brands in four-wheelers and two-wheelers have had few inquiries and sales have dropped by more than 50% in the least two years, says Anil Shinde, who has a dealership for Toyota and Bajaj Auto. “When there is a scramble for potable water and other essential items, two-wheelers and four-wheelers become luxury items. We have also had to stop washing of vehicles at our service stations due to water shortage," Shinde said.

Shivdas Mitkari, who runs three supermarkets in Latur and a distribution agency for plastic water tanks, says the only businesses that have grown in Latur over the last three years are transport of water, digging of underground water tanks to store water, and installation of plastic tanks.

“In Latur district, people have spent at least ₹ 4 crore in getting water tanks constructed in their homes. But sale of consumer goods in supermarkets is down by 50%," Mitkari says.

View Full Image Retail business in the region, which is dependent on farmers, has taken a hit. Photo: Aniruddha Chowdhury/Mint

Kalantri of Kalantri Food Products says the impact of low rainfall on the rural economy. He says if a farmer sells his produce for ₹ 1 lakh in a normal season, he puts ₹ 25,000 in the bank and uses ₹ 75,000 on buying farm inputs, household items, grocery, and the education of his children. “70% of the rural economy in Marathwada is run by the farmer and his income directly impacts the other stakeholders. Due to low yield, there is no surplus to invest in farm input and consumer goods or save in a bank account," Kalantri adds.

Retail hit

Pradeep Solanki, president of Latur Vyapaari Mahasangh, which is an umbrella body of 60 traders’ and retailers’ associations, said the retail business that depends on farmers has taken the hit.

“Agriculture itself has become stagnant in Marathwada leaving little scope for other dependent industries to grow. If it does not rain well this year, even traders and retailers will think of migrating out of Latur," Solanki says.

The construction industry is also sluggish as the local municipal body has stopped giving permissions to new projects. “The real estate sector is down all over the country and for reasons other than drought but in Latur the local customer has become somewhat cautious in making decisions," says Lakshmikant Karva of Fibro Plast Doors Pvt. Ltd. He, however, adds that the situation is not as bad as being made out “by the media" and a good monsoon in 2016 could turn things around quickly.

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