It is
October-November, kharif harvest time. The farmer has just started reaping
soybean or maize crop in, say, Bihar or Madhya Pradesh. Typically, he gets up
at 4am and loads his produce, perhaps 1 tonne or less, in a truck or tractor
and takes it to a mandi which may be 50km away. He reaches there hoping to get,
say, ₹1,800 per quintal for maize or close
to ₹4,000 a quintal for soybean, which
are the broad Minimum Support Price (MSP) benchmarks. With all due processes
followed, he puts his stock up for sale at the mandi. Buyers, usually a closed
group, offer ₹1,500 and ₹3,500 respectively,
which is not acceptable. The farmer decides to wait for a better deal. By 4pm,
however, he realizes that prices have fallen to ₹1,400 and ₹3,200. Buyers are
aware that the farmer must catch a 5 o’clock bus, the last available, and
return to his village. He can’t keep his stock for the next day, he reasons, as
the same story will likely play out. Besides, his family would have harvested
more of the crop by then. There is hence a despair sale.
The farm law giving
farmers the right to sell outside the mandi would have protected them from this
story playing out. In a way, it reinforces something already in place called
the Model Agricultural Produce Marketing Committee (APMC) laws of 2003, which
over 16 states have implemented to give farmers this right. They can sell their
output where they like. Andhra Pradesh, Telangana, Tamil Nadu, Maharashtra,
Bihar and Karnataka are some states that allow it. The horticultural produce we
see being ferried about in Mumbai today on some days is a manifestation of it.
However, traditions endure. For example, Bihar, which has almost fully
implemented these laws and repealed its APMC monopsony, still has farmers going
the mandi way.
Why should farmers
oppose an all-India law on the same? After all, we have an operational eNAM
(e-national agricultural mandi), offering an alternative marketplace that has
not aroused protests. Clearly, it’s powerful lobbies in Punjab, Haryana and
Uttar Pradesh that are up in arms, as rich farmers fear a loss of hegemony.
There have been clear signs of their role in the year-long agitation against
the trio of farm laws enacted in 2020, though small-operation farmers did not
complain. Nor did these protests spread to other states. Why were they confined
to north India?
This is where the
second law comes in, the one that pushed for contract farming. This is also
very much in operation already. The Tata Group, Reliance, Big Bazaar (Future)
and Godrej have linkages with farmers for contract-based supplies of
standardized-quality farm produce. No wonder we pay ₹50 per kg for
onions at their outlets even when a shortage pushes market prices upwards
of ₹80 per kg. With intermediaries cut
out, farmers get reasonably high compensation. The farm lobby does not like
this. So, what does it do?
The MSP issue has
been raked up on a hypothetical scenario that the laws will let India Inc make
inroads in the sector and initially pay farmers high sums, but the government
will then slowly withdraw MSP procurement, and once that is done, evil
corporate houses will pay them less, leaving them hapless as APMCs would have
withered away. Sounds fantastical? Yes, but the gullible will fall for this
story even though the government has assured that MSPs will remain. While
support prices are announced for all significant crops, they are active for
only rice and wheat, which Food Corporation of India procures in bulk for our
public distribution system (and buffer stock).
Anecdotally, it has
been seen that in contract farming, farmers often renege on contracts and sell
elsewhere when prices are high, and companies at the other end find it hard to
begin legal proceedings. Soft-drink firms have had this problem with potato and
tomato farmers in the past.
The third law met
less resistance, as it merely said that the Essential Commodities Act was to be
withdrawn and stock holdings at the retail or wholesale ends would be
applicable only under specified conditions.
The problem with
India’s agriculture sector is that it employs around 60% of our workforce and
contributes to just 15% of the economy. Yet, farm lobbies, which include
landlords, large-holding farmers, intermediaries and APMCs, are just too
powerful and hold sway over small and marginal farmers who are led to believe
in doom forecasts. True, these lobby groups provide informal support to
landless labourers and farmers in the form of loans, buybacks, advice, etc.
This fosters close relations that allow farm leaders to stoke their anxieties
without making space for them to understand the true situation.
The repeal of these
laws would be very unfortunate because it may mean that we are unable to
commercialize agriculture for an extended period. The fact that farming is
constitutionally a state subject means that the Centre has limited power on it,
unless states are taken along. The Union government may have been compelled to
withdraw these laws because it needs to stay in power to effect reforms, and if
three states turn antagonistic, its future agenda would be in jeopardy.
Can we ever go back
to getting these laws in? The answer is ‘yes’, and for this to happen, the
government needs a stronger communication strategy, one that effectively
conveys their benefits to all farmers across India. This will be a long battle
that requires patience and perseverance, but it can be done.
It will, of course,
take time. States that are more open to these ideas and have brought in the
Model APMC laws could serve as case studies to be propagated among farmers in
other states. Large numbers need to be convinced that these laws are in their
interest.
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