Three Agri Laws: Choose your battles wisely

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I strongly believe that the present farmer agitation, primarily by the farmers of Punjab, is not in the best interests of the farmers at large and those who are leading this agitation are harming the cause of the farmers.

Col Yogander Singh, Military Historian

As an army officer I believe that the acme of the leadership lies in picking your Aim wisely and join only those battles which lead to achieving that Aim.

In keeping with the dictum aim of a farmer leader worth his salt should be well-being of the farmers. I strongly believe that the present farmer agitation, primarily by the farmers of Punjab, is not in the best best interests of the farmers at large and those who are leading this agitation are harming the cause of the farmers. Let me explain.

Recently the centre enacted three laws, namely:-

  1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, allowing the farmers to sell their produce outside the Agricultural Produce Market Committee (APMC) regulated markets.
  2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, to create a framework for contract farming. This is an enabling law, which will come into operation only if a farmer enters into a contract with free will. If farmer finds the proposed contract non-remunerative, he may opt to sell his produce elsewhere.
  3. The Essential Commodities (Amendment) Act does away with the Centre’s powers to impose stockholding limits on foodstuffs, except under “extraordinary conditions” like war, famine, other natural calamities of grave nature and/or annual retail price rise exceeding 100% in horticultural produce (basically onions and potato) and 50% for non-perishables (cereals, pulses and edible oils). This law is basically meant to operationalize the law permitting sale outside the Mandis.

Going by the statements made by various Kisan leaders, one can assume that their ire is primarily directed at the provisions of the The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, which they believe would lead to withering away of the Mandis (APMC) and loss of MSP. Government on its part is claiming that the MSP is here to stay.

Let’s review the status of Mandis and procurement at MSP as on date.

(a) Today India has a total of 6630 Mandis against the required 10163. If these were spread evenly each of the Mandi would serves approximately 463 square Kms catchment area against desired 250 square Kms. However since these are mostly located in Punjab and Haryana, their coverage in the rest of India is patchy.

(b) While total of 27 crops are presently covered under MSP but most are not procured by the states at MSP. Only 6% of crops produced by 6% to 8% farmers (mainly from Punjab, Haryana and Western UP) are able to get MSP on their Paddy and wheat.

State (FCI) procurement is limited to wheat and Paddy and the procurement at MSP is well organized in Punjab and Haryana, nearly 95% and 80% of Paddy and wheat respectively are procured. However it is just 11.4% in UP and even less in West Bengal and Andhra Pradesh.

As it is most of the crops, even those covered by MSP, are traded outside the Mandis, which continue to operate. Thus it is wrong to say that new bills will kill the Mandis.

Overall 29% of Paddy and 44% of Wheat is sold in the Mandis while 49% of Paddy and 36% of wheat is sold directly to trader by the farmers. The central government spent around Rs.83000 Crores on procurement on MSP during the Financial Year 20-21, of which 21000 Crores was spent for Paddy.

Now let’s see the implications of making the MSP legally binding on the trade.

(a) This will result in across the country demand from the farmers to bring their crops also under MSP.

(b) Since the private players don’t have the will and resources to buy at higher than market price and purchase at less than MSP will invite punitive action, the private trader would exit grain trade.

(c) Since the private players will not be there the government will have to buy all crop surpluses at MSP.

(d) Is it feasible? If the government was to procure entire Paddy and wheat crops at the MSP, just these two crops will require funds to the tune of Rs. 100000 Crores annually. One can only imagine total funding needs!

(e) Simply put this would require massive amounts to subsidize such purchase. Back of the envelope calculations put this figure the at more than entire tax collection of central government.

EOM.


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