MOST of us Indians (and NRIs and OCIs) are in the midst of some sort of discussion (in homes, in offices or over social media) about the farmer agitation. What we hear from the Leader of Nation – ‘the new farm bills will immensely benefit our farmers’ seems to be at odd with the news of the protests. Mainstream media blows the same bugle as the govt. So, we look for some answers elsewhere.
And thus,two days back a friend popped a question on WhatsApp. ‘These laws are for their benefit. Why these protests? ’ he asked sincerely. ‘Removal of mandi system will allow them to get best prices.’
Below is what my limited understanding allowed me to answer –
Swaminathan commission reports (popular name for national commission for farmers) which looked at agrarian crisis in detail and formulated reports that are to form the basis of improving the livelihoods and income of farmers suggested many solutions. But one key aspect of its recommendations was – govt cannot experiment at the risk to farmers.
In his words “Small farm families should not be exposed to administrative and academic experiments and gambles in the market.” You want to adopt new tech, new solutions, anything – do it at govt risk, not farmer’s risk.
A large number of marginal farmers lost their standing crops as suddenly the cash disappeared. So, no buyers in markets!Many have not recovered from that one crop loss (because every crop is sowed and taken care on credit or whatever little savings they had).
That is an example of a policy where the maximum risk is on the shoulders of the most marginal (which in our country is a very large percentage).
Swaminathan says that govts are supposed to ensure MSP for farmers.
“The Minimum Support Price (MSP) mechanism has to be developed, protected and implemented effectively across the country. MSP of crops needs to keep pace with the rising input costs.”
He adds, “The scope of the Minimum Support Price (MSP) programme should be expanded to cover all crops of importance to food and income security for small farmers. Arrangements should be made to ensure MSP at the right time and at the right place… . Also, advice to farmers on crop diversification should be linked to the assurance of MSP.”
He gives a formula to calculate MSP – input cost plus minimum 50% profit.
“The MSP should be at least 50% more than the weighted average cost of production.”
There are 3 parts to the input costs. None of the govts has ensured that the MSP gets calculated at this level. We are currently at a stage where only two parts are considered (and that too not 100%).
Why are protests primarily only in Punjab, Haryana and western UP (although rest of the country is slowly waking to it)?
Because at present only 6% of farmers in India have access to MSP and that too for about 35% of their produce. So, in a way only 2% produce gets MSP.
So, neither have the MSP been given at what is recommended by national commission for farmers nor it is given for all the crops (to start with there are only about 23 crops on the official MSP list but mostly only wheat and paddy is implemented).
Swaminathan reports defines a per square kilometer range in which there should be a mandi. Presently we are about 25-30% of that number. So, neither have we provided access to get to a mandi. Now where is reasonable access to mandis?
Answer- where there is reasonable access to MSP. Which is Punjab, Haryana and western UP primarily. Hence, the protests are here.Rest of the Indian farmers never got their right of MSP to start with. But the news is getting there, and they are waking up to their rights.
Let us consider what happened when what govt is now trying to implement all over India was implemented in Bihar (they removed the mandi system and let private players in). This was around 2005-06.
Was it a success?
Well the number of labourers who leave Bihar every harvest to come and work in North India is answer to that. They sell their crop to private players at about 1100-1300 per quintal when MSP for same wheat or paddy is about 1800-1900.
Did breaking mandis help them increase their incomes?
Govt knows the answers. A world renown agriculture economist Devinder Sharma did an analysis. He presented data on income growth. Govt employees vs farmers. Starting 60s-70s till a few years back.
In that time govt salaries increased 150-200 times whereas farmers income increased 10-15 times. Govt employees get over 100 types of allowances as part of salary. Farmers are not given the right formula to calculate their input costs.
But mainstream media will tell you govt is not abolishing MSP. Well farmers say very good. Put it in the laws. Say any purchase below MSP will be a criminal offence. Govt refuses to do that (giving away their long-term intentions).
The protests are primarily to force the govt to commit to MSP and if they wont then to take back these three laws.
The thing is free market is a noble idea – but free and fair are two whole different things all together.
Maximum number of farmers in India are marginal – which means they own less than one hectare. They do not have resources to take their produce to next town, forget the next state! Instead of giving them more mandis this system will ensure that established mandis are being taken away from them.
When they say private players will pick produce from your doorstep – remember when instead of giving access to banking to rural India we allowed Sahara Shri to be their doorstep bank? Millions are still looking for their life savings. So, a free market and a free and fair market are altogether different aspects.
The current mandi system is maintained and expanded using the cess/taxes govt collects. With there being no taxes outside the APMCs the business will move there to start with and then slowly these APMCs will disappear. And all that will be left is free market! It could be another Jio story – cut the competition first, cut throats later. There being a difference between free and free+fair.
There are many other points that farmers are protesting, but all they have demanded to check the govt intentions is that put in black and white that there will be no procurement below MSP.
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