One hopes that the talks among the agitating farmers and the government come to an amicable answer quickly. But if farmer leaders stick to demanding a repeal of the farm laws, then I am afraid the stalemate is most likely to linger. In such a charged atmosphere, rationality normally becomes a victim of anger and hatred, which does not serve the goal of any, like farmers.
Nevertheless, let me spell out some standard information about Indian agriculture, which might support negotiators on each sides of the aisle, with a popular objective to advantage the farming community’s bigger interest.
A significant study that we at ICRIER performed with OECD showed that among 2000-01 and 2016-17, Indian agriculture was implicitly taxed to the tune of nearly 14% of its worth. It was mainly due to restrictive trade and promoting policies, ranging from export controls to stocking limits to the restrictive mandi program in the nation. Therefore, the way to boost farmers’ value realisation was to liberate agriculture from these a variety of controls. The farm laws below discussion are intended to do precisely that. Interestingly, this had been a extended-standing demand of 1 of the tallest farmer leaders, the late Sharad Joshi, due to the fact the 1991 reforms. But somehow, a worry has been produced that these farm laws will rob farmers of APMC markets, their MSP, and they might even shed their lands to significant corporate homes via contract farming. These fears, genuine or imaginary, have been blown out of proportions with political motives.
There is no doubt that the APMC markets and the MSP program will face competitors from private markets and out-of-APMC-mandi transactions. But will this hurt the farmers or play in their favour? Opinions differ. I think it would support the farmers at big, particularly the modest and marginal ones. Creation of more 10,000 Farmer Producer Organisations (FPOs) and the promised Agri Infrastructure Fund of Rs 1 lakh crore would help in that course of action. But quite a few amongst the agitating farmers worry losing the MSP of wheat and paddy that they get in Punjab-Haryana.
What is the reality of the MSP? The NSSO’s Situation Assessment Survey (70th round) revealed that, in 2012-13, only 6% of farmers sold their create at MSP. And, of course, a majority of them have been from Punjab-Haryana belt. After that, there is no such survey out there in the nation. In current analysis with my colleague, Ritika Juneja, we worked out the worth of agri-create (paddy, wheat, pulses, oilseeds, and cotton) purchased by government agencies at MSP for the year 2018-19, and what percentage of the total worth of agri-create this constitutes. Interestingly, the quantity once again comes to about 6%!
So, all these years, due to the fact the MSP was introduced in 1965 via the newly-constituted Agricultural Prices Commission (now renamed as Commission for Agricultural Costs and Prices, which I had the privilege to chair for the duration of 2011-14) and Food Corporation of India (FCI), only 6% of farmers and broadly 6% of the worth of agri-create has benefitted from this program. And keep in mind, the ‘MSP and APMC’ program aids mainly these who have big surpluses, mostly the big farmers. So, if 1 truly desires to support the modest and marginal farmers, the ideal method is via FPOs at the village level and not in APMC mandis! About 86% of Indian farmers are modest and marginal (owning significantly less than 2 ha), operating roughly 47% of the total operated region. So, these arguing for APMC mandis and MSP are essentially arguing for 6% of farmers or 6% of the worth of agri-create.
Given these standard information, how do we dispel fears of the agitating farmers? First, the government need to be prepared to give in writing that the current program of APMC markets and MSP will continue and strengthened. Second, the government can also give in writing that the contract is of create, not of land. Third, farmers can take dispute settlement to district courts, if they like. Fourth, to best-up these written assurances, the government can also commit to building a fund of Rs 25,000 crore below the Price Stabilisation Scheme, which can be used to help industry rates of specified commodities that take a dip of more than 10% under MSP. This is akin to operations of NAFED to help industry rates of pulses and oilseeds, or Cotton Corporation of India (CCI) for cotton rates.
This can be extended to maize, sorghum, pearl millet, and so on. One significant query with this method is how to deal with the losses when these government procured stocks are unloaded in the industry as they will invariably incur losses. And if stocks preserve piling, as is the case with wheat and rice today, how do we appropriate this imbalance in demand and provide? In that case, either limit the size of procurement or go for value deficiency payments to these who invest in ‘put options’ at MSP for specified quantities at the time of sowing. An specialist committee will have to be set up to appear into its operational recommendations. A additional positive step will be to announce a diversification package for the Punjab-Haryana belt.
I ought to also say that repealing of these farm laws would be like robbing the rights of more than 90% of farmers who by no means gained from the MSP program and who are largely modest and marginal farmers. Asking for generating MSP statutorily binding even on the private sector will be anti-farmer as substantially of private trade will shun this, major to chaos in the program. It will be worse than repealing these laws!
Lastly, 1 ought to keep in mind that farmers often want a greater and greater value for their create, but greater meals rates can also bring pains to poor shoppers. Art of policymaking is to balance the interest of producers and shoppers inside affordable economic sources.
The author is Infosys chair professor for agriculture, ICRIER. Views are individual