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Indian Farming at Crossroads : Reaping the Whirlwind

Manoj Varghese Manoj Varghese
07 Dec 2020

Big brands of potato chips like Lays, Bingo, Haldiram nowadays enter into a direct agreement with the farmers to procure raw potatoes from small cities or rural areas. 

In Mhow, 20 kms from Indore in Madhya Pradesh, big corporates have procured the entire potato field under the contract farming, chip it with their machines in the field itself, get it dried and take it for sale at a grand level. It’s a win-win situation for both the farmers and the corporates. 

The farmer is at a low risk of losing the crops, and the corporates are ensured of the raw material at a minimal rate. One potato cut into 4-5 pieces, sown in the field, yield 8-10 big potatoes in a short span of three months. One bigha land is leased out for Rs 10-12,000 from which around 500 kg potato is procured. The Malwa belt, known for its high productivity of crops is mostly leased out to such Marwadis, and imports potato from other parts of the country like Saharanpur and hill cities for its own local consumption. 

A normal farmer cultivates 2-3 crops in a year in the region; soya bean from March to June, wheat after rains till February, pulses for 2-3 months in between or a seasonal vegetable. The one bigha farmland yields around 300 kg each of wheat and soyabean. 

The Minimum Support Price (MSP) of wheat in MP is Rs 1975 and soyabean is Rs 3390 per quintal. Thus, a hard working farmer with one bigha land can earn on an average 16-18,000 per year. 

In general, almost 94% of farmers do not get the MSP in India, owing to the degraded quality of food grains or for one reason or the other. The farm labour, transportation, long queue at the wholesale markets (Mandi) and a dip of almost 30% price compels them to sell the produce to a middleman or a landlord nearby. 

The Government’s move to bring in three ordinances on Farm Laws in Parliament and later passed them into Acts in September has become a bone of contention. More than 500 farmers’ unions are now on a path of agitation. 

Around 10,000 farmers have gathered at Singhu border, and lakhs of farmers from other parts of the country are on their way to Delhi. Prime Minister Narendra Modi reiterated that farmers stood to benefit from the new measures. Most of the farmers are not convinced by the assurances and fear that their liability will increase as a result of the changes.

Eyebrows have been raised over the way these three legislations came into existence. The government acted in haste and adopted dictatorial form in passing them in the Parliament, without conceding the demand of the opposition parties to send the bills to the Select Committee. It did not even allow debate in the House. Almost a dozen Parliamentarians opposing in Rajya Sabha were made to disqualify for the bill to sail through. Though agriculture is a state subject, the Centre did not even consult the states before making this law much against the federal spirit of the country.

The farmers are currently paid MSP for certain crops, mainly wheat and rice. Produce is currently sold at auctions organised by Agricultural Produce Market Committees (APMC) in each state. There are restrictions on who can purchase goods at those auctions. The reforms will dismantle the APMC structure and allow Indian farmers to sell their goods to anyone for any price, even to buyers from outside of their state.

The two issues that farmers are mainly concerned are: procurement and MSP. The procurement of the production is quite high in Punjab and Haryana, irrespective of the landholdings. If MSP is there, farming is profitable. If it is withdrawn, it will lead to losses as the cost of production is quite high. Hence, farmers will quit farming, as it is not profitable. The MSP system has made farmers dependent on the central pool procurement system.

The first law gives freedom to the farmers to sell their produce anywhere in the country. The second law is to give legal guarantee to the agreements that farmers reach with the traders. The third law is lifting ban on the storage of millets, pulses and oilseeds. 

Farmers feel that these laws are aimed at weakening the local market committees and empower the corporate sector. 

A few practical questions that bother the laymen and farmers equally are:

Is it feasible for the small farmers to take their produce to the city or other state? 

Are our farmers educated enough to browse through electronically to know rates, or have money and other resources to sell their produce in other markets? 

Can a farmer holding two acres take his produce to a market away from his village and sell it? Who will pay him the transport charges? 

Can this farmer manage the market forces? Can he bargain with the market forces? 

What if he fails to get even the transport cost? Basically, the farmer is expected to learn the marketing skills! 

The traders will have an upper hand over the small farmers with cash in hand while formulating legal guarantee agreements. This would make the farmers sacrificial goats. Even with the statutory bodies and the Mandis in place, the market forces have been cheating the farmers in the local market yards by suppressing the demand and thus bringing down the price below MSP. Instead of giving them the MSP guarantee, leaving the market to the corporate sector and the traders would do no good to the farmers. 

The laws would also take away the right of the farmers to complain against the non-payment of the MSP. Basically, the farmer is expected to learn the legal skills!

With the lifting of ban on storage of essentials like pulses, spices, the traders will buy the produce at the time of yield at lesser price and stock them, and create artificial demand for them to make greater profits. 

In the past, several well-performing governments lost power on account of this storage issue, be it the onion or pulses. The government has no mechanism to control this gambling by the traders and the corporate companies, who can store the essential commodities creating artificial scarcity. 

The government fails every time the market forces create artificial scarcity, even with the ban on storage. Now, with the ban lifted, the government would not be in a position to check the market and make the essential commodities available to the people. Basically, the trader will govern the market demand and supply!

Farmers have taken to the streets since these laws are framed to benefit a few corporates, who are otherwise disabled to enter the Mandis and procure the grains at a higher rate of MSP. These laws would jeopardise the food security and security of the farmers in the country.

 If the Central government is sincere and honest to help the farmers, it should take measures to ensure MSP for every crop. This is what the farmers across the country have been asking for decades. The government, if it is farmer-friendly, should give MSP to the farmers, buy their crop and pay their money directly into their bank accounts.  

Several small and medium landholders who own less than 4 hectares of land are renting out their fields to large farmers as they cannot afford capital incentive agriculture (machines and other inputs). Across India, during the last two decades, the number of marginal and small landholdings (less than two hectares) grew from 83.5 million to 117.6 million. But in Punjab, marginal and smallholdings fell from half a million to 0.36 million during the same period. The number of semi-medium, medium and large (more than two and over 10 hectares) increased from 0.62 million to 0.69 million which shows poor farmers are either selling land or renting it out to big farmers. 

The decline in small landholdings in Punjab shows they are non-viable under modern capital-intensive farming. There are only four per cent farmers in India who own more than 10 hectares of land.

The agitation and aggression of the farmers is at its peak. A video is going viral, wherein a reporter of a leading TV News channel was forced to tender apology while covering the farmers protest at Singhu Border for having projected them as Khalistan activists, terrorists and goons. “The farmers have no trust in the Government as every sector is being privatized, be it the Railways, Airlines, Education, Oil and Natural gas, mobile networks, healthcare, etc benefitting a few like Ambanis and Adanis. Most of the farmers are free after sowing the rabi crops in the field and are tension free at home, and have come prepared for a long agitation”, says a protesting farmer. 

Around 32 farmers’ union leaders were called by the Government on December 1 for talks over a cup of tea. The farmers did not sip the tea, instead said our fellow farmers are waiting at the border with kheer (sweet rice). The government has offered to form a committee, but the farmers are not ready to budge, and have demanded to take back the three agrarian laws. The farmers from Maharashtra, Gujarat, Rajasthan, Karnataka, MP and other states have expressed their solidarity with the farmers’ protest and are likely to join soon. Transporters have warned of a strike from December 8 in support of the farmers demand. 

Farmers from Punjab who are protesting against the new farm laws in Delhi are suffering from deep economic stress and shrinking land holdings. The contract farming has killed the agriculture sector in several other states. From 2014, the Delhi Government has allowed the farmers to sell their fruits and vegetables outside Mandis. In Kerala, owing to the high labour costs, the farming has come to a standstill, leaving several paddy fields and the fertile land barren. Almost all food grains, vegetables, fruits are now being imported. Primary agriculture cooperative society procures grains in Bihar for the past 13 years. The middlemen procure the grains at a very low rate, bringing loss to the farmers and sell it at a very high rate.

Recently, the Railway Minister twitted that a train load of maize has been procured from Karnataka and transported to Uttrakhand, but the fact remains that the maize with MSP Rs 1750 in the state was procured at a rate of only Rs 900. In UP, the BJP workers are in a fix and are supporting the farmers. BJP Yuva Morcha president along with the supporters are protesting in front of the Mandi gate in Jhansi. The local MLA alleged that no MSP is being given to the farmers and have demanded the District Magistrate to intervene.

Several countries like Britain, USA and Canada have come out openly in support of Indian farmers. In Canada, there are no mandis, but the trader pays a reasonable sum of money to the farmer against the procurement of food grains, vegetables and the fruits. The Government encourages the farmers to cultivate well and ensures their hard labour yields a good sum for their livelihood. In India, neither the Government nor the big corporates could be trusted, when it comes to power or money.

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