(On 19 November 2021, following a year of protests by farmers at the borders of Delhi, Prime Minister Narendra Modi announced that the three contentious farm laws would be repealed in the forthcoming Parliament session. This piece from The Quint's archives is being reposted to highlight the long-running debate over the need for reforms in the agriculture sector, which was lost in the government's decision to bulldoze the laws through the Rajya Sabha in questionable circumstances.)
Farmers across north India are protesting the new agricultural reforms introduced in September. The Quint spoke to Sunil Jain, Managing Editor at the Financial Express and Vivian Fernandes, senior journalist and TV anchor who discussed various aspects of the new laws with us.
What do the new laws say about the Minimum Support Price (MSP)?
Vivian Fernandes says that currently MSP is announced on 23 commodities, but procurement happens only on two commodities (rice and wheat) and that too in few states, mainly Punjab and Haryana.
“In Punjab and Haryana, the procurement is open-ended. That means whatever wheat and rice the farmers produce is purchased by the Food Corporation of India or the agencies of the state government.”Vivian Fernandes
He further added, “The Food Corporation of India for a couple of years now has not been wanting to pay the high commission charges which the commission agents of Punjab are charging. So the fear is that it might go outside the mandi to procure, which will of course not affect the farmers, but over a period will reduce procurement.”
On the other hand, Sunil Jain, managing editor of The Financial Express, believes that “if the MSP system is to continue, Punjab's decline to obscurity is going to go on”.
“If you look at Punjab, during the green revolution it used to be one of the fastest growing agricultural GDP states in the country. Over a period, because the MSP hikes cannot be that much, the Punjab farmer has managed to get only a very small growth rate and there’s a far better growth rate when it comes to milk or fruits and vegetables, or you know meat, poultry among other things. If the MSP system is to continue, and it will continue. Punjab’s decline to obscurity is going to go on because what is happening is that other farmers are moving to horticulture, poultry or areas which are going to give them more money, whereas the Punjab farmer is not doing that.”Sunil Jain
Non-APMC mandis: Bigger market or road to exploitation?
“Before the central legislations were enacted, farmers could sell outside the APMC mandis, but they had to pay the mandi cesses because the cesses were payable in a notified area not just in the mandis and with a notified area I mean a block, or a district attached with the Mandi,” says Vivian Fernandes
He further adds, “The central legislation has now said that the cesses and fees will be payable only within the physical confines of a mandi and not outside. Which means that if you sell outside the mandi, you don’t have to pay the charges.”
According to Vivian, this is what the farmers, particularly in Punjab and Haryana, fear because in these two states there is a dense network of APMC mandis. The farmers there feel that if the mandis get uncompetitive, then over a period they will weaken and then they will fall into disuse and their suspicion is that some corporates will then take over the mandis on the cheap.
However, Sunil Jain tells The Quint that the APMC mandis right now are tightly controlled by the arhtiyas (middlemen) which leaves room for little transparency.
“What happens right now in the APMC mandis is that these are very tightly controlled by arhtiyas. The arhtiyas will tell you that this is the price I’ve negotiated. There’s very little transparency out there. This is the reason why you want more choices. (As per the new laws), it’s not as if the APMC mandis are going away. The farmer can still sell in the APMC mandis if he wants, but he also has a choice of selling in a non-APMC mandi.”Sunil Jain
He further said, “As far as the issue of being taken for a ride by the middlemen and things like that, let's keep in mind that today, if you leave aside the MSP-based procurement which actually happens in you know 4-5 states and is for wheat and rice, in any case, most of the purchases that are taking place are through the private sector players.”
What happens in the case of a dispute?
Both Jain and Fernandes feel that the government needs to ensure that a robust dispute settlement mechanism is put in place for the farmers.
“You require a dispute settlement mechanism. In the APMC mandis there is a dispute settlement mechanism. If the farmers are not paid then the commission agent will stand to lose their licence. Whereas if you buy from outside the mandis, who do the farmers go to?” Vivian told The Quint.
On this Sunil Jain believes that a disputes happen even today and there is a system in place to deal with them. “Crops that are being sold today are being sold through the private parties and whenever there is a dispute and whatever mechanism they have today, they use that. So, it's not as though dispute resolution is something which will suddenly come up when the private sector comes in. Secondly, when the government of India or the state governments start creating mandis, certainly they need to work very hard on creating a dispute resolution system,” he said.