Agriculture

Interview: 'A Level-Playing Field for Farmers Can Only Come Through an MSP Regime'

In an interview with The Wire, Vijoo Krishnan of the AIKS says that the creation of new trade areas without appropriate government regulation and price intelligence is the government effectively abdicating its responsibility.

New Delhi: The Narendra Modi government’s recent moves to reform the agricultural sector has snowballed into a political controversy over the past week, with thousands of farmers and political leaders in Punjab and Haryana protesting against what they see as the Centre’s attempt to do away with a government-backed minimum assured price for their crops.

The three new Bills – which were tabled in parliament last week and passed by the Lok Sabha – will make it easier for farmers to sell their produce directly to private players and big buyers while also loosening existing restrictions that discouraged investment in the sector.

While Prime Minister Narendra Modi has promised that the minimum support price (MSP) regime is here to stay, and that the new pieces of legislation are aimed at increasing the incomes of farmers, many including the CPI(M)-affiliated All India Kisan Sabha (AIKS), believe that a greater role for corporate buyers of crops will result in a raw deal for smaller farmers.

In an interview with The Wire, Vijoo Krishnan, joint secretary of AIKS, says that the creation of new trade areas without appropriate government regulation and price intelligence is the government effectively abdicating its responsibility.

Krishnan believes that ensuring MSP is made a legal right – a task that cannot be achieved by any one single measure – and also expanding and improving the existing mandi system is the way to reassure farmers. Edited excerpts from the interview.


Farmers fear that the new agriculture reforms are a precursor to doing away with the MSP regime. But if the current system of government procurement, which is necessary for the public distribution system (PDS), continue, won’t MSP operations still stick around? 

That fear is arising out of their [farmers’] experience on the ground and the BJP government’s earlier decisions. Already procurement at MSP is low. When the three Bills are read together, one can clearly understand how the World Trade Organisation diktats to cut subsidies, reduce public stockholding and such measures are being implemented through them.

The Shanta Kumar Committee had articulated the same and recommended privatisation of procurement and storage operations as well as for a reduced role for the Central government. It had recommended that the Centre should not accept grains under the central pool beyond the quantity needed by the state for its own PDS and other welfare schemes in case of any bonus being given by them on top of MSP. This is the direction in which the BJP government is moving. In a state like Kerala, where the LDF government is procuring paddy at Rs 2750 per quintal , which is about Rs 900 per quintal more than the Central MSP, one can imagine what impact that will have on the farmers’ lives.

The second part of the question is whether the MSP operations will continue to stay if the system of government procurement for PDS continues. The fact is that there is almost four times more than the buffer limit of foodgrains presently being procured, even when less than 20% of farmers are covered. The PDS requirement as per the present entitlements is only a minuscule part of this. If the government restricts its procurement just to the requirement of PDS, that itself will mean drastic scaling down of procurement. That is precisely the fear of farmers.

In the present system, procurement creates an upward pressure on the state to do the distribution. Even this will cease, gradually putting the PDS also in trouble. The farmers are demanding expansion of public procurement at remunerative MSP, the government is doing just the opposite. Although the MSP and procurement may continue to remain on paper, they will be rendered irrelevant by these legislations.

Farmers know what the policy prescriptions of the advisors of the government on PDS and other food security schemes are – food stamps, DBT  and so on – and realise that the overall direction in which it is moving is to shirk off its responsibility and dismantle the existing system rather than strengthening it.

Market intervention by the government depended on gathering price intelligence from mandis, which was crucial to initiate procurement operations when prices crash, though often under pressure of local struggles by farmers. These new Bills will ensure that the government will no longer have such information on market transactions and prices for farmers, whereby it will also get an excuse not to intervene.

Meanwhile, the mandi system will also collapse as traders and existing players will move outside the mandis into new trade areas. So, that price intelligence mechanism will also not exist. Farmers fear this and have enough reasons not to trust the verbal assurances.

Members of the Talmel Sangathan, an umbrella organisation of various farmers’ unions, take part in an hour long ‘Lalkar Rally’ to press for their various demands, in Amritsar, September 14, 2020. Photo: PTI

One of the demands that have come from some farmer bodies is making MSP a legal right. How will that look and work in a practical sense?

The Swaminathan Commission had recommended MSP at least one and a half times the total cost of production (C2+50%) and that was the biggest poll promise of Narendra Modi in 2014. Over 200 organisations of farmers had united to form All India Kisan Sangharsh Coordination Committee and developed the Farmers’ Right to Guaranteed Minimum Support Prices for Agricultural Commodities Bill, which was also presented as Private Members’ Bill in parliament. This was a demand that arose from the grassroots. The government has ignored that and is imposing Bills without any consultation with farmers or state governments.

MSP as a legal right would mean that the farmer will be entitled to guaranteed remunerative price with the obligation on the government to ensure the same. If there is political will, this can be done by expanding its procurement network to ensure not just the buffer stock for food security schemes but also for procuring a wide basket of agricultural produce. It can be done by effectively carrying out market intervention when prices are falling, ensuring the dumping of subsidised produce does not take place in the name of free trade and building direct marketing systems for farmers.

Other important steps that are closely connected to this include setting up an effective price deficiency payment system for farmers or compensating traders who oblige to pay MSP, incentivising farmers’ cooperatives, Panchayats, Women’s Self Help Groups, FPOs or such entities to emerge as competent players in the market space etc.

A basket of measures can be implemented to deliver on the obligation. All provided there is the political will.

Also Read: Agri Reform Bills: What Will the New System, Which Effectively Bypasses APMC Mandis, Look Like?

Introducing new markets outside of the APMC zones is one of the goals of the new farmer Bills. How can the government make sure that the relationship between private players and small farmers stays on an equal footing, and indeed that big corporates will want to reach out to smaller agricultural producers at all?

Big sharks are interested to enter only to eat up small players and source cheap foodgrains or agricultural produce at the expense of poor farmers. We have no two opinions on that.

All talk of services from farm to fork we know is not to cater to the poor consumers or to the poor farmer. Equalising or creating a semblance of level playing ground can only be ensured by ensuring that price mandatorily will not be less than the MSP calculated as per C2+50% wherever the trading takes place.

If this is made a legal right, we can see how these very big players who are pushing for the Bills will vanish from the scene. Secondly, by strict supervision and effective oversight on players and transactions in both markets and thirdly by collecting market fees in both kinds of markets, whatever that levy might be.

Statue of Mahatma Gandhi on the premises of the Parliament House during the monsoon session, New Delhi. September 20, 2020. Photo: PTI/Kamal Kishore

Why are we seeing protests only limited to a few states? Is it because MSP operations aren’t that widely spread in other states? If so, what does that say for your opposition to these farmer Bills? 

Protests have been happening across the country, though they have been most intense and continuous in Punjab and Haryana. Both states, having the widest procurement mechanism, naturally have been at the forefront.

On June 10, the ordinances were burnt in more than 3,500 centres across the country. On August 9, the anniversary of the Quit India Movement lakhs participated in a Jail Bharo programme with the slogan ‘Stop Corporate Loot’, ‘Save Farmer, Save India’. On September 5, a few weeks ago, more than 2 million farmers and workers protested against the Ordinances across the country and burned effigies. The protests have happened with the AIKSCC and organisations like AIKS as well as trade unions coming out in support.

The PMO, over the last 3 months, has been flooded with emails and letters. They should reveal how many farmers’ organisations protested, when and where and how many sent their memoranda to the prime minister. Haryana had protests in all districts today [Sunday]. On Monday, Karnataka is having a massive united rally and continuous actions for the next few days. September 25 has already been declared as a National Resistance Day of Pratirodh Diwas.

This set of legislations is not going to benefit farmers in any state. It is not restrictions in marketing that is causing distress of farmers; it is rather the absence of remunerative prices and assured procurement that is leading to distress.

What is your take on the argument that this will help moderate the high taxes that certain state governments levy on mandi operations? For example, Punjab and Haryana impose a greater tax than states like Madhya Pradesh and Odisha…

It really depends on the finances of the state government. In revenue-surplus states like Odisha, they do not have to fall back on mandi taxes for revenues. It is also worth noting that in Punjab and Haryana there is also a greater investment on infrastructure that has taken place.

Nevertheless, reducing of Mandi tax may be considered if there is such a demand from below with the state government consulting all stake-holders and we are open to that.

Internal reform is one thing and what is being attempted is entirely different. With the Central government concentrating all powers in its hands and not even giving the states their GST dues more constraints on the states’ finances is ill-advised. It is the prerogative of the state to decide according to the specific situation in the state. In a federal system, the Central government is bound to respect their autonomy.

Everyone, I assume even the AIKS, agrees that APMCs don’t function very well. What can be done to strengthen the existing system and make them function more efficiently?

The APMC Acts were introduced in the 1960s and 1970s to put a check on the monopoly powers of large traders and big buyers who historically used their economic power and extra-economic means to buy grain from poor farmers at low prices. It was to ensure there would not be exploitation of farmer in price fixation, grading, weighing and payments. Although not always implemented effectively, the APMC Acts introduced a system of auctions which was designed to bring more competition in the purchase of agricultural produce.

The BJP government has however decided to throw the baby out along with the bathwater as a solution.

We need a lot more mandis to be set up to begin with and expand the network. Easing of the licensing procedures to get more traders into the fray can be thought of. Agricultural credit has to be improved to free poor, smallholder farmers, tenant farmers etc from the trade-credit interlocking which makes them entrapped to some traders.

Many states have already brought in changes like single-point levy of cess, single license to operate across mandis, opening private market yards etc. It is true that bureaucratisation and undue political interference in some mandis are also leading to problems. But there has not even been an assessment of the implications of these changes.

Procurement of produce is in progress at a market yard. Photo: MAHAPFC

The middlemen in the agricultural ecosystem stand to lose a lot as a result of this new reform. Obviously, many believe that those who play this intermediary role deserves to be abolished, but they are also in some cases a trusted part of the chain for farmers. The APMC model provides for licensing/verification of traders to a certain extent. The new one does not, does that mean the trust level will go down?

To paint a picture that middlemen only play a negative role is not correct. There could be checks and balances to ensure that they do not emerge as an exploitative burden for the farmer. As I mentioned earlier, that falls under the purview of internal reforms to strengthen APMCs.

In any case, there will be no middlemen who will go away. There will only emerge new entities as well as old players who will operate outside the mandis without any regulation or checks. The APMC model provides for licensing/verification of traders to a certain extent while the new one does not. This clearly could lead to a trust deficit.

Also Read: ‘Death Warrant’: Opposition Slams Rushed Passing of Two Controversial Farm Bills

Barring a total U-turn on the Bills, what can the government do to assuage the concerns of farmers right now?

In the wake of the undemocratic manner in which the government is pushing through the Bills in parliament, throwing to winds all established norms, there is not much to expect from them. If the government was interested in taking everyone together it could have easily taken the Bills to a parliamentary committee for further examination.

It could have actually said that the ordinances have time till December in any case and will have wide consultations with all stakeholders in the meantime to address all concerns, before being introduced in parliament.

What it needs to have done was to enact the Bills that farmers had asked for, i.e guaranteed remunerative prices as a legal entitlement and freedom from indebtedness. Only on the basis of that other discussions could have happened. Now farmers will resist the legislations on the ground and show non-cooperation to their implementation.