For Farmers in Punjab, Minimum Support Price Doesn't Guarantee a Better Income

With or without the government-mandated minimum support prices, private players in Punjab have been calling the shots, and the new farm laws only legitimise the rampant practice.

Chandigarh: Farmers from Punjab, who are up in arms against the Centre’s new farm laws, have more than one reason to remain firm on their demand for the rollback of the contentious laws.

For crops where there is no assured government purchase even after the announcement of minimum support price (MSP) in the state, farmers have no option but to sell their produce in the open market at much lower prices. Farmers in the state fear that the Central laws would further exacerbate the situation, even in the case of crops where returns are assured.

In Punjab, there is 100% government procurement at MSP for wheat and paddy. But it is not the case with crops like maize, for which the Centre announces MSP every year, but there is hardly any government purchase at that rate in the state.

As a result, market forces decide the selling price that is often below the MSP announced by the Centre. The pricing of the produce further dips if moisture level in the crop is high.

For instance, when maize arrived in local mandis in October, it was sold at Rs 800 per quintal, way less than the MSP of Rs 1,850 per quintal announced by the Commission for Agricultural Costs and Prices in July this year. The reason cited by traders for buying maize produce at lower price was high moisture content. The market price has slightly improved over the weeks, but it is still nowhere near MSP of Rs 1850 per quintal.

Also read: Punjab: Protests Against New Farm Laws Have Seen 12 Farmers Die, Centre Remains Unmoved

Vinnay Kumar, chief agriculture officer of Hoshiarpur district, which has maximum area under maize (65,000 hectares) in the state has told The Wire that farmers are getting not more than Rs 1,000 to 1,200 per quintal for their maize crop in the district. The situation is similar in other mandis too, he has added.

On why farmers do not get MSP, Vinnay has said that it is because there is no government purchase, thereby forcing the farmers to sell their produce directly to the traders at the existing market rate.

The demand and supply factor too plays spoilsport in fetching good rates to the farmers in the state.

Director, department of agriculture, Punjab, Dr Rajesh Vasisht has told The Wire that the influx of maize crop from Bihar, Andhra Pradesh and Eastern Uttar Pradesh farmers in Punjab mandis too has lowered the rates. Last year, the market rate was better as the supply from other states was limited due to floods. The situation is different this year, he has added.

A trader from Hoshairpur, Partap Singh, said that this year COVID-19 pandemic too killed the demand in the poultry farm and cattle feed industry where maize is widely used. As the demand is recouping, rates may improve in the near future.

Big farmers like Sansar Singh Bittu, who has 18 acres of land in Pathankot district, has said that he has for now stored maize crop produce due to low market price and will sell when prices go up.

But Shingara Singh, a maize farmer from Patiala district who sold his produce below Rs 1,200 per quintal, has told The Wire that not every farmer has the capacity to store their produce and wait for the prices to go up.

“For majority of the farmers, the immediate concern is to sell their crop, realise whatever money they get and then move to the next crop because of their financial constraints and looming debt liabilities,” he has added.

Shingara Singh has said those favouring Centre’s new laws often argue that farmers can stock and even can take their produce to other mandis for better returns. “But we don’t have requisite resources. The shirking land holdings in Punjab are further signs of distress,” he has added.

Punjab has 10 lakh operational land holdings but as per the last Agriculture Census (2015–16) report, a whopping one third farmers in the state have marginal and small land holdings (between 1 to 2 hectares), another 33.67% farmers with semi-medium holdings (between 2 to 4 hectares), 27.92% with medium holdings (4 to 10 hectares) and 5.28% with large holdings (above 10 hectares). One hectare of land is equal to 2.47 acres.

There are maize farmers like Gurcharan Singh from Siyonti village near Punjab’s Pathankot, who faced double losses. He has told The Wire that as soon as his produce was ready to harvest this year, two-third of it was destroyed by wild animals from the Dhar forest block that falls in the vicinity of his farm.

He has said he had spent a good amount fencing his field a few years ago but this could not stop wild pigs from entering the field and destroying the crop. There was also no compensation for the losses he incurred.

If this was not enough, the market played a spoilsport. He did not get more than Rs 1,100 to Rs 1,200 per quintal this year for his leftover produce against Rs 1,400 per quintal received last year.

Gurcharan has said that there is no government handholding even as middlemen and traders take away much of the profit of the farmers.

Cotton and basmati rice

Cotton is another example where market forces have denied farmers their legitimate MSP to start with.

Gurjeet Singh, a cotton farmer from Bathinda district, has told The Wire that the Centre in July announced Rs 5,725 per quintal for cotton. But cotton was sold as low as Rs 4,000 when farmers went with their produce in local mandis last month.

Punjab farmers protest

Members of various farmer organisations block a railway track during a protest against the central government new agriculture bills, at Nabha in Patiala, Thursday, September 24, 2020. Photo: PTI

The rates were only improved when farmer organisations staged protests outside the office of government agency, Cotton Corporation of India (CCI), in Bathinda, Gurjeet Singh has recalled.

Another farmer Khawha Singh of Mansa has said that he had sold his produce for Rs 4,600 per quintal. “Even though the price later improved, who will compensate for my loss? Why the government does not ensure MSP-based procurement the moment farmers produce is ready,” he has asked.

Baldev Singh, another farmer, has said that 10 years ago, cotton in Bathinda was sold as high as Rs 8,000 per quintal.

Also read: A Minimum Support Price for Farmers Should Be Made a Legal Right

In other businesses, there is a gradual increase in the income and the profit, but in agriculture, there is a huge instability. “Our input cost has gone up. Labour to pluck the cotton is expensive now. But where is the return?  Even MSP is not adequate,” he has lamented.

This year, 56 lakh quintals of cotton is expected in the market as area under cotton was more than five lakh hectares, an increase of 1 lakh hectare from the last year. So far, CCI has already purchased 10 lakh quintals and remaining by private players as on November 7.

Basmati farmers are equally annoyed.  Majority of the farmers have sown 1509 basmati variety, hoping to get good returns.

Inderjeet Singh, a farmer from Kot Budha in Taran Taran district, has told The Wire that the market price of 1509 variety is not more than Rs 1,500 to Rs 1,600 per quintal against Rs 2,300 to Rs 2,500 per quintal sold last year. He has added that even another basmati variety of 1121 has been sold anywhere between Rs 2,500 and Rs 2,700 per quintal as against Rs 3,200 to Rs 3,300 per quintal last year.

He has blamed it on the cartel of private agents for the dip in market rates. They cleverly buy basmati from Uttar Pradesh and Bihar mandis to bring down prices in local mandis too.

On the other hand, Gurdial Singh Bal, chief agriculture officer, Amritsar, has said that the sluggish demand of the Indian basmati in the Middle East is one of the main reasons for the lower prices in the market. However, he has hoped that the prices will improve in the near future. The 1509 variety was sold at Rs 1,900 per quintal on Saturday in Amritsar.

‘Market is not a philanthropist’

R.S. Ghuman, professor of economics at Chandigarh-based Centre for Research in Rural and Industrial Development (CRRID), has told The Wire that the Centre’s claims that the new farm laws will help farmers getting good returns for their produce in the open market is at the variance with the ground reality.

Ghuman has said the Centre announces MSP for as many as 23 crops every year but except wheat, paddy and to some extent cotton, there is no assured government procurement for any of these crops, leaving the farmers at the mercy of market forces.

market yard

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

Explaining further, he has said one must understand that the market is not philanthropist. It only works for the profit, and has no concern for farmers’ income. There is a fundamental law of economics that is demand and supply, which governs the market price. And many times, it is manufactured too. For instance, onion rate has touched Rs 80 per kg not because demand has shot up but because there is a supply constraint that can be man-made too in the shape of hoardings, among others.

“If government cannot ensure better returns for all crops other than wheat and paddy even despite announcement of MSP, how can it ensure that farmers will get good returns if everything is governed by principle of open market, which the new farm bills intend to do so by weakening the agriculture produce market committees (APMCs) and MSP system,” Ghuman has pointed out.

Ghuman has also said that there is also a pressure on India from the World Trade Organisation (WTO) to reduce its food grain reserve, which means that the government’s procurement for wheat and paddy may also go down massively if it happens.

“Wherever agriculture has gone into the hands of private players, the farmers have gone into financial distress, ” Sukhdev Kokri, general secretary of BKU-Ekta Ugrahan, has said. Kokri’s organisation has been at the forefront of the farmers’ agitation in Punjab.

Kokri has said that there are examples in Europe and United States where farmers despite having extremely large land holdings are unable to sustain themselves due to poor returns for their produce. In foreign countries, not more than two percent of their population depend upon agriculture.  Here in India, 60% of its population is dependent on agriculture. “How will farmers with small land holdings in India survive then?” he has asked.

He has added that there are statements from Canadian prime minister, Justin Trudeau, who said that the interest of the farmers is heavily compromised when agriculture is left at the mercy of the market forces.

Farm expert Devinder Sharma too has told The Wire that the open market has not worked anywhere in the world. “How will it work here?” he has asked, and has added that the entire economics of open trade is so woven into exploitation of the poor.

Sharma has said that governments deliberately make agriculture sector financially unsustainable to keep the so-called economic reforms alive, which then reduces the number of people in agriculture, and to pack them off to urban areas to work as cheap labour in industries and service sectors.

Also read: Farmers Across 20 States Block Roads to Protest Against Farm Laws

The result of these faulty policies is exposed during the COVID-19 pandemic, as just on the second day of the lockdown, lakhs of people began migrating back to their villages. This clearly shows that the economic design that we have worked out did not prove beneficial for the poor, Sharma has added.

He has said, “It is time to learn from reverse migration and go for reverse economic policies. We should go for strengthening agriculture that should be the new power house of economic growth.”

“Why do we have to follow the failed policies of the US and Europe? Why can’t we have some sensible mainland economists who sit and decide what country needs?” he has asked.

He has further added, “We must realise agriculture needs support. Agriculture is the only sector that can be the engine of economic growth and provide employment to millions of people. Most importantly, it is the only sector that can arrest climate change. So, why are we not focusing there and unnecessarily focusing on industry just because the Western economists have said so?”

Crop diversification plans in doldrums?

Maize, as farm experts say, was Punjab’s traditional crop grown alternatively with wheat before it was replaced by paddy-wheat cycle in the early 1970s.

As paddy crop has massively receded state’s groundwater table, Punjab government in July this year has pushed farmers to grow maize instead, citing environmental compulsions.


Representative image of farmers working in a field. Photo: Flickr/Feng Zhong (CC BY NC ND 2.0)

The state agriculture department has thumped its chest too when it claimed that they were successful in increasing the area under maize.

In 2018-19, total area under maize in Punjab was 1.09 lakh hectares, and increased to 1.60 lakh hectares in 2019-20. This year, it touched 2.45 lakh hectare, an increase of 53%, data obtained from the Punjab agriculture department has disclosed.

But Jagmohan Singh, general secretary of BKU-Dakunda, has said that the state has cheated farmers by convincing them to grow maize when the state agencies have failed to buy their produce at MSP or regulate the purchase by the private players.

He has said if the state government thinks that they will be able to increase the maize area in the next season, they are mistaken.

Also read: Farm Bills, Small Farmers and Chasing the Agri-Dollar Dream

“Why should farmers grow maize instead of paddy if they can’t get assured MSP for their produce,” Jagmohan has asked.

Dr Rajesh Vasisht, director, agriculture, has told The Wire that there is no procurement of maize or other alternate crops in the state because the Centre has not notified any government agency for the procurement of crops other than wheat and paddy.

The state government on the other hand does not have financial resources to procure these crops on its own as it needs a huge amount of money, Vashisht has added.

But a senior journalist Hamir Singh has said that both the Centre as well as the state lack the will for agriculture reforms.

He has said that state distributes pulses under the public distribution system (PDS) system. “Why can’t it procure from its state farmers at MSP? That way, farmers will get assured return, and the state can also phase out areas under paddy,” he has said. He has added that crop diversification cannot take place unless there is an alternate MSP-based procurement system in place.

Maize, he has said, is a widely used crop in Punjab. If the Centre is not procuring it, the state can find a way out to buy it from farmers at MSP and then realise the money by selling it in the open market as maize flour or other by-products. Even it can be used under the mid-day meal system too, he has added.

Vivek Gupta is a Chandigarh-based independent journalist.