Thursday, December 03, 2020

A SINCERE QUESTION

‘These laws are for their benefit. Why these protests?’ a friend asked (sincerely).  ‘Removal of mandi system will allow them to get best prices.’

Swaminathan commission report (popular name for national commission for farmers) which looked at agrarian crisis in detail and formulated reports that are to form the basis of improving the livelihoods and income of farmers suggested many solutions. But one key aspect of its recommendations was - govt cannot experiment at the risk to farmers. You want to adopt new tech, new solutions, anything - do it at govt risk, not farmer risk. Remember demonitisation? A large number of marginal farmers lost their standing crops as suddenly the cash disappeared. So no buyers in markets! Many haven’t recovered from that one crop loss (because every crop is sowed and taken care on credit or whatever little savings they had). That is an example of a policy where the maximum risk is on the shoulders of the most marginal (which in our country is a very large percentage).

Swaminathan says that govts are supposed to ensure MSP for farmers. He gives a formula to calculate it - input cost x 50% profit. There are 3 parts to the input costs. None of the govts has ensured that the MSP gets calculated at this level. We are currently at a stage where only two parts are considered (and that too not 100%). Why are protests primarily only in Punjab, Haryana and western UP (although rest of the country is slowly waking to it) - because at present only 6% of farmers in India have access to MSP and that too for about 35% of their produce. So, in a way only 2% produce gets MSP. So, neither have the MSP been given at what is recommended by national commission for farmers nor it is given for all the crops (to start with there are only about 23 crops on the official MSP list but mostly only wheat and paddy is implemented). Swaminathan reports defines a per square kilometer range in which there should be a mandi. Presently we are about 25-30% of that number. So, neither have we provided access to get to a mandi. Now where is reasonable access to mandis? Answer- where there is reasonable access to MSP. Which is Punjab, Haryana and western UP primarily.  

Let’s consider what happened when what govt is now trying to implement all over India was implemented in Bihar (they removed the mandi system and let private players in). This was around 2005-06. Was it a success? Well the number of labourers who leave Bihar every harvest to come and work in North India is answer to that. They sell their crop to private players at about 1100-1300 per quintal when MSP for same wheat or paddy is about 1800-1900. Did breaking mandis help them increase their incomes? Govt knows the answers. A world renown agriculture economist Devinder Sharma did an analysis. He presented data on income growth. Govt employees vs farmers. Starting 60s-70s till a few years back. In that time govt salaries increased 150-200 times whereas farmers income increased 10-15 times. Govt employees get over 100types of allowances as part of salary. Farmers are not given the right formula to calculate their input costs.

But mainstream media will tell you govt is not abolishing MSP. Well farmers say very good. Put it in the laws. Say any purchase below MSP will be a criminal offence. Govt refuses to do that (giving away their long term intentions).

The protests are primarily to force the govt to commit to MSP and if they wont then to take back these three laws.

The thing is free market is a noble idea - but free and fair are two whole different things all together.

Maximum number of farmers in India are marginal - which means they own less than one hectare. They don’t have resources to take their produce to next town, forget the next state! Instead of giving them more mandis this system will ensure that established mandis are being taken away from them.

When they say private players will pick produce from your doorstep - remember when instead of giving access to banking to rural India we allowed Sahara Shri to be their doorstep bank? Millions are still looking for their life savings. So, a free market and a free and fair market are altogether different aspects.

The current mandi system is maintained and expanded using the cess/taxes govt collects. With there being no taxes outside the APMCs the business will move there to start with and then slowly these APMCs will disappear. And all that will be left is free market! It could be another Jio story - cut the competition first, cut throats later. There being a difference between free and free+fair.

There are many other points that farmers are protesting, but all they have demanded to check the govt intentions is that put in black and white that there will be no procurement below MSP.



#FarmersProtest

#SpeakUpForFarmers

2 comments:

Sukhjit Singh said...

Also published at https://punjabtodaytv.com/english/farmers/

Sukhjit Singh said...

Hindi translation published at https://junputh.com/editors-choice/why-farmers-are-protesting-against-farm-bills-2020-explainer/?fbclid=IwAR0k_UASPaANn0DF7Q1rU5zWlIGD9XYY4L0TKRTnYHUQXDIAfRh7B-6-h-Q

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