Ten Facts in context of Farm Acts and Farmers’ Agitation
First things first . Let’s get the context straight before we go into the text of the Farm Acts. These empirically verifiable statements will give the readers the necessary background to understand why there is more than meets the eye with respect to the ongoing agitation.
First, while marginal and small farmers are still the mainstay of agriculture in most parts of the country, states like Punjab and Haryana, and the irrigated tracts in UP and MP are seeing a consolidation of land holdings. The agitation is being led by the farmers from Punjab who normally disposes their surplus paddy and wheat to the FCI through the intermediaries. This is the reason why the movement has not been able to extend its reach beyond the two states. If the issue had been so germane, MP farmers would have also found merit in this protest. It should also be mentioned that paddy production is not ecologically sustainable as well. If anything, the farmers of Punjab and Haryana should be seeking a package for diversification and export promotion, access to markets in central Asia and support for agriculture outsourcing abroad. One would also strongly recommend that the entrepreneurial spirit of the Punjab farmers is leveraged in this direction, which will be a win-win situation for all stakeholders. The fact is that the peasant mode of production has to give way to commercial agriculture, and it is best to prepare the ground for it sooner, rather than later.
Secondly, the production of cereal crops is NO longer the driving force of agriculture. As India makes the transition to a middle income country, there is greater focus on High Value Agriculture (HVA) – fruits, vegetables, diary produce, livestock. In fact by 2015, when your columnist was the Mission Director for Horticulture and Micro Irrigation, horticulture production had crossed cereal production in weight, volume and value! The changing profile of agri-commodity production, including diary and livestock calls for a different kind of infrastructure including cold chain. A recent study of NABARD has shown that not only are fewer than half the rural work force dependent on agriculture, those engaged in the wheat- rice cycle are even lesser in number. In fact over the last few decades, the share of cultivators in the total workforce is declining sharply: it was less than 20% in the state of Punjab in 2011, and if one was to follow the trend, it should be between 15-17 percent today. Again, while the share of crops in the GSVA is going down, that of the dairying and livestock sectors is growing.
Thirdly, the Right to Work, the Right to Food and the massive internal migration has ensured that ‘labour markets’ are no longer confined within the village, or even within the district. The official documents of the Government of Punjab show that over ten percent often state’s labour force is from internal migrants , and a very large number of them is also employed in the fields of Punjab , especially during paddy plantation, potato sowing and reaping and for harvesting of wheat . This is marked by outmigration of Punjabi youth, especially from the landowning Jat community to Canada, Australia and foreign pastures. This is changing the demographics of rural Punjab.
Fourthly, while Punjab is still an important source of cereals UP and MP has started producing more, and their share in the marketable surplus is also rising. In fact, Punjab with 3 MT trails behind UP with 5.5 MT and MP with 3.3 MT. Erstwhile deficit states like West Bengal are also producing surplus rice, but as Bangladesh has also improved its cultivation practices, even the cross border informal trade has come to a halt. The states which need support are smaller, less populated states like Kerala and the states in the NE.
Fifth , with regard to MSP and procurement (through FCI, Nafed and state agencies), a clarification has already been issued. The CACP will also continue, for this will be determine the base price for ‘market led transactions as well. In fact the Farmers (empowerment and protection) agreement on Price Assurance and Farm services Act, 2020 stipulates:
‘The price to be paid for the purchase of a farming produce may be determined and mentioned in the farming agreement itself, and in case such price is subject to variation, then such agreement shall explicitly provide for
- a) guaranteed price to be paid for such produce ;
- b) a clear price preference for any additional amount over and above the guaranteed price , including bonus or premium to ensure best value to the farmer and such price reference may be linked to the prevailing prices in specified APMC yard, or electronic trading and transaction platform or any other suitable benchmark prices.
The sixth point is related to Dispute Resolution . this columnist is convinced that a forum at the level of local executive magistrate is a far better option than the cumbersome procedures of civil courts. The lawyers lobby is ONLY interested in prolonging litigation. In any case, under pressure, the government has allowed the civil courts to also exercise jurisdiction. The revenue department is in direct touch with the farmers and also conducts bi-annual crop surveys, and the likelihood of a more nuanced arbitration is possible. Replacing this with the formal structure of courts, with all the adjournments and delays is not really in the best interest of the farmers. Such arrangements certainly suit the intermediaries.
Seventhly, it must be noted that more than the farmers, it is intermediaries who will lose out, for their commissions even on procurement by FCI and NAFED will be cut. It is estimated that the Arthiyas make over Rs 3000 crore per annum on paddies and wheat alone. There is no value addition, and no incentive for quality production. The entire effort is to just pass the FAQ test. In fact this Academy and the IRMA at Anand are leading a study to understand the reasons for lack of transparency in procurement regimes.
Again, we must place on record that the E NAM initiative is well underway, and though there are initial teething troubles, the pan India markets for agriculture will benefit the farmers, especially as infrastructure for warehousing, assaying and insurance becomes standard practice. This will cut the costs of intermediation, and also facilitate direct purchase by the modern retail industry, which will bring in standard operating procedures.
The ninth point is that Informal contracts and leasing are already under way, and anecdotal evidence shows that at least thirty percent of the land is not under the direct plough of the owner- cultivator. The new laws will facilitate these arrangements, and also ensure that lands which have been left fallow on account of fear of a permanent alienation are brought under cultivation. The Acts clearly specify that under NO circumstances can farmers land be alienated in favour of corporates. The relevant section is quoted :
No farming agreement shall be entered into for the purpose of _
- a) Any transfer, including sale, lease and mortgage of the land or premises of the farmer,
‘Last but not the least ,even for corporates, it makes more sense to enter into transactions with co-operatives and FPOs for it helps in the consolidation of produce, thereby reducing transaction cost and time .And last but not the least, corporates are interested in the produce of th land, not land itself because the cost of corporate farming is substantially higher than that of an owner cultivator. This is NOT their core business, and the earlier this realization dawns the better it would be.
In fine , it is clear that either by design or default, the true import of this policy has not been properly communicated to the agitating farmers . The earlier a dialogue is established , the better it would be for all concerned. One sincerely hopes that this column helps place issues in perspective .
By Sanjeev Chopra
(The writer is an IAS officer. views expressed are his personal.)