Farmers will continue to be in distress as long as they are shackled by the state APMC laws
Reports of a farmer from Maharashtra's Solapur getting a measly Rs 2.49 from the sale of 512 kg onions to a trader (for Rs 1 per kg on sale executed at the Solapur market yard, total sale value comes to Rs 512; after deducting labour, weighing, transportation and other charges adding to Rs 509.5, the net realization is Rs 2.49) in the district has led to all-round consternation.
Rs 2.49 is the net revenue from the sale of the crop; it isn’t a profit. To arrive at it, we need to deduct from this the cost of producing 512 kg onions which includes the expenses on seeds, fertilizers, pesticides, irrigation, labour, cost of credit and so on. All of this amount (minus Rs 2.49) is the loss incurred by this farmer. It means an increase in debt and attendant disastrous consequences.
The condition of the majority of other farmers is no less precarious as their realization from sales at depressed prices is far from adequate to fully cover the cost. Juxtapose this with the retail price of an onion being as high as Rs 40 per kg in some markets (albeit domestic) and the current global scenario wherein there is an acute shortage in many countries, so much so, the authorities are forced to take recourse to the ration of its supply in supermarkets. The state of affairs is highly inequitable, unjust and unconscionable.
Who is responsible for this?
The small and marginal farmers (those with land holdings less than 2 hectares) who constitute about 86 per cent of the total number of land-owning farmers sell their crop produce on two outlets viz. Agricultural Produce Market Committee or APMC mandi (marketplace notified under the state APMC Act); (ii) ‘private local market’.
The “Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India”, SAS in short, released by the National Statistical Office (NSO), covering the period July 2018 to June 2019, reveals widespread dissatisfaction among farmers with the price realized from the sale of their produce. Their highest dissatisfaction is with sales in the APMC mandi followed by sales in the private local market.
The low price from sale in APMC mandi has to do with state laws under which farmers can sell their produce only in ‘designated’ mandis. In the mandi, arthritis – the local term for commission agents (they arrange for auction and delivery of the produce) – and the licensed trader/buyer rule the roost. The duo ensures that the farmer gets a low price besides facing other adversities viz. rejections, weighing less, delayed payment, etc. Levies such as market fees, anthias commission, rural development cess (RDC) etc further add to their woes.
The capacity of APMC mandis is extremely limited; the majority of small and marginal farmers are forced to come to private local markets, where sales are legally barred. At these markets, they end up selling their produce to the very traders who dominate the APMC mandis, at throwaway prices. The latter has the blessings of corrupt bureaucrats and politicians (in many cases, they or their kin also masquerade as traders) and hence, won’t face any action for violating the law.
The farmers also look to the state agencies such as The Food Corporation of India (FCI), National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) etc where their level of dissatisfaction - as per the SAS survey – is low. This is natural as state agencies buy at the minimum support price (MSP) notified by the Union government (at present, it notifies MSP for 23 farm items). But, their purchases are limited.
Except for paddy and wheat where FCI and other state agencies buy only 30 per cent of farmers’ produce, for all other crops their purchase is minuscule. In the case of paddy and wheat, the percentage share is high essentially because these purchases are meant for feeding the beneficiaries/poor under the National Food Security Act (NFSA). Even so only 6 per cent of farmers – mostly rich with larger land holdings - get the benefit of government procurement.
There has been increasing clamour for the government to substantially hike purchases by its agencies (albeit at MSP), increasing coverage of crops under their procurement plans, legal guarantee for the purchase of all farmers’ produce at MSP even by private trade and so on. All of this sounds like building castles in the air.
The government neither has the infrastructure – physical and administrative – nor the financial muscle to purchase, store and handle the mountain of crop produce all farmers offer for sale. Even if, it had, a fundamental question remains whether the State should be involved in such activity. As for legal backing to MSP, the government can’t force a private person to pay a certain price to the farmer. It won’t pass judicial scrutiny.
The extant arrangements are far from addressing the concerns of the farmers. What then is the way forward?
They need to be liberated from the clutches of the state APMC.
The agri markets should be opened up and farmers allowed to sell their produce in other outlets as well. Towards this end, in 2017, Modi Government passed a Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Law. Besides giving more options to farmers for selling, it provided greater flexibility to traders such as a ‘single pan-State licence’ for buying from anywhere in the State. But, the majority of the states showed no interest.
In September 2020, the Union government enacted three central farm laws. For this purpose, it invoked entry 33 of the Concurrent List in the Constitution – inserted vide an amendment in 1954 – which allows it to regulate inter-State trade and intra-State trade and enable the purchase of specified farm commodities directly from farmers anywhere in the country, even outside designated APMCs.
The laws fill the existing void by legitimising sales on all non-APMC platforms such as private traders, processors, aggregators, exporters and so on without disturbing APMC mandis. These opened up unlimited opportunities for farmers to sell their produce, thereby helping them get higher prices, which could even exceed MSP depending on the demand-supply scenario. They don’t have to pay any levies for selling at non-APMC platforms and can save on transport costs in case the buyer picks up from their doorsteps.
The farmers could also enter into contractual arrangements with enterprises (private companies, cooperatives etc) that would not only give them an assured market at pre-set good prices but also the timely supply of quality agricultural inputs viz. fertilizers, seed, pesticides etc and a package of good agronomic practices for securing higher yield and quality foodstuff.
Despite manifold gains including higher crop yield and remunerative prices and the laws holding a promise of doubling farm income (or even more), these triggered prolonged protests and demonstrations – mostly confined to Punjab, Haryana and Delhi. The intervention of the Supreme Court by staying their implementation in January 2021 and no decision despite having got a recommendation from a committee (set up by none other than itself) favouring these laws emboldened the protestors to continue with their stir. As a result, Prime Minister Narendra Modi was forced to announce the repeal of the laws on November 19, 2021.
(The writer is a policy analyst)
