Guarantee MSP and improve its scope to make farmers 'atmanirbhar'

Rajnath Singh, a senior member of the Modi cabinet, says the government wants to make Indian farmers ‘atmanirbhar’ (independent), but the protestors in New Delhi think the three new farm laws will actually make them ‘corporatenirbhar’ (dependent on corporates for a living).

Ask farmers what they want

While no one is against empowering farmers, it is the method adopted by the Modi administration to do so that has raised more questions than answers this government can offer. Prime Minister Narendra Modi insists the Acts passed by Parliament recently will liberate our ‘annadata’ from the clutches of drudgery and offer them a better price for their produce. In short, they will make BIG money. However, skeptics, mostly peasant leaders, believe it is another ploy to benefit the big players at the cost of hapless farmers. Most importantly, has anyone asked the supposed beneficiary of the new law if he wants ‘big’ money or just good and assured money?

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The Congress and the BJP may have brownie points to score from this squabble, but it is needless to say the subject of guaranteed minimum support price (MSP) is a genuine one for the average farmer. MSP is a “minimum price” for any crop that the government considers as remunerative for farmers. So, how come MSP became so important for a farmer?

Agriculture – Before and after economic reforms

Before the economic liberalisation of 1991, farmers were mostly protected by government programmes initiated under the Green Revolution, White Revolution and an array of schemes. Most importantly, restricted economic activities and closed markets meant farmers weren’t under much pressure to produce and they were not ambitious enough to earn BIG money. Post liberalisation, the farmers’ world changed upside down. Fast expanding cities engulfed their fertile lands (farmers themselves gave them away for lure of BIG money); emerging middle-class and their ability to spend started influencing farmers’ decisions (what seed to buy, extensive use of chemicals for a higher yield, sale in organised markets, etc). Corporates made a meek backdoor entry and traders, moneylenders went on an exploitation spree.

Farmers were shown a false dream that competitive markets would work best for them and they fell for it. Unequipped to handle rapid changes, the Indian farmer collapsed under his own expectations. He couldn’t sense the booby trap he was getting into and went full throttle, often borrowing money from banks (most of the time from loan sharks) with a wish to get extraordinary returns from his field and also to catch up with socio-economic changes happening around him. Most of his wishes have remained unfulfilled though. The Big money never came for most of them, who were either marginal or small farmers. Unable to wriggle himself out of the mounting debt trap, he either committed suicide or quit farming. According to the National Crime Record Bureau (NCRB) data, a whopping 3,42,884 farmers died by suicide in India between 1995 and 2019. Those still toiling on the field are surviving on government largesse, which comes periodically in the form of farm loan waiver or MSP.

Several committees were formed in the subsequent years to “strengthen” the agriculture sector. Farm loans would be waived off periodically — first by the Union government of the day then by the particular state government — all with an eye on the fast diminishing rural vote bank (Census 2011 data shows as many as 1.78 crore people moved from villages to cities for jobs — a 2.8% growth rate every year.)

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One such committee was formed under Padma Vibhushan M S Swaminathan, the father of Green Revolution in India. Of the many suggestions made, Swaminathan had said that MSP (minimum support price) should be 50% more than the weighted cost of production. After years of denial, the Union government finally relented. In 2019, Union Agriculture Minister Narendra Singh Tomar announced that 200 out of the 201 recommendations of the Swaminathan Committee report on farmers have been accepted, including the one on MSP.

Circa 2020

The enactment of three new farms laws in 2020 — Farmer’s Produce Trade and Commerce (Promotion and facilitation) Act, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and the Essential Commodities (Amendment) Act, 2020 — meant the Centre has reneged on its promise of farmer welfare. Farmer leaders see this as a renewed attempt at “corporatisation of agriculture”.

“While the government may claim they have no plans to scrap MSP, it can use the new law craftily in future to go back on its word,” said Ajit Navale, general secretary of the Akhil Bhartiya Kisan Sabha, which is actively participating in the farmers’ protests in Delhi. While proudly announcing that farmers can sell outside the Agriculture Produce Market Committee (APMC) and enter into contracts with companies, the government has cleverly made it easier for the outside buyers (traders, corporates, food processors, exporters, etc) to buy from farmers at a price even less than the support price. While leaders talk about ‘liberating’ farmers from bondages, in reality it is the buyer who has been ‘liberated’ from the compulsions of paying equal to or above the MSP.

Earlier, while selling his produce in an APMC ‘mandi’, farmers were at least assured of a price for any of the 21 listed farm commodities (rice and wheat being the most prominent ones). The traders were registered and bound to pay for whatever they purchased. “Under the new law, only a PAN card would suffice for them to buy from any grower. Besides, if the trader defaults, the aggrieved farmer cannot go to a court, but has to knock on the doors of the commission that will be specially formed for the purpose. This makes it amply clear that an average farmer will not be able to stand up to a mighty corporate in case of a dispute,” said Navale.

Supporters of the new laws argue that only 6% farmers in India benefit from the MSP regime, with the coverage restricted to 21 crops only. Since these numbers are miniscule, why oppose the Acts, they contend. Farmer leaders say that unfortunately their opposition to the Centre has been misconstrued. “Nobody wants the government to buy all farm produce. What we simply expect is that the government should amend the laws to ensure farmers get a price above the MSP — irrespective of who buys it,” adds Navale. The naysayers conveniently forget that when the government purchases food grain for the public distribution system (PDS), the supply in the open market comes down and farmers fetch good prices by default. Since most of the 21 crops (especially wheat, rice and pulses) are produced in abundance in our country, without the government buying any of them, traders would then force farmers to lower their prices and buy at dirt cheap rates. So why keep only a few crops under government pricing? Why not bring all crops under MSP and then make it compulsory for private buyers to purchase over and above the government decided price?

Don’t kill the goose…

Undoubtedly, the Agriculture Produce Market Committee (APMCs) ‘mandis’ today have become hotbeds of corruption and mismanagement. Instead of weakening them further, the government should increase their efficiency. With all their limitations, APMCs have for years provided farmers a place where they can sell their agri output for sure. Giving unhindered entry to corporates/traders in the purchase process will result in further exploitation of our peasants. The dairy farmers of Maharashtra are already experiencing the consequences of the highhanded attitude of such organised groups. If we do not want our vulnerable farmers to cave in to pressure from avaricious buyers, then APMCs need to be restructured and its operations streamlined.

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Farmers definitely want permission to sell outside APMCs. The ideal condition would be the one where a healthy competition between APMC ‘mandi’ and open market results in higher price realisation for farmers. Instead of weakening the existing structure (APMCs and MSPs) and building a new one (based on pure profits), the government should listen to the protesters and make MSP a constitutional guarantee and expand its scope. That would be a win-win for all.