What is your opinion about three contentious bills passed in Parliament despite protests from farmers?
These bills have now been passed in Parliament and would soon become law. Considering that farmers have been protesting on the streets for over a month now, it is high time we sit and talk to them and find out what their concerns are, what changes we need to incorporate in the legislation, what kind of safety nets are to be provided and how to regulate private investments and capital flowing into agriculture.
After the bills were passed in Parliament, I saw a lot of excitement among the agri-business companies and mainline economists. They are all saying that farmers are being misled, and in reality they would stand to benefit and get a higher price. My question to them is that if you are willing to pay farmers a higher price than MSP, why can’t you stand with farmers and urge the government to accept their demand of bringing in a fourth bill to make MSP a legal right for farmers? In any case you are saying farmers will get a higher price so why can’t you assure them that in future no trading will take place below MSP?
This means we should ensure that MSP becomes a legal right for farmers. That will be the real freedom for a farmer, when he knows that whether he is selling in Punjab or in Bengaluru, whether inside or outside the mandi, he would at least get the MSP for his produce.
When the industry is promising higher prices that means the industry is willing to procure at a price above MSP. So the entire burden of higher price will not be passed on to the government, the private sector will be a major partner.
Can you throw some light on systems in place in the US, European Union (EU) and Australia, and how farmers there get strong government support and subsidies.
In the US and Europe, open markets in agriculture have been operative for six to seven decades. If open markets were so benevolent, the US or European farmers would not have been in the grip of a severe crisis. In the US, farmers are at present faced with a bankruptcy of $425 billion. This is at a time when the suicide rate in rural areas is 45% higher than in urban areas. This is also at a time when the US farmers receive an average of $60,000 annual subsidy. Whereas, farmers in India get nearly $200 annual subsidies.
The US has big retail like Walmart which has no stock limits. The US has not only ‘one country, one market’, it has in fact ‘one world, one market’ operative. They also have contract farming and commodity trading. The biggest commodity exchange is in Chicago. Despite all this, if the US farmers are passing through severe crises, it is a clear indication that market reforms in agriculture have not helped them. Even the chief economist of the US department of agriculture has said that since the 1960s farm incomes have been on a steep decline.
When
Ronald Reaganwas the US President, the then agriculture secretary Earl Butz had made a famous statement ‘get big or get out’. That is what exactly the markets in agriculture look forward to. The result has been that small farmers in the US have been pushed out. Today, the number of farmers has come down to around 1.5% of the population.
US President Donald Trump’s agriculture secretary too has reiterated the same, saying in America the big gets bigger and the small goes out. The same thing happened in Canada and in the EU. If we look at Europe, agriculture is receiving a support of $100 billion every year under the common agriculture policy programme. Of this, 50% goes as direct income support to farmers and yet farmers are in crises there. The stress and depression farmers are undergoing there is an indication that they are faced with declining financial stability on small farms.
What difference do you see in small and marginal landholdings in India as compared to large corporate-owned landholdings in the US or Europe?
In the US, the average landholding is more than 400 acres (160 hectares) and in Australia, it is more than 4,000 hectares. In India, the average land holding size is 1.1 hectare and 86% farmers have landholdings of less than 5 acres (2 hectares). If the open market model of agriculture has not worked for bigger landholdings in America, Canada, Europe and Australia, I don’t understand how it will work for small landholdings in India. Instead of blindly aping the open agriculture market model from there, the challenge here should be how to evolve our own model of agricultural marketing which conforms to the peculiar conditions of Indian agriculture - primarily helping small farmers.
Though the Centre declares MSP on 23 crops, it only procures paddy and wheat. When most of the other crops are sold much below the MSP, how can higher prices be provided to farmers?
Shanta Kumar
(former Union minister) committee report had said that only 6% farmers in India get the benefit of MSP, which means the remaining 94% are dependent on the markets. If the markets were so efficient, I see no reason why Indian agriculture should be passing through such a terrible crisis. The same markets which did not perform for all these years are suddenly now being seen as saviors of farmers.
With only 6% farmers getting the MSP, the challenge now is to expand the MSP regime throughout the country. We have close to 7,000
Agricultural Produce Market Committee(APMC) mandis across the country. The need is to set up 42,000 such mandis if we have to provide a mandi at a radius of 5 km. Since the government announces MSP for 23 crops, of which only wheat and rice is procured, and with some procurement of cotton and pulses, most of the remaining crops get a lower market price. I am looking forward to a time when we are able to take the MSP regime from the present 6% to benefit at least another 60% farmers. This will help realise the vision of Sabka Saath Sabka Vikas.
As the US and other European markets have a high focus on quality of agricultural produce, where does India stand?
There is no denying that the focus of US agriculture has been on improving the quality, and that is why there has been a rise of major agri-business corporations. They have also focused on building the food value chain. Whenever agri-business companies have stepped in, they have brought in technology to check quality norms. But let us not forget, in the US, because of the takeover of the dairy sector by big corporations since the 1970s, 93% of small dairy farms have been closed down. These dairy farms were also having sophisticated technology. They closed down because the prices crashed and the big business increased milk production.
How do you see the increase in MSP for wheat and paddy since 1970?
In 1970, the MSP for wheat was Rs 76 per quintal. In 2015, after 45 years, it was Rs 1,450 per quintal. This means an increase of 19 times. If you compare this with income parity norms of other sections of the society, basic pay and dearness allowance (other emoluments not added) of government employees have increased by 120 to 150 times during these 45 years. In the case of university and college professors, this has increased by 150 to 170 times and of school teachers by 280 to 320 times in the same period. So what do you expect the farmer to do?
A study done by Organisation for Economic Cooperation and Development in collaboration with the Delhi-based think tank Indian Council for Research on International Economic Relations had shown that between 2000 and 2016-17, Indian farmers lost Rs 45 lakh crore. Can we imagine how much farmers are suffering? Imagine if this loss was encountered by corporates, the entire nation would have woken up to the crises India is facing. But this particular subject is not at all discussed in the media.
The economic survey 2016 tells us that the average income of a farming family in 17 states of India, which means roughly half the country, is Rs 20,000 a year. This means a farmer’s family is surviving on nearly Rs 1,666 per month.
But there are also flaws in the APMC mandi system.
Some flaws have evolved over a period. There is cartelisation and mafia. So, why not reform the APMCs? We need to remove the political influence in mandis and ensure mandis operate in a professional manner. We need to see that there is competition within the APMC mandi.
Bihar did away with the APMC Act in 2006 and it is said that the decision made farmers’ condition worse. But why did not farmers in Bihar protest like farmers in Punjab and Haryana?
If bulk of the delivery in APMC mandis is in Punjab and Haryana, they are the ones who know where the shoe pinches. In Punjab 87% of wheat and paddy is procured. In Haryana, it may be around 80%. But in Uttar Pradesh, only 7% procurement takes place, in Rajasthan it is 4% and in Bihar it was hardly 1%. So, when they do not have any idea what procurement is all about, how do you expect them to stand up and protest?
What do you say about the Essential Commodities Bill passed in Parliament in which commodities like onion, potatoes, cereals, pulses and edible oil have been removed from the list of essential commodities and one cannot know how much stock a person is holding?
This means that we have actually legalised hoarding under the garb of saying that farmers would actually benefit. When there is asymmetry in power, how do you expect a big player to negotiate with a small player? Secondly, when there would be hoarding at this scale, the big storage companies would be calling shots and deciding what the prices would be. #
Source: If Open Markets were so benevolent, farmers in US and Europe wouldn't be in severe crisis. The Times of India. Chandigarh. Sept 26, 2020.
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