Shivraj Singh Chouhan faces his biggest challenge ever

While the Madhya Pradesh chief minister engineered a fantastic agricultural turnaround in his state, why he couldn't dismantle the agri-traders' lobby remains a mystery

For want of a nail, the kingdom was lost, goes the saying. Madhya Pradesh Chief Minister Shivraj Singh Chouhan might lose his kingdom — 6.4 million farmers, to be specific — to keep around 350 agricultural traders happy.

Everybody knows what happened in June-July this year. Farmers grew a huge onion crop. Prices plummeted. The Madhya Pradesh government intervened and bought around 900,000 tonnes of onions at Rs 8 per kg from farmers. But farmers were still not happy and their protest took a violent turn. The police opened fire at the protesters. Five people were killed. Finally, the onions just rotted and had to be dumped because state agencies like Markfed bought the onions, but had no place to store them and could not sell them for want of infrastructure.

Then it was the turn of soya. Soya, which is turned into de-oiled soya cakes and exported to Western countries for use as feed for animals, is a popular crop among farmers. They also grow a lot of tur. Prices of both commodities crashed internationally. Interestingly, prices remained stable in neighbouring states like Maharashtra and Rajasthan. They plumeted only in Madhya Pradesh. This was the clearest indication that a group of people was gaming the market. Those who knew the actors said mandi agents had got together, formed a cartel and forced prices down.

Enter the government to the rescue. This was as it should be. Recognising the limitless political damage angry farmers could do, Chouhan announced a scheme that would keep everyone happy — the cartel of traders as well as the farmers. A new “MSP” was announced — a modal price of the commodities derived on the basis of the average market price of the commodities in three different states. The farmers could register to sell their produce in the state mandis and get a receipt. The difference between the minimum support price and the “modal price” (bhavantar in Hindi) would be borne by the state government and the difference deposited in the account of the farmer. Basically, it was a double subsidy — to the trader, indirectly, and to the farmer, directly. Eight crops have been covered under the bhavantar scheme. The sale period will be between October 16 and December 15 this year except tur for which the period is February 1 to April 30, 2018. 

Traders were ecstatic. They are paying the lowest possible price to the farmer, pointing out that the difference would be borne by the state government. What did it matter who was paying him? The confusing question is: The difference between what? The price the farmer was paid and the modal price? Or the MSP?

This has not been satisfactorily answered. The farmer is, of course, expecting the highest price point. But one thing is clear: He is still completely at the mercy of the trader and the mandi. If he could not sell to the mandi, there would be no reference price point.

The question is, while Chouhan engineered such a fantastic agricultural performance in his state — offering zero interest agri loans, all kinds of incentives — why couldn’t he dismantle the lobby that represent agri traders who run the agricultural produce marketing committees (APMC)? 

Bureaucrats say this is a tricky one. Although there are only 350-400 agents, they represent stability — to local politicians because they subsidise elections and petty expenses; and farmers because they have the capacity to tide them over in bad times (for a price, naturally). The agents are totally integrated into the political system. When in the initial days, Chouhan was still open to dismantling the agent system, the person who protested most vigorously, refusing to go along, was his finance minister, the now disgraced Raghavji — because he himself was an agent from Vidisha. As long as APMC actors can get together and dictate the price, there can be no real marketisation of agri-commodities.

So far, nearly three fourths of MP’s farmers have registered under the bhavantar scheme. The ultimate total payout by the state government could be as high as Rs 10,000 crore. And if farmers feel the government has short-changed them, well, Chouhan could have a problem on his hands. Of course, the only comfort is the Madhya Pradesh Assembly election is not till 2019.