Farmers' stir in Punjab, Haryana: Of politics and fear of losing MSP

The All India Kisan Sangharsh Coordination Committee has planned a nationwide protest on September 14

Farmers in Punjab and Haryana are out on the streets against the three agri-produce marketing Ordinances, set to be tabled as Bills in the Monsoon Session of Parliament.

The first facilitates out-of-mandi trade without disturbing the current structure of agricultural produce marketing committees (APMCs), the second provides a framework for contract farming, and the third amends the Essential Commodities Act (EC Act) to delist some items from government control.

The Ordinances were announced as part of the government’s Atmanirbhar Bharat mission in May. But it is now, when harvesting and sowing are done, that farmers are realising the full import of the legislation. They are afraid the new legislation will be the first step to whittle away the system of minimum support price (MSP) and procurement by the Food Corporation of India (FCI). And eventually, procurement by the FCI will dwindle to nothing, which spells deep insecurity, especially in Punjab and Haryana.

By contrast, farmers in Maharashtra are sanguine. Four years ago, Maharashtra had allowed fruit and vegetable farmers to sell their produce outside the mandis: It made no significant difference, as most farmers continued with APMCs as their primary platform of sale.

NITI Aayog member Ramesh Chand, who is a prime driver of the Ordinances, told Business Standard Punjab and Haryana farmers were not reading the reforms right. The changes will neither end MSP nor lead to the corporatisation of Indian agriculture — the two biggest fears.

“Nowhere does the Ordinance mention it will disturb the existing MSP-based procurement system for some crops. Nowhere in the current government is there any discussion at any level to dilute MSP. On the contrary, under this government’s regime, MSP purchases have only increased,” Chand said. “Of course, if the farmer wants to enter into any sort of agreement for getting good inputs, he can do so, but farming will have to be done by him. We have made provisions in the contract farming Ordinance that even construction of any sort of structure on a farmers’ land is prohibited.” 

Why not all farmers are protesting

Vinod Sinam is a middle-aged farmer from Sonee village in Mandsaur district of Madhya Pradesh. In a year, he usually cultivates at least three crops -- wheat in the winter, soybean in the summer, and garlic between the two seasons.

For Sinam, the price he gets for his produce is most important, irrespective of whether he sells it in a nearby mandi or buyers come directly to his farm.

“In April, when mandis opened only sporadically due to the lockdown, traders came to our house to buy freshly harvested garlic. Sometimes the price paid was more than what we get in mandis. But in some transactions, the rate wasn’t commensurate with what we expected,” Sinam said over the phone.

He said if he gets a price equivalent to the one which is decided by the mandi committee, there is no harm in selling directly to traders -- otherwise, mandis are the best available option. For millions of farmers like Vinod Sinam of Mandsaur, the key yardstick is the price they get for their produce. 

The apprehension in Haryana and Punjab is different: Once procurement shifts outside the regulated markets or mandis, the Centre and its agencies, such as the FCI, will gradually wind up their annual wheat and rice purchases from these states, leaving them at the mercy of traders.

Punjab and Haryana contribute a major chunk of the Centre’s annual wheat and rice procurement, which is then distributed through the Public Distribution System (PDS) across the country.

"Punjab and Haryana farmer apprehensions about the farm Ordinances have been magnified by the central government's misleading statement like 'MSP will continue’ which farmers are finding deceptive. They interpret it as an end to unlimited procurement of paddy and wheat after the 2022 Punjab elections,” Ajay Vir Jakhar, chairman of Bharat Krishak Samaj told Business Standard.

The All India Kisan Sangharsh Coordination Committee (AIKSCC) has planned a nationwide protest against the Ordinances on September 14.

It’s about taxes, too

The issue has also assumed distinct political overtones with Punjab Chief Minister Captain Amarinder Singh using the Ordinances to corner the Opposition Akali Dal (Badal). 

For the Akali Dal in Punjab and also the BJP’s new partner in Haryana, the Jannayak Janta Party (JJP) lead by Dushyant Chautala, opposing the Ordinances is fraught with difficulty as these parties are part of the government. But supporting them openly may antagonise a large chunk of their primarily rural and agricultural vote bank.

The two states also fear that if a sizable chunk of the agriculture trade shifts outside the mandis, they will stand to lose substantial chunks of their annual revenues.

The Commission for Agricultural Costs and Prices (CACP), in its latest rabi report, noted that in 2019-20, statutory taxes (mandi tax/APMC cess + arthiya commission) levied on wheat in Punjab and Haryana were in the range of 5.5 per cent to 4.5 per cent. In Uttar Pradesh and Madhya Pradesh, these taxes are only 2.5 per cent and 2 per cent.

These taxes go up further when incidentals, such rural development and infrastructure development cess, commission to society, nirashrit shulk (destitute fee), and mopari charges are levied by states.

Though the Centre asserted that the three Ordinances just provide an alternative marketing channel to farmers, those in Punjab and Haryana aren’t convinced. And political parties are egging them on, spotting the revenue hole the reforms represent.