Farmers have expressed fear that the new agricultural laws it will eliminate MSP’s safety cushion and discard the mandis, thus leaving them at the mercy of the big corporations. However, the government has repeatedly assured them that the MSP will not be eliminated.
Most agitated farmers belong to Punjab Y Haryana since they have been the government’s biggest beneficiaries minimum support price (MSP) for most crops in the country. However, farmers’ unions have repeatedly claimed that their protests are taking place across India.
How MSP Affects Farmers
MSP is the minimum price the government pays when they purchase any crop from farmers. It is announced by the state Farm Cost and Price Commission (CACP) for more than 22 commodities annually, after calculating the cost of cultivation.
Food Corporation of India (FCI), which is the main state grain procurement agency, largely buys only rice and wheat at those prices due to lack of storage and funds. The FCI then sells these food grains at highly subsidized prices to the poor and is then compensated by the government for its losses.
Consequently, millions of tons of rice and wheat are purchased in the states of Haryana and Punjab. The guaranteed prices encourage farmers to produce food grains in large quantities, which ultimately leads to a higher subsidy bill for the government.
Yet this government-provided safety net greatly benefits farmers in relatively affluent areas of Punjab and Haryana, forcing their poorer counterparts in Bihar and other less resourceful states to sell at a discount.
In Bihar, for example, the purchase of crops by FCI has remained at less than 2 percent of the state’s total production. Therefore, most farmers are forced to sell at a 25-35 percent discount. Furthermore, the state’s grain procurement infrastructure is underdeveloped compared to Punjab’s well-developed market yards and efficient procurement centers.
Furthermore, the agricultural community of Punjab and Haryana is rich and politically influential. This ensures that the FCI continues to buy large quantities of rice and wheat from them. By comparison, Bihar farmers are not very strong financially and therefore cannot take advantage of the MSP.
What the government says
The three agricultural laws have been projected by the government as major reforms in the agricultural sector that will eliminate intermediaries and allow farmers to sell anywhere in the country.
Until 2020, the first sale of agricultural products could occur only in the market patios (mandis) of APMC (agricultural products marketing committee). However, after the entry into force of the Agricultural Products Trade and Trade (Promotion and Facilitation) Act 2020, it allows farmers to sell outside of APMC mandis in India.
The government has held multiple rounds of talks with farmers and has tried to assure them that their interests will not be compromised. However, no significant progress has yet been made to break the deadlock in the laws.
Bharat bandh
The leaders of 18 political parties have expressed their support for the ‘Bharat Bandh’ on December 8 called by the farmers’ unions.
After five rounds of talks between the Center and the farmers’ unions failed to end the stalemate, the two sides are scheduled to meet again on December 9, the day after the nationwide strike.
(With contributions from the agency)
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