Updated: September 21, 2020 12:23:43 pm
Farmers walk through a rice field when they return after the day’s work in Prayagraj (AP)
On many occasions, it is not the law, but what it seems to convey and the context in which it is framed that is relevant. This is certainly the case of the Draft Law on Trade and Commerce of Agricultural Products (Promotion and Facilitation) that will become law with its approval in both Houses of Parliament.
This law does not establish anywhere that the current system of purchase of food grains (essentially wheat and rice) by government agencies based on minimum support prices (MSP) would end. A plain reading the bill suggests that such purchases at state-regulated APMC (agricultural products market committee) mandis will continue as before. The APMCs would not stop working either; nothing prevents farmers from selling their produce or traders and processors from buying from these mandis.
All the law does is provide farmers with an alternative platform to sell. This could be a processing plant / factory premises, a produce collection center, cold storage, warehouse, silo, or even the farm gate. Transactions in such “business areas” will not be charged APMC rate or market rate. These levies will only be applied in operations carried out within the limits of regulated markets or mandis established by virtue of the respective APMC state laws.
Farmers’ perception
However, this is not how farmers, especially in Punjab and Haryana and probably MP and Chhattisgarh as well, perceive the new law. The government has sought to project the legislation as “creating an ecosystem” where farmers will enjoy “freedom of choice” to sell to anyone, anywhere in the country. Henceforth, neither farmers nor traders, processors, retailers and exporters will be forced to sell or buy at the physical facilities of APMC mandis.
But farmers, at least in those states, seem less interested in the promised freedom. For them, what matters is the threat to the existing system, which has performed reasonably well with all its limitations.
In 2019-2020 alone, government agencies purchased 201.14 lakh tonnes (lt) of wheat and 226.56 lt of rice from Punjab and Haryana. That, at their respective MSPs of Rs 1,925 and Rs 1,835 per quintal, would have been worth Rs 80,293.21 crore. And all these purchases were made in the mandis.
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Farmers protest in Patiala (Express photo by Harmeet Sodhi)
Today’s “ecosystem” benefits not just farmers. Government agencies contract through arhatiyas or commission agents. The grain that is brought to the mandis is unloaded and cleaned on the platforms in front of their stores, before being auctioned, weighed, bagged and loaded onto rakes or trucks. For all these services, they charge a 2.5% dami or commission in addition to the MSP. Arhatiyas also earn money by financing farmers, who in turn sell their products through them.
For farmers, arhatiyas (many of them big farmers) and mandi workers, the gains from “freedom” are theoretical. Losses from CMPA becoming unviable, which can happen if trade moves outward and the government gradually stops buying, are practical and real. What if the neighboring mandi doesn’t earn enough market fee and becomes a BSNL versus Jio or Airtel?
“For companies, the first year is chatti (generating losses), the second year is khatti (breakeven) and the third year is hatti (generating profits). If they are allowed to buy directly, they will first make sure the mandis close without the government doing so, ”said Pritam Singh Hanjra, a farmer from Urlana Khurd village in Panipat.
Whats Next
But the questions that must be asked are: will dismantling the APMC monopoly really lead to them becoming redundant? Second, would they allow agribusinesses to establish a direct connection with farmers and remove intermediaries from the market?
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However, for farmers in Punjab and Haryana, the struggle is to keep both CMPA and government procurement. And that is worth even exchanging one’s own freedom.
A clue to the answer to the first question is found in Bihar. The state repealed its APMC Law in 2006, however, the Gulab Bagh mandi in the Purnea district handles approximately 5-6 liters of corn arriving annually. That makes it almost as big as Punjab’s more famous Khanna or Rajpura APMC. Even today, most of Bihar’s 30-40 liter maize production is purchased through traders / aggregators operating for multinational commodity companies and feed mills.
There are more established APMCs in specific commodities: Unjha in Gujarat for jeera, Guntur Mirchi Yard in Andhra for chili, Lasalgaon and Narayangaon for onions and tomatoes in Maharashtra, which are unlikely to face an existential threat in the near future. The simple reason is that they are sponsored by farmers and buyers alike. For them, creating a parallel marketing infrastructure for products is not easy.
Regarding the second question, milk is a product that is not marketed in mandis nor is it covered by the APMC laws. However, most organized private dairies purchase it through wholesalers rather than directly from farmers. Aggregators and intermediaries will remain in the agricultural marketing landscape even if CMPAs cease to exist. Even large companies will prefer to acquire through them and not deal directly with farmers.
However, for farmers in Punjab and Haryana, the struggle is to keep both CMPA and government procurement. And that is even worth exchanging one’s own freedom.
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