agri bills reforms msp

Delhi border is sealed and the farmers are waiting for getting an appointment with the government to at least listen to them. They do not know that the job of the government is to make good laws and their reprint versions. The poor farmers also don’t know that it is their own responsibility to understand those futuristic laws and bills.

The current series of the following three bills are not new 

  1. Farmer’s Produce Trade and Commerce ( Promotion and Facilitation)Act,2020

2. The farmers (empowerment and Protection) agreement on price Assurance and Farm services Act 2020

3. The essential commodity ( Amendment Bill Act 2020).

These are almost an extended and repetitive versions of  

  1. Agricultural Produce and Livestock Marketing (Promotion and Facilitating) Act (APLM 2017) 

2. Doubling the farmers income by 2022 in 2018 , and

3. Significant change in fixation of MSP 2018

Interestingly all these laws are also deconstructed versions of APMC modernization act of 2003.

Isn’t it too simple to understand for all of us ?

These bills in true sense are really good and if implemented well could change the future of farming and farmers in the country. However this would  require one major paradigm shift in the thought process of policy makers for the agri-ecosystem.

 Since independence all the policies in the country related to farmers’ development are based on the doctrine of Mahatma Gandhi that “ Mass production is production by masses”. Today after investing billions of dollars in agri-subsidies, loan waivers, infrastructure development , APMC formation , cold storage infrastructure development and export subsidies, we are finding that economies of scale is the only way forward.

We have also begun to realize that such economies of scale is possible by shifting ownership of farmers from the Government to the corporates.

The Magic of MSP

Everyone is really concerned about the MSP for around 23 crops which is being declared by the central procurement agencies and state governments. Let us look at the status of this MSP. There were two committees in the past which have worked extensively on this subject. MS Swami Nathan committee somewhere in 2006 gave the formula for computing the MSP. The formula suggested three components of this MSP for a crop.

a.     The material input cost  for a crop incurred by the farmer

b.     The material input cost + labor cost ( or the opportunity cost for working as a labor at MGNREGA or other’s farm)

c.      The material input cost + labor cost ( or the opportunity cost for working as a labor at MGNREGA or other’s farm) + Cost of capital + the prevailing land lease value for the crop period. (C1)

The committee recommended that the MSP must be 50% more than the third cost or the C1 as computed above. Interestingly Dr Verghese Kurien was also of the opinion that dairy farmers must get at least 50% more than his costs. Another committee later also recommended for sugar cane that the MSP must be 75% of the levied sugar price as per the quota of the sugar mill.  As per the prevailing MSPs out of 23 crops only Bajra with an MSP of Rs 2250 per quintal matches the Swami Nathan committee’s recommendation and all other MSPs are below the C1 .

In recent times the farmers of Punjab are stated to get an average of Rs 1000 per quintal for their Maize against MSP of Rs 1850 .

Government procurement of grains

In 2015 Shanta Kumar committee revealed another interesting aspect of MSP utilization and its awareness amongst the farmer’s communities. As per the report only 14% of paddy and wheat crops have been purchased by the government agencies. 75% of paddy and 65% of wheat growers did not know that the government is buying the crops at all. 68% of paddy and 60% of wheat growers are not even aware about the MSP.  If MSP is such a neglected and unknown subject then why are we discussing it ?  

Now in such circumstances, farmers do not need another bill or law. Rather they need education and enough of awareness about these laws and government policies through the extension department. Today it is also suggested that the agri-scientists from the corporate sector will help farmers to grow better their crops for doubling their incomes.

Wasn’t it the job of a large pool of scientists and agronomists working in agriculture universities, ministries and state agriculture departments since the ages?

My two cents

I have no complaint towards any of the agricultural bills or laws as it has been structured well . I am only concerned about

a.     How do Indian farmers understand these laws?

b.     Who will educate them on doing business online?

c.      Who will train them to bargain with the corporate buyers?

d.     Who will provide them infrastructure for bandwidth, smartphones, electricity for scaling up etc?

e.     Who will help them learn the legal contracts to be carried out at FPO and at corporate level?

I think the government must convert all the Panchayats in the country as Agriculture University and create a help desk in all the villages so that all the issues and business of the farmers are handled inside their villages only.

That may  be the true empowerment of farmers in the country.

A blog by Kuldeep Sharma