Every now and then we are reading about reports on farm protests and people speaking for and against farm laws.
There are 2 major concerns of the protestors:
- The APMCs (Agricultural produce Marketing Committee) will vanish.
- MSP (Minimum Support Price) system will go away.
Let me give the rationale behind the establishment of the above systems.
How APMCs came in to existence? At one time India had an extremely exploitive zamindari system. The Zamindars lent money to poor farmers and took most chunk of farmers’ harvest as the repayment of the loans they had given. Due to this system, the marginal farmers could never come out of the vicious loan-trap. Nehruji, who was of a socialist mindset wanted to end the system. Hence, he encouraged the states to create designated “market yards” where the sale, purchase of the food produce could occur. They were called APMC (Agricultural produce Marketing Committee) yards where only licensed Commission agents could arrange the sale of the goods produced by farmers and charge a commission. The intention was noble i.e. to give protection to farmers.
How MSP came to existence? There was sever shortage of food during the 1960s. The Govt. wanted farmers to invest and grow more staple crops like rice and wheat. Punjab, Haryana and western UP (being the most fertile regions) were chosen first for green revolution. But farmers were apprehensive to be part of Govt experiments for green revolution. Hence, Govt announced MSP before the sowing season so that the farmer has definite idea of the money (s)he will get after harvest. The Food Corporation of India (FCI) procures the crops at MSP mostly. Hence, we see the protests are mostly focused on these areas only.
But, a system which is not dominated by market forces becomes corrupt. What happens over period of time?
- The Commission agents in APMCs formed cartels and hence farmers did not get the highest price for their produce.
- As politicians became corrupt, politically close people got to become Commission agents and become monopolistic and hence exploitive.
- Due to populist policies, the MSP are always raised which are paid of taxpayers money.
- But since, the Commission agents have gotten entrenched, the farmers get much less than MSP, and the benefit of the MSP went to corrupt FCI officials and Commission agents.
- Due to monopoly of commission agents, they became exploitive. They started lending to farmers and finally have taken place of the “Money Lenders”. The current system has taken us back to the same earlier system of “Money Lenders”.
- The MSP is typically at a price higher than the market(both local and international) prices at tax payers’ money. So, the Govt. essentially procures and stores the grains which neither can be consumed nor exported (barring the ones used for mid-day meal and food security). We have seen the food grain rotting in FCI storages which are ultimately sold to wine makers.
Because, since the current system has become corrupt, the three new laws make an attempt to correct it.
- One law allows farmer to sell his produce to any one having a PAN card, that means the competition will be fierce for procuring farm produce and hence farmer will be freed from APMC which has so far exploited him/her.
- The law on Contract farming will ensure that the farmers are guaranteed of a minimum price before sowing with the person/company giving him/her contract.
Who are set to lose because of the laws?
- First, the middlemen – They will lose the privilege and power of keeping farmers under their thumb and exploiting them
- Second, the corrupt FCI officials – They used to share the benefit of MSP (being paid from taxpayers money) with Commission agents and will lose a big chunk of this ill gotten money.
Now, we can very well understand why the protests are occurring. The protestors might not be Commission agents, but I am sure they are sponsored by commission agents and corrupt FCI officials.
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