Farmers in Punjab are worried about the implications of the three new farm bills that will allow them to sell their produce directly to private players. Vikas Vasudeva reports on the concerns of farmers, commission agents and workers despite the government’s assurances that the legislation empowers them
In June 2020, 55-year-old Shingara Singh in Fatehpur village in Patiala, Punjab, sold his spring season maize crop at ₹700-₹800 per quintal, far below the Minimum Support Price (MSP) of ₹1,850/q fixed by the Central government for the season’s crop. He says private traders buy the produce at a much lower price than the MSP.
In the upcoming Rabi (winter) season, Shingara is hoping to get a remunerative price for his wheat crop. In Punjab and Haryana, the Central government purchases wheat and paddy (rice) at the MSP, which gives farmers an assured market and return. But Shingara is worried that following the passage of the farm bills in Parliament last week, even wheat and paddy will face the same fate that crops that are not purchased by the government agencies of the State or the Centre face.
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The Central government says the three bills — the Essential Commodities (Amendment) Bill, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill — are aimed at transforming agriculture in the country and raising farmers’ income. The provisions of the bills, it says, will enable barrier-free trade in agricultural produce and empower farmers to engage with investors of their choice.
‘I can’t trust private players’
But farmers are not convinced by the government’s promises. In both Punjab and Haryana, farmers are up in arms against the three farm bills. They fear that they are a step towards abolition of the MSP regime, leaving farmers to suffer possible exploitation at the hands of big corporate houses. And the fear is not limited to any one group of farmers; it is shared by marginal, small and large/ other farmers. While marginal farmers (those cultivating up to two and a half acres of land) and small farmers (those cultivating up to five acres) fear that they will be completely pushed out of agriculture, large farmers (cultivating over five acres) feel they may be able to ride it out for a few years, but will eventually find it difficult to stand up to multinational corporations and big traders.
Shingara is wary of dealing with private companies. His fear is rooted in his experience of trading with a company. He started sowing barley crop around eight years ago after a liquor manufacturing company near his village offered to buy his crop. “The company makes beer. People from the company came to our village and wanted us farmers to cultivate barley. They said the company would purchase our produce at a higher price than the MSP. Initially, for two-three years, they did pay us ₹400 above the MSP. But later, when several farmers started sowing the crop and supply increased, they were reluctant to buy the produce at that assured price. On the pretext of quality, they either rejected the produce or paid us a lower price. After 2015-16, I stopped cultivating barley,” he says.
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Dilbag Singh, 44, another farmer from the same village, who has over 15 acres of family land, speaks of a similar experience that left him poorer. “A local pea processing industry asked me to plant green peas. In 2012, representatives of the company approached me and said they would pay ₹8.5 per kg. They prepared some documents as well. I planted the crop. When the crop was ready, I took a tractor trolley with around 100 bags (50 kg each) of produce to their unit, but they were unwilling to buy my crop citing poor quality. It was only after the intervention of local farmer outfits that they purchased my crop. Later, I sold the rest of my crop that I had sown in five acres of land at ₹2-₹3 per kg in the local mandi (market place). I had to bear heavy lossses,” he says. “I can’t trust them anymore.”
The story is no different in other parts of the State. In Tibba Tapprian village in Rupnagar district, Dharmpal Singh, who owns close to three acres of land, says he sold 25 quintals of maize crop at ₹800/q at the Balachaur mandi a few days ago. “The government announces the MSP, but what’s the use if I have to sell my crop below the MSP? Government agencies should buy farmers’ produce at the MSP or make it legally mandatory for private traders to purchase crop at the MSP,” says the 56-year-old.
A senior government official points out that the government did not intervene as maize is not distributed under the Public Distribution System (PDS). “Government purchases only those crops that are distributed under the PDS. Maize is not among those crops,” says Gurvinder Singh, Joint Director at Punjab’s Agriculture Department.
Surjit Singh, 65, fears that mandis under the Agricultural Produce Market Committee (APMC) will gradually vanish if private trade is allowed without any government regulation. “Trade within the mandi through the arthiya (commission agent) is taxable, which includes rural development fee, market fee and the commission of the agent. But after these bills, no taxes will be levied on trade outside the regulated mandis,” he says. “That means private traders and companies can offer a higher price to farmers as they won’t have to pay tax. Once they start offering a better price to farmers than what is offered in the mandis, it is but natural that farmers will be inclined to sell their produce to them. And over time, with trade outside the mandis growing, the mandis will eventually disappear. As I stand against the new bills, I have decided I’ll sell my crop of Basmati rice only through the mandi. But for how long will I be able to do this? I can negotiate with private traders or companies to some extent because I have better resources than the small and marginal farmers (he owns over 25 acres of land in Patiala’s Lachkani village). Yet, against the big corporate houses, it will be a losing battle,” he says.
A strong, age-old bond
While the government says farmers can now trade anywhere, Gurmukh Singh, 47, asks how that will be possible as they cannot afford the hefty transport costs. Gurmukh is a small farmer with around four acres of family land in Lachkani village. He has sown paddy in his field. With hardly any resources to store or transport his produce, he is extremely worried. “Once I harvest my crop, I sell it at the local mandi. Even if I get a higher price from private traders in some faraway place, it won’t be easy for me take my produce there. I do not have the capacity or resources to trade my crop at distant places. So, even if the bills promise us the freedom to sell anywhere, it seems a distant dream in practice,” he says.
“Moreover”, he adds, “I can’t leave my commission agent for private traders. The relation with my arthiya goes back generations. Whenever I am in need, I get money from him. He pays me in advance for the crop that is to be harvested. Such a relationship based on trust will be difficult to establish with private traders or companies.”
In Patiala’s Ranbirpura village, Avtar Singh, who owns two and a half acres of land, is equally grateful to his commission agent. “I have already taken an advance of ₹1 lakh from him for the paddy crop that I had planted this season. It would have been next to impossible for me to cultivate my farm if my arthiya had not given me the advance. He gave me an advance only because he is assured that my paddy crop, which I’ll sell through him, will be purchased by government agencies at the MSP. If the government stops purchasing paddy or wheat at the MSP, I don’t think I’ll be able to cultivate any crop on the farm. No one will give me an advance or offer any financial help without a tangible guarantee,” he says.
Avtar fears that once the parallel private market starts functioning outside the regulated market, there will eventually be no MSP in that market. “The government should come out with another bill making MSP a statutory right of the farmers,” he says.
Commission agents and labourers working in grain markets have their own concerns about the new bills. “The government has announced the MSP for several crops but it is only for wheat and paddy that farmers actually get the MSP. And that’s because the government buys it. For instance, this year, government agencies purchased wheat at an MSP of ₹1,925/q during the official procurement. But now, after government purchase, the wheat is being bought by private traders at ₹1,600/q-₹1,650/q in the mandi here. The government, it seems, wants to remove us from the market,” says Mulk Raj Gupta, president, Arthiya Association, Patiala new grain market. “But they possibly don’t realise how many people are generating employment in this entire chain, be it labourers, staff at shops, employees of market committees or others,” he says.
In the grain market, Badri Mukhiya, 45, who hails from Bihar, ropes in labourers from his State. He says he has been coming to Punjab since 1990, but is now worried after hearing that work at the mandi could reduce. Work includes loading and unloading of produce and cleaning of grain. “If farmers stop coming to the mandi altogether or even if fewer farmers come, there will be less work. The livelihood of at least 20 people and their families who are associated with me is dependent on the work we do here. We earn around ₹400 a day, but we will have to return to our native place if there’s no work. Everyone is worried,” he says.
Concerns and responses
Agricultural experts have expressed their reservations about the bills as well. Lakhwinder Singh, Professor of Economics and Coordinator at the Centre for Development Economics and Innovation Studies at Punjabi University, Patiala, has been mapping rural Punjab for decades. He says these bills have generated a lot of suspicion as they were passed through the ordinance route. “The new bills state that the foodgrain trade will be in the hands of private traders. But no safeguards have been enacted. The majority of farmers in India are small and marginal farmers. They usually wait for the crop to be harvested in order to fulfil their basic needs. They don’t have the capacity to trade the food at distant places. Therefore, the claim that farmers will have the freedom to sell does not hold true. Giving private players the freedom of foodgrain trade without any regulation will eventually lead to the emergence of monopolies, oligopolies or a cartel system,” he says.
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Noted economist and professor at the Ludhiana-based Punjab Agricultural University, Sukhpal Singh, points out that 86% of Indian farmers have less than five acres of land, and 67% of farmers have less than two and a half acres of land. “These are the victims of the grave economic crisis. How can these small farmers sell their produce in other markets? What is the purpose of new markets if small farmers cannot participate in them? How will the new private markets operate? These new markets will not have any regulation and they won’t be taxed by the State government. State governments will regulate only the already running markets. In Punjab, for instance, these markets levy 8.5% tax, including 3% market fee, 3% rural development fund, and 2.5% commission of the commission agents. Thus this year, the tax is around ₹155/q on paddy and about ₹164/q on wheat. This means that due to non-tax on private purchase, the purchase of paddy and wheat will be cheaper for private buyers to the extent of ₹155-₹164/q. Initially, even if private markets offer farmers ₹55/q-₹64/q on paddy and wheat purchases, they (private traders) would still get a profit of ₹100/q. Government procurement will be affected as farmers will be inclined towards private markets. As the volume of purchase increases in the new system, the government will reduce its purchase target. Gradually, government procurement will be negated. In such a situation, the prices of crops in private markets will be reduced,” he says.
In response to all these concerns, Prime Minister Narendra Modi said in a series of tweets in English, Hindi and Punjabi that MSP will continue. “Government procurement will continue. We are here to serve our farmers. We will do everything possible to support them and ensure a better life for their coming generations,” he tweeted. He added the government was bringing in these provisions as middlemen have been bullying farmers for years.
Union Agriculture and Farmers Welfare Minister Narendra Singh Tomar has also tried to allay fears. He said the APMC system will continue. Alleging that the Opposition was trying to mislead the country, Tomar said, “Farmers, so far, were forced to sell their produce in mandis. In Punjab there’s 8.5% tax in the mandis on several items. Now, through these bills, the farmers will be able to sell their produce even outside the ambit of the mandi.”
The distance between traders and farmers will reduce now, Tomar told Parliament. “If a trader will visit a village, farmers of that village will assemble at one place to sell their produce. [The] trader will fix the rate of purchase after discussing with farmers. The trader will purchase the produce and take that away in a truck. Farmers will not have to go anywhere to sell their produce,” he said.
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Playing politics over the bills
Despite the government’s assurances, concerns persist, and not only among the Opposition parties. After initially supporting the ordinances pushed by the National Democratic Alliance government, Shiromani Akali Dal, an old alliance partner of the Bharatiya Janata Party, decided to take a U-turn on the issue. The Akali Dal’s lone representative in the Union Cabinet, Harsimrat Kaur Badal, quit the Cabinet in protest against the bills. In her resignation letter to the Prime Minister, Badal wrote, “In view of the decision of the Government of India to go ahead with the Bill on the issue of marketing of agricultural produce without addressing and removing the apprehensions of the farmers and the decision of my party, Shiromani Akali Dal not to be a part of anything that goes against the interests of the farmers, I find it impossible to continue to perform my duties as a minister in the Union Council of Ministers.”
The Akali Dal has also accused the Congress government in Punjab of “double speak” on the issue. The Congress government in 2017 amended the State APMC Act after coming to power in Punjab to include provisions similar to those in the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Akali Dal claimed. According to the State Act, trade can be done only after obtaining a licence from the government in its mandis under the Punjab Mandi Board or the private mandis. However, according to the Centre’s new farm bills, no licence from the State government is required; any PAN card holder can engage in trade. Besides, no private or government mandi is required for trade under the new farm bills. Trade can be done outside the physical premises of markets or deemed markets notified under various State agricultural produce market laws.
The ruling Congress party, on the other hand, accused the Akali Dal of misleading people on the farm bills and asked the party to part ways with the NDA. Chief Minister Amarinder Singh said that the Akali Dal’s claims of standing shoulder to shoulder with the farmers are hollow as long as it remains a part of the Central government.
In neighbouring Haryana, Deputy Chief Minister Dushyant Chautala, whose Jannayak Janta Party is part of the coalition government with the BJP, has made it clear that while there’s no mention of doing away with the MSP in the farm bills, he will quit if the MSP is indeed discontinued. That leaves a question mark on the alliance.
While parties spar with one another, farmers are concerned about the present. On September 25 afternoon, hundreds of angry farmers sat on the Amritsar-Delhi national highway at the Shambhu border of Punjab-Haryana, protesting against the bills. Jasbir Singh, 55, who owns two and a half acres of land in Kutha Kheri village in Patiala’s Rajpura Tehsil, says he has enough cash in hand to undertake farming operations. “But after harvesting my paddy crop, I’ll be needing money for sowing wheat in my field. It’s only my arthiya who will give me an advance. If mandis go redundant and arthiyas go away, how will I sustain myself? I am under a debt of about ₹2.5 lakh. I don’t think I have a choice but to sell my land,” he says as he drops his head in despair.