The Plan The Centre Should Put To Punjab And Haryana’s FarmersBloombergQuintOpinion
While tens of thousands of farmers and agriculture workers camp at Singhu and Tikri borders of Delhi-NCR to protest against the farm laws enacted by the central government, there is a piece of good news from Punjab.
After months of the blockade of rail movement, goods trains have finally started running. The railway action, which resulted in complete stoppage of movement of even essential goods from and into Punjab was perceived as unwarranted and avoidable. Fortunately, the Railways are now able to move about 50 rakes of food grains out of Punjab, creating storage space for the procurement of rice. The inward movement of fertilisers has also started.
This should help Punjab in harvesting a good Rabi crop. Now the Punjab farmers will not have to travel to Haryana to buy urea and DAP!
MSPs, Water, And Incentives
It is not difficult to understand the reasons for fear gripping the farmers of Punjab and Haryana as a result of the enactment of Farm Laws, especially the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020. This legislation permits anyone with a PAN card to purchase agricultural produce without paying fees applicable in APMCs.
More than 90% of mandi arrivals of wheat and paddy are procured by government agencies at MSP in Punjab and Haryana. Cotton grown by farmers is also procured at the Minimum Support Price and sugar cane farmers are assured to get the Fair and Remunerative Price from sugar mills. The farmers of these crops are thus assured of remunerative prices and they do not have to face the volatility experienced by farmers growing other crops. These two states have large surpluses and farmers fear that if procurement is substantially reduced, the market prices of wheat and paddy will fall.
The farmers growing other crops like kinoo, maize and vegetables already face volatility of market forces. This year, for example, farmers in Punjab realised only Rs 1,000-1,200 per quintal for their kharif maize while the MSP was Rs 1,850.
The farmers in Bihar also received similar prices for Rabi maize against the MSP of Rs 1,760 per quintal. But Bihar farmers have given up any hope of realising MSP for their crops so they do not protest. The CSDS Lokniti post poll survey in Bihar found that agriculture and MSP did not find a mention in the ten voting issues in the November 2020 Bihar assembly elections. In Andhra Pradesh and Karnataka too, farmers sold Kharif maize at Rs 1,200-1,300 per quintal.
Since almost every farmer in Punjab and Haryana can sell his wheat and paddy at MSP, the fear of the MSP regime being diluted haunts them much more than the farmers in other states where the procurement system is not effective enough.
The farmers of Punjab and Haryana know that their brothers in UP, Bihar are forced to sell their wheat and paddy at prices that could be 20-30% lower than the MSP.
Year after year, they have seen some quantity of wheat and paddy from adjoining states being transported to their states and procured by MSP as production in Punjab and Haryana.
A study by NASA had found that the water table was declining by about 70 centimetres a year from 2008 to 2012 in these two states. The farmers are not unaware that they should be switching from paddy to other less water-guzzling crops. They are not ignorant of the findings of several expert committees that the health of their soil is deteriorating so fast that even higher doses of fertilisers are not helpful, productivity is stagnant and they have to dig deeper every few years for water.
Haryana launched the “Mera Pani - Meri Virasat” scheme under which the farmers are to be given Rs 7,000 per acre if they diversify from paddy to other crops. Newspaper reports suggest that about 20,420 hectares were diversified from paddy to cotton.
Punjab has not made meaningful efforts to give direct income support for such diversification from paddy.
In the last few years, the government has been procuring about 5-7 million more wheat and 13-15 million more rice than its requirement for PDS. So, there is a need to reduce procurement at MSP. However, there is a need for a roadmap to indicate how much wheat and paddy will be procured from each state over the next ten years. If a detailed study is done and state-wise targets of procurement are agreed with the states, there is no reason why diversification will not become a reality in water-stressed regions in Punjab, Haryana, and western UP.
The Price Of Success?
Since the advent of the green revolution, Punjab and Haryana have provided food security to India. The farmers adopted new technology promoted by the governments. And the state governments created marketing and storage infrastructure to procure wheat and rice at MSP. It is ingenious to blame the state governments of these two states for collecting market development fees and rural development fees. They should not be blamed for doing what other states failed to do.
In appreciation of the contribution of the farmers of original green revolution states, the centre should design and roll out a scheme of direct income support to farmers who diversify from paddy. It could be on a tapering basis for the next ten years.
So far, the farm laws enacted by the centre have not touched sugarcane farmers as the pricing regime has not been affected. The sugar mills provide FRP to farmers. Like paddy, here also, there is a case for reducing the area under sugarcane which is also a water-guzzling crop.
What The Centre Can Do Next
The Farmer’s Produce Trade and Commerce (Promotion and facilitation) Act, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and the Essential Commodities (Amendment) Act, 2020 do provide a template for removing impediments in attracting private investment in the agriculture supply chain. They also bring predictability to the regulatory regime. However, it would be naive to think that these laws alone would be enough to make agriculture more profitable for farmers. Since APMCs will still remain a reference point for price discovery, the states need to invest more, not less, in upgrading the facilities within APMCs and issuing more trading licenses.
The agitation by farmers will hopefully persuade the central government to prepare a ten-year comprehensive roadmap of reforms and consult the states in the true spirit of cooperative federalism. The recent move by the government to provide an additional allocation of Rs, 65,000 crore to clear the arrears of the fertiliser companies has certainly created an opportunity to pursue much-needed reforms in the existing regime of fertiliser subsidies. However, negotiating reforms in the fertiliser subsidy regime, that would involve reconciling conflicting interests of the stakeholders, will be a test of the government’s resolve to honour India’s federal character.
Lastly, the media will do well to refrain from painting agitating farmers as misled or anti-national.
Siraj Hussain is Visiting Senior Fellow, ICRIER, and former Union Agriculture Secretary. Jugal Kishore Mohapatra is Chairman, NABFINS, and former Fertiliser Secretary. Views are personal.
The views expressed here are those of the authors, and do not necessarily represent the views of BloombergQuint or its editorial team.