Political harvest

| Updated on October 26, 2020

In challenging the new farm laws, Punjab, Chhatisgarh, Rajasthan are evading key issues

Striking a populist chord, the Congress-ruled Punjab government has struck down certain key provisions in the three agri-marketing laws passed by the Centre by passing its own laws in the State assembly. The State has sought to enforce minimum support price in non-APMC markets for rice and wheat, threatening to enforce penal provisions if this is not observed. Non-APMC yards will be required to pay a mandi fee to the State, as opposed to the Centre’s Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act (FPTC) which exempts such non-APMC ‘areas’ from shelling out a fee. Not surprisingly, Congress-run Rajasthan and Chhatisgarh have decided to follow suit. It is unfortunate that reforms in agri-marketing, having been set into motion by the Model APMC Act of 2003 and since then endorsed by the UPA, have run into a political storm. The Congress had argued for unshackling trade in agriculture in its 2019 manifesto.

The model Agriculture Produce and Livestock Marketing Act (APLM), 2017, is quite similar to the present FPTC law, except that it seeks to enforce MSP in private market yards. Traders protested the MSP provision, which perhaps explains its absence in the current FPTC law. With the MSP at the epicentre of the current furore, a negotiated solution can still be sought, balancing the interests of farmers, State governments and traders. A cap on mandi fees and ‘commissions’ (now very high in Punjab and Haryana) is a short-term option. It is notable that the new contract farming law, in fact, seeks to link prices to the APMC with a view to protecting farmers. The broader goal of opening up multiple options for farmer-sellers, improving price discovery by minimising intermediary costs and moving towards integrated agri markets should not be lost sight of.

Agri marketing reforms have moved at a glacial pace for the last 17 years. While direct purchase and contract farming have picked up in pockets as a result of some States implementing APMC reforms, private wholesale markets have not taken off. With the APMCs not permitting private market yards to come up in their ‘territory’, the FPTC Act has limited the APMCs’ geographical scope. However, these new markets need to co-exist with APMCs rather than substitute them. Hence, APMC reforms as spelt out in the APLM Act — democratisation of their working, increasing the participation of farmers and FPOs and curtailing the power of arthiyas — must be pursued, as these institutions remain crucial in regions where organised markets are weak. In fact, APMCs handle barely a third of all farm produce, being an overwhelming presence in just a few States. The new law does not address issues of documentation and regulation in the new markets, without which integrated markets cannot become a reality. It is to these concerns that the political class should apply itself.

Published on October 26, 2020

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