The announcement of abrogation of farm laws can only be the initial success of farmers’ collective actions. Most of the farmers are out of the ambit of these laws. The Shanta Kumar Committee report in 2015 estimated that only 6 per cent of the farmers could sell their produce through government agencies. Furthermore, the procurement is extremely unequal across States.
During 2017-20, Punjab accounted for 37 per cent, Haryana 25 per cent, Madhya Pradesh 21 per cent and Uttar Pradesh 13 per cent of total wheat procurement. Similarly, Punjab accounted for 26 per cent and Haryana 9 per cent of total paddy procurement. West Bengal, which is one of the top States in rice production, accounts for only 4 per cent public paddy procurement.
The government procures only a few crops but declares minimum support price (MSP) for 23 crops. MSP is decided on the basis of cost of production. The government is not bound to purchase all the crops on declared MSP. Public procurement stabilizes the prices and checks overexploitation by the private traders by benchmarking procurement prices.
In this regard, the impending demand of the farmers, a law guaranteeing MSP, would improve opportunities to receive fair prices by farmers. It would encourage farmers to invest more in agriculture and increase productivity.
A law guaranteeing MSP has multiple implications. First, the disparity between States and crops in accessing the benefits of public procurement may be evened out under the law. This would not only improve farmers’ economic well being but also empower them as a united force.
One reason the current farmers’ protest could continue for a long time is the better economic condition of the farmers of Punjab, Haryana and western Uttar Pradesh. On the other hand, that it had to continue for so long was due to lack of shared interest across farmers across India.
Any collective action requires shared objective and resource. Lack of resource to continue with the movement may end up in assurances from the government at the best with no actions taken afterwards. A case in point is Kisan Rally, organised by the All India Kisan Sabha in 2018, where 60,000-70,000 farmers joined the march. The rally took place under the backdrop of suicides committed by thousands of farmers. The government gave assurances of loan waiver but did not execute it as promised. The second issue is shared goal. The lack of shared goal came out overtly during the current farmers’ protest against three farm laws. Farmers from other States were supportive but not participative enough in the whole movement. That is why it took so long to overturn the laws. A guaranteed MSP throughout India would provide a legal safeguard for everyone.
However, its effectiveness would again depend on the State implementing agencies. Then it would be important for the farmer unions at national level, such as Samyukta Kisan Morcha, to address implementation issues by putting pressures on governments.
Breaking the interlock
The third issue that a guaranteed MSP may break the interlocking of markets by rural moneylender cum procurement agents. An age-old practice is rural India is that same person acts as money lender, supplier of agricultural inputs, employer and buyer of final product.
Thus, a single person interlocks the farmers in credit, input, labour and product markets. They determine the terms in every market which is often in their favour. As a result, farmers are exploited at every market causing vicious circle of poverty. This primitive practice is also prevalent in non-farm activities such as weaving.
The small farmers are often turned away from the market, and they fail to sell their agricultural products if they do not go through middlemen, the ones who interlock different markets. A guaranteed MSP to the farmers would help small farmers access markets better.
But credit at fair terms should be available through alternative institutions to unleash small farmers from the interlock. The inability to do so has resulted in failure of different farmers producer organisations (FPOs) promoted by public funds. FPOs developed out of SHGs are found to be better performing. Both access to credit and pre-existing social capital have helped them.
It is important that farmer unions should address issues that affect all or most of the farmers. A guaranteed MSP is one of them. This is more basic than repealing the three farm laws. This is one golden opportunity to unite the all the farmers of the country.
The writer is Associate Professor, Institute of Rural Management, Anand