One silver lining in the ominous clouds hovering over our economy has been the growth in agriculture and allied sector during the current financial year, despite the Covid-induced disruption. As sowing is about to close by September-end, the kharif area under cultivation has touched a high of about 110 million hectares. Kharif, unlike rabi, is a rolling activity, because of the monsoon movement, with sowing and harvesting coinciding across various parts. There are pockets where sowing for short-term (60/75 days) crops such as Urad Dal is done towards seasons end. So the area may go up further.

For the first time in India’s history agriculture has displayed a divergence in growth from the other sectors. The last contraction of the economy was in 1978-79 but agriculture too had been in negative territory. This points to pockets of robustness in rural India. Tractor and fertiliser sales have looked up.

Four main reasons explain why the rural/agricultural sector is continuing to do well.

1) Government data show that 1.06 crore migrant workers returned home during the lockdown. Many of them would have contributed to farming operations in the villages. Above normal rainfall at 108 per cent of the Long Period Average has also aided sowing.

2) Till July, around 45 per cent of ₹1,01,500 crore for the National Rural Employment Guarantee Scheme and 44 per cent of ₹1,15,569 crore for subsidised ration for this year have been allocated to States.

3) Under the PM Garib Kalyan Yojana, 42 crore people received financial assistance of ₹68,820 crore. Farmers received ₹4,000 and women account-holders received ₹1,500, well before kharif.

4) The cash and transfers in kind aided farmers, at the margins. It has helped buying seeds and fertilisers by small farms.

The new laws

It is in this context that we have to evaluate the opposition to the three farm-related laws. Farmers, mainly in the granary States of Punjab and Haryana, feel the changes hurt their interests.

The foremost worry among the three changes has been the enabler for trade outside the APMCs/ mandis. The fear that procurement by the FCI will be gradually withdrawn leaving farmers to the mercy of free-marketeers. This wrong perception needs to be changed.

Critics have quoted the example of Bihar wantonly, saying the abrogation of the APMC Act in 2006 led to the impoverishment of farmers. But the data points to the contrary. As per a 2019 NCAER study, the average prices of major crops such as paddy, wheat, and maize increased in Bihar after 2006 as compared to the pre-reform period — paddy by 126 per cent, wheat by 66 per cent, and maize by 81 per cent (see table).

On FCI’s role in procurement and distribution through PDS, the agency has reformed itself under its current leadership, which made changes to weed out vested interests empowering FCI to both procure and distribute smoothly.

The FCI’s role during Covid should be a panegyric to a government entity performing to potential during a crisis. FCI has never refused procurement, as it is open-ended. In some States, under local arrangements, State agencies procure and not FCI. In Bihar, for instance, the FCI procures under the Decentralised Procurement (DCP) system; it bears all costs and reimburses the State agency fully.

Under DCP, the State/ its agencies procure, store and distribute rice /wheat/coarse grains within the State. The excess stocks (rice and wheat) are handed over to FCI in the central Pool. The State’s expenditure on procurement, storage and distribution of DCP stocks are reimbursed by the Centre.

All expenses such as MSP, arhatiya/society commission, administrative charges, mandi labour charges, transportation charges, custody & maintenance charges, interest charges, gunny cost, milling charges and statutory taxes are reimbursed on actual basis.

Furthermore, Bihar is mainly into horticulture, the total vegetable production (potato, onion, okra, brinjal, cauliflower, etc.) being upwards of 160 lakh tonnes whereas paddy is only 80/85 lakh tonne. Canal irrigation being absent, the moist alluvial soil supports horticulture in most of Bihar more than water-guzzling paddy.

Feedback from farmers in Bihar is that they get almost the same price as the MSP but they also want procurement centres to be increased so that the MSP option is available. The mandi or the APMC system has never been a part of agriculture trade in any deep-rooted way and farmers want the freedom to sell to whomever they want. It is this “freedom of choice” that the new legislation enables.

Admittedly, the systems of market and support for agri trade differ across States and the voice of the farmers of Punjab, Haryana and elsewhere — where the Arhatiyas or commission agents have an organic/social compact with cultivators — should be heard. And a reiteration that the MSP procurement will continue is required. For sure, old structures in the agri market will yield place to new ones. But the way forward is through dialogue.

The writer is a top executive with a public sector bank. Views are personal