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’Why can’t big players buy in the mandi?’

Civil Society News, Gurugram

Published: Jan. 09, 2021
Updated: Jan. 29, 2021

Even as the government holds talks on its three contentious farm laws, promising amendments, farmers insist that nothing less than repealing them will do. Is this just a pressure tactic or do the farmers have a reasoned stand based on a close study of the laws?

Kavitha Kuruganti, who has been a part of the negotiations, explains that the amendments are so many that the laws need to be redrafted. In addition there is the need for a separate law on a minimum support price (MSP) mechanism.

The farmers have fundamental objections to the laws, saying they transgress into the domain of the states and create adverse market conditions instead of improving them as the government is claiming.

Going back to the drafting stage is the only option, says Kuruganti, who though not a farmer herself, has for long espoused the cause of making agriculture sustainable.

She is convenor of ASHA-Kisan Swaraj,  a member of the All-India Kisan Sangharsh Coordination Committee (AIKSCC) and Samyukt Kisan Morcha.

Kuruganti spoke to Civil Society on the detailed assessment that the farmers have and the private member’s bill that they would want passed.


Would farmers prefer new laws for the farm sector with all stakeholders involved?

The new law we are talking about is the MSP becoming a legal entitlement for all farmers. So, yes, we are talking about a new law but not the kind of market reforms that the government has in mind. In any case, state governments have been implementing what the Union government describes as ‘Model Acts’.  Since 2003, a large majority of states have already incorporated many reforms in relation to private markets, direct marketing, electronic trading, contract farming and so on into their APMC Act.

At state level, reform has been a more organic and natural process — not that we support all those changes -- but it makes tremendous sense for the states to undertake reform both in terms of administrative and political accountability. We have been saying this to the Central government during talks. That’s the kind of governance we need at state level. The Central government doing it goes against the principle of good governance.

Is this why you are asking for repeal and not amendments?

I have eight or nine reasons listed for repeal. To begin with, reforms have already been underway in states. You didn’t need uniform reform across states. Because just like agricultural production is extremely diverse across states and locations, farmers and agricultural markets are also diverse based on commodities, how far their resource structures have moved, what kind of markets prevail predominantly. One size does not fit all.

The second reason is constitutional validity. Both administrative and political accountability are best situated with state governments. That’s what’s good for the ordinary citizen, the farmer in this case.

Also, when a law goes wrong in its very objective and policy direction then what is the point of tinkering with some provisions here and there?  These laws are based on assumptions and not on evidence. They are faulty. There is this assumption that by these laws more competition has been brought in and therefore farmers will realize better prices. In fragmented markets, you are actually reducing contestability, as an economist will call it.

When a farmer is trying to sell his produce, you don’t really have many people bidding in these fragmented markets. If the government really wanted competition it should have asked all big players whether Adani or Reliance Fresh, to bid for the price they have to offer inside the mandi. That is competition.

You want to dismantle that. When you create a parallel structure you actually make the transaction invisible. So, I don’t know what the next farmer is getting.

The assumption that farmers will get good prices is wrong. So, an amendment here and another one there is not going to correct it. They are saying alright not just Pan Cards, we will register private players and the state governments are free to register them. You have taken away the regulatory authority that used to exist with state governments and given them the clerical job of saying you can maintain an online register if you want to.

By saying fees can also be levied, how does a farmer benefit? That does not protect the farmer from exploitation. And that is the not the equalization we are talking about between parallel markets. Equalizing requires full state regulation. When you have dismantled full regulation, how will amendments work?

We are also talking about why amendments don’t help from the protest perspective. If the central government had not ignored the protests which started seven months ago in June- July in Tamil Nadu, Karnataka, Punjab, amendments may still have been acceptable for the protesting farmers. Today, the agitation has intensified to a point where farmers will not accept amendments. The government tried every trick to prevent farmers from reaching Delhi. They have come to Delhi to get a repeal done and they will go back only with that.

It was said to the government during the talks  that they have only two options: either repeal or you will be forced to evict the farmers. The government is reacting because it has millions of farmers squatting at its doorstep. Otherwise, they have no reason to respond at all. They didn’t when the protests were far away.

We also looked into routine lawmaking procedures to explain why the government has only the repeal option and not amendments. When a bill is introduced in Parliament and it is sent to a standing committee, the committee may make several recommendations. In my 20 years as an activist engaging with lawmaking, I have seen any number of bills. They withdraw the bill and introduce the legislation as a completely new bill when 12 or 20 amendments are required. It’s a routine procedure in law making. The government knows this very well.

We are pointing this out. They ask us why are you not getting into a clause-by-clause analysis of these laws. They say from what we have gleaned during the talks we have picked up eight points across two laws – they are not suggesting any changes in the Essential Commodities Act – and these three to four we will do in the APMC Bypass Act and these three-four we will do in the Contract Farming Act. You can suggest any number of amendments, but don’t ask us to repeal. 

Some of us have worked on the laws, clause by clause. We know how many things have gone wrong. In just one law in the definition section of the APMC Bypass Act I would like to see four or five amendments. That many amendments to a law won’t make it a better law. It will worsen it.

We have asked them, what evidence do they have to show that these legislations won’t worsen the farmers’ crisis, that these laws are essential for some policy commitment for doubling farmer’s incomes?

What empirical evidence do they have? Whereas we already know that just seven months after the implementation of these laws, prices have crashed for farmers. Getting remunerative prices is not easy because 70 percent of trading has moved from the mandis into non-regulated spaces.

In such a short time? That is surprising.

No, it is predictable. We have been saying this. The first ones who move out are the licensed traders, forget the big players who will come in, sooner or later. The traders are today forced to take part in auctions. They have the huge advantage of knowing their farmers, of being moneylenders, of having a relationship with them and they also have some infrastructure and liquidity.

So why would they want to trade with government oversight any longer when they can buy from the same set of farmers at much lower prices using the existing resources and ecosystem they have? Why should they even deal with government oversight when they can go to unregulated markets. It is the licensed guys who have moved out first.

All this evidence is already in front of us. The government has no evidence to give in relation to better prices and benefits for farmers, apart from political posturing and prestige. So, they have no rationale or evidence for holding on to these laws. These are the reasons we are asking for repeal and not amendments.

You would prefer not to have a central law on farm reforms at all and leave it to the states?

Certainly. The constitutional validity of these laws is one reason why we are questioning the amendments route. Because the union government has no business to draw up a central act here. It is the domain of the state governments, so how can you just offer amendments.

But you have also asked for MSP to be a law. This would be a central law?

It would be at central level. We are not keeping states out and neither are we saying it would have an overriding effect on states. The kind of legislation we have already created as a private member’s bill empowers state governments and their authority. The Centre essentially has to provide financial assistance for MSP to be a legal entitlement. Implementation and additional decisions and protecting farmers interests has been left to state governments in the All India Kisan Sangharsh Coordination Committee Bill.

You would like to widen the scope of the MSP to include many more crops?

We are talking about all agricultural commodities, not just crops. That includes milk, meat, seeds and minor forest produce because the definition of a farmer as per the National Policy for Farmers 2007 is an expansive definition. It includes fisher-persons, livestock-rearers, forest dependent persons, beekeepers. All of them are farmers.

We believe that legal entitlement for all commodities will set right the equilibrium required for cropping patterns to be restored in India and help farmers shift from mono cropping not only for paddy but also for wheat. When assured prices exist which give farmers a small profit over and above cost of production, farmers will tend to pick up crops that are locally suitable and are environmentally sustainable.

An extensive MSP like this would require a commission or entity to administer it?

It will certainly require an institutional architecture that will implement the new entitlement for farmers. We are not asking the government to buy the last produce of the last farmer.

We are asking for a basket of measures. We are asking for government procurement and marketing interventions to get smarter and to expand.

Such an MSP law inherently will force the government to also get smarter with its international trade negotiations because you can’t promise that entitlement and then allow produce to be dumped by highly subsidized farmers from elsewhere.

Similarly, you can’t encourage high-cost farming. In the chemical corporatized agriculture paradigm the cost of production will be high and then you have to give 50 percent over it for MSP. So, the government will be forced to think of a low-cost, environmentally sustainable agriculture paradigm.

Farmer unions would prefer private companies to buy at the MSP rate from mandis. Would you also recommend an expansion of mandis?

Of course. We are not talking just about prices.  We do need more mandis. We do need more direct marketing options. We need investments in farmer collectives, storages and retention capacity, better warehouse receipts. The government has to invest.

We have placed disproportionate faith in deregulated private markets in these Acts. In the distant past there was disproportionate investment in some locations of mandis.

Farmers and their market interfaces are diverse. A woman farmer sells at the farm gate, an Adivasi farmer in the village haat. We haven’t invested in multiple marketing channels.

Farmers are not asking the government to buy everything. Initially, a little investment is required. But once the purchasing power of rural India is improved it will benefit the economy to the extent that the government can rake in more revenue. With purchasing power in the hands of producers, there is greater hope for farm workers. It’s a virtuous cycle.

Has the experience in contract farming, by and large, not been a good one for farmers? 

I find that in the organic farming sector, which is also into contract farming, farmers have actually benefited. The organic market is a niche one they can dip into. It is able to pass on benefits to farmers just like any niche market.

But if you look at contract farming in the seeds industry, for example, there is tremendous exploitation. Child labour exists, very low prices are paid to seed-producing farmers though seed companies charge exorbitant rates to seed- consuming farmers whether its hybrid maize or cotton or sorghum. They don’t even get into direct contracts with seed farmers. They go through agents called seed organizers.

The same system is used for potato contract farming. In Punjab I found that farmers who had a written contract with Pepsi for seed potato production were in a different situation from wafer potato farmers with whom Pepsi did not even have written contracts. The company may or may not buy. There is no assurance. If you look at sugarcane, a classic example of contract farming, it’s a disaster out there.   Tens of thousands of crores in arrears are pending to farmers.

So why are we so enthusiastic about contract farming. The government says why are you worried it’s a voluntary agreement. We are having to point out that contract farming appears attractive to highly distressed farmers who receive no assurance from the government. (But) If you guarantee MSP there will be no takers for contract farming.

The market is so adverse to farmers that an enterprise offering  contract farming looks attractive. So, we have to dig deeper into what appears to be voluntary.

Maybe they need better regulation for contract farming?

But so many states already have contract farming laws in their APMC Acts. Punjab and Tamil Nadu have separate contract farming legislation. Gujarat, Maharashtra and Odisha  have incorporated contract farming provisions in their APMC Acts. Why do we need a central law?

Contract farming has never been an attractive proposition to corporations because they don’t want to deal with so many marginal farmers. They would rather have a 500-hectare farmer doing it for them.

In this contract farming law, farmers have also been defined as an FPO (Farmer-Producer Organisation). That is a re-conceptualization of the FPO. For all of us, an FPO is an empowering farmer collective for greater bargaining space. Whereas in the government’s concept, the FPO is that chamcha who will make the job of the company easier by aggregating individual marginal farmers. There is a part in the contract Act called a production agreement which is akin to corporate farming where the risk is supposedly taken by the sponsor. It’s not as clean as it looks.


  • Rajiv Popli

    Rajiv Popli - Jan. 9, 2021, 2:23 p.m.

    Why link MSP becoming a law to these 3 laws? That is an independent subject whose inplementation as the agitation seeks is neither warranted in the current state of agriculture output nor is it sustainable. Why shouldn't market need driven crops not be produced rather than safe havens even if they were in far excess of demand and left to rot.

  • Rajiv

    Rajiv - Jan. 9, 2021, 2:17 p.m.

    Can Kuruganti comment on why farmers are already selling to traders outside the mandis at much lower prices when they have the option to go to the mandis and sell. What is the issue in giving all the objections clause by clause and leave it to the government to decide how to accommodate them? Why insist on repeal and not talk of specifics. There is clear politics and personal power play at work.