Amidst a nationwide lockdown announced by the Prime Minister, Narendra Modi on March 24, 2020 to contain the spread of the coronavirus disease, even as an overwhelming share of the economic activity has come to a grinding halt, agriculture too has suffered a major jolt. The crisis has come at a time when Rabi crop [October 2019 – March 2020] mostly winter staple, wheat is ready for harvest.
While, on one hand, harvesting operations have suffered due to shortage of labor [courtesy, sudden stoppage of all modes of transport and workers getting stuck where they were] on the other, farmers are unable to move harvested crop to the market for selling. According to an estimate, already, they have suffered loss of about Rs 15,000 crore [primarily due to crashing price of horticulture crops such as fruits, vegetables etc due to lack of buying]. In view of extension of the lockdown for 19 days, announced by Modi on April 14, 2020, this is expected to increase to about Rs 50,000 crore.
During lockdown part II, agriculture [besides other activities such as MGNREGA which are a source of livelihood for daily wage workers] has been exempt from its purview. The centre has also made elaborate arrangements for procurement of wheat under the MSP [minimum support price scheme] program and asked states to start procuring 25% of pulses and oilseeds under the its price support scheme. Besides, the government has operationalized the market intervention scheme [MIS] to compensate horticulture farmers for a dip in wholesale prices and damages to harvested fruits.
It is also coordinating with Railways for running 236 Parcel Specials on 67 routes to supply essential commodities viz. fruits and vegetables, agri-inputs, milk and dairy products at fast speed to help farmers, farmers producers organizations [FPOs] /traders and companies ensure continuity of supplies across the country. It has also kept over 300,000 trucks ready to ferry harvests under the national agriculture markets [NAM], an online trading platform that has been updated to meet the needs of farmers during the lockdown.
In view of handling and distribution [these operations are mostly labor- intensive requiring lot of manpower for loading, unloading and sorting of food commodities] being hamstrung by extended lockdown and strict adherence to ‘social distancing’ [this time around, the authorities will do strict monitoring and surveillance to ensure compliance and in case of even slight deviation, exemption can even be withdrawn], one wonders whether these government-led efforts will succeed. There is yet another serious constraint farmers live with even in normal times. This one has to do with a highly restrictive and draconian legislation christened APMC [Agriculture Produce Market Committee] Act.
The APMC Act empowers state governments to specify market areas – where farmers bring their produce for sale. Under the Act, only state governments have the authority to set up markets. These market areas are operated and regulated by market committees, also known as APMCs. Almost every state has APMC Act in place. There are a total of about 5000 such markets [also known as ‘mandi’ in local parlance] across the country.
The stated objective of the APMCs is to promote organized marketing of farm commodities to ensure fair play, achieve an efficient system of buying and selling of commodities, protect farmers from intermediaries and traders and to ensure better prices and timely payment for the produce. Far from achieving these objectives, farmers are being exploited by a network of licensed traders and middlemen who have complete stranglehold over these platforms.
While, on one hand, they don’t get to sell their entire produce at the MSP on the other, no alternative platforms are available where they could to sell. Even government agencies such as Food Corporation of India [FCI], National Agricultural Cooperative Marketing Federation of India Limited [NAFED] etc don’t come forward to buy which they are obligated to do in case the market price dips below the MSP. Actually, the problem is much deeper.
This has to do with a cozy nexus between politicians and grain traders [in many cases, the former also happen to be deeply entrenched in this business] that has existed and flourished for decades. A grain trader has a fundamental interest in ensuring that he minimizes his payout to farmer for the grains he buys from him/her. He can succeed in this game plan if farmer is left high and dry by state agencies. So, he collaborates with the politicians in the ruling establishment to ensure that state agencies remain weak and de-motivated.
This nexus also comes in the way of the government making necessary amendment in the APMC Act to open alternative channels of selling such as establishment of private yards/markets, direct purchase centers, consumer-to-farmer markets for direct sale, contract farming, special commodity markets and promotion of public-private partnership in management and development of agricultural markets.
Several committees including the National Commission on Agriculture [NCA] under Dr MS Swaminathan have made recommendations in this regard. These proposals are also included in the Centre’s Model Agricultural Produce and Livestock Marketing – [Promotion & Facilitation] Act, 2017. But, thanks to vested interest, these have been ignored. Moreover, the states are unwilling to forego the substantial revenue they currently get from levy of market fee on transactions at these mandis/markets which is unavoidable if other channels are also opened. So, the status quo continues.
Meanwhile, during a video-conference with state chief ministers and union territory administrations on April 11, 2020, Modi proposed modification of APMC Act. As a follow up, the Ministry of Agriculture [MoA] has asked the States to suspend certain provisions of their respective APMC Laws for three months to allow farmers to sell their harvest from multiple locations and to any buyer.
The union agriculture minister, NS Tomar, has argued that this will encourage ‘social distancing’ and end farmers’ distress by enabling them sell their produce at a remunerative price. If, states grant exemptions to certain aspects of the APMC Act, then finding buyers should not be a problem. The Centre is keen that large FPOs [essentially, these are rural agricultural businesses], large buyers, cooperatives and individual traders should be allowed to buy farm produce directly from the farmers, sidestepping the APMC regulations.
Giving several options to farmers for picking up farm produce at their doorsteps is very much in sync with nation’s fight against Covid – 19. But, so far only two states viz. Tamil Nadu and Karnataka have given their consent to amend their respective APMC Acts. Even if all states agree to go ahead [considering the gravity of the crisis, the Centre may succeed in convincing all BJP-ruled states and even others], it is unlikely that the alternative channels will be able to galvanize their machinery to complement agencies mammoth procurement efforts at such short notice. One can only wait and watch.
But, the bigger question is: what happens after the relaxation period [read: 3 months] is over? Will things be back to square one? Do the states have the gumption to let this amendment stay on the statue permanently? Should they not think in terms of dismantling the APMC Act or at the least, amending it on the lines of the Centre’s Model Agricultural Produce and Livestock Marketing – [Promotion & Facilitation] Act, 2017?
Much will depend on the ability of the state administrations to break the ‘cozy nexus’ between politicians and grain traders. To get a sense of whether or not, they can do it, look at the following: In August 2018, the then Devendra Fadnavis government had approved amendment to the Maharashtra Agricultural Produce Marketing [Development & Regulation] Act, 1963 in line with Centre’s model Act.
As per the amendment, the entire state was declared as a single market instead of the earlier rule of notifying “market areas” where sale/purchase of farm commodities could take place. This would have allowed a trader to obtain a single license for purchase of farm produce from any mandi within Maharashtra. Further, it allowed trade in all farm commodities, including livestock, outside the regulated APMC wholesale markets or mandis.
While, this was done by promulgating an ordinance, it could not be enacted in to law [in fact, the state government was forced to withdraw the bill on November 28, 2018 from the legislative council, a day after it was passed]. In this backdrop, to expect that APMC reforms will see light of the day looks like day dreaming.