A Question of Survival

Context:  While the recent agricultural bills by the Punjab government is in conflict with the central laws, they uphold the powers of the courts in dispute settlement and empower the state to regulate the trade of food grain.

The rationale for the introduction of farm bills by the Punjab Government:

• Fear of elimination of Minimum Support Price (MSP) system

• The Shanta Kumar Committee 2015, suggested measures to reorient the Food Corporation of India (FCI)’s operations by shifting away from the public distribution system to cash transfers. 
• The Commission for Agricultural Costs and Prices (CACP) has been recommending reviewing the open-ended procurement of food grain.

• The recent report of Reserve Bank of India (RBI) and the government does not favour the MSP.

• Losses incurred by the farmers: In the absence of government procurement, crops would normally sell 20 % below MSP for e.g. like in the case of Bihar.

• Loss to states: 

• Without assured procurement, for e.g. the losses for Punjab state could exceed Rs 15,000 crores.
• The  new farm bills disallow imposition of mandi fee on produce procured outside the mandi’s physical boundaries

• Possibilities of capping the procurement per farmer: as done in some states like Rajasthan, which will exclude 20% and 25% of unprocured wheat and paddy respectively by the Punjab government.

• The loss to arhtiyas and their employees: Because Central government agencies will not pay commission to arhtiyas in their price support operations for oilseeds, pulses and cotton.

• Arhtiyas will start charging farmers extra fee under various pretexts for compensating their commission loss

• Already low MSP provision than demanded: The Centre has agreed to the (A2+FL) +50% formula instead of C2+50%, which derives lesser MSP.

Conclusion: An opportunity for farm reforms has been lost in the lackadaisical handling of the issue