Facts From the Field

Context: New farm laws serve the interests of the majority of farmers.

Arguments in favour of new farm laws

• Improves farmers’ price realisation: Indian agriculture was implicitly taxed to almost 14 % of its value due to restrictive trade and marketing policies. - A study by the Indian Council for Research on International Economic Relations (ICRIER) and Organisation for Economic Co-operation and Development (OECD).
• Favoured by experts: E.g. demanded by late Sharad Joshi (farmer leader).
• Fears are imaginary: E.g.  Abolition of Agricultural Produce Market Committee (APMC) markets and Minimum Support Price (MSP), farmers losing lands to big corporate houses through contract farming. 
• Competition created on Agriculture Produce Marketing Committee (APMC) markets and MSP will benefit small and marginal farmers:
  • Creation of an additional 10,000 Farmer Producer Organisations (FPOs) and the promised Agri-infrastructure Fund of Rs 1 lakh crore will aid this process. 
• Any adverse impact on Minimum Support Price (MSP) will not affect the majority of farmers:
  • Situation Assessment Survey of National Sample Survey Office (NSSO) revealed that in 2012-13, only 6 % of farmers sold their produce at MSP. 
  • MSP had benefitted only 6 % of farmers or 6 % of the value of agri-produce.
  • MSP and APMC system primarily helps those who have large surpluses.

Way forward

• Promote FPOs rather than APMC mandis: and give assurances on APMC markets and MSP.
• Clarify that the contract will be for the produce and not for the land.
• Provide legal options: E.g. allow farmers to take disputes to district courts.
• Strengthen price stabilisation scheme: by creating a fund of Rs 25,000 crores which can be used to support market prices of specified commodities that take a dip of more than 10 % below MSP.
• Reduce losses in government procurement:
  • By limiting the size of procurement or go for price deficiency payments: to those who buy “put options” at MSP for specified quantities at the time of sowing.
  • Announce a diversification package: for the Punjab-Haryana belt.
• Do not repeal the new farm laws: as it will rob 90% of the farmers who never gained from MSP.
• Do not make MSP binding on the private sector: as it may shun private trade.

Conclusion: The art of policymaking lies in balancing the interest of producers and consumers within reasonable financial resources.