Markedly more Market-Savvy

Context: Even with reforms, farmers need to increase their bargaining power in the market to reap benefits.

Inherent Issues in Farm Laws:

• Essential Commodities (Amendment) Act: allows large corporates also to buy up huge stocks where when farmers sell their produce at harvest time prices fall.
  • The consequent rise in price in mainly due to the storing and releasing of the stocks as per demand by the traders, thus benefitting the trader, not the farmer. For e.g. -
    • Pulse and oilseed prices regularly increase 50-75%.
    • Semi-perishables such as onions and potatoes sometimes see a price rise of more than 500%.
• Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act: allows private mandis (or market yards) without tax. This reduces the bargaining power of small farmers.
  • The world over, when buyers are much bigger than sellers (average landholding of a farmer in India is 1.22 hectares), prices are depressed.
  • E.g. Karnataka farmers have seen steadily declining coffee prices due to large international buyers.
• Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act on contract management, forbids farmers from going to the court.
  • Complex contracts can dissuade farmers while a local bureaucrat will be the only arbiter of disputes.
• Issues with contract farming: Politics treats Farmer Producer Organizations (FPOs) as a means for votes, and most NGOs do not have the necessary business capabilities to set up genuine market-oriented FPOs.

Way Forward:

• Directly passing on subsidy to farmers instead of physical procurement is worth reconsidering. 
• Use of Information Technology can help anticipate glitches in implementation and sort it out.
  • For e.g. MSP implementation puts small millers and processors under the control of local government red tape and some harassment.
• Ensure self-sufficiency in food: just as the governments of the United States and European Union are trying. (the Indian farmer receives less than 1/ 30th of what an EU farmer receives.)
• Increases the bargaining power of farmers: The way out is shown by Amul, the world’s largest dairy cooperative in terms of the number of members.
  • It is ‘for the farmers, by the farmers, of the farmers’ — no subsidies, and a turnover of over Rs 50,000 crore.
  • The total turnover of the top 10 agricultural food cooperatives worldwide is over $200 billion.

Conclusion: While we say ‘Jai Jawan’, we need to say ‘Jai Kisan’ — and mean it — as well.