Need Ordinance to Ensure Farmers Get MSP

Context: Instead of nudging the states through a model draft or consultations, the Centre has taken the ordinance route on the subject of agriculture, thus eroding the federal system of the country.

The objective of the Ordinances: They seek to deregulate the agricultural markets in the country:

• Diluting the provisions of the Agricultural Produce Marketing Committees Act (APMCA).
• Removing inter-state barriers on the sale of crops. 
• They also exempt agricultural transactions in the trade area outside the purview of the APMCA.
• Dispute redressal mechanism: Under the conciliation process, the local SDM being the first port of call to resolve the dispute and appellate jurisdiction vesting with the senior officers of the government. 
• It wants away with the system of intermediaries called arhtiyas or commission agents. 

Issues related to the ordinances:

• Insidious anti-farmer bias: These ordinances sought to facilitate the corporate sector like exporters, aggregators, and suppliers in the value addition chain. 
• Eroding safety net: A centralized ‘one nation, one market’ system will divest the farmer of a level playing field by eroding the safety net of Minimum Support Price (MSP).
• Withering away of market yards set by APMCA and traditional mandis: has impaired the already set complex system leading to massive disruptions and leeway.

• Creation of Asymmetry in between APMCA and traditional mandis: Market fee and cess would still be charged in traditional mandis as against none under the ordinances. 
• Advantage of the traditional mandi system:

• It has stood the test of time, and its crumbling is likely to hurt states like Punjab and Haryana more, as these have a sound mandi/procurement network.
• In 2006, when Bihar did away with the APMCA, unscrupulous traders started fleecing farmers by procuring crops at rates much below the MSP.

• Dismantling arhtiya-kisan relationship: The arhtiya usually finances the farmer for farm operations, family functions and other emergent needs. 

• The commission agent makes logistics arrangements to act as a bridge between the farmer and the procuring agencies.

• The dispute redressal mechanism provided for under the ordinances does not inspire confidence as it is silent on recourse to the courts of law. 
• Issues related to contract farming: Benchmarking for price discovery under the ordinance has been linked to the APMCA prices, but the contract farmers supply seed to seed companies at rates higher than the MSP. 
• Fluctuation in prices: As cereals, pulses, potato and onions will be stocked in the value addition chain without proper regulation, their rates are likely to fluctuate, hurting the poor consumer the most.

Way Forward:

•  Guaranteed Procurement at MSP: calculated on the C-2 formula. 

• The formula covers labor, operational, capital, storage, transport, and other incidental charges in the Swaminathan Commission recommendations. 

• Criminal prosecution: Any person found purchasing the agricultural produce below the MSP should be made liable for criminal prosecution.
• Respecting the federal principle: Since agriculture is the state subject addressing the concerns of the states through a model draft or consultations.