Farmers need protective price mechanism and not illogical three farm laws

In the free market system there is no ethics or morality, higher margins are the only driving force behind every action or practice.


The farmers agitation is continuing, strongly unabated, even after 100 days. If newspaper reports are to be believed, it has spread to rural India and is now expanding rapidly beyond the boundaries of neighbouring states, surrounding the national capital. If one looks at farmers agitations of the past decades, they were all focused around the demand of improving the economic condition of farmers who despite all the tall talks and claims made by successive governments, continued to suffer and their condition has degenerated over the years instead of improving. This is borne out by the horrific fact- the number of farmers suicides has kept on increasing and migration from rural areas continued unabated. These facts should have alarmed any government worth its salt, but alas, those in power went on projecting themselves as the true friends of farmers but did nothing to alleviate their misery. All these years the farmers have been demanding only one thing- “Please ensure that we get remunerative price for our produce so that we can survive”.
It needs to be understood again and again that Agricultural markets are not “markets” in the true sense of the term. Here Keynesian economic theory doesn’t work. Here the supply is not determined by demand, and production cannot be controlled or curtailed with dwindling demand. Farms have seasonal output in a short span of a few weeks while consumption takes place over a year. In this scenario, leaving the farmers at the mercy of “market” forces is like throwing them before vultures. In the free market system there is no ethics or morality, higher margins are the only driving force behind every action or practice. In this scenario, what led the government to pass these three farm laws defies comprehension. One can’t implement a theory mindlessly even though the ground conditions and stark reality are totally different. The proponents of opening the agri markets to the private sector forget this stark reality and show no concern for the poor farmers of our country.
Governments always have had the power and authority to do something to alleviate the myriad problems of farmers. This could have been done either by controlling the input costs or by ensuring remunerative prices for their produce. But governments did neither. They left the markets to determine the input prices and they left the farm produce prices also to the mercy of the market forces. This is clear from the fact that despite declaring MSP for 28 crops, only six percent of all the farm produce is sold at MSP . This clearly bursts the myth that private sector needs to be allowed into the agri markets, in fact they are already there. Now it seems the policy planners want the big corporates to enter the agricultural produce markets, as for them, it seems, private sector means the big corporations and people with deep pockets. For those writing these laws, the village trader, the mandi licensed trader, arhatias, rural dealer of fertilizer, seed shopkeeper or local money lender do not come within the definition of private sector, only the billionaires constitute “free markets”.
It has also been argued by the law makers that we need heavy investment in agriculture sector, which could take place all these years. Their logic is that if “private players” are allowed in agricultural markets by allowing them to set up private mandies and contract farming, then farmers will become prosperous. Nothing can be farther from the truth than this. In Bihar and some other states, there are no APMC’s and contract farming has been prevalent throughout the country during all these years, but why did things not improve and why Bihar farmers have remained poor? The Government must come out and answer these questions logically and explain to farmers how these laws are in their interests.
Logically, the offer made by the government to put these three farm laws into abeyance, for one and half years and the situation created due to ongoing farmers protest has already put these three farm laws into deep freeze. No government worth its salt can gather the courage to implement them in times to come. But this does not solve the problem of farm distress and of ensuring remunerative prices to farmers for their produce. For that to happen, policy makers, instead of being blindly led by free marketeers, should prepare a blueprint to ensure that the farmers do get remunerative price for their produce. A better way to do it is by bringing a law to ensure Minimum Support Price to farmers and a fool proof mechanism to enforce it. The all pervasive corruption prevalent in the Food Corporation of India, state food procurement machinery and entire food distribution network remained unchecked all these years. The time has come to not only stop all the loot there but also to ensure that the price support mechanism put in place, is implemented honestly. We have ignored the problem of corruption long enough at our own peril. The Farmers agitation should be used as an opportunity to correct the malaise plaguing our nation for decades. The It is time to bell the cat.

(Vijay Shankar Pandey is former Secretary to Government of India)

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