Updated: February 17, 2021 9:16:37 am
The Supreme Court took a practical stand on the farm trade laws — implement them after consultation and with a well-defined framework spelt out. It led to the stand the government has taken — of holding the laws in abeyance for 18 months. This will provide the time for discussing details of agricultural reform, which is necessary since the laws were passed in a hurry.
To begin with, it has to be understood that in a continental country, a one-size-fits-all prescription will not work. In Punjab, Haryana and western UP, minimum support price (MSP)-based agriculture has a logic. It was surprising to read a well-known agricultural economist say that the region must get out of the rice/wheat rotation. Not all regions must diversify. If you have great alluvial soil, good irrigation and almost a century-long tradition of the application of science to agriculture, then there is nothing that says don’t grow the highest-yielding paddy and wheat in the world. This is the wrong advice on diversification. It’s like telling Gujarat and Maharashtra to get out of dairy or cotton. In south Punjab, with less irrigation, and parts of Haryana not covered by the Indira Gandhi Canal, some diversification to pulses, cotton etc. could work but the solid specialisation in this region remains.
The argument that private trade anyway exists is misleading. Arhtiyas (middlemen) are important in Indian agricultural markets. They are a part of the supply chain in north-west India. Here they are not like the middlemen elsewhere. They function simply as agents of the procurement agencies. This was done by the Manmohan Singh government to reduce overhead costs of procurement.
A lot of the theorisation on private trade in the north-west takes place in Krishi Bhawan. The middleman in north-west India wouldn’t dare to take on the FCI and the mai baap sarkar. Those who pushed the farm laws on the last day of Parliament are from other regions, where procurement doesn’t work and the spread of markets must be encouraged in normal times. MSPs in those parts are like ghost money — something which worked at some other time or place. But to ignore it in north-west India is just not kosher.
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To say that e-markets, forwards and farmer-managed companies (the last as designed by a committee I chaired at the beginning of this century) are all wonderful is to be with the angels. But to think they are the dominant mode of rural organisations two decades later is naive.
Agriculture is the one good sector in this hellish year. So, we need to strengthen it, not feed off on its glory, even outside north-west India. We have the largest spread of agricultural markets in the world according to spatial maps. But they are not APMCs. With weak markets (outside of grains) and without first-stage processing and other infrastructure, the farmer knows he is at the mercy of the trader and comes out on the streets when that is not understood. When good agricultural land was to be given to Suzuki in central Gujarat, farmer leader Lalji Desai brought a thousand tractors with women and children on the road. Sanat Mehta and I joined them and spoke to them in Gandhinagar. But they insisted on direct negotiations. It’s happening again. The trader is the traditional exploiter and the animus between the lala and the Jat is the stuff of folklore. No wonder s/he is out on the road in Punjab.
Policy can do a lot, but some caution in a bad non-agricultural year won’t hurt anybody. In a normal year, one would have suggested that if the market is there, the state should use its leverage. But in this year, the state will fight stagnation after the pandemic and will not have the time to intervene with that selective touch.
The MSP was in its glory when Marxist economist Ashok Mitra was chairman of Agricultural Prices Commission in the days of compulsory procurement and zonal restrictions. Each crop had its own report then. When I took over, I decided, since prices play an allocation role, there will only be two reports, one for kharif and another one for rabi, apart from one for sugarcane (an annual crop). In the 1982 rabi report, I said relative prices and, in that context, MSP had the role of an intervention mechanism when markets failed, outside the compulsory procurement area. Later, the concept of transport costs and managerial costs became important and a conceptual report I was commissioned to write was classified. The last time I argued for a “fair” MSP to states like Rajasthan and Gujarat was as an advisor to the then finance minister, Jaswant Singh, together with Ram Niwas Mirdha, former deputy speaker of the Rajasthan assembly and a champion of dry land agriculture. Sharad Pawar, a kisan at heart, summarised my conceptual report and released it in a Parliament question, knowing full well that compulsory procurement MSPs were a ghost concept outside north-west India. Today, when the farmer agitates on MSPs, s/he says don’t be unfair to me.
The Essential Commodities Act should be ditched together with the medical waste of the virus. Next year, after COVID recedes, we will use all these lovely laws we have always wanted and start the slow walk to the land of perennial sunshine. Good laws are good because progress starts with them. But not all laws are good everywhere.
First let’s wait out the COVID. From Mehsana to Navsari and Nashik to Mumbai, the milk train must run again. Then a modified version of the laws with a roadmap can be on the agenda — not everywhere, but most places outside the lands of the five rivers. The kisan may then be with us and many times she is a woman, who not only serves the langar, but also does agriculture.
This article first appeared in the print edition on February 17, 2021 under the title ‘One law can’t fit all’. The writer, an economist, is a former Union minister
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