Ashraf Engineer
February 17, 2024
EPISODE TRANSCRIPT
Hello and welcome to All Indians Matter. I am Ashraf Engineer.
As more than 200 farmer unions marched towards Delhi in the past week, the national capital turned into a fortress. The Delhi Police, controlled by the Union Home Ministry, lay down nails, barbed wire and concrete barricades on the farmers’ route and used tear gas shells and rubber bullets to disperse them. It’s not just farmers in India who are on the march. Across the world, farmers are grappling with existential issues. And there are some similarities between the demands of those in India and those in Europe, who are also protesting on a war footing at the moment. Look closely at what’s driving the protests and you will see striking parallels: low prices for their yields, inadequate government support, unsupportive policies and climate-change-induced crises.
SIGNATURE TUNE
You might recall that there was a massive farmer agitation in 2020. So what’s different between those protests and the latest ones?
In 2020, farmers were vehemently opposed to three farm laws that they said would put them at the mercy of large corporations. There was also a fear that government mechanisms of procurement of their produce would be dismantled. Such was the intensity of the protests that the government had to repeal the laws. The latest agitation was to demand a legal guarantee of minimum support price, or MSP, for all crops, a full debt waiver for farmers, pensions and withdrawal of cases registered against farmers in 2020.
Of this, the MSP is the one the farmers are most focused on. What is MSP? It is a guaranteed price for farmer’s produce offered by the government. So, in case the market price for a crop falls below the MSP for any reason, say a bumper harvest, the government purchases the entire quantity offered by the farmers at the MSP. The goal is to support farmers selling their produce in distress and to procure food for public distribution.
In 2020, the protest was led by the Bhartiya Kisan Union and the Samyukt Kisan Morcha. The latest ‘Delhi Chalo’ movement was spearheaded by different unions, the Samyukt Kisan Morcha (Non-Political) and the Kisan Mazdoor Morcha.
While Rakesh Tikait and Gurnam Singh Charuni were the main leaders in 2020, this time it’s Jagjit Singh Dallewal of the Samyukt Kisan Morcha (Non-Political), and Sarwan Singh Pandher, general secretary of the Kisan Mazdoor Sangarsh Samiti.
Unlike the last time, the government opened talks early with the farmers but it has also done everything in its power to stop them from entering Delhi
Coming back to MSP, it’s a matter of survival for farmers, which is why it’s got them up in arms. They usually find themselves in a buyer’s market. Their crops are marketed in bulk and, if there are supply increases, prices start falling. Generally speaking, the farmers lack pricing power. This means their income levels are always precarious. What makes it worse is they pay market prices for inputs like seeds, pesticides and fuel. These costs either remain steady or rise, thus trapping them in a pincer-like grip of uncertain income and widening costs.
It’s the MSP that is meant to stabilise production and to control retail prices of food. However, farmers don’t always get the MSP. This is because procurement centres have not been set up or commission agents are too powerful and they buy the produce below the MSP.
To counter this, farmers are demanding a legal guarantee of the MSP. After all, they point out, what’s the point of having an MSP if farmers don’t actually get that income.
The root of the latest protests can be traced back to mid-2023. On June 7, 2023, the government announced an MSP for kharif or summer crops, such as pulses and cotton, raising prices between 5% and 10% over the previous season. Farmers were unhappy with the hike.
The All India Kisan Sabha, for instance, said it was “unfair, belies the hopes of the farmers and inflicts huge losses in their incomes”. Ashok Dhawale, president of the sabha, said rising costs and an unfair MSP would push many farmers, especially small, marginal and mid-level, into crippling debt. He pointed out that when the Bharatiya Janata Party came to power in 2014, it had said the MSP would be calculated as per the Swaminathan Commission’s recommendation of C2+50%. C2 is the comprehensive cost of production. This, Dhawale said, was never done.
Then, too, farmer leaders had said that MSP needs to be made a statutory right.
Experts are sympathetic to the farmers’ demands. They point out that only three to four crops – such as wheat, paddy and cotton – are actually being procured at MSP while the remaining fetch much less. This non-implementation of the MSP has proved to be a major hurdle to crop diversification, which Indian agriculture needs. If MSP were to be given legal status, farmers would have the confidence to harvest other crops.
So, what’s the mechanism to guarantee MSP?
The government could force buyers to pay MSP but it is not a foolproof approach. Many buyers could choose not to buy at all or withhold payments for large periods of time. The other option is for government agencies to buy the entire output. That is impractical any way you look at it, whether from an implementation point of view or economic. The government simply doesn’t have that kind of money.
There’s a third option, commonly known as price deficiency payments or PDP. In this option, the government does not purchase the crop. Instead, it pays farmers the difference between market price and MSP if the former is lower.
This system was piloted in Madhya Pradesh through the Bhavantar Bhugtan Yojana. The most-quoted rate for a crop in the Agricultural Produce Market Committee mandis as well as two other growing states during the month of sale was taken as the market price. The price difference between that and the MSP was paid on the actual quantity sold by the farmer and backed by an anubandh patra or sale agreement with the trader, the tol parchi or the weighment slip and the bhugtan patra or payment letter signed by buyer and seller.
The scheme was piloted during the 2017-18 kharif season for eight crops. Roughly 21 lakh farmers registering for it and payments of Rs 1,952 crore were made, but the scheme petered out due to lack of Central Government support.
Economists, meanwhile, are opposed in principle to the MSP. In their view, farmers should sow what the market demands and this will lead to higher prices for their harvest. A cost-plus MSP, they argue, ignores demand and distorts production decisions, resulting in oversupply of some crops and undersupply of others.
If at all farmers must be supported, say economists, it is better to do it through direct cash transfers – a fixed annual sum deposited into their bank accounts. This could be a fixed amount per farmer or per acre of holding. This, argue economists, doesn’t distort the market and enables farmers to diversify their crops, grow what they wish to and to sell to whom they wish.
So far, it’s unclear if the government is willing to think out of the box.
I started this episode saying farmers elsewhere in the world are up in arms too. Nowhere is this more true than in Europe. Paris, for example, has witnessed intense farmer protests. Their complaints will sound familiar: rising costs, higher debt and falling sale prices.
In their case, the average price of agricultural products declined by 9% in the third quarter of 2023 compared to a year earlier. Just like here, they are saying they need more government support.
Like in India, banks are reluctant to lend to farmers, so they don’t have access to cheap finance, which is badly needed for them to stay afloat.
In Dover, in the UK, farmers staged a tractor demonstration against foreign imports of food.
Farmers have blocked roads in Poland, Hungary, Spain and Belgium too.
In Poland, lines of tractors, blocked roads in 256 places. In Spain, tractors cut off traffic near cities such as Pamplona, Bilbao, Toledo and Zaragoza.
Farmers in Poland and Hungary said the European Union was not doing enough to halt cheap imports from Ukraine, which was undercutting local produce.
Belgian farmers, meanwhile, protested at a European Union meeting of ministers in Genk against anti-pesticide legislation. As a consequence, the European Commission recommended that net emissions be slashed by 90% by 2040 compared to 2015 levels, but scrapped its so-called Green Deal to halve pesticide use across the EU. Farmers had complained that cutting pesticide use would harm their crops and jeopardise food production.
In Greece, farmers demanded lower electricity prices, tax-free diesel, subsidised animal feed and changes to EU environment rules.
In Italy, too, farmers protested. They were angry at the scrapping of an income-tax break and “ideological” EU rules on food imports and emissions.
As you can tell, there is a dark cloud over agriculture across the globe. Farmers are dealing with a variety of issues and many of them are common across geographies. This is serious because at stake are not just the livelihoods of millions and millions of farmers and those who rely on them but also the ability to feed the world’s population. Food security, already in jeopardy because of climate change, could become an even greater worry.
Our farmers are our greatest defence against that and they need all the help they can get.
Thank you all for listening. Please visit allindiansmatter.in for more columns and audio podcasts. You can follow me on Twitter at @AshrafEngineer and @AllIndiansCount. Search for the All Indians Matter page on Facebook. On Instagram, the handle is @AllIndiansMatter. Email me at editor@allindiansmatter.in. Catch you again soon.
