THE ECONOMIC IMPACT
The biggest factor for farmers is the assured income that comes from the MSP mechanism. Farm expert and former UP Planning Commission member Sudhir Panwar says, “The Green Revolution states –– Punjab, Haryana and western UP belt –– have a vibrant and organised mandi system, which would be rendered defunct with the new laws. This is the main reason the farmers are protesting.”
Farmers selling their produce outside the mandi system will mean loss of revenue for Punjab and Haryana governments as the two states see maximum public procurement of rice and wheat.
Punjab earns nearly Rs 3,000 crore annually through a 6% market fee and rural development cess with government agencies procuring nearly 250 lakh metric tonne of crops worth Rs 50,000 crore. Punjab earned over Rs 1,620 crore by procuring 128 lakh metric tonnes of wheat earlier this year and could earn Rs 1,320 crore from the public procurement of nearly 110 lakh metric tonnes of paddy worth Rs 22,000 crore that started this week. Punjab also reduced the market fee by half for Basmati this time to compete with Haryana.
“99.6% of the wheat and rice in Punjab is procured by government agencies and just 0.4% by private agencies after Punjab brought in a State APMC Act in 2017 to allow private mandis in a regulated manner,” a senior Punjab government official told ET. He said Punjab’s farmers “feel safe” in growing wheat and rice crops as it gets procured on MSP with early payments. Hence, 35 lakh hectares in Punjab is devoted to this.
The public procurement is organised differently in other states. For instance, Chhattisgarh and Madhya Pradesh have smaller land holdings as compared to Punjab, Haryana and western UP. About 86% of Chhattisgarh farmers have land holdings of less than 5 acres.
“In the villages, 30% of small farmers grow crops for consumption and depend on MNREGA for their cash needs. Small farmers usually never reach the mandis. They are tapped by arhtiyas or even big farmers who reach their villages and buy the crop,” says Panwar. Since small farmers are not in the mandi system, they remain unaffected immediately and hence passive to the protests.
Chhattisgarh rural development minister TS Singhdeo differs, “The new laws will also disrupt Chhattisgarh’s procurement system, which is largely dependent on cooperatives. Our farmers have organised themselves and have better bargaining power for their produce.”
In Haryana, the BJP-led government backs the new laws, but has slashed the existing 4% market fee and a state rural development fees to just 1% last week to ensure farmers come to the mandis.
“The revenues are set to drop. We would need to make good the loss from other avenues or seek the Centre’s help. We earn Rs 900 crore annually by procuring 75 lakh metric tonnes of wheat and 90 lakh tonnes of paddy,” a Haryana government official told ET. “The private mandi system is for a limited number of some progressive farmers in the state. Most farmers will opt for state mandis and will get MSP there,” Haryana BJP president OP Dhankar argued.
In TRS-ruled Telangana, 86% of land holdings are less than 5 acres with average land holding size being 2.8 acres, which is lower than the national average. Though Telangana saw the second highest procurement of paddy in 2019-20 (after Punjab), there have been no protests in the state.
THE CORPORATE ENTRY
Punjab chief minister Amarinder Singh says that the new laws would bring in private mandis in an unregulated manner where anyone would buy produce without registering with the state government. With this, Punjab stands to lose yet another revenue stream that could be used to build rural link roads and develop state mandis. “We have got no money under GST since March, which amounts to Rs 8,000 crore. If the mandi market fee revenue also goes as per the new laws, I would be left with only selling liquor to earn Rs 4,000 crore a year through excise. We have no other income,” Singh says.
“There are enough central schemes under which rural infrastructure can be built like rural roads under PM Gram Sadak Yojana. Why does the state need to fleece farmers to build roads for them?” BJP national general secretary Tarun Chugh said, responding to the CM’s claims.
Experts, however, worry about the fate of small farmers. Panwar says, “Farmers have zero bargaining power. They can bargain with the arhtiya but not with a big corporate. This is why he is resisting the change. There has been no discussion on this aspect.”
THE POLITICAL LINK
The biggest factor remains the strong political links of the farm sector in the Green Revolution states. Prominent farm leader and Bharatiya Kisan Sangharsh Samiti national president Pushpendra Chaudhary says, “The Green Revolution states’ politics have been governed by agriculture. The farmers bear a very heavy imprint on politics. Also, arhtiyas, who are integral to the sector in the two states, are politically influential and have, probably for the first time, joined forces with the farmers. This is why the protests have become vociferous in the two states.”
Arhtiyas practically run informal mandis, called ganj in local parlance, in the states where procurement of wheat, paddy and other MSP crops takes place. Ganj is a small enclosed area which has shops on all sides and space for trolleys laden with grains to be driven and offloaded. The arhtiyas buy these crops on a price decided with the farmer, and have large storage rooms. “They rule the informal markets and the prices. This system is likely to be finished with the corporate sector coming in and dealing directly with the farmers,” says Pushpendra Chaudhary.
The two states also have highly organised farmers’ organisations, which have been setting the tone for farmers’ protests for years now. Panwar says, “Both Punjab and Haryana have seen organised farmers unions. This is why they always lead these protests on agriculture issues.”