Farm laws: It may still be a broken ladder

Many farmers are excluded from the system and continue to toil for low incomes

The right granted to any farmer or trader to conduct transactions in any trade area has been the main point of contention in the recent farmers’ protest. This specific part of the Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act (FPTC) has been perceived by the farmers - mainly from Punjab and Haryana - as the withdrawal of government’s participation in the Agricultural Produce Market Committee (APMC) market yards.

More importantly, the farmers see it as a sign of the end of Minimum Support Price (MSP) policy, leaving the farmers at the mercy of private players. The APMC Act and MSP have always significantly affected the farmers of Punjab and Haryana uniquely due to active procurement by the Food Corporation of India ever since the green revolution days.

However, the heterogeneity of the implementation and impact of APMC Act and MSP across India and across various types of farmers have so far been sidelined by the news media. An examination of its implementation in Odisha can help us get some crucial insights on such variations.

The state enacted the Orissa Agricultural Produce Markets Act in 1956. Unfortunately, it remained only on paper. Regulated Marketing Committees (RMC) (APMCs in Odisha) were established across the state, but without any on-ground operations. Lack of market regulation allowed certain market players like rice millers to exploit the farmers by purchasing paddy at low prices.

Combined with the usury by private moneylenders, it resulted in farmers generating really meagre income. The breakpoint for the farmers was the severe drought in 1999-2000. Farmers formed unions across western Odisha and started demanding implementation of MSP and public procurement.

At the same time, Odisha was facing large number of starvation deaths, especially in the Kalahandi-Bolangir-Koraput region. In order to tackle this issue, the administration decided to improve and increase the rice distribution through the Public Distribution System.

To meet this increase in the distribution of rice, the state decided to implement the Decentralised Procurement Scheme (DPS) offered by the Government of India since 2003. The state government agencies, mainly the Odisha State Civil Supplies Corporation, procure paddy from the farmers through the Primary Agricultural Co-operative Societies. Note that there are no commission agents in the procurement system here.

However, in the case of farmers who do not have transportation facilities, the village level middlemen who own tractors, take their produce to the market yards.

Present state of market regulations and its impacts:

Although the public procurement of paddy has remarkably increased in Odisha, a large number of farmers are still excluded from the system. Due to small landholding size, most of the small and marginal farmers, who constitute more than 90% of land-owning farmers, produce only small surplus of paddy, which they find it uneconomical to personally take it to the market yard. So, they sell their produce at extractive prices to the village-level middlemen who have transportation facilities.

Another group of farmers - the sharecroppers or tenant farmers - are completely excluded from the APMC and MSP system. Under the Paddy-Procurement Automation System (P-PAS) in Odisha, in order to participate in the public procurement, farmers are required to register themselves on the platform by submitting land records.

Sharecroppers do not possess these necessary documents, which are with the landlords. As a result, they sell their produce to their landlords or to the village-level middlemen at a price much lower than the MSP.

Better opportunities in manufacturing and other sectors have led to a gradual increase in migration of farmers to nearby cities and to other states. This has resulted in an increase of share-cropping in Odisha. Unofficial assessments state that sharecroppers comprise nearly 60% of the overall farming community in Odisha.

Public procurement

Moreover, the public procurement in Odisha is highly concentrated in the western region. Market yard infrastructure in western Odisha districts like Bargarh, Sambalpur and Kalahandi[6] is well-developed as compared to other districts. Part of the reason for the developed RMC market yards and concentration of public procurement is the strong farmer associations in the western part of Odisha. The farmers in other districts sell mostly to private traders.

What the recent farm laws mean for the farmers: The APMC and MSP policy in Odisha has resulted in a skewed distribution of benefits across various groups of farmers. For some farmers in Odisha, the MSP and APMC implementation has brought in some relief by ensuring fair and remunerative prices for their produce.

But, a big part of farmers is excluded from the system and continue to toil in return of low income. According to the latest Situational Assessment Survey of National Sample Survey Office, the average monthly income of farmers in Odisha is Rs 4,976, which is one of the lowest in India.

The FPTC Act might offer some solace by offering alternative choices of the market for the farmers which can be leveraged to get a higher price, but it remains to be seen as to how these benefits can pass on to a group of farmers - sharecroppers, small and marginal farmers - who have a very minimal marketable surplus.

Also, a plethora of other problems which are beyond the scope and objective of the farm laws, like climate change, crop diseases, shoddy implementation of crop insurance scheme, low productivity and a dearth of extension services. These are still major hurdles for the farmers in their quest to improve their incomes.

(The writer is a researcher on agriculture policies; he holds a Master’s degree in Public Policy from NLSIU, Bengaluru; he was a research associate for the 'Indian Agricultural Markets' project hosted by the Centre for the Advanced Study of India, University of Pennsylvania)