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The middlemen system that worked through APMC mandis created wealthy people and impoverished farmers
By Sudesh Verma*
It is natural for people to develop vested interests in continuation of a system that has worked quite well for them. To change the inertia and bring a new direction needs a much greater degree of force. The old order created vested interests of middlemen, politicians and other stakeholders in Agriculture that thrived on honest and hard-working farmers.
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The middlemen system that worked through Agricultural Produce Market Committee (APMC) mandis created wealthy people while it impoverished farmers. The aadhatias who dominate and manipulate the markets have forced farmers to sell their produce through them and in lieu of a substantial tax up to (8 per cent).
As for example, in Punjab there are 28,000 Commissions Agents (adhatias) that operate in the APMC markets for families of farmers that number about 12 lakhs. These agents are well organized and the system does not allow new players to get in easily. So they are protected. They dole out small finances to destitute farmers in times of need and thereby control their produce in the market.
These adhatias are powerful and control politics through control on these farmers who can’t speak much because of the control system. For them these adhatias are the government since the political system sustains them in case of disputes that are resolved locally using muscle power or numbers.
These adhatias had opposed direct payment to farmers since this meant empowering the community that has depended on them for support and survival. Many studies have suggested that farmers wish to deal directly with the market and get payment directly in their accounts. Payment of 8 percent tax is a huge amount and it is variously estimated that these middlemen get commission worth Rs 4000 crore or more in Punjab alone.
Also read:
- Government sought to allay farmers’ fears as Parliament passed controversial agri-bills
- ज़रुरत नए क़ानून की नहीं पर एपीएमसी एक्ट में संशोधन और तमिलनाडु की ‘उझावर संथाई’ योजना को देश भर में लागू करने की है
The two farm bills are actually a surgical strike on the system of middlemen that has not allowed our farmers to become empowered. Before the Green revolution, Indian agriculture was not considered profitable. The network of irrigation system, fertilizers and improved variety of seeds improved agriculture but failed to impact farmers substantially because the system favoured the middlemen.
The reforms initiated by the Government would liberate farmers from the fangs of these middlemen
The reforms initiated by the Modi Government would liberate farmers from the fangs of these middlemen, empower farmers by making them earn more, fill them with new energy by enabling them to sell directly in the market if they do not wish to go to the APMCs. They can get better price for their produce by going to any mandi of their choice even outside the State and without paying any tax.
This will bring in more competition and offer better prices to farmers. There would be more people as buyers since the market would be deregulated. Hence there would be more people getting employment. The Government’s interest is to give better prices to farmers. At present the system empowers the middlemen and farmers live the life of bare minimum. There is a huge difference between the price of produce procured from farmers and the price sold to final consumers. The addition at every stage is huge and not dictated by the market.
The adhatias know this and hence they have in alliance with their political masters are trying to create an atmosphere of fear by saying that the Government would dismantle the MSP regime. Farmers are innocent and gullible and may get misguided by the false campaign. No less than the Prime Minister has clarified that the MSP regime would continue as it used to be. The government is confident that farmers would see the truth finally. Saner voices have started coming out and speaking the truth behind the agitation in the name of farmers. The legislation does not dismantle the old structure but farmers are being given a new mechanism to become more powerful.
Let us come to the second legislation. Vested interests are trying to say that this would lead to corporatization of agriculture and make farmers workers in their own lands. Far from the truth! As of today, in many parts of India, farmers work through contract farming known by various local names. There is no one legal framework that can protect them. This often leads to legal hassles and exploitation and often farmers end up losing their lands.
The legislation on “The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services” creates a legal structure for those entering into contract farming and gives protection to farmers. In case of dispute, a farmer is liable only for input costs he may have received but if there is default by the other party fine upto 2.5 times can be imposed by the administration. First there is provision of arbitration by representatives of contracting parties and then the provision for arbitration by administration in case the former fails to resolve it.
The biggest problem facing Indian agriculture today is fragmentation of holding making it less productive since input costs have arisen. About 86 per cent farmers are small and marginal making agriculture unable to reach economies of scale. If one wishes to use tractor or other machines the landholdings would make it prohibitive.
This legal framework would enable these farmers to reach an agreement with a third party over their produce without losing the title of their lands. Actually the title of the land can never be brought under dispute. The agreement is exclusively for the produce. This would enable them to get better inputs leading to improved agriculture, better yield and better pricing dictated by the market.
The farmers already know the price they would get and if the third party sells in better pricing then, farmers would get a part of the profit. If there is crop failure or otherwise, farmers would still be ensured and they would not incur loss. Those who are opposing are actually aware that the new system would take away exploitation and make them more accountable.
This may lead private players to invest in agriculture in a big way by way of creating storage facilities, food processing industries etc. for which the Government has already announced incentives. The current system has failed to ensure price stability. When there is crisis, farmers don’t get the price and when there is glut, crop is wasted. Those who suffer are farmers and not the middlemen.
Let us try to analyze the third legislation which is on Essential Commodities Act. When the Government buffer system is working well through FCIs, the PDS system for poor is working quite well and MSP system is also working quite well, why should there be fear of hoarding and storage. Indian agriculture is at a takeoff stage. There is a huge buffer stock to take care of contingencies. Since agriculture is seasonal fresh stocks will keep coming. Thus the act should be invoked only in Emergency situations, including situations of too much price fluctuation, which are enumerated in the Bill.
The Modi Government is committed to empower farmers. Already farm produce procured through MSP has gone up by at least 25 times when compared to ten years of UPA Government regime that preceded this Government. The Prime Minister does not have any vested interests since he is dismantling the control regime that has been the bane of this country since it benefitted elite at the cost of suffering majority.
By taking out the system of Red or Blue beacon cars he dismantled the vestiges of the British Raj, by allowing self certification and obviating attestation by Gazetted Officers he gave respect to citizens, through GST he tried to attack system of control and corruption by converting India into one market, through demonetisation he launched the frontal attack on hoarders of cash, and through atma nirbhar bharat in defence production he attacked the system of Commission in defence purchases that used to demoralize the country. Through these three legislations he is trying to revolutionize agriculture and add fresh breath to the community/activity that has sustained the country by fulfilling its food needs.
Bravo Prime Minister Modi for taking the bull by the horn!
*Sudesh Verma is a panel spokesperson of the Bharatiya Janata Party and in-charge of the party’s media relations. He has worked as a professional journalist for more than two decades in Delhi. He has written a book on Narendra Modi called ‘Narendra Modi: The Game Changer’.
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