Interview on changes in agricultural trade

Recently, the government passed two ordinances related to agriculture. “Agricultural Produce Trade and Commerce (Promotion and Facilitation) Ordinance-2020” and “Farmer (Empowerment and Protection) Agreement on Assurance of Value and Agricultural Services Ordinance-2020 “. The Prime Minister and the Minister of Agriculture have called these two ordinances, as the means to open the way for “freedom of farmers”. Mazdoor Ekta Lehar (MEL) talked about these ordinances with many peasant leaders across the country. The key points made by Shri Vikal Pachar, National President of All India Swaminathan Sangharsh Samiti, during an interview with Mazdoor Ekta Lehar, are presented in the following paragraphs.

Mazdoor Ekta Lehar (MEL): Recently, the government has passed two ordinances related to agriculture. The Prime Minister and the Minister of Agriculture have called these ordinances, as opening the way to “freedom of farmers”. One of them is the “Agricultural Produce Trade and Commerce (Promotion and Facilitation) Ordinance-2020”, according to which the barriers to inter-state agricultural trade will be removed. Will this solve the problem of farmers not getting the right price for their products?

Vikal Pachar (VP): Preparations for an ordinance to open more of the agricultural business to private companies were made by the government in February itself, when the budget was presented. The government wants to hand over the agricultural sector to corporate houses.

So far, only 6 percent of procurement is being carried out under the Agricultural Produce Marketing Committee (APMC) Act across India. Wheat and paddy have to be procured in states like Haryana and Punjab by the APMC, for the purposes of providing it to the Public Distribution System (PDS). The government wants the APMC to withdraw from the purchase of wheat and paddy. The government has also reduced the budget of Food Corporation of India (FCI). Due to the changes in the Mandi Act, private mandis will now replace the government mandis. When the government itself is not able to provide the minimum-support price, as announced, to the farmers, then it is totally baseless to expect the mandis of corporate houses (capitalist companies) to give the farmers a fair price, for their products. There are private mandis in Bihar. The farmers there get a quarter of what should be paid to them for their crops. In Gujarat, the payment for the crops is not even 60% as compared to what they are able to get in Haryana on selling the same crops in the mandis of private companies.

MEL: On the “Farmers (Empowerment and Protection) Agreement on Assurance of Value and Agricultural Services, Ordinance -2020 ” – it is believed that this ordinance will open the way for large-scale contract farming. The government is claiming that the income of the farmers will not only be protected but it will increase through contract farming. But in many cases, it has been found that the farmers, engaged in contract farming are completely bound by the terms and conditions of the big companies, in practice, becoming their slaves (as in the case of potato growers for PepsiCo in Gujarat). What are your views on this?

VP: Contract farming is similar to the way the British used to get indigo cultivated by the farmers. The farmer’s land was also destroyed in the process. The farmer had to buy grains to survive, from the market outside. Big companies will force the farmers to do the contract farming, in order to maximize their profits. The farmer will not have the freedom to produce crops of his own choice. Those who are getting wheat, rice or other things, under the PDS scheme, will be deprived of those items – there will be massive cuts in the provision of these food grains. Market prices of these items will also go up. One of the conditions in contract farming is that the contractor will provide seeds and fertilizers for cultivation. The farmer will contribute through his hard work. However, the farmer will be obliged to deliver the harvest as per the the quality specifications, demanded by the contractor. Land is not a machine that will produce one size and one quality item. When you produce apples, tomatoes or peppers it is affected by the weather. Contractors will include such conditions in their terms of engagement, that they will only buy products of a certain size, colour and quality from the farmers. The farmers will have to compensate for any deviation from the specified quality of the crop due to weather failure or any other reason. Further, the cost of inputs provided by the contractors will be recovered from the farmers.

MEL: You have raised the point of mandis. What are the problems in the mandi system (A.P.M.C) that has existed till now? How has the government connived to spread corruption in them and contributed to their destruction?

VP: There is definitely corruption in government mandis. But the farmer was getting a fixed price for his crop from the government mandis even though not under happy circumstances. Changes to the mandi act are meant to enable the private mandis to do the purchase. For example, the notice has already been issued in Haryana and Punjab to reduce the workers on rolls, consequently the workers in the Mandi Society are being fired. There will be neither be an investigating officer on behalf of the government nor will there be any supervision by the government in the private mandis. That is, private companies will be given a free hand in deciding the price of agricultural produce; the government will not take any responsibility to monitor them.

As far as corruption in government mandis is concerned, the farmers were certainly deprived of their right to have their say in formulating the rules and laws of the Mandi Act. Farmers bring their crop yields to the mandis, with the hope of getting the minimum support price. In the mandis, he finds no arrangement made even to cover his produce from rain or sun. There is no provision of food and water for the farmers. The farmer stays in the mandi for four-five days and, finally, tired of all the harassment he has to undergo due to the irregularities and corruption of the government officers, he leaves the mandi after selling his crop at whatever price he can get. This corruption is perpetrated by the middlemen in collusion with the mandi officials. Today this is the condition of agricultural mandis across the country. Today most of the government mandis have conditions similar to that which prevailed in mandis before Independence; the buyers (middlemen) used to bid for the products farmer brought to the mandis. If the government’s intends to, then it can eliminate corruption from the mandis. But the government has strengthened corruption instead of eliminating it.

‘My crop my records’ – Through this scheme, the record of the crop and all the relevant details of land records of the farmer, is always with the government. The state knows that if I am a two-acre farmer, I will have 40 quintals of wheat at the time of harvesting. The government can easily make arrangements to purchase 40 quintals of wheat 6 months in advance and issue me a token. My crop yield should be weighed as soon as I take it to the mandi. The government could also make arrangements for CCTV cameras in the mandi, and prevent the loot and plunder. Thus, the conditions of the mandis can be improved for the farmers.

Apart from this, the tax that is collected through the farmers, is a huge revenue for the government. The government could use that tax to modernize the mandis and quickly end the system of loot and plunder. But the tragedy is, that neither the Central Government nor the State Governments want to end the sufferings of the farmers and make them strong.

MEL: “Guaranteed purchase of their produce at a price of one and a half times the cost” – the farmers have been fighting a long battle with these demands. What are your thoughts on this subject?

VP: The Central Government sets the minimum support (MSP) price. During their discussions with the Agricultural Costs and Prices Commission (CACP), farmers have raised concerns with the government about the discrepancies in determining the price of their produce. MSP is computed based on the prescribed formula already set in the computer. All over India the crop yields are computed by the same formula irrespective of the conditions of the land in that region. For example, the formula is based on the assumption that the same quantity of urea will be required in every field and river water will be available everywhere to the same extent. The computer calculations do not take into account the fact that tube-wells are not able to provide water in many farms, where there is no proper canal or any other definite source of water. Similarly, higher prices of the cost of diesel are not factored in, while computing MSP.

Another major problem is, that the land rent is not included while computing the MSP. You will find that in most places in India, there is a practice of giving land on contract for farming. The sharecropper (farmer) pays rent to the landowner. The crop is taken to the mandi only after this payment. For example, if a small businessman has a small shop, he also adds the rent of his shop to his cost of production. Government and the C.A.C.P. do not recognize the land rent and the family labour as part of the cost incurred by the farmer. How is the cost of wheat fixed by the computer at Rs 1150 per quintal? It is estimated that two fertilizer bags are needed and accordingly priced, then it is assumed that the river water is available with no cost, for which neither electricity is being spent nor diesel. For computing the crop yield, the uniform standard of land is assumed. It is taken for granted that the land is plain, and hardly any labour needed to grow the crop and hence the cost of labour is kept to a bare minimum.

The third point is that the administrators do not consider the farmer to be a worker. For example, there is a law of minimum wage for a worker. The farmer has only one occupation. Apart from farming, he is not doing any other work. As long as his wages are not added to the cost of his crop, whether the price is fixed one and a half times or twice, it is unfair to the farmer. The computation in fixing MSP is thus unjust to the farmers. The ministers of the government (whether the state or in the centre) shamelessly shout from the rooftops that they have implemented the recommendations of the Swaminathan Commission.

As per the recommendations of the Swaminathan Commission, various peasant organizations of the country have computed the price of wheat to be Rs 2600 per quintal. Consequently, when the government talks of giving one and a half times of the cost, the price of wheat should be about 4000 rupees per quintal.

One more thing, before the market system was introduced in the agricultural sector, the condition of the farmers was not as bad as it is today. At that time, the trade was not based on money. It was a barter system – that is, to take other goods in exchange with grains. Ever since the open market system has been introduced in agriculture, inflation has been rising in all commodities. But the increase in the prices of agricultural products was not included in the inflation rate and their prices were not increased as per the inflation rate. In the 70s, there was no need to buy seeds and diesel for agriculture in the open market. These items were available at government-controlled prices. Now the government does not take the responsibility of providing us with all these essential inputs needed for growing crops, at a government-controlled price. Now our cost of production has increased with inflation. But the farmer does not get the price for his produce, in line with the rate of inflation and that is the reason, the conditions of farmers have been deteriorating, going from bad to worse.

Today the farmer is trying desperately to survive, by taking a loan. The government’s own figures show that the monthly income of each farming family is only Rs 3400. This family income means most of the farmers in the country are living below the poverty line. With an income of Rs. 3400 per month, how will the farmer survive? How will he raise his children and provide good education and health facilities to his children? He will either commit suicide because of the unbearable conditions of his family or, survive by mortgaging his land to banks or moneylenders. If since 1970, the prices of crops were determined and paid to the farmer taking in to account the actual cost of production incurred by them, today we would not have to ask for one and a half times the cost of production. The government’s agricultural policy was not right from the very beginning.

And now, year after year, 3-4 percent of the people are pushed from being an agriculture-cultivator farmer to a wage labourer, due to the greater penetration of big corporate houses in the agricultural sector.

MEL: Large monopoly capitalist houses are joining the agricultural trade. They will buy the produce directly from the farmers and fix the price. What will happen to small and medium farmers in this situation?

VP: Only middle and marginal farmers are left in the country. 90 percent of the country’s farmers own about one and a half acres of land, that is, he is a small or marginal farmer. Those who can compete with big companies must have large cold- storage capacity. Those who have the ability and financial capacity to provide for their family for 6 months. The debt burden on the small and medium farmers will be so much that he will not be in a position to deal with the big companies.

In the initial years, big private companies will pay farmers a little more than the government-determined price. This is the standard practice so that the small traders who buy the crops of the farmers currently will be wiped out of the market.

Look at the telecom sector. Initially, there were about 20 companies in the telecom sector. Rates kept decreasing. Now there are only three companies left – Airtel, Jio and Vodafone-Idea and they are now deciding the rate as they wish. The government itself wants to let go of its control over agriculture and it wants it to be in the hands of private capitalists. When there is no law to control prices, the loot and plunder will certainly increase. A time will soon come when the farmers will be forced to hand over their land to these big companies.

MEL: Farmers are fighting for loan waivers. What do you think about it?

VP: We do not want loan waiver, we want to be debt-free. There is a huge difference between forgiveness and salvation. Let us talk about the Swaminathan Commission. The Commission’s report came in 2005. According to the Swaminathan Commission from 2005 to 2020, there is a difference of 75 lakh crore rupees between the price we should have received and the price we should have got. Across the whole country, farmers owe debts amounting to Rs 11.5 lakh crore. Of this, Rs 3 lakh crore is the debt of the corporate houses. That is, all the marginal farmers of the country can become debt-free if they receive 7 to 7.5 lakh crores of what is due to them. Actually, the farmers have been robbed of their wealth over the years.

We are telling the government that we do not need money from you, you should only return our money, which has been looted from us. The government had created the Swaminathan Commission with the so-called objective of “welfare of farmers”. Neither the Congress government nor the BJP government implemented the Swaminathan Commission Report. The price for the crop that the farmer should have got in 2005, he has not got it even today, in the year 2020. During all these years, if we take the crops which are grown twice a year, we were cheated big time, in terms of what we were paid compared to what was due to us, in case of 28 crops. Our economic situation has been steadily declining in the last 14 years. Prices of fertilizer, diesel and tractor have been continuously increasing. Due to the wrong policies of the government, the farmer has been pushed more and more into debt. Had the government’s policies been for the good of the farmers, the farmer would not been pushed into debt at all. The farmer has the right to demand that he should be made totally debt-free.

MEL: Our country is an agricultural country. Agriculture sector makes a huge contribution to the country’s economy. If we want to relieve agriculture from the current crisis and we want to provide a happy and dignified life to our farmers, then according to you, what should be the way forward?

VP: It is said that before independence, the farmers constituted 84 percent of the population in the country. Today the government says that the proportion of farmers in the population has gone down to 58 percent. The contribution of agriculture to India’s GDP is now at 12 percent, whereas in 1947 it was at 85 percent. The facts are as follows: Of all the budgets presented since 1947, only 2.5 percent of the government budget has been provided for the agriculture sector, i.e. for the 58 percent of the people in India, so how will this sector progress? On the other hand, look at the budget provisions for the big corporate houses industry; in the 2020 budget, 22 percent of the country’s public money is being given away to the big corporate houses.

Our country is agriculture-rich. In order to keep our land fertile and our agriculture sector productive, the Central and State Governments should make a budget for agriculture separately to improve the infrastructure facilities for agriculture.

Similarly, there should be a separate budget provision for the proportion of population dependent on agriculture.

We are of the opinion that 50 percent of the budget should be spent on essential facilities for the people, such as education, healthcare, transport etc. and out of the remaining 50 percent, 34 percent of the budget should be provided to the agriculture sector. When this 34 percent of the annual budget is available to the agriculture sector, then you will be able to build a warehouse for farmers.

Vegetable prices, such as tomato prices today, are Rs.60 per kg for customers, but farmers have sold it for Re. 1/kg, as they do not have cold-storage capabilities of their own. The government should promote community agriculture, which will improve agriculture, as is done for example, in Poland.

The government claims that we will double the income of the farmers. How will you double the income of 58 percent of the population by providing for them, only 2.5 percent of the funds in the budget. It is absolutely impossible.

Today we farmers are also raising the demand for a guaranteed minimum income. The reasoning behind this is that whatever the farmer is producing, be it vegetable, grains, pulses or sesame, he is not just producing it for himself. He is producing it for all the people in the country. He is producing the food so that no person in the country can go to sleep with a hungry stomach. Just as the soldier is the protector of the country on the borders, similarly the farmer is the saviour of the people from hunger in the country. We are public servants without government appointment. The government should ensure that whether it is the family of the farmer or the worker, he gets a minimum income so that he can lead a dignified life. So that they can provide their children with good education and take advantage of good healthcare facilities. It is the responsibility of the state to ensure that all the workers and peasants are provided with all the basic facilities needed to lead a dignified human life. For this right to be realized in practice, the farmers will have to struggle together with the workers.

MEL: We are grateful to you for all this valuable information. We stand shoulder to shoulder with you in the struggle to save the agricultural sector from privatization and destruction.


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