Why Farmers are Against the National Policy Framework on Agricultural Marketing

The National Democratic Alliance 3 government is beset by unresolved agrarian issues. Despite launching various schemes aimed at appeasing the farmer and peasant communities, including digitised marketing, the government seems to be hitting one road block after another.

As it is, the farmers have been unhappy given the government’s failure to provide a legal guarantee on the Minimum Support Price of all crops. The fact that the almost year-long farmer protest that began in February 2024 at the Punjab and Haryana borders continues even today is a testament to this. The deteriorating condition of a 70-year-old farmer leader who has been on an indefinite fast for more than a month has added a sense of urgency to the volatile issue.

The farmers’ demand is the same as before: a legal guarantee on the MSP. The crackdown on the farmers over this and the demand for fair compensation, resettlement, and rehabilitation for lands acquired in BJP-ruled States has deepened their mistrust of the Central government. One of the principal reasons for the breakdown is the abject lack of understanding of what plagues the farming community and the lack of consultation with stakeholders.

Backdoor entry?

The latest run-in involves a National Policy Framework on Agricultural Marketing circulated by the Union Ministry of Agriculture and Farmers’ Welfare. This policy is the first of its kind proposed after the three farm laws were withdrawn in 2021.

Also Read | Minimum Support Price: A question of how, not why

The draft was put up on the Ministry’s website on November 25 and comments were solicited from interested stakeholders within a time frame of 15 days. The limited window for responses evoked some heartburn but it was the least of the issues. Farmer and peasant organisations feel that the entire proposal is a backdoor tactic to bring back the three farm laws that were withdrawn after a protracted one-year-long protest in 2020-21.

If implemented, the policy would come into force from the date of its notification and remain effective for 10 years.

The rationale

The overriding rationale of the policy is that despite accelerated agricultural growth in the past two decades, attributable to horticultural crops, livestock, and fisheries, the small and marginal farmers involved were unable to reap the benefit of the bumper production. And this was because of—according to the policy’s own understanding— fragmented land holdings, high cost of production, and lack of demand-driven production, accessibility to good markets and optimum realisation of value for produce.

Farmers’ income, the policy reasoned, could improve if there was integrated output management, application of digital public infrastructure like blockchain technology, use of innovation, capacity building, and professionalism. There was an “information asymmetry” in marketing the produce and undertaking market-driven production. The idea was to mitigate the “uncertainties of market and price”.

The policy critiques the present Agricultural Produce Market Committee system that exists in 27 States and three Union Territories. Organised wholesale marketing was undertaken through 7,057 wholesale regulated markets in these States and UTs, of which 1,100 markets became non-functional.

The density of these markets varied. In many States, market committees and markets were notified but market yards and infrastructure were not established. Market density was critical for providing markets to farmers closer to their farm gate or villages.

Other reasons cited for justifying a national agri-marketing policy were that there was no data available on the extent of unregulated wholesale markets and infrastructure facilities, nor was there any on the number of wholesale markets under municipal councils or places for fee collection.

The protests

On December 23, farmer and peasant organisations held protests across the country against the proposed policy. They said the policy was a ploy to bring back two of the three rejected farm laws—related to mandi marketing and contract farming.

At the call of the Samyukta Kisan Morcha (SKM) that spearheaded the year-long farmer protests in 2020-21, farmers from over 500 districts sent memorandums through the District Collectors to President Droupadi Murmu seeking her intervention to facilitate a discussion between the government and the farmers.

The immediate context was the deteriorating condition of farmer leader Jagjit Singh Dallewal who has been on an indefinite fast since November 26 and the contentious agricultural marketing policy. On December 26, the SKM wrote to the President’s office requesting an appointment with her.

Organisations such as the All India Kisan Sabha (AIKS), which was among the key farmer and peasant outfits involved in the “kisan siege” of Delhi four years ago, say that the policy is a conspiracy to sacrifice farmers’ interests and benefit corporate ones. Small producers, they argue, will be adversely hit if the policy were to become a reality. Not just that, the policy seriously undermines federal principles, especially as agricultural marketing is a State subject. According to the AIKS, the spirit of the draft is to “dismantle the power of the State governments and abolish state supported market infrastructure, erode the role of the Agricultural Produce Market Committees, thus leaving small and marginal farmers at the mercy of private trading cartels”.

The policy, many organisations feel, would push out small producers from agriculture. Asha Kisan Swaraj, a broad front of various farmer organisations, said that even though the framework recognises that agricultural marketing is a State subject under Entry 18 of List II under the Seventh Schedule, the drafters did not hold any consultations with State representatives before framing the policy.

Like the AIKS, the Asha Kisan Swaraj was also part of the broader protests in Delhi.

Farmer leader Jagjit Singh Dallewal rests during his hunger strike, at the Khanauri Border in Sangrur district, Monday, December 23, 2024.
| Photo Credit:
PTI

Competition in the form of multiple channels of marketing, it said, could provide visibility on trade transactions but this required government oversight and regulation. Such channels of marketing could be exploitative and deceitful as well.

Moreover, the policy completely ignored the demand for a legal guarantee of MSP, which was one of the principal demands of the farmers. In addition, the draft did not spell out any commitment by the Union government to bridge marketing and auxiliary infrastructure gaps by financing and supporting the State governments.

On the other side, the policy has been hailed by certain circles, as “a consultative and persuasive way” to push market reforms. The AIKS pointed out that big business was opposed to a legal guarantee to MSP because the strategy was to produce at the cheapest rate, do value addition, brand the product, and market it.

Features of the policy

The policy recommends setting up of private wholesale markets, direct farm gate purchases, replacement of traditional market yards with corporate warehouses and silos, and fixing a unified market fee and trading licence system.

It proposes that big corporations can purchase directly from farmers, bypassing the APMC market yards.

Interestingly, the policy document acknowledges that there is no independent study about the functionality and benefits accruing from the existing 125 wholesale private markets present in five States and the challenges faced by private owners in the operation and management of these markets.

The vision of the draft policy framework is to build a “vibrant marketing ecosystem where farmers of all categories find a market of their choice to realise the best price for their produce, to be accomplished through improved efficiency, enhanced competition with multiple marketing channels and no monopsonic [single buyer] market structure, [but with] transparency, infrastructure, and adoption of innovative digital technology and also agri value chain based marketing.”

Its stated mission is to bring in efficiency and competition. For this, it aims to develop multiple channels for marketing, involving the private and the public sector. It pushes for a set of 12 reforms in agricultural marketing laws and policies that include setting up of private wholesale markets, direct purchase by processors, exporters, organised retailers, bulk buyers from farm gates, declaring silos/cold storage as deemed market/yard, allowing establishment and operation of private e-trading platforms and contract farming.

The AIKS pointed out that handing over storage infrastructure to private corporations eliminates a critical safety net for farmers during price volatility, denying them any space for bargaining over prices.

Federal foibles

The policy had no regulatory clause that would make it mandatory for traders to share a portion of the surplus with the producers. It claims to provide a standardised policy and proposes an “empowered agricultural marketing reform committee” of state agricultural marketing ministers on the lines of the Empowered Committee of State Finance Ministers on GST.

This, farmer organisations say, is to “push the States to adopt the reform provisions in the State APMC Acts, notify the rules, and build a consensus among the States to move towards a unified national market for agricultural produce through a single licensing/registration system and single fee”.

It is also feared that with the proposed Empowered Committee, the Centre would end up dictating terms and conditions and render State governments helpless and voiceless.

The draft policy states that proposed committee would strive to “bring a law for agricultural marketing, uniform market fee, and (resolve) other issues for the benefit of farmers and barrier-free agri trade with an approach of ease of doing trade”.

The policy makes a push for Farmer Producer Organisations in a big way. It suggests that cluster-based FPOs can enter into contract farming arrangements with big business houses.

It categorically says that that States and Union Territories that may have notified agricultural marketing policies will need to tweak their policies in consonance with the national framework to achieve the goal of making the “best possible market and price” available to the farmers for their produce.

Rajinder Chaudhary, Professor of Economics at Maharshi Dayanand University, Rohtak, says that the policy is premised on the grounds that it would give farmers a choice of channels for sale and treat APMCs as if they were government companies.

“APMCs are not government markets. The APMC is not a nuclear industry that private enterprise cannot enter there. Middlemen can be private individuals. The policy seems to be saying that rather than regulated markets, we should have unregulated markets,” he said. “But the question is how can we have unregulated markets?”

He further explained that the argument in the policy is foregrounded with data on the lack of regulated markets. Where each APMC should serve an area of 80 square kilometres, right now there, one serves a 407-square kilometre area, he said. “But they forget to answer who is responsible for this. It is the state that should provide this.

“In order to justify contract farming, they say they wish to give price assurances on the concept of the Fasal Bima Yojana. As it is, the farmers are not getting their dues and the FBY itself is a failed experiment. As an economist I fail to understand that (sic) if the premium is to be paid primarily from government funds, then why can’t the government itself pay the farmers who are adversely affected.

“They (the government) recognise that agriculture is a State subject, then move on to a GST kind of regime that is centralised. If it is a State subject, let it be so. They issue full page advertisements for everything; why couldn’t they publicise the policy draft and approach farmers’ organisations for larger feedback?

Farmers raise slogans as they block a road during the statewide “bandh” called as part of their ongoing protest, near Golden Gate in Amritsar on December 30, 2024.
| Photo Credit:
PTI

“The policy is a ploy to bring back at least two of the discredited farming laws, pertaining to APMC mandis and contract farming. This 35-page document gives no idea that there were these three laws that were repealed and that there was a year-long farmers’ agitation against them,” he said.

The draft, he stressed, is a reintroduction of the farm laws in the name of providing marketing channel options to farmers. “The policy pushes for unregulated markets. Private enterprises are already in that area. At present, the APMC mandis do not bar private enterprises. But they are regulated markets. Further, the policy says that the landholding size is small. Now that cannot increase in India. But contract farming also cannot help farmers. This policy is meant to be a national policy, uniform all over the country. What happens to the rights of individual States who opt to stay out?,” he asked.

“Kerala for instance doesn’t have APMCs but has other regulated markets. They say APMC mandis do not provide any services but serve as cess collecting offices. Who is responsible for this? It is the State that is. They are leaving the farmers to the vagaries of the market and weather. It is not in the interests of consumers either,” Chaudhary said.

When asked about the implications of the policy if it were to come into effect, he said that there was sufficient evidence in the health and education sectors of the consequences. “Those who are well off are accessing private services whereas those who are poor opt for government services. The same would happen here. Large farmers would move to private enterprises and would be in a position to negotiate better terms of trade whereas small farmers would rely on the APMC where their voices would not be heard,” he said.

Nowhere in the world have farmers got good prices for their produce without government intervention, he said. “It is in the nature of agriculture. Demand for food is inelastic whereas supply of food is variable. This leads to a huge variation in price. Food is a basic item. Income elasticity of food is less. Left to market forces, agriculture will not keep pace with the rest of the economy. State intervention is a must,” Chaudhary told Frontline.

Agricultural economist Vikas Rawal has a slightly different take. While he agrees with most of what Chaudhary says, he adds that the proposed policy is “full of hot air, badly drafted, and meaningless”. Rawal says: “There is a section on market fees where there is no mention of the market. There is no specific direction in the policy. It does not address the key demands of farmers. It has no blueprint on how investment will be mobilised.

“There is a lot of talk of improving agricultural infrastructure but no commitment to putting an additional penny to it. It does not say that the government plans to address the problems it identifies.

Also Read | Farmers versus Modi government: Another winter of discontent arrives in Delhi 

“It at least recognises agricultural marketing as a State subject. To form a committee led by States is not a bad idea. It clearly demonstrates that what was done in 2020 was a mistake,” he said.

On the policy’s claim of growth in agricultural production and specific growth in horticulture, livestock, and fisheries, Rawal told Frontline that there is no data to back these claims. “There are no crop cutting surveys for horticultural crops. There is some integrated sample survey for estimated milk production. We have not been able to find data for such surveys from any district. These surveys are a hoax.

“If a survey is being done by the States, there should be an allocation in the budget for such surveys. We have filed RTIs but have not been able to get it [information] from a single State. Every State produces a [certain volume] of milk production. We have not been able to get a sample of even a blank questionnaire. We don’t have data on fish landing as well. In all three sectors, the data is suspect.

“I suspect that because of the slowdown in the manufacturing sector, data is being manipulated to show growth in other sectors. These are old tactics. Even in forecast crops, the estimates are produced several times in a year. A lot of data is being manipulated in agriculture to show increased production.”

He further explained: “Whether there is fertiliser or not, rain or not, nothing matters. Official data shows that there was a shortage of DAP fertiliser. But agricultural production strangely keeps growing. Their argument is that agricultural infrastructure is poor and farmers are unable to get the benefit. Nobody would disagree but the question is: what is being done about it?

“The government has no idea how much investment is required or where that investment is going to come from. APMCs are not perfect. But their problems are not being addressed. Instead of strengthening regulation, the policy advocates an unregulated market structure,” he added.

As of now, the controversy over the policy doesn’t seem likely to dissipate, with farmers regrouping on their demand for a legal guarantee for MSP and also stepping up pressure against the proposed agricultural policy.