Modi Government Nearly Trebles Paddy Procurement At MSP In Punjab, But Farmers Insist On Legal Backing For Pricing Regime

The Narendra Modi government is fast mopping up the paddy crop cultivated during this year’s kharif season, which has begun arriving in various parts of the country following harvest.

But that has not helped it to end the protests in a few parts of the country, especially Punjab.

A Press Information Bureau press release said that until 12 October, the government had procured 4.85 million tonnes (mt) of paddy with a major share of nearly 3 mt coming from Punjab.

Paddy procurement in Punjab by various government agencies has nearly trebled this year from 1.1 mt procured last year.

However, there is a clear lack of coordination among various government agencies in uploading data on procurement. Data with Food Corporation of India show that 2.95 mt of paddy had been procured until 12 October.

The Centre has been quick to procure paddy from Punjab farmers this year in view of protests against agricultural reforms through three separate legislations.

The legislations give farmers the freedom to sell their produce wherever or to whomever they want and to enter into contract farming.

The third aspect of the reforms is allowing farmers to sell their produce freely during peak harvest season as the Centre has removed the cap on the amount stocks traders or wholesalers can hold for a specified commodity.

Opposition parties, particularly the Congress, that is in power in Punjab, have unleashed a campaign against these reforms, saying it would result in ending of crop procurement by government and the minimum support price (MSP) system for 23 crops in the country.

The Centre has made it clear that it has no such intentions and has also made it clear that the old Agricultural Produce Marketing Committees (APMC) would co-exist with any new marketing system that might come up following the legislations.

With the backing of the Congress, and now with the Shiromani Akali Dal joining them after exiting the National Democratic Alliance (NDA) government, farmers in Punjab have been protesting for over two weeks now.

In particular, they have resorted to blockade of trains that has resulted in Punjab staring at a shortage of coal for producing electricity. The protests are continuing despite the Centre procuring paddy quickly.

However, there has been an easing of the stand by both the Modi government and the farmers. The Centre has now come forward to hold talks with them, while farmers too have agreed to talk to Union Agricultural Secretary Sanjay Agarwal.

Though talks are scheduled today, it is anyone’s guess if there will be a meeting point as the farmers are demanding a legal backing of MSP for them. The MSP is, till now, only a reference price for the government to decide on market intervention.

Usually, the Centre intervenes in the market to buy any commodity if its prices drop sharply below the MSP.

However, wheat and paddy are exceptions since the Centre procures them for its buffer stocks and for distribution through ration shops and various welfare schemes.

According to the 2015 High-Level Committee Report on reorienting the role and restructuring of Food Corporation of India, by former union minister Shanta Kumar, the Centre’s MSP system operates primarily in wheat and rice, that too in select states such as Punjab, Haryana, Andhra Pradesh, Madhya Pradesh and Chhattisgarh.

This explains the concerns raised in Punjab by farmers, aided by the campaign of the Congress and Akali Dal.

But the Centre may not be able to provide any legal backing to the MSP system as such a guarantee could prove burdensome for it.

Industries, which are end-users of these commodities, say that giving legal backing to MSP could result in more harm for farmers as they can refrain from buying commodities in a market distorted by such a price support system.

“For the rabi season, wheat MSP has been fixed at Rs 1,975 a quintal (100 kg). But we can get wheat imported from abroad at around Rs 1,800,” said a roller flour mill owner not wishing to identify himself.

Expectations are that the Modi government could buy time by agreeing to consider and probably make the farmers realise the benefits of the agricultural reforms it has implemented as part of the Atmanirbhar Bharat Abhiyan (self-reliant India campaign).

The reforms were announced as part of the Modi government’s efforts to spur the economy that was affected by the onset of the coronavirus pandemic, which has so far affected 71 lakh people of which 1.09 lakh have succumbed to it.