Farmer Protest Perspective: The Fight Is No Longer between the Good and the Bad, but between the Corrupt and the Rapacious
RN Bhaskar 15 December 2020
The farmers’ agitation has thrown up some rather perplexing questions. Unfortunately, until now, few have dared to articulate them. Politicians do not want to speak about such things because most of them have themselves been beneficiaries of corruption. So, when farmer leaders are accused of corruption, they cannot defend themselves.  But, surely, they cannot submit to a more dangerous game being played?
The truth is a lot more complex. There is growing discomfort that few are willing to talk about the centre's culpability.
True, Agricultural Produce Market Committees (APMCs) are corrupt. But so is the Food Corporation of India (FCI)—several times more.  Yet, FCI is allowed to procure more grain than even the storage capacity in India (see chart).
APMCs are managed by states. FCI is managed by the Centre.
The Centre seeks to abolish state corruption. But it permits Central corruption and has not touched FCI.
The Pot and the Kettle
The entire game appears to be one in which the Centre is trying to stop state political sources of finance, using corruption as an excuse.  
It is India’s Bo Xilai moment. That is how many in China perceive the moves against corruption. They recall how the China premier Xi Jinping managed to remove Bo Xilai—one of his most formidable political contenders—by slapping corruption charges against him.
Like in China, so in India. As the old saying goes, in the public bath, everyone is naked (hamam mein sab nange hain). It is extremely easy for a powerful politician to accuse another of corruption, without actually addressing the source of corruption. 
Opposition states are against the contentious farm legislation because, deftly, the Centre has tried to convert a state subject into a Central domain. Worse, it sought to keep disputes related to agriculture outside the domain of courts, as pointed out brilliantly by noted journalist P Sainath
With opposition leaders incensed, farmers livid and the past promises of the government ringing hollow, I expect this agitation to blow up, big-time.
Suddenly, non-Bharatiya Janata Party (BJP) and even some BJP ruled states have found an issue around which they can rally. 
Why Exempt the FCI?
To understand this, it is necessary to look at the three pieces of legislation relating to agriculture, which the farmers want repealed. They talk about the need for farmers’ produce being sold through commodity markets, and not through APMCs. They talk about contract farming, but don’t permit farmers to give their land on lease to another farmer or corporate. The only part of the legislations that appears to be without major flaws is the one which allows for the free movement of farm produce across the country. 
First take the bit about commodity markets. If all agricultural produce must be sold through commodity markets, why was the law not extended to cover the Food Corporation of India (FCI)? It is the largest procurement agency in the country. So, if selling to the APMCs is bad, why is sale to the FCI good?
And why is it that even after six years in power, the warehouse storage for grains continues to remain inadequate, while procurement continues to soar (see table). If you analyse this situation, you find that there is a close linkage between corruption and the penchant for procuring more grain than the warehouses can store.
In 2010, the Supreme Court was furious to learn that huge quantities of grain were lying in the open, exposed to the elements and pests.  It ordered that all grain that could not be stored should be given free of cost to the poor. Sharad Pawar, then Union agriculture minister, informed the Supreme Court that he would try respect its orders, but found reasons not to distribute the grain to the poor. It gradually became known that the grain was of such abysmal quality that the poor would have revolted, and malpractices of FCI would come to light. 
According to well-informed people in the government, FCI often purchases second (or even third) rate grain from farmers at first grade prices.
Most of the beneficiaries are large farmers, often in Punjab, Haryana and Western Uttar Pradesh (UP), though well-connected farmers in other states also benefit. Small farmers are often ignored, leaving them to sell at distressed prices, despite the minimum support price (MSP).  
The difference between paid price and the price-that-ought-to-have-been is shared by the farmer, FCI officials and other politicians. The pickings are large. At other times, FCI is persuaded to revise the fair and acceptable quality (FAQ) for grains, and then justify the procurement of all rain-damaged crop. This crop is then sent to flour mills, so that the bad quality grain gets mixed up with good quality grain. As it happens, most of the flour mill owners are also farmer-politicians. They know the quality of grain that goes into the flour mill and ask for a subsidy from the government. They get the additional money too. Thus, there are multiple benefits when it comes to FCI’s procurement—big farmers, Central and state government officials and politicians are all major beneficiaries. 
By abolishing APMCs the government cuts off the incomes of state politicians but keeps intact the incomes and benefits accruing from the Centre as largesse to those who play ball with it. It strengthens the clout of the Centre even while weaking the financing capability of the states. Both sides are corrupt. It is only a story of the pot and the pan. 
What about the WDRA?
There is another angle to this. In 2007, the Union government tabled the Warehousing (Development & Regulation) Act (WDRA).  Then it was forgotten because neither the FCI, nor the state governments wanted it. 
Then, possibly as a reaction to the Supreme Court’s harsh strictures against the government’s ability to provide storage for grain, the files were dusted and re-tabled and the WDRA got enacted on 26 October 2010 vide Government of India Gazette Notification dated 26th October 2010. 
The WDRA is a great concept because it is a statutory authority under the department of food and public distribution. It provides for the development and regulation of warehouses, the negotiability of warehouse receipts, and the promotion of orderly growth of the warehousing business in the country. The mission of the authority is to establish a negotiable warehouse receipt (NWR). 
Despite over a dozen emails to the WDRA over the past six years requesting for the status of warehousing under its ambit, this organisation has chosen to maintain a studied silence.  Finally, a document of the WDRA emerged in one of the NCDEX annual reports and that is where one gets the information that it has a cumulative capacity at 14.1 million tonnes (see table). 
Now compare this number with the 63.4 million tonne storage that already exists with the FCI, CWC (central warehousing corporation) and the SWCs (state warehousing corporations). Logic would demand that the Centre introduces a law to amalgamate all the warehouses under the WDRA. But it chooses not to do so and attacks only the APMCs. 
Logically, again, the government should be asking FCI to procure grain for the public distribution shops (PDS) from commodity markets. Let the farmers sell to farmer producer organisations (FPOs) or to WDRA storage units. There, qualified assayers give a receipt for the quality and the quantity of grain given by the farmer. If the quantity is too small, the FPOs act as aggregators.  
The farmer, with his dematerialised receipts, can encash the negotiable receipt with any bank on the basis of current prices on the commodity markets, or sell in future markets, or let the grain lie with the warehouses till he is ready. He can sell part of the grain stored, or the entire lot. The responsibility of keeping the grain intact is that of the warehouse. 
That would have cleaned up agriculture. With the volumes of rice and wheat, the commodity markets and the warehouses would have got more business, and there would have been a seamless approach to price discovery.
If the government wants to offer an MSP (not just for rice and wheat, please), it can ask FCI to purchase the grain through commodity markets at the support prices. That will ensure that traders are also compelled to pay the same prices. 
Today, FCI collects grain only from well-connected farmers, leaving smaller farmers to sell at distress prices. That distress would have gone away had the WDRA been given teeth and the warehouses of all government agencies amalgamated under the WDRA.  
Clearly, farmer prosperity is not the key issue that the government seeks through the three controversial legislations. 
Farm Distress
There is no denying that the farmer is distressed. Just look at the data provided by National Bank for Agriculture and Rural Development (NABARD). It shows that farmers earn as much from daily labour as they do from cultivation. By itself, cultivation does not sustain the family.
But observe the figures closely. Livestock gets him only Rs711 a month. This is absurd. If there is a good cooperative, a farmer should be able to earn at least Rs100 by way of profit (income less expenses) per cattle per day for 300 days a year. That means that each cattle head should be giving the farmer Rs3,000 each month.
That he does not get this amount is because the government has not made cooperatives compulsory. UP, which is the largest milk-producing state, does not encourage cooperatives.  It pays its farmers Rs14-Rs18 per litre when cooperatives pay upwards of Rs26 a litre. Since buffalo’s milk has more fat content, each buffalo can fetch around Rs50-Rs60 per day. The ban on cattle slaughter makes things more difficult for farmers because he now cannot even get the Rs20,000 per cattle head he used to get when it stopped giving milk. 
UP is a BJP-ruled state. Why has it not promoted farmer welfare there? At Rs14-Rs18 the farmer makes profits of just Rs2-Rs6 per litre. At Rs26, he would make another Rs8 per litre.  The farmer would have quadrupled his income.  
That is why the sanctity of doubling farm incomes begins to ring hollow. 
The three farm legislations are weapons of political marginalisation of opposition states. They are not for farmer empowerment, or for helping agriculture. Some sections may benefit. But not the entire farming community. And not agriculture. 
Clearly, if the government is serious about improving the lot of farmers and of making agriculture healthier, begin with milk cooperatives in Uttar Pradesh, and compelling FCI to purchase from commodity markets first. The rest can follow later. 
(The author is a senior journalist.)
3 years ago
The government is not keen on solving essential problems, such as warehousing and cold storage, so much wastage takes place not just in FCI, but elsewhere. There is no strategy to wean farmers away from some crops, to prevent glut in these commodities. Farmer representatives are talking of how private companies have planned for large grain silos, why does'nt the government do that ? Why have'nt farmer cooperatives been encouraged and financed, when we have models like Amul before us ? Secondly to expect farmer agreements to be settled by IAS type bureaucrats, that too without access to courts, is ridiculous. The IAS, sad to say, is corrupt, callous and extremely pliable to political pressure, thus incapable of providing justice. Whether the Appellate Authority's decision can be challenged in courts thereafter is also not clear in the Acts, which is wrong, because every other appellate authority can be challenged in the SC, what makes farming agreements which are essentially commercial agreements, different ? Thirdly, the government has abdicated its responsibility towards food price control through these Acts. There are other points in the Acts which do not inspire confidence, a patient reading proves that. Finally, the reluctance to discuss the Acts in Parliament by cancelling the winter session supposedly because of Covid, yet having Union Ministers campaigning wholeheartedly at the same time in Bihar, tells us how much the government is avoiding its responsibilities.
Meenal Mamdani
Replied to jaishirali comment 3 years ago
Very well said.
This govt has said one thing and done another so often that there is a massive trust deficit.
I found this 45 min discussion very informative.
3 years ago
What I understand is
1. APMC is corrupt and current law can possibly address it
2. FCI is corrupt, but current law doesn't address it
3. There is also corruption in milk procurement, its not being addressed.

So why are we opposing the current law? lets demand laws to address other sources of corruption.
3 years ago
1. It is precisely due to the reasons cited by the writer Private & corporate should be allowed to compete against APMC within and outside in procurement. Let the farmer decide to whom he should sell.

2. Since Govt. resources are limited they want to encourage private sector to get more involved in infra ( warehouse & cold storage etc) and to facilitate that these laws are needed.
3. The writer seems to be living in fool’s paradise if he think court will facilitate quick decision on disputes of farmers with procurers. We are all aware of the corruption in lower judiciary and the humongous delay in cases. It would be better to argue for farmers’ tribunals rather than depend upon courts. SDM with all limitations is better than that.

4. It is better that govt. extend incentive to farmers of these two states to divert to less water guzzling crops.

The writer seems to be from JNU and need tutoring on better debating.
Replied to baskarans53 comment 3 years ago
Bhaskaran if you are correct and having genuine concern please take your arguments to the discussion tables with Govt.They are keen to discussclause by clause.
This country is fed up of people doing opposition & criticism in their ivory towers.
3 years ago
MONEYLIFE would do well to send this Article-exactly as it is-to our Honourable PM and ask him to send pointwise response.
Lets see what happens.
Well done R N BHASKAR!
Replied to ssk.pab comment 3 years ago
Why Bhaskar and his likers are not coming upwith/conveying these points at least thru agitating Farmers to the discussion tables Govt. is so openly asking for.
U & me Harping here in isolation serves no purpose
3 years ago
This article highlights some unknown aspects of the ongoing agri reforms. However this article is too long and could have been edited for more clarity. There are some good suggestions like WDRA reform, FCI reform that are not standing out due to the dispersed nature of this article. The topics like China's Bo Xilai style accusations, UP milk cooperatives, state level procurement being targeted, etc that could have been separate articles. It would also have been great if the author had quantified and compared the state level procurement and the FCI's procurement, to highlight the inadequacy of the current reforms.
Meenal Mamdani
Replied to shankar_1979 comment 3 years ago
Seems you know quite a bit about it.
Why don't you and the author of the earlier article get together online and divvy up the work between you and post the detailed articles per subject so we all learn from this.
Replied to Meenal Mamdani comment 3 years ago
Only 6% of all farmers in India benefit from MSP and majority of these beneficiaries are from Punjab and Haryana. Their vested interest in this agitation is thus clear. Fact No.1: India is having surplus wheat and paddy. Fact No.2: Paddy and Wheat cultivation requires unsustainable amounts of ground water resources . Fact,No.3: Without adequate storage facilities and low demand, it is unrealistic for any agency, whether State or Centre, to go on procuring grains and allow it to rot. Why are Punjab and Haryana farmers not diversifying into other crops? Also, why are they not accepting Govt's offer of meeting all their concerns (including a written undertaking on MSP), but stubbornly insisting on repeal of the laws which benefit several crores of other farmers? Why this cussedness?
Meenal Mamdani
Replied to B. V. KRISHNAN comment 3 years ago
To answer to your first question. There is a political reason for it similar to why farmers in Western Maharashtra are heavily invested in sugarcane in a region low on water resources.

As far the second question, it is because farmers don't trust Modi/BJP govt. They worry about a hidden clause in the huge bill that would negate promises given to the farmers. GOI should withdraw this Bill and come back to the parliament so all parties can discuss it before passing it into law..

Replied to Meenal Mamdani comment 3 years ago
So, are you saying that if the reason is political, it is justified? You can't justify one wrong by pointing out another wrong. Moreover, we are not in surplus in sugarcane like we are in cereals. As for farmers not trusting Modi/BJP, may I point out that they are in this present plight only because they trusted another political regime - for past several decades.
Replied to Meenal Mamdani comment 3 years ago
How ur so sure that all farmers are voicing opposition to Bill. Pl keep in mind that these days is the vested interested ones who muster up a louder voice
3 years ago
Thanks for shining bright light on the funda behind these farm laws. What about the Corporatization aspect of the law that is being largely talked about.
Replied to vinnyjm comment 3 years ago
Sorry to say that this article conceals, more than it reveals! For instance, it conceals the fact that APMC is a state subject and has nothing to do with Central Govt. Second, it states wrongly that APMC is abolished by the bill. This is totally false because Centre cannot enact on a state subject. This article, under guise of giving lot of irrelevent other information, is trying to earn readers' trust to make them believe this is a bad law! Who is pushing this agenda thru this writer?
Replied to B. V. KRISHNAN comment 3 years ago
By these laws, Central Govt is aiming at nullifying the presence of APMCs in the short to medium term. The author has done a fair job by not getting into the true but controversial Corporatization aspect of these laws.
By introduction of these laws, in all probability, there will be centralization of corruption.
Replied to vinnyjm comment 3 years ago
So is it ok to let the middlemen continue to exploit the farmers? Without these new laws, farmers will forever be fleeced by the middlemen. Centre has nothing to do with the farmers daily transactions - whether they sell at APMC or elsewhere, then how can you allege "centralization of corruption". Corruption is right now happening at APMC yards - by middlemen fixing rates and earning commission. But I am sure you wont agree to this, because one can't wake up a person who pretends to sleep!!
Replied to B. V. KRISHNAN comment 3 years ago
If these laws go unchallenged, there won't be any reason for the farming community to continue what they do. The result will be a demonetization like situation in the medium term.
Even the blind can see where this govt is heading to.
3 years ago
Came to know that an hectare land in the states such as punjab, haryana... costs around 2.5 crores!!!... so, wondering whether these people need/deserve any MSP/ subsidies? and for how long one can depend on these so called MSP/subsidies...when most of the Industries are already/on the way of 'on-demand' basis else they may completely wipe out at one surgical strike by nature /covid like random events? - are we learning any from the current covid situation on the ground to face the fact or still looking for conformity/certainty?
3 years ago
APMCs abolished? Really? MoneyLife is now easy to predict for the tone of the articles! Pathetic! You can as well convert moneylife to PoliticalLife
3 years ago
Sorry to note MoneyLife allowing such motivated articles to be published in its Newsletter. And such long meandering article. At least it should have edited to bring out crisply the crux of the allegations, motivated as they are. FCI has been in existence through many Governments and its working has been subject to CAG Audit all through. The parliamentary committees have enough opportunities to go into its shortcomings and drag any Govt over the coals. If there has been no discussions on FCI in the context of the Farm Laws, it is either that such issues are irrelevant in that context or like the author says "Hamam me sab nange hai". Please do not convert MoneyLife into another "The Wire" or similar paper and compel us to unsubscribe.
Replied to kcganga2108 comment 3 years ago
I agree. In its thrust as an anti-establishment mouth-piece, it is all right for Moneylife to voice opposing views, but this time they have failed to do the basic fact-check! Sorry to say that this article diminishes my regard for ML for being independent!!
3 years ago
The article is thought provocating. There are deeper issues to be considered.

Reforms don't happen all at once.
One step at a time.
Sharad Pawar as agriculture minister (Centre) kept writing letters for years to State Chief Ministers to reform these exact laws. Not much happened.

I would request the author to write an article on the history of agriculture reforms over the last 15/20 years, and point out what else needs to be done in the next 5/10 years.
Replied to amey153 comment 3 years ago
3 years ago
What is your reaction to the congress demanding cash instead of grain given by Govt during covid relief. Which was actually a right step to use disaster as opportunity ti settle the FCI storage issue as well as fiscal effect. Farmer leaders demanding 15 lakh in account promise a fakepropaganda of confused Congress. Even when he has provided so much free during crisis. APMC are not closed only an additional option to sell is given and mandatory corrupt option has been removed. Essential commodities Act actions also have been made optional with transparent process. So don't you think this agitation is by corrupt to continue the corrupt regime. And surprised that you also want to be part of this campaign of supporting corrupt.
3 years ago
This cannot be called as an article, its just a motivated propaganda pamphlet with twisted and false narratives, Its just like pointing some other corruptions, mismanagement and saying address that first and come here, is nothing but absurd. If you are really genuine then you should have asked your are trying to address the corruption in APMCs and solving one problem, that is good, please address the the corruption in FCI etc as well. But you don't want that. The article clearly shows that you are party to the ongoing corruption some where or you are a beneficiary, otherwise this fake news pamphlet cannot make it as an article here. Anyway I am seeing these type motivated half baked fake news on money life these days repeatedly. So I would rather unsubscribe to save my time and you can continue to peddle the people who enjoy reading these and appreciate.
Replied to bvgreddy.library comment 3 years ago
Agree 100%. This is another motivated attempt to derail the much wanted reform, purely to serve vested interests of a few people.
Replied to bvgreddy.library comment 3 years ago
You are absolutely right. The journalist thinks readers are fools and will not understand his attempt to change the goal post. He should have stuck to the farm laws and not gone into other issues which can be taken up separately.
3 years ago
Very good points - the Government must first cap the maximum amount of grain that FCI can stock. Procurement by FCI should be capped to the amount required to achieve the target food safety buffer only.

To ensure minimal impact to farmers, the Government must allocate the amount it procures to farmers against their Aadhaar card with say a cap of 10 tons per Aadhaar and payment direct made into the Aadhaar linked bank account.

As agriculture is a state subject, Central Government should immediately stop interfering with APMCs and instead permit state governments to procure and store food grains
3 years ago
This article is full of untruths and half-truths. For instance the author repeatedly accuses the Govt of "abolishing" APMCs. It is a total false-hood meant to mislead public. PMC being a state subject, how can a Centre law abolish it? He says "despite MSP, farmers are selling at distress prices". If So, why are farmers clamoring for MSP? Agreed, FCI is not without corruption which dogs every govt organisation - state or centre. To end it, the monopoly of FCI should be removed by allowing private players. In almost every other activity, private capital is allowed, then why not in agriculture? Agreed, grain is rotting in FCI godowns, and that is because the quantity stored is many times more than what is needed. Yet Punjab-Haryana farmers insist on producing water-guzzling wheat and paddy, sell it at high MSP to FCI thru corrupt practices, then burn the stubble at enormous health cost.
And, the Central laws nowhere bans present practices. It only alows farmers a choice. If he does not want to avail of the alternative offered by the lay, he has nothing to loose, but he has everything to gain by at least allowing the new laws to take effect and see how it works.

Replied to B. V. KRISHNAN comment 3 years ago
Can govt. correct the flaw in UP?
Binu S. Thomas
3 years ago
Superb piece. Gives an entirely new perspective to the farm laws debate.
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