An unfiltered take on why private buyers in the farming sector are not bad
Videos and images of farmers sitting on the roads in the extreme cold have pained almost most of us. After all, they are our “Anndatas.” While the farmers are adamant on repealing the laws, the government has tried to propose amendments in laws. It is certain that both the parties are not going to back down any soon. So, should these demonstrations continue to take place? What about the cultivation of crops for next year, what about the challenges residents of Delhi are facing due to protest?
Let’s take a look at one of those laws which allow private buyers to buy produce from farmers directly.
The APMC Act was enacted in 1950 which freed the Indian farmer from the monopoly of the local trader and gave substantial benefits to the farmers. But it also created oligopolies. Each trader built relationships with a set of farmers in which traders used to provide credit, the farmers used those credits during the farming and then used to sell their produce to the specific traders so that their credit can be adjusted against the sales. In most of the cases, these traders became the conduit for the sale of farmer’s produce at MSP. It is almost impossible for every farmer to reach MSP centres to sale their food grain. Hence, this practice reduced the net received by farmers to below MSP (do you really think traders wouldn’t have asked for off-the-books commission).
Several expert committees, experts and conferences since the 1980s have recommended introducing more buyers for farm produce, which would reduce the exploitation of farmers. The logic is very understandable. If there would be more buyers for a product, the farmers would have a chance to negotiate for the maximum price. However, there could be an argument that what if the demand of the product is less than the supply? The farmer might suffer and have to take any price that their buyers offer. But then the government says, that the farmers can come back to APMCs and they will get MSP there.
People have brought the model of Bihar in the discussion where APMC Mandis was abolished in 2006. They say that the farmers still struggle in Bihar despite it being an open market. In fact, farmers of Bihar travel to other states to sell their produce. Here, it is to be understood that the Bihar government might have destroyed the Mandis, but, they have not encouraged the private buyers efficiently. That’s why there is a lack of private buyer in the state.
When private buyers start buying produce across India, the problem of Bihar can be solved as private buyers from other states might visit the state and buy produce there.
Is private investment that bad?
One example has become very common that privatization of education sector and telecommunication has finished or lowered the efficiency of government establishments. Hence, the private takeover of the farming sector will destroy farmers.
Yes, the services of BSNL is almost non-existent, private education institutes charge a lot of money. But hasn’t Jio and private schools/colleges have revolutionized the country. It is Reliance’s Jio which has connected the rural population to the Internet. Calling service is free, the price of mobile data is by far the lowest in the country in comparison to other countries. We pay only $0.26 for 1 GB of mobile data while the UK pays $6.66 and the USA pays $12.37 per GB and the global average is $8.53. It is private education establishments, which have helped India achieve a 74.37 per cent literacy rate which was 61.01 per cent in 1991.
We also need to understand that the situation of farmers is not that great across the states. Narendra Singh Tomar provided a data in Rajya Sabha which said that the national average income of a farmer is around Rs 10,000 per month. In states like Bihar, West Bengal, Odisha, Jharkhand, Uttarakhand, and UP, the average income of a farmer is less than Rs 5,000. Do we really want our food-providers to spend their month at just Rs 5,000? Without reforms, changes are impossible. Yes, it might backfire and the farmers might struggle, but if we don’t change things now, we will keep hearing news of farmers distress across the country. If the laws do not do well, the farmers can always go back to the government and ask to abolish the laws.
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