A matter of trust: Why farmers want MSP written into law

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On Saturday, farmer leaders held the fifth round of talks with the Narendra Modi government. Four hours into the meeting, they started a silent protest, holding up “Yes or No” placards and making it clear they would not shift their protests from Delhi’s borders until the new farm laws were revoked, and the minimum support prices for crops, or MSP, was written into law.

The MSP regime has always operated as an executive programme rather than under a legal mandate. So why are farmers asking for it to be written into law now? This question is a source of confusion, even tension, in the discourse around farmer protests, more so because the new laws don’t mention MSP, let alone explicitly remove it.

It’s a simple question with a complicated answer.

In the course of our reporting on the protests, my colleague Basant Kumar and I have been speaking widely with farmers to understand what’s driving their demand to repeal the new laws and provide legal sanction to the MSP regime.

Primarily, the demand seems to stem from a lack of trust.

On more than one occasion, agriculture minister Narendra Singh Tomar has reiterated that doing away with MSP was never the intention of any of the new laws. Technically, this is true. In fact, the Farmers’ Produce Trade and Commerce Promotion and Facilitation Act, the most controversial of the new laws, does not explicitly state MSP will be done away with or that the Agricultural Produce Market Committee mandis – where much of the produce under the MSP regime is sold – will be eradicated.

Citing this, the Modi government has expressed bewilderment over the protests, specifically the demand to repeal the new laws, which it insists merely allow for a parallel market. The new laws actually allow farmers greater freedom in choosing where to sell their produce and to whom, it has argued, and pointed out that farmers themselves have expressed concerns in the past about the functioning of APMCs and mandis.

Farmers counter that the laws are intended to make APMC mandis obsolete, even if they do not state so explicitly. And if they had to choose between the flawed mandis and the market regime the new laws seek to bring about, they will go with the APMC system. Why?

According to farmers, the answer is multifold.

Currently, when a farmer sells their produce in a mandi, they must pay a tax, which is levied at a rate of 8.5 percent in Punjab and at 6.5 percent Haryana. According to the new laws, if a farmer sells their produce outside a mandi to any corporate in any part of India he does not have to pay this tax. This is an incentive for the farmer to sell outside. And as more and more farmers sell outside, mandis will die out. This also incentivises companies to drive out APMC mandis, their competitors, out of business.

Moreover, if farmers start selling their produce outside, mandis will not get a regular income. “Part of the tax paid by the farmer goes into maintaining the mandi. It is used to pay salaries of its employees and maintain interior roads connecting villages to the mandi,” explained Ramadeep Mann, a farmer and activist. “What will happen when farmers are incentivised to sell outside the mandi?”

Balbir Singh Rajewal, 77, is chief of the Bharatiya Kisan Union’s Rajewal faction. He owns 60 acres of land in Punjab and is one of the leaders of the protests. He explained that Punjab alone produces paddy and wheat worth Rs 65,000 crore a year. Some 130 lakh tonnes of wheat and 180 lakh tonnes of paddy is surplus to the growers, and it’s procured by the government from APMC mandis. “If corporations drive out the mandi system who will buy all of this surplus?” he asked.

If the bulk of the surplus cannot be sold, farmers fear, prices will crash as supply would overwhelm demand. This will deprive farmers of whatever negotiating power they have now.

‘Middlemen are service providers’

A key talking point that the Modi government has used to sell its new laws is that they will rid farmers of middlemen. But farmers don’t necessarily see middlemen the way the government does – as inherently bad. Rajewal, in fact, argued the term “middleman” was incorrect in the context of APMC mandis.

Since MSP is fixed by the government, the middleman, also known as vicholi or aadti, isn’t involved in making deals or negotiating prices with farmers, he explained. Their job is mainly to help farmers load and unload the produce, clean, package and bill it. The vicholi is paid 2.5 percent commission for the service.

In the model envisioned by the new laws, who will do all this for the farmer? Farmers fear private buyers will fix the prices for this service, and since it is an essential service to them they will have to shell out whatever prices the buyers dictate.

A decline of the mandi system will have a ripple effect on not just prices but on lives and livelihood as well. In Punjab alone, Rajewal said, there are some 48,000 middlemen. What will happen to them if mandis become obsolete?

They will be rendered jobless unless private buyers of farm produce employ them. If they do, the middlemen will get institutional backing, giving them more power over farmers, not less. To make matters worse, the Farmers’ Produce Facilitation Act states that if there is a dispute between the farmer and the corporate buyer, it’ll be adjudicated by the sub-divisional magistrate or the district collector instead of a civil court.

“These offices tend to work very slowly and in some places they can open doors to corruption,” said Sukhvinder Singh, a farmer in Rajasthan. “We want to be able to take our matter directly to a civil court. These ways of resolving conflicts are just not reliable.”

Relationship between middlemen and farmers

It is clear speaking from the protesting farmers that the relationship between a farmer and a middleman is not merely transactional. It’s dictated by cultural contexts that vary among states, even regions within states, and takes years to establish.

Aside from providing services to farmers in mandis, it is the middlemen who bail out farmers when they are in sudden need for money. “Suppose a farmer or a family member has an accident or is getting married, or the farmer is reeling from losses suffered the previous year, he’ll come to us for money,” Dinesh Singh, a middleman, explained. “Between the farmers and us, there’s a credit system in place. We help out the farmer and he returns us the money with some interest once his harvest is sold.” It’s a relationship built on trust, he added.

Once a parallel private market for farm produce emerges, he said, middlemen will be reluctant to help farmers financially as it will no longer be certain that they will be able to sell their surplus.

Relationships built on trust will thus be broken, Singh argued.

And trust, Rajewal explained, is key. Not just in the relationship between the farmer and the middleman, but also between the farmer and the government.

In an interview with Newslaundry, Rajewal spoke of the “erasure of trust” between those who govern and those they govern. “The problem is policies are written by people who studied abroad and have never felt the soil under their toes. Moreover, everyone knows that this government talks a lot more to corporates like Ambani than to farmers or anyone else. So why would we trust them?” he asked. “Why did the government not speak to us before bringing in these laws? Why were they rushed in as ordinances? We are the ones turning the soil inside out day and night. Don’t you think we’d know something about agriculture?”

In 2006, Bihar abolished the APMC system altogether, presaging what the Modi government is seeking to do all over India. The Bihar government, in which the BJP was a partner, wiped out mandis claiming it would improve the lot of the state’s farmers. Then, the protesting farmers ask, why aren’t farmers in Bihar better off?

In this context, their demand to withdraw the new laws and write the MSP into law is a demand for dignity.