Punjab & Haryana farmers’ protests, the core is procurement

AGRICULTURE / GOVERNANCE/ FEDERALISM

Topic: General Studies 2:

• Issues and challenges pertaining to the federal structure 
• Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security
• Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Punjab & Haryana farmers’ protests, the core is procurement

Context: The Farmers’ protests have erupted once again in north India primarily in opposition to the new farm acts

What are the farmer’s concern?

• Their main worry is about a possible withdrawal of the Minimum Support Price (MSP) and a dismantling of the public procurement of grains. 
• They also contend that by leaving farmers to the mercy of the open market, the stage has been set for large private players to take over agriculture.
• The farmers’ unions want nothing short of a complete withdrawal of the recently enacted Farm Acts, which they claim will ruin small and marginal farmers.
•  It needs to be noted that the protests are largely in the States of Punjab and Haryana. 

What is government’s contention?

• The government claims that the Acts will only increase options for farmers in the output markets, that the MSP-procurement system will continue, and that there is absolutely no plan to dismantle the system. 
• To support its claims, the government points to the fact that there is absolutely no mention of either MSP or procurement in the Acts.
• It is true that a large-scale public procurement of paddy is going on in Punjab as the protests are raging, thus assuaging the fears of farmers in the region.

Why are farmers primarily from Punjab & Haryana are protesting vociferously?

• The Public Distribution System (PDS) is the lifeline in these States. Farmers in Punjab and Haryana are heavily dependent on public procurement and assured price through MSP. 
• This is far greater than farmers in any other State. 
• Nearly 88% of the paddy production and 70% of the wheat production in Punjab and Haryana (in 2017-18 and 2018-19) has been absorbed through public procurement.
• In contrast, in the other major paddy States such as Andhra Pradesh, Telangana, Odisha and Uttar Pradesh, only 44% of the rice production is procured by public agencies. 
• In the case of wheat, this percentage is even lower. In the major wheat States of Madhya Pradesh and Uttar Pradesh, only a quarter (23%) of the production is procured by public agencies
• This clearly shows the heavy dependence of farmers in Punjab and Haryana on MSP and the public procurement system. Therefore, any disruption to the system, real or perceived, will cause a major upheaval

What are Government’s obligation with regard to Food Security of Nation?

• Obligation under NFSA: If farmers of Punjab and Haryana need the procurement system, the government needs it even more. This is because of its obligations under the PDS and the National Food Security Act (NFSA) that is a legal and rights-based entitlement.
• Large Number of people to be supported by PDS: There are nearly 80 crore NFSA beneficiaries and an additional eight crore migrants who need to be supported under the PDS. The government needs an uninterrupted supply of grain, particularly from these two States, to maintain the PDS. 
• Procurement is needed to supply PDS: In the last three years, nearly 40% of the total paddy production in the country (45 million tons) and 32% of wheat production (34 million tons) has been procured by public agencies to supply the PDS.
• Impact of Pandemic: This year, due to the onset of the novel coronavirus pandemic and the migrant crisis, the government has earmarked much larger quantities for public distribution — about 58 million tons of rice and 37 million tons of wheat. This translates into nearly half of the rice production (49%) and 35% of the wheat production in the country.
• Open Market Procurement is not feasible: Due to Pandemic, government needs to procure a huge quantum of grains than in previous years as the government cannot afford to go to the open market. That is a sure recipe for disaster as prices will skyrocket, and with the stock restrictions gone under the recent Essential Commodities Act Amendment, there is a possibility of large-scale hoarding too.

Why these States matter for government?

• If the government intends to procure such huge quantities of grains, then it needs to turn to these two States, because it is these States that have always been in the forefront in supplying grains to procurement agencies. 
• Nearly 35% of the rice and 62% of the wheat procured in the last three years has been from these States. Also, nearly 50% of the total coarse grains came from these two States. 
• Thus, the government has little option but to continue its procurement from these States in the foreseeable future. Even after the COVID-19 situation improves and the migrant crisis abates, the obligations under the NFSA will continue.

Way Ahead

• Engage with Protestors: It is clear that dismantling the procurement system is neither in the interests of farmers nor the government. Therefore, it is imperative that the government reaches out to the farmer groups and assures them of the indispensability of MSP-procurement system. 
• Diversify Procurement: The government has to diversify its procurement away from two States of Punjab & Haryana
• Build Consensus: The severe trust deficit that resulted from the way the Farm Bills have been rushed through needs to be addressed by adopting a conciliatory approach towards farmers and the States.