Mainstream Weeklyby Upal Chakraborty *
The long-drawn struggle of the farmers has resulted in the Government unilaterally scrapping the three Bills. The farmers view this as a partial victory while the apologists for the Government maintain that the farmers are shifting goalposts. The latter contention is not at all true. The demand for a legal sanction for the MSP and implementation of Swaminathan Commission recommendations on the exact quantum have been long-standing demands included in the recent struggle right from the beginning. Successive Governments have failed to implement the report’s clear recommendations.
Firstly, the struggle of the farmers stems from a mistrust of the Bills (The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, is relevant to the topic discussed here) which, they felt, was targeted at dismantling the Mandi structure and the concept of MSP (Minimum Support Price) in the long run. It was believed that the main aim of the Bills was to facilitate crony capitalists close to the powers that be to purchase farm products through a monopoly or oligopolies, enabling predatory practices by initially offering high prices and, after the Mandis die their natural deaths, step in with lower prices – the farmer now at the mercy of the traders. The Acts stipulated that sales outside the mandis would be tax-free, which only deepened the suspicion. Although it did not scrap the existing APMC (Agricultural Produce Market Committees) regulations, it restricted its enforcement to the physical boundaries of the markets.
The farmers of Punjab and Haryana spearheaded the movement because the APMCs were most effective and widespread in Punjab, Haryana and West UP. Punjab and Haryana receive a MSP of more than Rs 80,000 crore every year. Apart from the farmers and their families, the livelihood of traders, shopkeepers and other beneficiaries are traditionally dependent on MSP.
What do the Swaminathan Commission reports state? A little background may not be out of place here. The National Commission on Farmers (NCF), chaired by Prof. M. S. Swaminathan, submitted five reports through the period December 2004 - October 2006. The final report focused on causes of famer distresses and the rise in farmer suicides, and recommended addressing them through a holistic national policy. It covered a gamut of solutions – including land reforms, irrigation, credit and insurance, food security, employment, productivity of agriculture and farmer competitiveness.
The measures suggested by NCF included:
• Promotion of commodity-based farmers’ organisations such as Small Cotton Farmers’ Estates to combine decentralised production with centralised services such as post-harvest management, value addition and marketing for leveraging institutional support and facilitating direct farmer-consumer linkage.
• Improvement in implementation of Minimum Support Price (MSP). Arrangements for MSP need to be put in place for crops other than paddy and wheat.
• MSP should be at least 50% more than the weighted average cost of production.
There are various methods used to calculate the cost of production. Let us consider a manufacturing unit and draw analogies. What do the costs include? The cost of production – labour costs, raw materials, consumables, maintenance of machines, depreciation on capital items, electricity and fuel costs, etc. These are termed as direct costs. The overheads included in supporting the manufacturing activities – like the salaries of accountants, the maintenance staff, the IT systems, etc. are also included while computing the costs and allocated to individual products. And finally, the interest cost on capital expenditure and a notional rental value for the premise (if owned by the organisation) are also included.
Now, let us draw an analogy with the cost of production for farm produce. There are at least six methods to compute this, known as: A1, A2, B1, B2, C1 and C2. It has been argued by the Government that the Swaminathan report states that “MSP should be at least 50% more than the weighted average cost of production