FAR FROM THE TRUTHS

• MSP MYTHS : Neither do the laws say anything about it, nor is the MSP/APMC system going to disappear with these laws.
• MANDI FEES : What would certainly come under pressure is the high commission of arhtias, mandi fees and cess that states collect, which account for as much as 8.5 per cent over the MSP in Punjab.
• MANDI SYSTEM : Milk, poultry, fishery, etc. don’t go through the mandi system and their growth rates are 3 to 5 times higher than that of wheat and rice. Overall, almost 90 per cent of the agri-produce is sold to the private sector.

• FILLED GRANARIES : The FCI is overloaded with grain stocks that are more than 2.5 times the buffer stock norms, indicating massive economic inefficiency in the grain management system.

WILL FARMERS GET MINIMUM SUPPORT PRICE?

• MINIMUM SUPPORT PRICES : Most of the slogans at the farmers’ protests revolve around the need to protect MSPs, or minimum support prices, which they feel are threatened by the new laws.

THE REALITY

• SELECTED PURCHASE : However, the Centre only purchases paddy, wheat and select pulses in large quantities.
• MSP AND FARMERS : Only 6% of farmers actually sell their crops at MSP rates, according to the 2015 Shanta Kumar Committee’s report using National Sample Survey data.

• APMC MANDIS : However, most government procurement centres in Punjab, Haryana and a few other States are located within the notified APMC mandis.
• TAX-FREE PRIVATE TRADE : Farmers fear that encouraging tax-free private trade outside the APMC mandis will make these notified markets unviable.
• REDUCTION IN MSP RATES : Tax free trade could lead to a reduction in government procurement itself.
• MSP CAN SET A FLOOR PRICE : Farmers are also demanding that MSPs be made universal, within mandis and outside, so that all buyers, government or private will have to use these rates as a floor price below which sales cannot be made.

MANDIS IN INDIA

NEED FOR MORE MANDIS

• In 1976, there were 4,145 large markets in India, with the average area served at 775 km2.

• But there were only 6,630 mandis in 2019 with an average area served of 463 km2.
• Using another set of criteria, a government committee in 2017 had recommended that India should have at least 10,130 mandis.
• So, by all counts, India needs not less but more mandis.

TRADE AND MANDIS

• TRANSACTIONAL COST AT MANDIS : In the existing private markets too, there is no evidence of farmers receiving higher prices than in the mandis.
• EXCESS PRODUCTION : The private sector will not come forward to buy at MSP, and the state will not have the viable outlet to buy all.(Over-occupied FCI granaries).

• PENALISING OR IMPRISONMENT : By creating stringent rules (fine or imprisonment), the state may create a situation where farmers would not be able to sell at all.

• MANDIS ARE THE LAST RESORT : For small and marginal farmers, APMC mandi is the last resort channel of sale.
• WELCOMING PRIVATE INVESTMENT : If APMCs are reduced in importance, they will lose rather than gain unless more of them are organised into FPOs and become attractive to private agencies for contract farming or direct purchase.