Farmers' protests

Why are farmers in Punjab and Haryana angry?

Print edition : January 01, 2021

In Amritsar on December 11, farmers shout slogans before leaving for Delhi to protest against the agricultural laws. Photo: NARINDER NANU/AFP

The anger of the peasantry in the two States reflects the fear that the long-standing marketing arrangements, which ensured the viability of farming since the Green Revolution, are being abandoned by the Central government.

Why are farmers from Punjab and Haryana particularly restive ever since the farm laws first made their appearance through ordinances introduced during the height of the pandemic? Although the platform of the resistance has widened to include more than 400 peasant organisations from across the country converging on a common set of demands, the epicentre of the protests has undoubtedly been occupied by farmers from the two States, particularly Punjab.

The three Acts have, broadly speaking, triggered four sets of concerns among the Indian peasantry. First, there are tangible fears that the laws, which liberalise agricultural marketing by severely limiting the role that mandis play, would affect government procurement and prices of produce. Second, the option to sell produces at a tax-free rate outside the mandis dictate that farmers with better storage infrastructure will gain significant advantages, while others, particularly small and marginal farmers, will be badly hit. Third, there are fears that contract farming undertaken by big corporate buyers would skew bargaining power against farmers. Finally, with the Essential Commodities Act being dissolved, artificial crises can be contrived for the sole benefit of large stockholders of agricultural commodities.

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The reason why farmers from Punjab and Haryana have been the most active in bringing out these issues is that they are deeply engraved into the experience of the agricultural sector in these two States. The greater dependence of the rural populace on farming as a source of livelihood in the two States is obviously an important factor. More importantly, during the past two decades, the returns from cultivation, particularly of paddy and wheat, the two major crops in these States, have remained reasonably sustainable for farmers. That this has been largely because of a better price realisation through public procurement centres is another obvious facet of agriculture in the two States. The realisation that they stand to lose everything has obviously angered the peasantry in the two States.

Ranged against the peasantry has been the counter-argument posed by those who seek to delegitimise the struggle, which seeks to portray the ongoing struggle—especially by Punjab’s farmers—as being the exclusive concern of the richer sections of the peasantry and traders. The counter-arguments rest on three myths.

Myth I: Mandi benefits the large farmer only

Major proponents of the Farmers Produce Trade and Commerce (Promotion and Facilitation) 2020 Act have vilified Agricultural Produce Market Committees (APMC) by terming them as captured spaces of large farmers and commission agents (Arhatiya). The problems identified within the APMC mandi are reflected in the Shanta Kumar Committee recommendations (2015). The report concluded that small and marginal farmers are at a severe disadvantage in the APMC mandis, whereas large farmers enjoy better price realisation. It also observed that commission agents as middlemen often reaped profits, which eventually raised foodgrain prices. Therefore, to ensure better prices to small farmers, the committee recommended that the market space ought to be liberalised. This would allow private traders to buy produce at a higher price outside the mandi premises, which would help farmers. It rests on the assumption that private traders—or, indeed, private corporations as envisaged in these new laws—always ensure better prices for producers. These arguments set the basis for the first myth, which has been used to smear and label the ongoing movement as a movement of large farmers and Arhatiyas in Punjab and Haryana.

But this is a caricature of reality. Firstly, the MSP is a notional price which sets a price floor in the APMC mandi where grains are sold and procured. MSP, although announced for 23 crops by the Commission for Agricultural Costs and Prices, are mostly implemented only for rice and wheat. More importantly, a little more than 65 per cent of the procurement of these two crops are from Punjab and Haryana. Therefore, in the rest of the country private traders already dominate. Yet, farmers do not realise higher prices than the MSP, not even for paddy or wheat.

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Second, the importance of better price realisation for Punjab and Haryana through APMC mandis is the core of the growth performance of agriculture in these two States in the past few decades. The Green Revolution led to growth in yield and area of the foodgrain crops such as rice and wheat in the 1980s and even the 1990s in these States. However, in the past two decades, the growth in the gross value of output for both paddy and wheat was primarily led by growth in prices. The compound annual growth rate for paddy was only 1.2 per cent between 2011-12 and 2018-19; the same for wheat was less than 1 per cent. Although yield growths have not tapered off, the potential for increase is now marginal compared with the initial decades of the Green Revolution. APMC mandis have played a crucial role in establishing and maintaining the support price-led growth regime, which ensured better returns from cultivation following the success of the Green Revolution. This despite the fact that the functioning of APMC mandis reflected disparities in benefits accruing to different classes within the ranks of the peasantry. However, the system, whose key assurance was a measure of price stabilisation, benefited not just large farmers but small and marginal farmers too.

Crucially, what the proponents of liberalisation do not care to take into account is the relative advantage that small and marginal farmers realise in Punjab and Haryana compared with this section of the peasantry in other States. The accompanying table illustrates the advantages enjoyed by small and marginal farmers in Punjab and Haryana compared with the rest of India. It explains not only what the peasant in these two States stands to lose but also the extent to which small peasants elsewhere have lost because of the absence of state support.

During 2012-13, 78 per cent of the sales by small and marginal farmers in Punjab and almost 90 per cent of the sales by small and marginal farmers in Haryana for the kharif paddy crop were above the MSP, whereas in the rest of India just a little over one-fourth of the small and marginal farmers’ sales realised the prices higher than the MSP. Moreover, the average price realised in Punjab and Haryana, especially for paddy, was significantly higher than in the rest of the country. Although the price differential was lower in the case of wheat, three-fourths of the sales by small and marginal farmers in Punjab realised prices above the MSP; in Haryana, this was even higher, at 94 per cent. In contrast to these two States, barely 40 per cent of the sales made by small and marginal peasants in the rest of India reached the MSP.

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Better price realisations by small and marginal farmers in these two States are directly related to their access to the mandi. In both Punjab and Haryana more than half of the small and marginal farmers are able to sell both crops in a year at the mandis; the coverage of mandis in the rest of India is much poorer. Only 29 per cent of total kharif paddy produced in the country and 44 per cent of the total wheat produced was sold at the mandis in 2012-13. Therefore, the myth of the disadvantage of small and marginal farmers in Punjab and Haryana propagated by the proponents of market reform does not take into account the relative advantage that farmers in the two States enjoy compared with the rest of India. Therefore, for all classes of farmers the procurement of crops in MSP through the mandi is an important aspect of ensuring sustainable farm incomes.

Myth 2: Commission agents are instigating the protests

The problem of indebtedness among Punjab peasantry goes back a long way. Even during the colonial period, M.L. Darling’s study, “The Punjab Peasant in Prosperity and Debt”, published in 1925, revealed that the quantum of debt of the peasantry was about five times their annual income. The Green Revolution further intensified the need for agricultural loans, since agriculture became capital intensive in these regions. Amidst rising debts, commission agents became the important source of informal credit. Prof. Sukhpal Singh and T.K. Dhaliwal, in a study of the commission agent system in Punjab during the 2000s, have shown that the dependence on commission agents are more than just a relationship of a trader-producer. The socially well-knit relation is often a reflection of the dependence based on the access to easy and quick loan, albeit with higher interest rates. The current farm laws have identified the role of commission agents as only a middleman, interrupting the value chain by benefiting from exerting higher price on grains. However, the role of commission agents as a source of informal credit is forgotten, a role that has intensified because of the systematic dilution of the institutional credit since the neoliberal reforms of 1991 in India.

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In the previous two decades, as the cost of cultivation grew and direct subsidies declined in agriculture, the loans from commission agents in these regions of Punjab and Haryana remained the last resort for farmers. To put it mildly, as Shreya Sinha noted in a recent study, commission agents are a “necessary evil” for farmers in this region. The onslaught on the mandi system through the introduction of corporate buyers will displace the smaller commission agents from their influence in mandis. This is why the farmer and trader interests are in confluence. The social fabric with which the moneylender-trader (Arhatiya) is related to the farmers have several facets to it. Merely identifying their role in the supply chain would not address the question of why farmers are so dependent on private moneylenders. The current protests are therefore a resonance of the fact that for an indebted class of peasants, the Arhatiyas remain a close ally, since they have nowhere else to turn to for credit, particularly after being abandoned by institutional sources.

Myth 3: The workers do not have a stake in the protests

The employment situation has also worsened considerably in the past few years. The worst affected are the landless Dalit workers. In Punjab and Haryana, the rural non-farm casual work is still not enough to ensure the required amount of work-days to maintain subsistence. According to the latest Periodic Labour Force Survey of 2018-19, in Punjab and Haryana, a little more than 93 per cent of the total casual workers are still engaged in the farm sector. Needless to say, this represents a huge section of marginalised landless workers. A heavy dependence on the casual wage work in the rural farm sector has led to worsening conditions among casual workers in two ways. First, due to mechanisation in various farm operations in these two States, the average number of days of employment in agriculture is much lower than in other States. Therefore, most workers are engaged as porters filling gunny bags with crops and toodi (straw), loading and unloading these bags for transportation and other such tasks. Second, since there are migrant workers from Bihar and Uttar Pradesh who are employed on piece wage rates in labour gangs for several crop operations in these two States, local wage workers depend heavily on the manual work provided in the nearby mandi.

A recent survey by the Foundation for Agrarian Studies in a village in Mansa district of Punjab revealed that more than 40 per cent of the landless Dalit workers in the village were dependent on the work provided in the nearby mandis as porters. The work was primarily the loading-unloading of bags of toodi and grain bags. Lack of paid non-farm employment opportunities has effectively tied this class of manual workers to the APMC mandis. It is but natural for this section to safeguard their spaces of work, especially if they stand to lose their only source of livelihood.

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The protests against the farm laws are therefore a milieu of class interests, and simply smearing the resistance as “misled” is a grave disrespect towards the cognitive and intellectual abilities of the angered mass. While it cannot be denied that the influence of commission agents in APMC mandis has caused greater indebtedness among the peasantry, the solutions offered are seen to be even more troublesome. Over-emphasising the role of corporate buyers in these Acts, who will operate outside the mandis, without any guarantee of the MSP, will deteriorate the conditions of farming further. However, since the solidarities of these classes at the core are interlinked and well-knit, the usual criminalisation tactics of the Centre have so far failed to penetrate the farmers' protest. It is indeed a grim reality that the different classes of farmers and workers in Punjab and Haryana, who would have otherwise been seen as opposing class forces, are now solidified into a protest, and the growing resistance has exposed the Narendra Modi government’s close ties to big business.

Soham Bhattacharya is a research scholar at the Economic Analysis Unit, Indian Statistical Institute, Bangalore Centre.

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