Chandigarh: The Punjab government last week rejected the Centre’s National Policy Framework on Agricultural Marketing, calling it an attempt to bring back the contentious provisions of the three farms laws Parliament repealed in 2021. In response, the Centre has said Punjab’s decision to oppose the proposal appeared political and would be a “huge loss” to the state.
In a letter sent last week to the deputy agriculture marketing adviser and convener of the policy’s drafting committee at the Union Ministry of Agriculture, S.K. Singh, Punjab’s additional chief secretary of agriculture, Anurag Verma, emphasised that agriculture was a state subject. ThePrint has seen a copy of the letter.
“Government of India should not come up with any such (agricultural) policy and should leave it to the wisdom of the state to frame suitable policies on the subject as per their concerns and requirements,” the letter said.
Punjab also said the most “crucial issue” was that the policy did not mention the minimum support price (MSP) of wheat and paddy. “At the time of the farmers’ agitation in 2020, one of the main issues was the apprehension of the farmers that the Government of India has the ultimate objective of doing away with procurement of wheat and paddy at MSP.”
The absence of any reference to procurement at MSP in the draft policy, it added, has again given rise to the same apprehensions among Punjab’s farmers.
S.K. Singh told ThePrint “The proposed framework is just a set of suggestions which are in no way binding on any state, nor do they intend to impinge upon the state government’s power to regulate agriculture. If Punjab does not want any reforms in agri-marketing or make use of central schemes that will monetarily help the farmers, it is up to them.”
In June last year, the Union Ministry of Agriculture sought suggestions and comments on the national policy framework from various states and other stakeholders.
The agricultural marketing policy lays out a broad blueprint for the strengthening and modernisation of the agri-value chain and the marketing infrastructure. It envisages the creation of additional regulated markets for the sale of agriculture produce. These markets could be either government or private.
The policy recommends utilisation of preexisting infrastructure like private warehouses and silos to be declared as market areas under the state Agriculture Produce Marketing Committee (APMC) Acts already enacted in most states.
It also offers to bridge infrastructure gaps in value addition chains of agriculture produce through special schemes, the creation of dedicated markets for organic produce, and the rationalisation of market fees and commission agents’ charges.
Finally, the agricultural marketing policy proposes a “price insurance scheme”, which will ensure a certain assured income for the farmer, and a separate set of policy interventions for the Northeastern region and for states that do not have Agriculture Produce Marketing Committee (APMC) Acts. APMCs regulate the sale of agricultural produce in India.
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Punjab govt’s opposition
In its letter sent on 10 January, Punjab said agriculture was a state subject under Entry 28 of List-II (State List) of the Seventh Schedule, Article 246 of the Constitution, and framing such a policy was “against the spirit of the Constitution”. “Agricultural marketing is a state subject. Our founding fathers had realised that these activities depend on the geographical conditions of a region. These conditions differ from state to state,” the letter said.
Adding, “Therefore, they had rightly put this subject in the state list. This ensures that policies are made according to the specific needs, conditions and challenges of a state as the states are better positioned to understand the local factors such as crop patterns, status of infrastructure, region-specific requirements of the farmers etc.”
It further opposed the agricultural marketing draft policy on the grounds that it places “significant emphasis” on promoting private markets while admitting there is no independent study about benefits accruing from private wholesale markets.
“The broad spirit of the policy is to promote private markets and to significantly dilute the Agricultural Produce Market Committee (APMC) markets and to eventually make them irrelevant,” the letter claimed. Adding that, in Punjab, an APMC market, on average, serves an area of 115 square kilometres—the “highest density of APMC markets amongst all states”—it said, “There is no need for any new private markets.”
“As of now, farmers are able to sell their produce in the APMC markets in a totally transparent manner and under a well-established regulatory regime which ensures that the interests of the farmers are safeguarded. With the coming in of private markets, the APMC markets will be destroyed. Thereafter the farmers will be at the mercy of the owners of the private markets,” it added.
Punjab said the proposal to declare silos as deemed market yards has been also strongly opposed by farmers, who fear that Multinational Corporations (MNCs) “will step into the shoes of Food Corporation of India (FCI) and exploit them”.
“They also apprehend that the ultimate objective is for FCI to get out of purchasing Wheat and Paddy at MSP. This will be greatly detrimental to the marketing of the two major crops of the state i.e. Wheat and Paddy,” added Punjab’s letter.
‘Punjab’s objections not grounded in facts’
Responding to Punjab’s objections, S.K Singh said, “The points raised by the state government in its letter rejecting the draft policy are neither grounded in any logic or facts. Punjab has, for political reasons, decided that it should not agree to anything even in the form of a suggestion from the government of India.”
“Apart from the suggestions we have also come up with many schemes that will benefit the farmers like price insurance scheme, filling of gaps in agri-chain infrastructure. Not making use of these will be a huge loss to the state.”
He said that any policy invention with regard to the MSP or procurement was out of the scope of the agricultural marketing policy framework. “There is a separate wing of the Government of India that deals with the question of procurement in MSP. It was not supposed to be a part of this exercise. However, we have recommended a price insurance scheme in which insurance companies will bridge any gap between the price at which a farmer is forced to sell his crop and the MSP declared for that particular crop.”
He added, “In not agreeing with anything given in the framework Punjab’s response is purely political. Otherwise, why would they not want their own farmers to do well?”
He also said that the Centre had already factored in state autonomy in policy making and the draft clearly says that states will work on their agriculture marketing frameworks taking guidance from the national framework. “There is no coercion from the Government of India to the Punjab government to implement the policy inventions suggested in the framework. It is only a broad map which the state government can choose to course ahead the way it wants,” said Singh. “It would be ideal, however, if the systems developed in Punjab are working in tandem with systems developed in other states or at the national level.”
He also said that he was “shocked” at the inferences drawn by the Punjab government regarding setting up of private markets and warehouses when the ultimate goal was to “increase the density of the APMC markets”.
“It has a market in every 115 square kilometres. But the ideal is 80 square kilometres which will mean that a farmer will commute a shorter distance, reducing transportation costs when he is bringing his produce to the market.”
The proposal suggests that the state explore the possibility of identifying and registering pre-existing private infrastructure, such as silos and warehouses, as markets to “facilitate the farmers”.
“In case pre-existing private infrastructures do not exist, the state government can encourage the creation of new ones,” he added. “And in case the state government does not want to deal with any private player they can create more markets themselves.”
Singh said that organised wholesale marketing in the country is undertaken through 7,057 regulated markets as of 31 March 2024 established under APMC Acts. “The density of these markets vary from State to State and taking the country’s average one regulated market serves 407 sq km area against the norm of 80 sq km. Worse is that more than 1,100 markets are non-functional,” said Singh.
Opposition to commission agents
The state government also opposed capping commission charges to 4 percent on perishable and 2 percent on non-perishable commodities on the grounds that commission agents and farmers share a traditional “symbiotic” relationship, where commission agents provide services like input supply, trade facilitation etc.
“Aarthiyas (commission agents) also help in carrying out large-scale procurement operations of Wheat and Paddy as per the quality standards of the purchase agencies within a short period of time. So, deciding the rate of their commission should be the prerogative of the State,” the Punjab government said, responding to the letter.
The Punjab government also objected to a proposed cap on the market fee between 1 to 2 percent, which, along with the rural development fund, was “a major source of income for the State and Mandi Board”, it said.
The funds have been used to establish a wide network of APMC markets and connect village roads to them, it said, adding that 1,900 Mandis and a network of about 65,000 km of rural link roads were added as a result of these funds. “With the reduction in these fees, it will not be possible to maintain the mandis and the rural roads network,” says the letter.
Singh said the Punjab government was charging the highest market fee in the country, a cost that has to be paid by the buyer. “On the ground what actually happens is that this is collected from the farmers adding to the farmer’s cost of production.”
Similarly, he said, “The commission agent charges are not going into the state treasury.”
“If this is a payment for a service being provided by a commission agent then the charges should be commensurate with the service being provided. Punjab government has no objection to paying private middlemen large amounts of money that neither benefits the farmer nor the state government,” said Singh.
The state government also mentioned that the draft policy “encouraged contract farming” which has been a thorny issue with the farmers in Punjab. Singh said the policy only referred to the creation of an online database of companies and entities that are interested in or who deal with farmers on a contractual basis. “The database will help empower those farmers who are keen and willing to undertake contract farming. What objection can a state government have to such a move? Except to oppose for the sake of opposition?”
(Edited by Sanya Mathur)
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Let the state and its unions commit collective economic suicide. India is just tired of this. They want to keep milking the tax payers, milking the declining soil health, declining water table. No amount of MSP will solve Punjab’s problems. Until they realise that they need to pivot away from the status quo, punjab can’t be saved.
May wahe guru bless the state despite the colossally low IQ of its polity and unions.