Fadnavis backs off on APMC PDF Print E-mail
Monday, 03 December 2018 03:55
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Farmer protests in Delhi related to inability to reform markets


Even if farmer anger at low prices doesn’t translate into BJP governments in states like Madhya Pradesh losing in the current round of assembly polls, the issue is getting bigger by the day. While that is why the BJP made large hikes in minimum support prices (MSPs) of various crops some months ago, this is why Congress president Rahul Gandhi is going around making a series of loan waiver and higher MSP promises in states like Madhya Pradesh; Gandhi, of course, is following the grand example set by prime minister Narendra Modi who made similar promises in Uttar Pradesh in the last elections. So, while there has clearly been a fair amount of political support to the thousands of farmers who are in the capital to protest the NDA’s policies, there is no doubt farm distress is rising. As FE has repeatedly reported, with the exception of a few crops like cotton, despite the government’s assurance that farmers will get at least the MSP for their crops, there is a big difference between market prices and MSPs.

While the farmers are asking for loan waivers and higher prices, both are related; both are related to free markets, though the protesting farmers haven’t explicitly brought this up. In a situation where markets are free, local prices would broadly mirror global prices; indeed, MSPs are usually set while keeping global prices/trends in mind. With most governments over the past 70 years not allowing free agriculture exports, however, local prices have been much lower than global prices. And, with no freedom to even move their goods, prices vary widely even within states. Some weeks ago, while maize cost Rs 1,100 per quintal in Rajgarh in Madhya Pradesh, it was selling for Rs 1,332 in Neemuch in the same state; bajra cost Rs 1,400 in Baran in Rajasthan but Rs 1,637 in Jodhpur, moong was selling at Rs 4,431 in Nagaur in Rajasthan but Rs 5,250 in Jodhpur and groundnuts cost Rs 3,575 in Sabarkantha in Gujarat versus Rs 4,250 in Rajkot. That is why, when Modi promised a loan waiver in Uttar Pradesh, Icrier professor Ashok Gulati had pointed out that the loan waiver equalled what the farmers in the state had lost out by way of not getting MSPs for the wheat and rice they grew.

This is where Maharashtra chief minister Devendra Fadnavis’ still-born market reforms come in. Since most APMC mandis are cartelised, Fadnavis had removed fruits and vegetables from the Vashi mandi list some years ago—that meant farmers didn’t have to sell in the cartelised mandi but could sell for a higher price outside if they wanted. They continued to flock to Vashi because, since Fadnavis didn’t give free land to set up rival mandis, there was no other market.

In October, Fadnavis announced more reforms and said that all agriculture produce, including livestock, could be sold outside APMC mandis and a Bill was passed in the assembly. While he still needed to create alternate mandis for the move to really help, opposition from those who controlled these mandi has resulted in him withdrawing the move. So, expect more farmer protests, more loan waivers in the months to the general elections in May.


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