The agricultural reforms ongoing in India presently are very important and beneficial to farmers generally and in the long run. Privatization and free markets always win in a competitive world (which Indian food market definitely is).
Right now, the farmers aren't allowed to sell directly in the free market, they have to go through the middle-man called APMC mandis. These mandis or markets, though government owned, are a bureaucratic entity consisting of torts and commission agents. The reforms are intended to remove these middle-men so that farmers can now sell directly to the seller (be they retailers or wholesalers) just as it should be in a free and privatized economy.
If these middle-men are removed from the equation then why will farmers not be happy? Isn't that a very basic and common sense question? Any sane farmer with a little bit of common sense would cry and raise havoc until these reforms are implemented. Any sane farmer would fight and protest for bringing these reforms, not against it.
As it so happens, two kinds of people are not happy with the reforms and they are the group who is protesting:
1. The torts and commission agents who are heavily dependent on APMC mandis for their income. They will obviously oppose the reforms as their commission income is crushed by the reforms.
2. Those farmers who are dependent on the MSP (Minimum Support Price) arrangement and have taken undue advantage of it until now (by only producing MSP crops like wheat and rice) which has resulted in a glut or oversupply but the government still has to pay them MSP which ultimately goes from the tax payer's pocket.
With privatization, MSP will be gone and the market determined price will apply to the farm market (like almost all other markets). With no MSP, the farmer has two options:
1. Switch from rice/wheat to other crops which are in demand such as pulses and tomatoes.
2. Keep protesting and hope that govt. will renege on MSP.
A wise and intelligent farmer will obviously take the first route. Since this is a people friendly government which has won with an extraordinarily large mandate, there is very little chance that they will rollback the MSP decision.
More and more farmers should come out vocally and support the reforms otherwise they'll lose a wonderful opportunity to become free from the unhealthy APMC ecosystem. As for the tax payer, it should be crystal clear whom you should support after reading this article.
To understand more about India's ongoing agricultural reforms, watch this Youtube video by Shekhar Gupta of Print who de-clutters greatly what this is all about.
1 comment:
I bet that the new free market mandis will be worse for farmers for sure, and that they would not cooperate to make a cooperative mandis replacement to get more from the market for their products, but some corporations will do it and also to give them less. At least is how free market usually works.
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