A dead end | Business Standard Editorials

Clipped from: https://www.business-standard.com/article/opinion/a-dead-end-121010300855_1.html

Govt cannot accept extreme demands of farmers

Multiple rounds of talks between the protesting farmers and the Union government seem to have made no progress. The last round raised some hope, but it now appears that the government conceded some ground for virtually nothing. The government agreed to exclude the farming community from the ambit of the pollution control law and not to tinker with the existing subsidy system in the draft electricity amendment Act. Neither of the concessions should have been given but even then the farmers are not convinced and have threatened to intensify the agitation if their main demands of repealing the new laws and a legal guarantee for minimum support price (MSP) are not accepted. The farm unions have threatened to start shutting malls and petrol pumps in Haryana, and will enter the national capital on January 26. The next meeting is scheduled for January 4.

However, the farmers have taken a maximalist position and are blackmailing the government — no matter how one looks at it. This is not the way to resolve any issue. To be sure, the government should have built a wider consensus before getting the laws passed. But it is now willing to engage with the protesting farmers and address their concerns. On its part, the government has not only proposed significant changes to the farm laws but has also agreed to the farmers’ demands in other areas such as pollution and power. Thus, it is now incumbent on the farmers to be a little flexible and find middle ground. What the protesters are demanding is untenable, and repealing the laws will not be in the long-term interests of either the farmers or the Indian economy.

India needs large-scale investment in agriculture, which can be mobilised only by large, organised firms. It is not clear how lifting restrictions on maintaining stocks will hurt the farmers’ interests. In fact, buyers with deep pockets and logistical support will be able to buy more food grains and fresh produce from farmers, which can not only be stored for the lean season but can also be transported to areas with deficient production. This would help stabilise prices and reduce risks for farmers. The logistics support and economies of scale will also increase export opportunities. Similarly, the law on contract farming provides a framework. It does not force anyone to enter into any contract. It is not clear why the protesting farmers want to deny this option to fellow farmers across the country.

The only legitimate contention can be with regard to the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, which liberalises trade in farm produce. The fear is that this might end MSPs. The government has not only clarified but given a written assurance that there would be no change in the MSP regime. However, the agitating farmers, who are the biggest beneficiaries of MSPs, want a legal guarantee. The government simply cannot accept such a demand. A legal guarantee to MSPs will increase prices and lower demand. The government cannot buy everything and the private sector will move out because of lower final consumption. In the end, the farmers will have a legal price but no buyers. Since only about 6 per cent farmers benefit from MSPs, the rest will be priced out of the market. Therefore, the demands of the protesting farmers cannot be accepted by the government. The best way forward perhaps is to allow the states to not implement these laws.

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