Why did Farmers Agitation Disintegrate all of a sudden?

[Authored by: Mandar Garge, Apr 09, 2021]

A brief about why the Farmers' agitation lost its fizz. 

The 26-Jan incidents exposed the reality of the farmers' agitation, and the agitation started losing its force. But the protests were still on for a month or so. But now the agitation seems to have lost its momentum altogether. Why?

The protestors who carried out agitation did not represent even 1% of India's farmers community. Moreover, these  protesters were not really farmers, they were either the middlemen or rich-farmers-turned-middlemen.

Reading up the new Farm laws, one can easily realize that the laws stand to liberate farmers economically from the shackles of restrictions that current laws impose. Farmers today can sell only to one "state-designated"  APMC (Agricultural Produce Market Committee, or 'Mandi' in simple terms) associated with their geographical region. This has managed to create APMC monopoly over last several decades. The middlemen who run these APMCs have severely exploited the farmers and become super rich, while the farmers have continued to remain poor for decades.

The farmer's income has remained very low when the incomes from other jobs have increased multifold in past 4-5 decades. The current, restrictive and monopolistic APMC system is the reason for this situation more than anything else. Farmers have not been allowed to sell outside the APMC, and the APMCs have exploited them. 

The new laws allow mainly three things:

1. Farmers can sell their produce anywhere in the country, and to any APMC or private buyers.

2. Farmers and private companies/buyers and make direct trade, make long-term contracts with them. This stands to bring in competition and break the APMCs'-monopoly in the buyer market.

3. Private entities can setup their own storage facilities and stock up farm produce (private players can now bring in investment in the farm produce supply-chain).

Going back to the current system, here is how it has worked so far:

• For an MSP (Minimum Support Price) of ₹ 100 that the FCI (Food Corporation of India) agrees to pay to the farmers for a unit of farm produce, the APMCs hold back around 7%-10% as commission. 
• The farmer officially receives around ₹ 90-93. Unofficially the mandis force the farmer to sell at a much lower rates and the farmer is forced to accept it for the fear of wastage of his produce stuck outside the mandis until he agrees. 
• The farmers often get their payments very late too.

These mandis also buy from farmers to sell to private players (as farmers are not allowed to directly sell to private buyers). There is big problem there too. E.g., the potato which the consumer buys at ₹ 30-60 a kg is bought at ₹ 1 or ₹ 2 a kg by these mandis from the farmers. Sad story. If you let private players enter the supply chain, the consumers could buy at ₹15 a kg and the farmer could still earn ₹ 10 a kg.

And that's exactly what the middlemen don't want to happen, because their monopoly and arm-twisting would be destroyed. And hence the protests. 

The government met the agitators 12 times in last 4 months showing readiness to discuss each and every point of contention in the new laws. But each time the protestors' demand was only one - "Role back all three laws". Now that's a bizarre ask.

Govt did not budge. The agitation went from Punjab & Haryana to Delhi and now to western UP and then it started fizzling out. The newly 'self-appointed' leader of the agitation - Rakesh Tikait is making claims of taking the agitation to other parts of the country. Oh sure Mr. Tikait - please do. Check out what response you get.

But here is the turning point that took the fizz out of these protests. A master-stroke of sorts. The change is pertaining to how MSP payment fulfilment would work. With the proposed change, the FCI would deposit the MSP money directly into the bank accounts of the farmers, and the middlemen/mandis will then have to take their commission from the farmers. 

This has left the middlemen faceless and not knowing how to react or how to oppose. They can't oppose because a) there is nothing wrong in this rule; and b) any attempt to oppose will clearly highlight their ill intentions. This simple operational change in the fulfilment of payments has taken the air out of their the agitation. The Punjab government and middlemen were the only ones who still continued to be illogical and oppose this change. The reasons are obvious. The politicians there own a lot of companies which play the role of middlemen. But if recent news are to be believed, if anyone is budging its the Punjab government and their middlemen, and not the center. 

Well done Central Government. No media (which went overboard in covering the andolan) is seen keen to broadcast this particular news (because it shows how Modi government score a point over it's opposition). Who cares about the media though. The farmers are ready to embrace this change with open arms and that's what matters. .

The big push the central government gave to jana-dhan bank accounts for the poor and their linking to Aadhaar in its first term is going to make this change fairly easy to roll out. 

[Authored by: Mandar Garge, Apr 09, 2021]

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