Need for the procurement system

Context- Dismantling the procurement system is neither in the interests of farmers nor the government.

What are the concerns of farmers related to new farmer’s acts?

Farmer’s concern- 

• Their main worry is about a possible withdrawal of the Minimum Support Price (MSP) and a dismantling of the public procurement of grains.
• This could corporatize agriculture; threaten the current mandi network and State revenues.

However, the government claims that the farmer’s new laws will-

• Break the monopoly- It allows intra-state and inter-state trade of farmers produce beyond the physical premises of Agricultural Produce and Livestock Market Committee (APMC) markets.
• The MSP-procurement system will continue, and that there is absolutely no plan to dismantle the system.
• Unshackle farmers– increase options for farmers in the output markets
• Boost competition– The competition will increase and private investment will reach villages. Farming infrastructure will be built and new employment opportunities will be generated.

Why farm protests have been highly intense in Punjab, Haryana?

1. PDS is the lifeline – The procurement system and MSP mechanism is strong in Punjab and Haryana.

• Nearly 88% of the paddy production and 70% of the wheat production in Punjab and Haryana (in 2017-18 and 2018-19) has been absorbed through public procurement.

2. Other states are hardly benefitted from the MSP mechanism.

Does government want this procurement system?

The need for procurement of paddy and wheat to government is even more because-

1. To support the needy one– There are nearly 80 crore NFSA (National Food Security Act) beneficiaries and an additional eight crore migrants who need to be supported under the PDS.
2. To maintain the PDS –  The government needs an uninterrupted supply of grain, particularly from these two States.
3. To overcome COVID-19 situation- Due to the onset of the novel coronavirus pandemic and the migrant crisis, government needs to procure a huge quantum of grains than in previous years as the government cannot afford to go to the open market.

What improvements are required in new farmer’s Act?

• Regulatory mechanism– Framework for supervision of all trade (irrespective of its being done on the electronic market or physical market) to ensure fair play by private players vis-à-vis farmers
• Lack of transparency in trade area transactions are two of the major limitations that need to be addressed immediately.

Instituting these safeguards will make the reforms foolproof.

What is the way forward?

• The government has to continue its procurement from Punjab and Haryana even after the COVID-19 situation improves and the migrant crisis abates, as the obligations under the NFSA will continue.
• The government should reach out to the farmer groups and assures them of the indispensability of MSP-procurement system.