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Can triple pricing fix the blunder of the new agrarian laws?

People First, an organisation that looks into the interest of the public sector has suggested a ‘triple pricing mechanism’ to correct the injustice of the recent agrarian laws.

Sabrangindia 03 Oct 2020

Farmers

The Centre’s three agrarian laws fail to ‘free’ farmers because they deliberately leave out the issue of pricing mechanism required for food grains, said People First, an organisation invested in the preservation of the public sector on October 1, 2020.

In a press release, the organisation members said that pricing mechanisms protect farmers from a triple-whammy: high risk due to exposure to natural elements, adverse terms of trade and non-remunerative prices.

“Farm products are critical to the life and livelihood of the entire citizenry. It can’t be subjected to the vagaries of a volatile market which could soon be dominated by predatory corporates and oligarchs,” they said.

Chairman M. G. Devashayam and Joint Convener D. Thomas Franco wrote that pricing mechanism should consider four essential factors: 

  • commitment of farmers and the issues that influences consumption

  • fair prices and protection of farmers and consumers against the vagaries of market forces 

  • reduction in cost of food grain procurement, storage, transportation and distribution 

  • an efficient delivery system to provide grains to the needy and effective intervention powers of the government to protect the interests of producers or consumers. 

To achieve these goals, the organisation suggested the methodology of ‘triple pricing.’

This mechanism was first recommended by the High-Powered Committee on Agricultural Policies and Programmes in 1990 headed by former Union Agriculture Minister Bhanu Pratap Singh and had top farmer-leaders. Chairman Devasahayam was a member of this Committee.

“It [triple pricing] will comprise of ‘parity price’ to fully compensate the farmers the cost of inputs and their other necessities of life, a ‘support price’ below which prices will not be allowed to fall, and ‘intervention price’ beyond which prices would not be allowed to rise,” said the statement.

This would mean that all, or part of the stocks, would be acquired by the government agencies at parity price as soon as the price of food grains in the open market rose above the fixed intervention price. Similarly, if the price falls below the support price, the farmers could sell their stocks to the government at the fixed support price. Competent Food Security Regulatory authorities with adequate powers to implement and monitor could effectively work such a mechanism.

Thus, the organisation argued that the mechanism would assure MSP to farmers and relatively stable costs to consumers. Traders would know the limits of their operation while small farmers would be saved from distress sales. The government would also have the facility to quickly locate and acquire food stocks in times of need.

“Committee’s recommendations were meant to prevent food inflation while making the farmer stand on his feet and be his own boss instead of depending on government charity or market volatility,” said Chairman Devashayam, urging state governments if not the Centre to adopt such laws.

Supporting the country-wide protests of farmers, People First said that the recent laws would throw small and medium farmers “to the wolves to be torn apart at their will.”

The organisation said that the laws provided for contract farming and deregulated production, supply and distribution of cereals, pulses, potatoes, onion and edible oilseeds. Moreover, People First claimed that the legislations were a direct violation of the federal structure of India since agriculture and markets are state subjects. They were also unconvinced of the Centre’s explanation that trade and commerce in food items is part of the concurrent list.

“APMCs were set up with the objective of ensuring fair trade between buyers and sellers for effective price discovery of farmers’ produce. Dismantling of the APMCs would mean the ending of assured procurement of food grains at minimum support prices (MSP)” they said.

Related:

Free trade for all farmers (but subject to restrictions!)

Farmer Protests: From streets to social media

False narratives cannot fill a farmer’s empty stomach

Amendments to agricultural laws, dangerous for farmers: National Unions

Can triple pricing fix the blunder of the new agrarian laws?

People First, an organisation that looks into the interest of the public sector has suggested a ‘triple pricing mechanism’ to correct the injustice of the recent agrarian laws.

Farmers

The Centre’s three agrarian laws fail to ‘free’ farmers because they deliberately leave out the issue of pricing mechanism required for food grains, said People First, an organisation invested in the preservation of the public sector on October 1, 2020.

In a press release, the organisation members said that pricing mechanisms protect farmers from a triple-whammy: high risk due to exposure to natural elements, adverse terms of trade and non-remunerative prices.

“Farm products are critical to the life and livelihood of the entire citizenry. It can’t be subjected to the vagaries of a volatile market which could soon be dominated by predatory corporates and oligarchs,” they said.

Chairman M. G. Devashayam and Joint Convener D. Thomas Franco wrote that pricing mechanism should consider four essential factors: 

  • commitment of farmers and the issues that influences consumption

  • fair prices and protection of farmers and consumers against the vagaries of market forces 

  • reduction in cost of food grain procurement, storage, transportation and distribution 

  • an efficient delivery system to provide grains to the needy and effective intervention powers of the government to protect the interests of producers or consumers. 

To achieve these goals, the organisation suggested the methodology of ‘triple pricing.’

This mechanism was first recommended by the High-Powered Committee on Agricultural Policies and Programmes in 1990 headed by former Union Agriculture Minister Bhanu Pratap Singh and had top farmer-leaders. Chairman Devasahayam was a member of this Committee.

“It [triple pricing] will comprise of ‘parity price’ to fully compensate the farmers the cost of inputs and their other necessities of life, a ‘support price’ below which prices will not be allowed to fall, and ‘intervention price’ beyond which prices would not be allowed to rise,” said the statement.

This would mean that all, or part of the stocks, would be acquired by the government agencies at parity price as soon as the price of food grains in the open market rose above the fixed intervention price. Similarly, if the price falls below the support price, the farmers could sell their stocks to the government at the fixed support price. Competent Food Security Regulatory authorities with adequate powers to implement and monitor could effectively work such a mechanism.

Thus, the organisation argued that the mechanism would assure MSP to farmers and relatively stable costs to consumers. Traders would know the limits of their operation while small farmers would be saved from distress sales. The government would also have the facility to quickly locate and acquire food stocks in times of need.

“Committee’s recommendations were meant to prevent food inflation while making the farmer stand on his feet and be his own boss instead of depending on government charity or market volatility,” said Chairman Devashayam, urging state governments if not the Centre to adopt such laws.

Supporting the country-wide protests of farmers, People First said that the recent laws would throw small and medium farmers “to the wolves to be torn apart at their will.”

The organisation said that the laws provided for contract farming and deregulated production, supply and distribution of cereals, pulses, potatoes, onion and edible oilseeds. Moreover, People First claimed that the legislations were a direct violation of the federal structure of India since agriculture and markets are state subjects. They were also unconvinced of the Centre’s explanation that trade and commerce in food items is part of the concurrent list.

“APMCs were set up with the objective of ensuring fair trade between buyers and sellers for effective price discovery of farmers’ produce. Dismantling of the APMCs would mean the ending of assured procurement of food grains at minimum support prices (MSP)” they said.

Related:

Free trade for all farmers (but subject to restrictions!)

Farmer Protests: From streets to social media

False narratives cannot fill a farmer’s empty stomach

Amendments to agricultural laws, dangerous for farmers: National Unions

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