Perpetually abroad, Modi loses sight of the grassroots mauled by demonetization

[footmarks]

Contract farming turns the farmer into a bonded labor. No independent farmer wants that.

The trade restrictions in fruits and vegetables are such that it is sometimes easier for traders to import goods from abroad than purchase the same from a neighbouring state.

APMC rules mandate that the sale or purchase of agricultural commodities notified under it are to be carried out in specified areas. In India, agricultural marketing is a state subject and that brings its own restrictions on trade.

If you want free trade in Agriculture, we need a separate law like GST to be passed in parliament.

BTW Bihar scrapped the APMC act. Other states however still have it.

Seriously? contract farming turns farmer into bonded labor? This is silly.Farming Contract, as per govt guidelines, enables farmers to sell their produce in market IF they get a price more than what the contracting party is giving. Contract farming basically cover three things - what to produce (onus on farmer), a minimum price guarantee (onus on contracting party) and minimum quality standards (onus on both parties). Contracts are central to any business, it does not make anyone bonded - there are ways to terminate a contract (and laws to safeguard rights to terminate a contract on reasonable terms).

 

[Bibo]

Seriously? contract farming turns farmer into bonded labor? This is silly.Farming Contract, as per govt guidelines, enables farmers to sell their produce in market IF they get a price more than what the contracting party is giving. Contract farming basically cover three things - what to produce (onus on farmer), a minimum price guarantee (onus on contracting party) and minimum quality standards (onus on both parties). Contracts are central to any business, it does not make anyone bonded - there are ways to terminate a contract (and laws to safeguard rights to terminate a contract on reasonable terms).

Yes seriously, In contract farming in India, the RISK is NOT SHARED.

The farmer alone assumes ALL THE RISK. But the profit is shared by both.

Unless risk is shared, it is unfair trade practices. For example, no compensation or insurance is provided for crop failure.

Not to mention that the Legal power of a corporation vs a small farmer is lopsided in India. For all practical matters he is at the mercy of the corporation.

 

[footmarks]

Yes seriously, In contract farming in India, the RISK is NOT SHARED.

The farmer alone assumes ALL THE RISK. But the profit is shared by both.

Unless risk is shared, it is unfair trade practices. For example, no compensation or insurance is provided for crop failure.

Not to mention that the Legal power of a corporation vs a small farmer is lopsided in India. For all practical matters he is at the mercy of the corporation.

Have you even seen any real farming contract? Crop insurance cover from an insurance provider is a must for entering into contract (at least in the contract that I have read). As a result, cost of premium is a part of cost of production, and hence minimum profit (basis minimum purchase price) is entirely of farmer's. Companies (contracting parties) enter into farming contract to hedge against supply constraints and abnormal price increase.

And legal power may be lop-sided, but political power is lop sided too (in reverse).

We need to deconstruct our stereotypes about farmers and farming in India. The lowest strata, the poorest and smallest of the farmers are suffering, I agree. But so is the lowest strata in general too. That suffering is not limited to farmers only.

 

[Bibo]

Have you even seen any real farming contract? Crop insurance cover from an insurance provider is a must for entering into contract (at least in the contract that I have read). As a result, cost of premium is a part of cost of production, and hence minimum profit (basis minimum purchase price) is entirely of farmer's. Companies (contracting parties) enter into farming contract to hedge against supply constraints and abnormal price increase.

And legal power may be lop-sided, but political power is lop sided too (in reverse).

We need to deconstruct our stereotypes about farmers and farming in India. The lowest strata, the poorest and smallest of the farmers are suffering, I agree. But so is the lowest strata in general too. That suffering is not limited to farmers only.

Contract farmers HAVE NO POLITICAL POWER

At best they can appeal to the local MLA if there are sufficient farmers like him to make up for voting numbers of if he is of the same caste.

I have seen enough contract to know that corporate do not ensure that insurance is taken. The farmer is not savy enough and is most times desperate enough to save some money by not taking the insurance. (Most times he wants to avoid the hassle) Irrespective of why the companies go into contract, the farmer is always dealing with abnormal risks.

Its only now that farmer are taking benefit of Pradhan Mantri Fasal Bima Yojana and taking up insurance.

 

[footmarks]

Contract farmers HAVE NO POLITICAL POWER

At best they can appeal to the local MLA if there are sufficient farmers like him to make up for voting numbers of if he is of the same caste.

I have seen enough contract to know that corporate do not ensure that insurance is taken. The farmer is not savy enough and is most times desperate enough to save some money by not taking the insurance. (Most times he wants to avoid the hassle) Irrespective of why the companies go into contract, the farmer is always dealing with abnormal risks.

Its only now that farmer are taking benefit of Pradhan Mantri Fasal Bima Yojana and taking up insurance.

Tell me which contract you have seen?

 

[The_Showstopper]

And what are these other ways? What demonetization did (an I am not a supporter of demonetization too, but few things are very obvious now, so just stating) is bring out the fear of being caught by law among the money hoarders. You can't keep your earnings in cash anymore (it's risky), you have to scout for new avenues to park illegal money or just have to pay tax and be happy. And what are the new avenues available? gold and real estate, the traditional ones are under serious watch by govt.

But sure, demonetization had some serious bad affects on general public. Not during those 2 months, but as an aftermath of it. with cash not being the primary source of trade anymore, the "cost" of tax by the traders are being transferred to the end customers (read inflation).

There are many ways to increase tax-base, the below links will list a few ways

Widening the tax base requires a more efficient taxman
Expanding Tax Base In India- TARC Recommends Measures
Mine the data: To widen India's direct tax base

Demonitization had more negatives than it had positives, I hope you agree with that.

 

[wiseone2]

Do you even know what a "Agricultural Produce Market Committee" is ?

Farmers DO NOT HAVE THE FREEDOM TO SELL THEIR PRODUCE TO ANYONE THEY WANT.

Have HAVE to sell their produce to "authorized" Broker / Middle men in "authorized" Mandi's.

They CANNOT sell it directly to supermarkets. They cannot store it in warehouses unless its "authorized" by the APMC.

The Govt has CREATED THESE Middle men .............. you want to give credit to the govt. for this ? Do so by all means .

Rajan forced the banks to disclose the NPA's but he did nothing to reduce interest rates and make credit available for the needy. All he did was bring transparency when he was forced to by the Modi govt. Not before.

Why would a Farmer treat farming as a business when its not profitable for him ? He does it because its probably the only thing he knows how and that gives him dignity.

Make farming profitable, reduce cost and increase price of produce.



LOL.... read up on APMC and their monopoly. You are talking about things you have no idea about.

Selling rice IS more profitable than growing rice .......... and you can thank the APMC for that. Thank the MSP for that.

Farming is a HIGH RISK sector in India. Only the desperate do it because they don't have any other choice. And for that they get exploited for their efforts at feeding us.

Which state is this ? There are no government restrictions in Southern India - AP, Karnataka & TN
Those regulations have to go

 

[Soumitra]

first of all, the term "sickular" was founded by our dear bothers n sisters who see the world in orange (quite healthy for the body and equally poisonous for the mind).
BJP will not and cannot be secular (not sickular) till its under the babaji called RSS. the day BJP gets out of the latter's shadow and gets its own face, we shall judge then how much secular BJP will be. till then, BJP will be a hindu nationalist party, no more no less. but its not necessary that everything that they do will be against secularism, like , implementing a railway project.
regarding UCC, who told you that anybody secular will oppose the same. heck anybody remotely secular will fight tooth n nail for it. so no, europe and america are essentially in secular hands.
rest i agree.

I already said that "we" call them sickular. By "we" I meant BJP supporters. You may say they see the world as orange - no problem in that

I never said BJP is Secular. But it is not Sikular either. It is open that it is hindu nationalist party.

My point was that there are no truly secular parties in India. So what right do other parties have to be holier than thou and declaring that they are secualr and BJP is communal

 

[kadamba-warrior]

So you think Hindus are going to go to crowded places and blow themselves up claiming Shiva is better ?

Is that what history teaches you ?

Is that why you don't feel optimistic ?

Is this guy for real? Comprehension problems?

 

[kadamba-warrior]

Bro, trust me, I know APMC very well. Individual farmers cannot sell directly, but contract farming can be done. Plus, farmer cooperatives CAN sell to supermarkets or whoever they want to under APMC act. Read the law first. The original intent of APMC act was to create a marketplace for farmers/sellers and buyers to trade. Overtime, just like license raj, it became a hub of malpractices. And the trader lobby today is so strong, they do not allow govt to scrap APMC act (agriculture being a state subject further make it difficult. It is politically not expandable). It's this lobby that resists FDI in modern retail.

This is exactly what I have wondered for a long time!

Every politician and his party worth their salt, swears by the farmers but how come so little has been done to rid the farmers of their misery at the hands of APMC's?

I too have seen (a little) poor farmers exploited by the middlemen - as it usually happens all over the world. But what baffles me totally is that this is all STATE-SANCTIONED in India. That too when every politician says that he/she is for poor and for farmers!!

More than the loan waivers, I hope government abolishes the middlemen system, provides for a fair marketing practice (something like e-market that was recently launched) and do something about water storage/management/rationing to provide irrigation for the poorest of farmers.

Else, the distress in farm sector is only going to get more desperate and severely damage our food security.

 

[Nilgiri]

@Nilgiri Anna, process of hay making is quite old. it was done by the opposition in the country since its birth. who do you think made the most hay till date ?

Obv whoever was in opposition the most....i.e non-congress parties. But there is productive hay making and hay flinging....more of the latter is happening now most unfortunately. I do expect better of Indian opposition parties (targeting real issues/lapses constructively) given the improved socioeconomic climate of India now compared to when were in terrible dire straits for a good 30 - 40 years.

Someone has to take first step on that, it is not on BJP to really do so since they occupying the castle right now....but even with that I have found they actually are open to criticizing themselves a lot more (given they got no holy dynasty to protect) compared to others...but looks like no one wants to try change tack outside the castle.

We'll let Indian public decide which is more relevant and mature to them....and hoepfully that will add pressure for real structured, issue-focused + delivery-focused parties to arise, that create and enrich debate rather than engage in shouting competition - because BJP is easily going to win the latter for forseeable future (on the ground where it counts as opposed to say media where things are skewed to the old luytens guard).

 

[kadamba-warrior]

It's not that simple and this is the same case all over the world.
No govt can allow daily consumables, especially food to cost more. They will loose mandate faster because the impact is much broader and much worse.
All govt strive to keep the cost of food items down by any means. This invariably rises problems for farmers.

In western countries, farmers are taken care of very well by other means. In India, because of our poverty, it is not possible for now.

You do realize that the middlemen (by state-sanction through APMC laws), actually do jack up the prices and the consumers do end up paying higher prices anyway, right?

I am only saying that we need to eliminate the middlemen and thereby let farmers sell directly to consumers and get all benefits. I don't think the prices would be any higher than they are right now.

 

[wiseone2]

Agreed on this point and I see only BJP doing something about it. This takes times as well as huge political capital & real capital.

One important aspect of having middleman is the supply chain that comes with it. If you take out the middleman, where is the alternative supply chain? The last thing I want is govt involvement in supply chain part as this would lead to huge corruption. So, what's the solution?

Farmers, especially small & medium ones can not afford the costs of the supply chain, hence you see at times tomatoes being thrown on roads because for farmers taking them to market is a bigger cost.

This is where you need effective retail which needs to come in.
Farmers -> counters like in most big retail stores. The govt can come in and ensure the profits are shared with the farmers with few rules in place.

The other aspect is the political clout of the middlemen. They wield enormous power, more than farmers with the sheer number of people that are involved in this chain, which is much significant than farmers.
It's not that simple. There is supply-chain aspect as well as electoral aspect.
Hence the reason why we should be supporting farmers, especially the small ones with frequent loan wavers and subsidies.

India's retail system is more inefficient than farming sector

 

[footmarks]

You do realize that the middlemen (by state-sanction through APMC laws), actually do jack up the prices and the consumers do end up paying higher prices anyway, right?

I am only saying that we need to eliminate the middlemen and thereby let farmers sell directly to consumers and get all benefits. I don't think the prices would be any higher than they are right now.

Model APMC act - 2003 tried to address some of the issues you mentioned. But Agriculture being a state subject, it had to be ratified by each state Govt to be established pan India (same as GST, even more revolutionary as it concerns 65% of our workforce, employed in agriculture and allied sectors). Needless to say, only a handful of states (4, I think) ratified it and that too after diluting it. Talk about political will-power.

Middlemen to serve important role in supply chain of perishables. They add value, albeit they charge much more than what they add. When modern retail came in early 2000's, companies tried to bypass these middlemen to get better prices and to pass on lower prices to customers by directly procuring fruits & veg from farmers (farm to fork model, as they say). It turned out, this was not viable from logistics point of view. There are 100's of farmers in each village, each having a small produce to sell. Reaching out to 1000's of farmers and negotiating prices individually with each of them, spread across far flung areas across the country - it was a nightmare.

APMC and mandi system was envisaged to counter exactly this problem and to establish a viable supply chain for agri-produce. There are small aggregators in local mandis who buy from individual small farmers, then there are traders who facilitate trade between small aggregators in local mandis and big aggregators in bigger mandis in cities. There is a whole list of value adding middlemen.

Problem is, they are looting both the producer and the consumer. I did research project for my MBA on "value chain of fruits and vegetables". As an example, Okra/Ladyfinger - farmers were given Rs 2.5/Kg price in local mandi. By the time it reaches state capital mandi, Prices inflate to Rs10/Kg. In Delhi Mandi the arrival price becomes Rs20/Kg. In Retail stores inside malls it was selling at Rs 28 to Rs 32/kg and at local veg seller in sector markets of Gurgaon, retail price was Rs 35/Kg. And this was around 10 years back.

 

[footmarks]

Most of the costs are due to the long transport times & costs, which hopefully GST will address.
GST will do wonders to the farm sector especially. Now a farmer can sell his wares anywhere in India.

It would be interesting to do a study on how much cost the transport adds to perishables both with in the state as well as across the states.

Hopefully. we are hoping for too long. Farmers bringing their produce to sell at local mandis also incur transport costs. Yes, there is a significant cost factor in holding and transporting perishables and wastages are high. However, even though middlemen charge a significant (exorbitant) price for the small vale they add, these people should invest in infrastructure too.