New Farm Bills: What Experts Think About Its Impact On Odisha Farmers

Bhubaneswar: Even as the nation-wide protests by farmer over the recently passed Farm bills touched a crescendo today with the shutdown of India (Bharat Bandh), it seems the real entities who are going to be hit hard by the new bills are none other than the State governments, who are set to forego a chunk of tax/cess money from the procurement system.

Odisha also saw a shutdown on Tuesday, with both the Opposition, except BJP, and the ruling party supporting the farmers' agitation against the Centre. While Congress and Left parties were more vocal, ruling BJD lent a moral(tacit) support, which is evident from the closure of state government offices today.

The bone of contention for the farmers in the new bills is that the MSP system will get abrogated throughout the country.

"The new law will put farmers under the mercy of big corporate houses. The Centre is trying to destroy the mandi system, so that the big corporate houses can buy the produces from farmers at an ultra cheaper rate. We demand for the complete rescinding of the bills," charged Akshaya Kumar, coordinator Nabanirman Krushak Sangathan.

Will MSP Be Abolished?

As per Tusharkanti Ghosh, Chief economic adviser, SBI, the bill has no such provisions, whereby the MSP on farm produces will get abolished. "It has only restrained the states from levying fees/cess on farm produces that are to be sold outside the mandis. Since states earn a hefty amount from such charges, it is the States who are going to lose, not farmers," he explained.

Will It Be A Bane For Odisha Farmers?

"The new farm bills will be a boon for the farmers in Odisha. Because, unlike Punjab, 40 per cent farmers in the State are still out of the MSP loop at present. And majority of them are small and marginal farmers," said a DGM level official in Nabard here.

A Reality Check

The data with Nabard and State Cooperative department reveal that at present, mandis in the State charge fees at the rate of 2 per cent of MSP plus Rs 32/quintal for grade A paddy and 31.25/q for common grade paddy as the fixed charge. The budget data puts the total earning for Odisha at around Rs 335 crore per year.

The procurement data with the State Cooperation Department puts the total farmers who had availed MSP facility in the last kharif procurment season were around 9.2 lakh. It needs mentioning that Odisha has a total of 48 lakh farmer households, as per latest (2015-16) agriculture census. But the State Cooperative department data for the last five kharif procurement seasons reveals that, on an average 10 lakh farmers had sold their paddy at MSP, which is only around 20 per cent of total farmer households in Odisha.

More startling data is that the sellers outside mandis are none other than small and marginal farmers, who often sell their produce at below MSP. They did so for on the spot payment.

"State’s small and marginal farmers with nearly 73 per cent landholdings had contributed around 18 per cent of paddy procurement, whereas farmers with around 9 per cent landholdings contribute a whopping around 65 per cent. And these 9 per cent farmers are large & middle landholding farmers," observed a recent CACP(Commission for Agriculture Cost and Prices) report.

The CACP break-up of data further shows marginal farmers (who have below 1 hectare land) own State’s over 42 per cent of operational landholdings, had on average contributed a mere 5 per cent of paddy procurement during the period 2015-20.
Similarly, small farmers (owning 1-2 hectare land) who hold around 31 per cent landholdings contributed only 12.9 per cent.
In contrast, large farmers (having more than 4 hectares) owning a mere 1.4 per cent landholdings but grabbed a whopping over 36 per cent of paddy procurement pie.

The summary here is farmers having land of more than 2 hectare to over 10 hectare have availed the MSP to the hilt as together they accounted for 72.9 per cent of the paddy procured.

But the main objective of MSP is to ensure a price guarantee mechanism for small and marginal farmers, who are vulnerable to distress sale.

Why Marginal And Small Farmers Fail To Sell At MSP?

“Factors like no procurement centres in villages, lack of market access plus the high transportation cost, have dissuaded small and marginal farmers from availing the MSP in Odisha,” the CACP report observed.

As per Neeraj Kumar, Rural Development Professor at the XIMB, if the new farm bill gets implemented in letter and spirit, not only more farmers will avail MSP, but the reduction in procurement incidental cost (mandi fees + fixed chare) will bring down the price of rice for consumers in the State.