Where Is India's Farming Sector Headed?

Farmers across the country do not face the same set of problems and are not looking for the same set of solutions. Farmers in south India do not have a significant stake in the rice and wheat market, so the question of legal guarantee for Minimum Support Price (MSP) does not have an impact on them. While farmers in Bihar and Jharkhand are hit by poor systems and extreme weather events, Maharashtra’s farmers have distanced themselves from the protest at Punjab-Haryana border, as they do not subscribe to the idea of legal guarantee for MSPܫ. They believe legal guarantee does not work in the absence of a corresponding Act.

ꦍSo why is south India not enthusiastic about the farmers’ protest?

🐼On November 11, 2023, K.G. Prasad, a paddy farmer from Kuttanad, Alappuzha—Kerala’s ‘rice bowl’—died by suicide. In his note, he blamed the government and banks for his plight. Denied a loan due to an unpaid Paddy Receipt Sheet (PRS) loan—meant to be repaid by the government—Prasad’s case brought attention to the widespread issue of delayed government payments, which adversely affect farmers’ credit scores. The PRS system, intended to enable farmers to secure loans against paddy sales, often fails due to government delays, pushing farmers into financial crisis.

Regional Challenges and Divergences

While northern farmers protest the draft National Policy Framework on Agricultural Marketing, southern states like Kerala and Tamil Nadu grapple with distinct challenges. Without mandis꧂, the Agricultural Produce Market Committee (APMC) Act does not apply, and these states rely on government-operated Civil Supplies Corporations, cooperatives, and collectives for crop procurement. This system helps to reduce exploitation by middlemen.

The legal guarantee for MSP is less of a priority in south India, where agriculture is diversified. In Kerala, 80 per cent of agricultural output consists of cash crops, while in Tamil Nadu, crops like maize, groundnut and coconut complement paddy farming. Paddy accounts for only 30 per cent of Tamil Nadu’s farming population and 35 per cent of its cropped area.

๊Thomas Isaac, economist and former Kerala finance minister, notes the adverse impact of trade liberalisation under agreements such as the South Asian Free Trade Area (SAFTA), particularly on Kerala’s commercial crops like rubber, tea and coffee. Over a decade, import tariffs on these crops were drastically reduced, compounding farmers’ problems. According to the Kerala State Planning Board, the import tariff for tea and coffee was gradually reduced from 100 per cent to 45 per cent, and for pepper, from 70 per cent to 50 per cent, over a period of 10 years.

MSP Implementation in the South

🔯Kerala boasts the highest MSP for paddy at Rs 2,650 per quintal and has extended MSP to 16 vegetable varieties. However, financial constraints hinder effective implementation. The PRS system, aimed at timely payments, often fails, pushing farmers into debt. Erratic rainfall, rising temperatures and extreme weather events exacerbate the situation, reducing yields for both paddy and commercial crops by 30-70 per cent.

🔜In Tamil Nadu, lack of awareness about MSP compounds the issue. A State Planning Commission report found 68 per cent of agricultural households were unaware of MSP, with many selling to private players rather than government agencies. Paddy procurement has significantly declined, with figures dropping from 44.26 lakh tonnes in 2022-23 to 27.74 lakh tonnes in 2023-24. Rapid urbanisation and shrinking agricultural activity mirror the trends in Kerala.

Southern States’ Focus on Agriculture

Despite challenges, the southern states demonstrate a proactive approach to agriculture. Karnataka’s 2024 budget prioritised agriculture through initiatives like “Raitha Samruddhi”, loan waivers and increased MSP rates for paddy and ragi𒊎. The state is also establishing an Agriculture Development Authority (ADA) to oversee policies and direct benefit transfers.

ღHowever, Karnataka faces significant hurdles, including high farmer indebtedness, marginal landholdings and shifts in cropping patterns. Paddy cultivation has declined by 36 per cent, while crops like Bengal gram and soybean have seen a significant increase.

A Divergence in Farmer Movements

ꦡWhile northern farmers demand legal guarantees for MSP on 22 crops, southern states have shown limited enthusiasm for these protests. Their diversified agricultural focus and smaller stakes in rice and wheat markets create less urgency for MSP legislation. Although sympathetic to northern farmers’ struggles, the southern states remain relatively uninvolved in the broader movement.

Bihar: APMC Act Scrapped, With no Alternative

𝓀Bihar’s agricultural sector highlights the fallout of deregulating farming and dismantling protective measures for farmers. Fourteen years after repealing the APMC Act in 2006, small farmers like Vishwa Anand from Muzaffarpur continue to face financial insecurity. The APMC, which regulated markets and ensured fair prices, was replaced by Primary Agricultural Credit Societies (PACS), leaving farmers vulnerable to exploitation by local traders offering prices far below the MSP.

“The Nitish Kumar government 🅺replaced the APMC with PACS, but PACS often refuse to buy our wheat, citing reasons like moisture,” says Anand, reflecting the broader crisis. With PACS failing to procure crops at fair rates, farmers are forced to sell to traders at extremely low prices.

PACS were introduced as a decentralised alternative to APMCs to facilitate foodgrain procurement at the panchayat level and encourage private market participation. However, the system has proven far from effective. The PACS act as intermediaries, buying grain from farmers and selling it to agencies like the Food ꧟Corporation of India (FCI) or private wholesalers. Yet, inefficiencies and corruption have rendered the system unreliable.

ꦆFarmers report delays in payments and claim they are often compelled to sell their produce below the MSP. “The government machinery is slow and corrupt,” alleges Anand. Moreover, PACS have become another layer of middlemen with allegations of corruption, he says.

Under the APMC system, farmers could rent space at regulated mandis for a nominal fee. These mandis♏ ensured MSP enforcement, they required registered buyers and provided storage and drying facilities, ensuring prompt payment to farmers. In contrast, PACS require land and identity documentation for registration, excluding many marginal farmers. Without their own funds, PACS depend on payments from state agencies, delaying payments to farmers until the next cropping season. These delays force farmers to sell their produce below MSP to fund the next planting season.

Delay in Procurement

ꦉWhile paddy is harvested in October, PACS procurement typically starts in late November or December. “We receive loans from state banks to procure grain, but payments to farmers are disbursed only after the grain is processed and sold to mills,” explains a PACS president in Darbhanga. The resulting delay forces farmers to sell below MSP to meet immediate financial needs.

♔Without proper storage or timely payments, farmers often sell their produce at distress prices. “We save some paddy for consumption and sell the rest at throwaway prices to middlemen,” says Anand. Middlemen exploit the situation, registering as authorised buyers and purchasing grain at low rates before selling it to PACS at MSP.

♒According to Anindo Banerjee, director at the Praxis Institute for Participatory Practices, even if storage facilities were used to their maximum capacity, it can only store three per cent of the state’s agricultural production. The lack of reliable procurement and storage has created a crisis, leaving small farmers vulnerable to exploitation.

An Unsustainable Livelihood

꧂Farmers, who make up 77 per cent of Bihar’s workforce and contribute 35 per cent to its GDP, are finding agriculture increasingly unviable. Amarjeet Kumar Rai, a landless farmer, explains, “By the time we harvest, local markets are flooded with produce, forcing us to sell paddy at Rs 1,200 per quintal—far below the MSP.”

🦂With no regulated markets, local traders dictate the prices, exploiting oversupply during the harvest season. Farmers, desperate for immediate cash and lacking storage options, are left with little choice but to sell at these low rates, perpetuating a cycle of poverty and financial strain.

Jharkhand: Unmet Promises on MSP

✅Farming in Jharkhand presents a dual challenge: inadequate irrigation and frequent drought. These issues significantly impact agriculture in the state. Due to its mountainous terrain, Jharkhand lacks a proper irrigation system, with 80 per cent of the agricultural land dependent on rainfall. Since the formation of the state in 2000, Jharkhand has experienced 15 drought events over 23 years, according to reports.

𒀰The predominant farming practice is single-crop rice cultivation, heavily dependent on rainfall. When rainfall is inadequate, farmers face severe financial distress. In 2024, favourable rainfall resulted in a good rice harvest, but farmers often struggle to receive a fair price for their produce. The MSP payments are frequently delayed, sometimes taking up to a year.

🐟In Bero block, 45 km from Ranchi, Sukhram Minz, a farmer from Ita Panchayat, harvested around 100 quintals of rice from four acres. He sold 45 quintals at a government procurement centre for Rs 2,400 per quintal. Minz, 36, remarked, “This year, rainfall was good, so the paddy crop flourished. However, the government’s promise to increase MSP from Rs 2,400 to Rs 3,200 per quintal turned out to be false.”

With good rainfall, the Jharkhand government set a target to procure 60 lakh quintals of rice this year. The procurement process, conducted through 680 PACS centres across 24 districts, typically begins on December 15. Ahead of the assembly elections, Chief Minister Hemant Soren ✤announced a Rs 100 per quintal bonus on rice, effectively raising the central MSP of Rs 2,300 to Rs 2,400. However, farmers remind the government of its election manifesto promise to raise MSP to Rs 3,200. Despite the JMM-led INDIA alliance returning to power, farmers question its commitment to these promises.

꧒Farmer leaders argue that agricultural issues have never been a priority for any government in Jharkhand, and farmers lack strong collective movements to demand their rights. Birendra Kumar, a leader of the Jharkhand State Kisan Sabha, highlights the absence of APMC mandis in the state, unlike Haryana, Punjab and Uttar Pradesh. Without these markets, farmers cannot organise large-scale protests over MSP delays. Instead, rice procurement through PACS is plagued by scams.

💞Kumar also points out other challenges farmers face, including unfulfilled government promises on MSP and delayed payments. These delays often compel farmers to sell their produce at lower prices to middlemen, who then sell it at PACS centres at Rs 2,400 per quintal. Limited to cultivating a single rice crop due to irrigation constraints, farmers in Jharkhand only benefit from MSP for rice. Wheat farming is unfeasible due to water scarcity, prompting demands for MSP on other crops such as millet, maize and linseed. With large-scale vegetable farming also prevalent, farmers are urging the government to emulate Kerala and procure vegetables at MSP.

𓄧According to the 2011 Census, 80 per cent of Jharkhand’s 3.29 crore population resides in rural areas, with around 70 per cent engaged in farming. Despite this, the government views farmers as a smaller segment. Farmer organisations claim there are over 50 lakh farmers in the state, though the Jharkhand State Crop Relief Scheme’s (JSCRS) website reports 45.4 lakh registered farmers. By December 2024, only about 2.3 lakh farmers had registered to sell their rice.

Maharashtra: Why Farmers are Not Protesting This Time

ꩲThree years before the Delhi farm protests grabbed headlines, thousands of angry farmers marched down the roads of Maharashtra in a historic agitation, throwing vegetables and spilling milk and threatening to stop the supply of fresh food produce to the markets.

Frustration among the farmers had been building for a long time. Maharashtra has the highest number of farmer suicidesꦏ, with some estimates suggesting over four lakh debt-ridden farmers taking their lives over the last two decades.

The farmers’ demands included the waiver of farm loans and setting the MSP for all crops, as per 🍌the recommendations of the M. S. Swaminathan Committeeﷺ, similar to the ones raised by the farmers in Punjab in the ongoing protests outside Delhi.

🐼In 2017 and 2019, the Maharashtra government introduced two debt waiver schemes to pacify farmers. The main demand for MSP remained unmet. Yet, farmers from Maharashtra are noticeably absent from the current protests in Delhi.

𝔍Farm organisations and farmers across the country endorse the demand for an MSP guarantee, says Raju Shetti, a former MP and leader of the Swabhimani Shetkari Sanghatana, who participated in the 2020 agitation. Without the MSP Act, the MSP guarantee will work only on paper, as there is no mechanism of action against traders who purchase farm produce at a lesser price, he said. “What our farmers need is a proper implementation of the MSP Act for the sale of all agricultural commodities which will be legally binding and can lead to penalties or imprisonment in case of illegalities,” he added.

🍬In 2018, Shetti tabled a private member’s bill in Parliament titled ‘Farmers’ Right to Guaranteed Remunerative Minimum Support Prices for Agricultural Commodities Bill’ so that farmers are guaranteed remunerative minimum support prices for agricultural produce with a minimum 50 per cent profit margin above the comprehensive cost of production upon sale. The bill was not approved and remains pending.

ꦏThe Shetkari Sanghatana opted out of the Delhi protests because it supported open market trade for farmers. “The MSP guarantee should not be the first option. Farmers will prosper if the government does not interfere with export restrictions,” asserts Anil Ghanwat, president of the Sanghatana, and former member of the Supreme Court-appointed farm panel.

ಞThe Union government uses the regulatory Minimum Export Price (MEP) mechanism to control excessive exports and ensure adequate local supply by discouraging exports when domestic prices are high.

ꦿ“The price offered in the international market for agricultural produce is much higher than what farmers are forced to sell in the domestic market. Our demand is for open market policies in agriculture. If those rates are lower, then the farmers should seek procurement under the government’s MSP,” says Ghanwat.

Ghanwat cites the example of a shortage in the international markets for wheat after the outbreak of Russia’s war on Ukraineꦫ. Internationally, Indian farmers could have earned over Rs 3,000 per quintal for wheat. However, due to the government’s export restrictions, wheat prices dropped and approached MSP levels. Furthermore, the government dumped wheat from its buffer stock at a lower price in the market, which further drove down wheat prices.

The MEP threshold is used politically, farm activists have claimed. For instance, in Maharashtra, a major onion-producing state🐲, the Union government lifted the ban on onion exports ahead of the assembly elections in November. During the preceding Lok Sabha polls, the ruling BJP’s Mahayuti alliance faced significant losses in 12 onion-producing constituencies, largely due to widespread farmer discontent over the controversial export ban.

🤡Adapting to an open market for all agricultural crops with no limitations on exports around the year would be beneficial for farmers, Ghanwat insists.

By Shahina K K, Tarique Anwar, Shweta Desai and Md Asghar Khan

(This appeared in the print as 'All that they want')