Lets take a simple example to demonstrate how the Farm Bills will work.
Lets take a Farmer A who grows and sells Potatoes.
What Happens Today
Usually Farmer A - must sell his produce of Potatoes at a Local Mandi. The Mandi is controlled by the State Forces (APMC). The Mandi consists of a group of middlemen who will collectively buy all the Potatoes in that region. What the Mandi decides is final. The Mandi decides on a price of Rs. 1080/- for a Quintal of Potatoes (100 Kg).
So Farmer A is forced to sell his potatoes for Rs. 1080/- a Quintal - which the Mandis will sell to the wholesellers for Rs. 1950/- a Quintal - making a profit of almost 50% out of which they will pay - Mandi Fees and other taxes to the State Governments
The Wholesellers will buy at 1950/- a quintal from this Mandi and will sell to various distributors at rates ranging from Rs. 2350/- to Rs. 2750/- per Quintal depending on transportation costs.
The Distributors will then sell to smaller distributors for prices ranging from Rs. 3100/- to Rs. 3750/- depending on the transportation costs
Finally the Supermarkets and the Retailers will buy at prices ranging from Rs. 3850/- to Rs. 4350/- per Quintal.
The Potatoes are Finally Sold to the Retailer at Rs. 52/- per Kilogram (Rs. 5200/- per Quintal)
This means a Farmer gets Rs. 10.80/- for a Kilo of Potatoes which ultimately sells for Rs. 52/- per Kilo
The Mandi, The Wholeseller, The Distributors - absorb a huge chunk of money although they all contribute to state taxes and money.
What happens post Modis Bill
A Blank Carpet license has been given to Ambani, Adani and all the Oligarchs to establish Agri Businesses to offer the same farmer Rs. 2100/- per Quintal instead of Rs. 1080/- offered by the Mandis
The Agri Businesses will then sell directly to the retailers through their chain of supermarkets like Reliance Mart or D-Mart or Jio Mart for a price of say Rs. 48/- per Kilogram (Rs. 4800/- per Quintal)
In this way - the Farmer gets more than 100% higher rate for his potatoes. The Mandis can still get his potatoes but they have to compete and bid a higher price.
On Paper - the Farmer Benefits and so does the Consumer (who gets his potatoes for 4 Rupees Cheaper) and the Mandis have free and fair competition.
Its a Win - Win right?
Sadly it is not.
The Problem with the Oligarchs (Agri- Businesses) is that collectively they are a bigger Mandi than 1000000 Mandis combined.
Is there a single clause in the Bill that says - an Agri Business which purchases from the farmers cannot own more than 5% of any grocery or vegetable retail chain
The Answer is NO.
This means - Ambani can purchase Potatoes as an Agri Business and stock his own Reliance mart and Jio Mart, D-Mart can purchase Potatoes as an Agri Business and stock their own D-Mart and so on and so forth.
Eventually - they corner the market
They ensure that the 5–6 Oligarchs take control of the entire supply of potatoes -and ensure that the other retailers who sell potatoes are sold their potatoes at 30% or so higher price and go out of business.
They ensure that the Mandis which simply cannot afford to match the Oligarchs in their offers - will eventually fold up and go out of business.
Once the Mandis fold up- the Oligarchs are in total control which means they can control and handle pricing in any manner they see fit - just like Mandis do except on a much larger scale.
IN SHORT THE OLIGARCHS (AGRI BUSINESSES) WILL DO THE SAME THINGS MANDIS ARE DOING
Why will this happen?
The Answer because - Thats what always happens in India
In US - you have the 5% Law in 33 States where no Agro Business that buys produce (Plant or Animal) can have a larger than 5% stake in any retail chain selling produce or any food manufacture chain that makes food products.
In China - you have a same law (Implemented by Deng in 1991) - where Agro Wholesellers and Chains cannot impose a profit exceeding 32% and this profit is linked wholly to the Productivity Index (Measured by the Flood of Yangtze and Rainfall and Worm infestation - depending on the Crop in question)
These tough legislations and rules - ensure that (a) The Farmer is not exploited (b) The Common Man is not exploited
Narendra Modis Bill - has not a single sentence where
(a) A Farmer has any protection against Bad Weather, Bad Debts or Bad Crops
(b) A Consumer has protection from an Agri Busieness also retailing the same Produce and creating a massive concerted Monopoly
Long Term Issues:-
(a) Just like Mandis - the Agri Businesses will start dictating prices which will be more unfair than Mandi Prices since the Political Element (Vote Bank Politics) becomes missing
(b) Mandis will go out of business eventually which means MSPs will disappear.
(c) The Oligarchs will find some way to squeeze the common man - once they have a Monopoly in vegetables and pulses and with removal of stock limits - they are entirely and completely in charge.
(d) State Govts will be suffer loss of revenue
Conclusion -
Either the Bill is a half baked piece of Tomfoolery which has not seen through the Implications or potential for utter misuse since it specifically excludes a lot of clauses which US or China have to really protect consumers and farmers - especially Conflict of interest clauses and 5% ownership clauses.
OR
The Bill is a deliberate quid pro quo aimed at getting a handful of votes in key areas and at the same time handing over the eventual food production and control - so far in the hands of small retailers to the Big names like D-Mart or Reliance Mart.
Thanks for Reading
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