No bonus points in Farmville?

Added incentive In some states, governments give farmers a bonus in addition to the MSP
Added incentive In some states, governments give farmers a bonus in addition to the MSP. Photo: Vinay Sharma

As if staring at the threat of a drought was not enough, farmers will be denied the bonus that state governments had offered in addition to the Minimum Support Price (MSP). In a communiqué issued to food secretaries, the Union food and civil supplies ministry has urged the states to refrain from giving bonuses on wheat and rice. The Centre blamed this practice for distorting the commodity markets. It also warned that if the states did not comply, the Centre would stop grain procurement.

In both BJP-ruled states (Madhya Pradesh, Chhattisgarh, Rajasthan) and non-BJP states (Kerala and Tamil Nadu), the governments give farmers some bonus above the MSP. Not only does it benefit the farmers financially, it also motivates them to increase foodgrain production.

The Centre believes that states such as Madhya Pradesh, Rajasthan and Chhattisgarh procure more grain than required by giving extra bonus, which leads to an increased burden of food subsidy and storage on the Centre, in addition to distorting the commodity markets.

In a letter dated 12 June, the Centre warned that it would stop procuring foodgrain from states that give such bonus on wheat and rice. In that case, the states will have to mobilise resources for the additional procurement on their own, as well as arrange for its storage.

Along with the Food Corporation of India (FCI), the Union food ministry is keeping a close watch on all such states. It plans to restrict the Central pool procurement as per the grain consumption of the states, leaving the surplus stock to be disposed of by the state government.

However, the BJP governments of Madhya Pradesh and Chhattisgarh have opposed the Centre’s move and decided to stand by their farmers. They may have been forced to take this step because the BJP’s victories in the 2013 Assembly elections owe much to the farmers.

While addressing an election rally at Sohagpur in Hoshangabad district on 28 October 2013, Chief Minister Shivraj Singh Chouhan had promised the bonus to the farming community. “Madhya Pradesh will emerge globally as a state where every farmer will lead a prosperous life,” he had said. “Agriculture will be made a profitable business. In order for the farmers to get a reasonable profit on their produce, a bonus of Rs 150 per quintal is being granted on wheat, rice and maize. Wheat purchased at Rs 1,500 per quintal is available to the farmers at Rs 1 per kg.”

Chhattisgarh Chief Minister Raman Singh also conveyed his disapproval to Union Food and Civil Supplies Minister Ram Vilas Paswan. He said that in such a situation, the Centre should dispose of surplus stocks and also bear the losses. Raman Singh said that the state government had announced the bonus to promote foodgrain production.

Under the MSP policy, farmers are given the incentives when the state procurement agencies buy the foodgrain. The state government buys wheat and rice according to an mou signed between the state and the Centre under the Decentralised Grain Procurement Plan. There is no provision in the mou for the state to grant bonus to farmers on rice. There is no restriction on the Central pool procurement of additional stocks of rice and wheat.

Raman Singh also said that since rice procurement forms the chief livelihood of farmers in Chhattisgarh and the mainstay of its economy, no policy revision on decentralised grain procurement or MSP should be undertaken without taking the state into confidence.

Ignoring the Centre’s decree, the governments of Chhattisgarh and Madhya Pradesh are going ahead with their plans to distribute the bonus. In Chhattisgarh, farmers will receive a bonus of Rs 300 per quintal, for which the state has set aside Rs 2,400 crore. The bonus will be distributed in two instalments. In the first tranche, Rs 1,200 crore has already been distributed.

In 2013-14, co-operative procurement centres in Chhattisgarh acquired 73.02 lakh metric tonnes of rice against the state target of 72.13 lakh metric tonnes. A sum of Rs 9,658 crore was paid as MSP.

When Chhattisgarh was formed in 2000, 5-7 lakh metric tonnes of rice were procured every year. When the BJP came to power, the amount kept increasing every year. In 2012-13 alone, 71 lakh metric tonnes of rice were procured and Rs 1,950 crore was distributed as bonus.

Madhya Pradesh is also offering bonus on rice, wheat and maize at the rate of Rs 150 per quintal. For the 2014-15 rabi season, procurement of wheat at the set support price was completed in May. The government had set its target for wheat procurement at 100 lakh metric tonnes.

Even as the Chhattisgarh government grapples with the bonus issue, there is a debate over who really benefits from the incentives. Experts claim that a major portion of rice is procured from affluent farmers. Hence, they pocket a large part of the bonus. According to an estimate, farmers with small land-holdings don’t get to sell their produce at MSP. Middlemen procure their grain at cheap prices, sell it at MSP and claim the bonus. The state has around 40 lakh farmers, of whom only 12 lakh will get the bonus. So, 28 lakh farmers will not benefit at all.

The issue will stir a political debate in Chhattisgarh and Madhya Pradesh, where the BJP had lured the farmers with the promise of bonuses. In the run-up to the 2013 Assembly election in Chhattisgarh, the BJP had also promised to increase the MSP of rice. In its manifesto, it vowed to put pressure on the Central government to increase the MSP from Rs 1,310 to Rs 2,100 per quintal. But after the BJP-led NDA regime came to power at the Centre, the state government is keeping mum on the issue. The Centre did increase the MSP, but only by Rs 50.

The Congress has taken to the streets in protest. Accusing the BJP of backtracking on its promises, the party hopes to reap political gains. As the Centre is against the idea of granting bonus, the challenge before the state government is to find a middle ground.

Meanwhile, the number of farmers in Madhya Pradesh and Chhattisgarh has been steadily decreasing over the past decade. Between 2001 and 2011, the number of farmers who own land or work on government land in Madhya Pradesh went down from 1.1 crore to 98.44 lakh. At the same time, the number of farm labourers jumped from 74 lakh to 1.22 crore. This is proof enough that farmers who once owned land are now forced to work as farm labourers.

The situation is no different in Chhattisgarh, where the farmer population has gone down from 44.54 percent to 32.88 percent, while the population of farm labourers has risen from 31.94 percent to 41.80 percent.

Translated from Tehelka Hindi by Naushin Rehman


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