Let ex-servicemen partner farmers in agri cooperatives

The government should set up agricultural co-operatives in every cluster of villages and in respective districts on a war-footing within a time limit.
We should involve the services of our military personnel who retire at a young age with several years of working life still left in them and would be happy to contribute to nation-building, recommends Atul Gupta.

Newspapers and television channels are full of articles and interviews both supporting and criticising the newly passed farm laws. The supporters feel the country has been waiting for decades for these laws which were deliberately delayed by previous regimes and will now result in milk and honey for the farmers. Those who are against the bills feel that the farmers have little to gain, but a lot to lose.

Unfortunately, most debates in our country are emotional instead of logical, the core issues are not discussed, statements are made without proof and solutions are rarely given.

The farmers with marginal holdings constitute about 85 per cent of all the farmers (classic ABC analysis of any spread) and are the weakest.

The real issues faced by the farmers are increasing input costs, low prices with uncertain sales, ever increasing debts, low productivity and poor induction of new farming technology resulting in a low standard of life.

An average annual income of a farming household is about Rs 2,16,708 in Punjab (lower than that of a fresh engineer) and about Rs 43,000 in Bihar (lower than that of a peon in any urban centre) (Business Today, December 11, 2020).

All efforts should be made to provide a decent income to our farmers.

Let us look at the case of high input costs.

MNCs have a monopolistic hold on supply of seeds, pesticides and other items. Prices of diesel are way higher than international prices due to extremely high domestic taxes.

Farm equipment, machinery, etc, are loaded with GST. All these add up to high input costs. While we talk of free electricity or water to the farmers, we do not mention these crippling costs burdening the farmer.

Let us now look at the crucial issue of low prices that farmers get for their agriculture produce.

Take the case of an expert idol-maker who makes beautiful idols. It is obvious that if he goes to the market to sell his idols himself, he will rarely get a good price. He will have to use the service of an agent or 'middleman' to sell his output to get a good price.

Similarly, the farmer is not an expert in sales and after the harvest he has to search for buyers to sell his produce at a reasonable price.

Since the number of buyers are fewer than the sellers (farmers), the farmer remains at the mercy of the buyer who has the upper hand, has a wider choice of farmers to buy from and can squeeze and exploit the farmer.

If the farmer is trying to sell perishable produce, the exploitation is even higher. When every business uses a sales network or agent(s) to sell its product/s, why deny the same to the farmer?

Simply telling the farmer that he is free to sell his produce anywhere will not get him high prices automatically unless an effective sales network is created for him.

When the farmer gets a poor return on his produce, he gets into a perpetual debt trap as his net income is lower than his net outflow. In the absence of other opportunities, he cannot escape from his debt-ridden situation.

Banks do not lend to him in the absence of any collateral and he falls into the trap of blood-sucking local moneylenders.

The corporate honchos and others who are propagating the theory that the new laws will automatically bring huge returns to the farmer should be able to tell us how it will happen in such an exploitative environment.

The farmer is being told that just as the dairy farmer has gained from the open market, he will also benefit similarly. But the dairy farmer is well-off only when he is able to sell to a co-operative at a good price. The co-operative takes up the job of selling the collected milk in the open market.

A similar system should be implemented for the farmer to upgrade his income and his standard of living. The traders will not set up the co-operatives, then who will?

APMCs are faulty but at least provide a place where the farmer can sell and not get cheated completely.

The Solution

My suggestion is the government should set up agricultural co-operatives in every cluster of villages and in respective districts on a war-footing within a time limit.

We should involve the services of our military personnel who retire at a young age with several years of working life still left in them and would be happy to contribute to nation-building.

Many of them return to reside in the villages and towns from where they were recruited. They possess the requisite discipline, are well respected and can play a vital role in this mammoth exercise.

The assigned army team and the farmers can be co-owners in each co-operative where the former can procure from the latter for temporary storage and then despatch it to the district and beyond.

Once the farmer is freed from the stress of selling in an uncertain market after each harvest and gets debt free by getting increased prices for his produce, he will be able to concentrate on activities like technology upgrades.

These co-operatives can play a central role in the life of the farmer by introducing technologies like solar power for home, goods carrying vehicles, pumps, mini-cold storage units, drones, drip irrigation, bulk purchases with higher discounts, being a direct party in contract farming contracts (model contracts can be made available) and spreading education in modern farming techniques.

Secondary employment will also get a boost. Frequent loan waivers running into thousands of crores would also become history.

Farm laws should be introduced but can be successful only when the necessary infrastructure is in place.

This approach will be a win-win for all the stakeholders like farmers, retired army men, people with technical skills, the end consumer and the country.

Atul Gupta is an engineer from IIT-Bombay with over 40 years of experience.