Wheat demand doing what farm laws could have done

Farmers are selling wheat at lucrative prices to private trade, as demand for exports has skyrocketed, ignoring the government’s purchases at minimum support price. “Actually, many things related to the farm laws are happening. You can see them happening,” finance minister Nirmala Sitharaman had said at the ET Awards last week.

Experts said this is how the agricultural markets should function – government procurement should offer a floor while the bigger markets work on commercial principles.

After more than a year of protests by farmers, the government had repealed the three laws – The Farmers’ Produce Trade and Commerce Promotion and Facilitation) Act, The Farmers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act and The Essential Commodities (Amendment) Act.

“Farmers are selling for export. They do not want to come for MSP because they find a better price somewhere else,” said Sitharaman, when asked whether the government was thinking of bringing the farm laws back.

The Centre had to cut MSP procurement target by 55% to 19.5 million tonnes from 44 million tonnes as farmers turned their back towards the procurement centres.

Anil Ghanvat, member of the Supreme Court-appointed committee on farm laws, said, “Many farmers benefited from the wheat exports. Many farmers got up to Rs 2,500 per quintal against the MSP of Rs 2,015 per quintal.”

However, as the government is now considering putting some restrictions on exports to control domestic inflation, Ghanvat said, “If the farm laws had been passed, it would have been difficult for any government to restrict the export process under the pressure of any segment.”

Sitharaman said, “Many states have started to see the benefits of liberating farmers. And there is just no one stopping them from doing it. In spirit, the three farm laws are happening.”

States like Madhya Pradesh have proactively supported wheat exporters by giving them various incentives. However, farmers from Punjab and Haryana could not reap benefits of wheat exports due to high taxation and quality issues.

Some progressive farmers from Punjab and Haryana privately admitted that had the farm laws been passed, it could have helped wheat exports.