With new farm laws, Punjab’s organic farming community fears corporatisation
Revisiting the now-revoked 2020 farm laws
Originally written on October 20th, 2020.
Around 40-km south-east of Punjab’s Jalandhar city lies the small town of Banga where Baljeet Singh owns and cultivates a 4.5-acre organic farm. The 36-year old farmer single-handedly manages all farm operations. This includes tilling the land himself– services of agricultural labourers are expensive– and selling the produce directly to his customers. “The mandis don’t care if I am growing organic or with pesticides; they will give me the same price. In this sense only, the new laws are good because earlier I was taking a risk by selling directly to my customers who offer better prices for organic produce,” he says.
In the ongoing protests against the passing of the three contentious farm acts, farmers and activists across Punjab have extensively argued how the acts will adversely affect the agriculture sector. The conversation around the bill, however, has excluded the small, but steadily growing, community of organic farmers in the state. The total area cultivated under the National Program for Organic Production (NPOP) has seen a net 500% increase since 2012-13 in Punjab. It is estimated that the state has around 15,000 farmers growing organically. Compared to conventional farmers, organic farmers face additional difficulties in terms of market availability and structural support, which according to Baljeet these acts will aggravate. “The protests are genuine. Plans are on to kill the farmer,” he says.
“The concept of organic farming is completely separate from mainstream farming because the farmer-consumer relationship is much better built,” he explains. This is partly because the infrastructure to market organic produce barely exists, and partly because the high costs of the produce limits the clientele. For these reasons, Baljeet is forced to sell directly to his customers. In this context, the ‘Farming Produce Trade and Commerce Act, 2020,’ allows him to continue with that practise without worrying about the law. The act expands the concept of a legal trade area to include trade with private players, which was previously not allowed. Rajeev Kohli, managing-director of Kheti Virasat Mission (KVM), a Punjab-based NGO which seeks to promote organic farming in the state, agrees with Baljeet. “It is good that now anyone can buy from a farmer, even if he is from a different state,” he says. They are joined in agreement by Hem Khosla, owner of a small organic store in Jalandhar, who adds that before the new law, they weren’t legally allowed to buy directly from farmers.
A major concern shared by all, however, is the entry of big companies in the supply chain of selling organic produce. When asked whether he has considered selling through retail chains like Big Bazaar, Baljeet quickly dismisses the possibility. “Big private grocery stores which sell organic produce have very high margins, anywhere between 20-30%. The farmer doesn’t get to share the profits,” he adds. He uses the same argument to explain why he doesn’t sell through Khosla’s store. The only viable option, according to him, is to sell directly.
Khosla says that her store usually keeps a margin of 10-15% while selling organic produce. “We keep our margins at those rates to cover handling charges, to pay salaries to our employees and to pay rent for our store,” she adds. She is quick to note that her store buys from farmers at prices much higher than the minimum support price (MSP), given that organic farming is more expensive due to high input costs. For example, the MSP of wheat is set at Rs. 1800/quintal but is procured at Rs. 4000/quintal by her store. “Our store caters to over 500 customers, therefore there is sufficient demand. In a way, we make the farmer’s job easier by connecting them to a large clientele,” she says.
Khosla’s store, which has tied up with several NGOs working in the field of organic farming, procures at prices higher than the MSP because it is run as a social sector initiative. According to Baljeet, the same cannot be said of bigger private players who are not mandated to buy at MSP. While the central government has repeatedly maintained that the MSP is not going away, Union Minister of Agriculture and Farmers’ Welfare Narendra Singh Tomar has said on record that “MSP was not a part of the law even earlier and MSP is not part of the law even today.”
This lack of assurance troubles farmers like Baljeet who do not trust the intentions behind the profit-oriented business models of private players. Similarly, Kohli is convinced that the government’s lack of legal commitment towards MSP means that they are not interested in keeping it. “They are not saying that their long-term plan is to get out of MSP. They haven’t declared it yet, but they are definitely going to do that,” he says.
The problem is compounded by the clause that in case of payment disputes between a farmer and a private trader, the matter would be taken up by the local sub-divisional magistrate (SDM) and not the civil court. Baljeet argues that the redressal mechanisms are rigged against the farmer because “local officials like SDM are in the pockets of private traders.”
Another avenue through which private players enter the agriculture sector is the ‘Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020.’ The act allows them to sign contracts with farmers in which they agree to buy produce from them in the set time period and at pre-decided rates. Khosla is worried that big corporations with their abundant resources and infrastructure will force small stores like hers’ out of business by monopolising the supply of agricultural produce. Baljeet says that this act will take away a farmer’s negotiating power and his sovereignty over his land.
While sponsors are “prohibited from acquiring ownership rights or making permanent modifications on farmer’s land or premises,” Kohli argues that the real danger lies in the eventual monopolisation of the supply chain by private players. “Initially, corporations will give bigger orders at better prices. After 2-3 years the system will become entirely dependent on them. Then, farmers will have to grow whatever they are told to,” he says.
Baljeet feels that organic farmers not only have the struggles of conventional farmers, but some more. There is no support price for labour intensive organic produce which should be higher than regular MSP, he says. He further claims that he’s never been a recipient of any government subsidies for organic farming. He also argues that the process of getting organic certification is too expensive for small farmers like him.
When asked about the timing of these acts, passed during severe country-wide economic distress, he says, “Agriculture is the only sector which recorded positive GDP growth. Companies now know that businesses can be shut down for months, but people will always need food to eat. They see this as their chance to take over the sector.”