 Hello and let's talk about the farm bills. The bills passed by the Modi government last week were signed by the president despite requests by the opposition to not do so. Footage from the Rajasabha has revealed that the members who sought a physical vote on these bills were in their seats when they asked for this request. This contradicts the version of the Rajasabha deputy chairman Hariwansingh who said that they were not in their seats and hence the demand was refused. Procedural issues aside, it's become increasingly clear that the Modi government's logic of supposedly freeing the farmers through these bills is full of holes. And this is clearly reflected in the massive protests that took place and are taking place across the country. We talked to journalists Aninder Chakravarty on this issue. Thank you Aninder for joining us. So we're continuing our discussion on the farm bills. We've seen protests over the past week of course, lot of protests across the country. And again and again, we've something we talked about last week but it might make sense to go in some more detail now. Is the question of what freedom is being offered to the farmers as per the government? The government claims that this is going to be a revolutionary moment for them. This is going to liberate farmers from the oppression of the Mondays from the APMC system. So is the APMC system really that bad? See the APMC system is not great. It is meant to be something which will protect farmers from the exploitative, you know, the old Sahukar, Zaminda thing that we have watched on Doordarshan when we were children, you know, the black and white movies, Dhopika, Zameen. And I was recalling yesterday that even if you, I don't know, have you seen Mr. India, the movie Mr. India? Oh no actually. You have. Okay, this movie has... I know about it but I haven't watched it yet. Then Anil Kapoor wears this belt which makes him disappear. Exactly. So, and it has that famous Mogambo-Kushwa dialogue. But it is about these big traders, these who put stones into rice and dal and Mr. India makes them eat it at one point, right? So this image of the Aditya or the grain trader who's a villain is actually inbuilt into our system. We understand it very well. So it's very easy to make us feel that they're villains and then there's no doubt that they have done many things which are bad and they exist all over the country, right? My point is that the APMC system, what does it do? It essentially says the law said that all produce needs to come to these designated wholesale mundis which will be regulated. Whatever farmers are bringing will be weighed, recorded, transactions recorded, prices recorded so that we know what is available, what price farmers are getting. Technically, this only works Prashant. If the government is going to buy at a procurement price, right? Or say this is the flow of price. If you try to buy below that, we will punish you, right? So the APMC Act also is accompanied by other things like the essential goods, essential commodities, which put a limit on how much you can store, right? So there are these three things which come together because if you look at warehousing in India, most of the warehousing from the data that one can get from 2018, 2020 is actually with private players, right? The government has about 25% of the warehouses and it is not generally accessed by farmers. It is accessed by these big traders. So APMCs are controlled by big traders. There's no doubt about it Prashant. But nonetheless, the fact also remains that the APMCs right now and you also written about and we also talked about their sheer lack of enough APMCs. But they also offer in the current circumstances, one of the few possibilities for farmers to actually get a fair price. And that fact also remains. So let's say that people say that it's only Punjab farmers who are unhappy because they're the ones who get MSP as if there's something very bad about getting MSP. Because if you look at it, even I was just calculating that how much does a Punjab farmer earn from, let's say an hectare of wheat growing land, right? Now we know that 67% of Indian farming families, two thirds have land which is lower than one hectare. Now, on an average, if you tell hectare, if you told me what an hectare is, I frankly have no idea. I know that it is 2.47 acres. But what is an acre that you've stumped me. So what I did was essentially I calculated the yield of wheat in a hectare of land and how much revenue a farmer would get if they produce. Now in 2018-19, I think there was a record yield of 52 average yield of about 52 quintals per hectare of land in Punjab. Okay. And you know that the MSP, which has been given now which is 2.6% higher than last year when you included the bonus, that is 1,975 rupees. So let's say that about 50 to 52 quintals of wheat could be produced on an hectare of land in Punjab. Then a Punjab farmer would end up with about a lakh rupees, right? If we look at UP, UP, the well-irrigated areas, the one hectare would again produce about 50 quintals of wheat, but lots of UP is actually very poorly irrigated. A lot of it is very dry and added. And in places like this, the average yield is between 30 to 35. Now even if I take a 35 quintal yield on one hectare of land, then essentially a UP farmer, a farming family would make about 70,000 rupees from that hectare of land if they sold at MSP, if they grew wheat. We know most don't, aren't able to sell at MSP, but that's a separate issue. So Prashant, when I hear one lakh or even 70,000, I think, okay, that's not too bad. One lakh rupees, 70,000 rupees. I mean, you get in a city or town, it's not too bad at all. And in village, that would be go a long way, right? And you think that really our farmers really that badly off because if one hectare is owned, they're making out to buy. But you have to remember that there are two seasons, maybe a third season of vegetables being grown here and there. So effectively, it is six months of work for one lakh rupees in Punjab and 70,000 rupees in UP. But this does not include costs, Prashant. So when we talk about any business, right, what will we do? We basically remove costs to work out what real income is. Now, are you aware of how costs are calculated in India for farmers, Prashant? Include inputs, fertilizers, all that stuff here. So there is a thing called the Commission for Costs and Prices, I think, CACP, right? And they publish three sets of costs on an average for farmers statewide. The first is what is called A2, which is all out of pocket expenses, which includes expenses and kind. But obviously, you also have to put in labor, which is something that you have to calculate in Pew that if these people work somewhere, this family, what would they make? So the second cost which is given is A2 plus FL, right? And the formula that the government, Modi government supposedly uses is A2 plus FL plus 50% and then a bonus is added to decide what will be the minimum support price, what farmers should get. But farmers have been consistently saying that this is not enough because if I have land and I use my own money, right? Effectively, I'm losing out on rent because if someone in a city or non-agriculture person was sitting on land, they'd put it out on rent and earn money from that, right? So there is an imputed rent cost that I'm losing out on. If I'm using my own capital to buy things, there's an imputed interest cost because if I had put that in a bank, I would get interest on it. So there is the third cost, which the Swaminathan committee had said should be what we call the comprehensive cost. It said that comprehensive cost of C2 plus 50% is what farmers should get. They cost plus a 50% profit on that, right? Now the C2 cost is higher in UP and lower in Punjab. This should not be a surprising because obviously the higher the yield, the average cost is going to come down, right? So the C2 cost, comprehensive cost in Punjab is about 1200 and 80 odd rupees and in UP it is about 1560 rupees, right? So you take this and work out the cost and you'll see that an average Punjab wheat farmer ends up with 35,000 rupees of profit from one hectare of land. An average UP farmer in a dry area will end up with 15,000 rupees of profit for six months of work. And this is not an individual's income, right? This is an entire family's income. This family labor goes into it. Now think about it, 15,000 rupees and the average, the government's own NAFIS survey, the NABAD financial inclusion survey tells us on an average, the UP agricultural family size is about six people. Now divide 1215,000 rupees for six months, for six people and what do you get? 200 rupees per month from agriculture, right? In Punjab, you will get slightly more, about 6000 rupees per month for five people or 1200 rupees. So on an average, a person living in an agricultural family in Punjab is getting six times more. Why? Because there's no MSP in UP, there's no Monday in UP, there's no irrigation in UP and all of that exists in Punjab. That's the difference. Absolutely. So what you're basically seeing is that if a more efficient APMC and MSP system were to come, that would be probably the best way to actually solve many of the issues you were talking about rather than actually destroy the APMC system and claim that you're liberating farmers. Because as we said that if Mr. Shanta Kumar of the BJP, of course his conclusion is different. When he did a report on FCI in 2014-15, if he said that only 6% of farmers are able to access Mondays, state procurement agencies. And even within that, those who sell it, they only get 35% of them get MSP for wheat and 27% for paddy. So even those who access it are unable to do it. So how are you blaming APMC or MSP? There is 94% of farmers and at least I would say 80% of the overall produce is being sold to private players already. It's not as if they're doing extremely well. Absolutely. And there's also a time when MSP procurement is actually for a very limited number of goods. So it's not even across a wide variety. So now in this context, the other question would be what happens with private players or the big private players coming to it? What is likely to change right now? So I was speaking to someone who belongs to a big Aratiya family from Madhya Pradesh and he said that, look, the point is that this is essentially a holding game. People make money if they have holding power. And he meant that both in physical sense, availability of warehousing and the second is availability of capital. So he said, look, what happens is that let's say I have bought, I anticipated that the price of Masoor Dal is going to go up to a certain amount and I bought up all the Masoor. So he said that, you see, how MSP works is that my family goes to small farmers and buys up their product. So if I'm going to get, let's say, 1850 rupees per quintile for on MSP for a particular product, I actually pay 1750 to the farmer or 1800 to the farmer. The 500 to 50 rupees difference is entirely mine. The farmer doesn't have to spend on taking it and loading it to the Mandi, I pick it up. That is my cost. And as we know that mostly all finance is provided by these people, the Aratiyas and so here's the thing. His point was that ever since ITC each opals entered the system, farmers are getting more or less the same price that we were giving. But we are getting replaced by ITC agents and we have started working for ITC because big, he said that ITC is still restricted by the rules. But when bigger players come into the system, they have a lot of holding power. So let's say as I was taking the example of Masoor Dal that he gave me that I have bought up all the Masoor this year and then Masoor Dal prices crashed for some reason, global prices crashed. I had to offload it because I could only store it for let's say seven, eight months. The next year what happened is that he told me that apparently Masoor is used for packing of crude in some way. I don't know what it is mean fracking he meant. I don't know. It is used for that in the Gulf countries. I'll have to find out about the details about how that works. But he said that and prices shot up. So he said that my family made a loss because they couldn't hold it. A bigger family and holding is not warehousing. It is a cycle of finance. Because when you hire a warehouse, you have taken money to hire it. You have to pay interest to someone or you lose out your interest yourself. This is an opportunity. So beyond the point you don't have the holding power to hold that warehouse, you have to clear it. A bigger company with more capital can hold it for two years. So they will see a down cycle for one year but they will see the up cycle of the second year. His point was that there is no way farmers are going to gain from that. But you have to take into account that he comes from a family which is a trading family. So one has to keep that in mind. There might be marginal gains here and there. There might be some way in which these big companies will come and undercut existing trading families. But again as you know the point is that there is so much entrenched interconnections that it is I don't think it is going to be that easy to replace these people and also I do not think that you know as I've written about how the main issue is about finance which is going to appear soon. It is not really Bandis or APMCs. So in this context the other argument that has often been posed is that this is and because big companies are going to come in there's going to be a sudden rise in efficiency across the supply chain in terms of storing in terms of the entire sector we're going to see a new far more efficient sector. So do you think that argument actually makes sense? If that were to make sense then we would have seen much more efficiencies in the rest of the world. Is it much cheaper to buy a potato in the US than in India or in the UK when you go and buy it from a shop? Of course not. Now the point is that wastage takes place in different forms. We know from studies that local markets in Latin America have lower wastage than the big corporate you know big fresh super stores because super stores come packaged as you have to buy five kilos at one time and quite often you buy five kilos thinking it is much cheaper on an average which you throw away two kilos because it goes bad. And this is a standard thing that happens. Wastage is massive in rest of the country not at the point of transit but at the point of consumption. So net wastage remains the same. It has not reduced and this is studies across the world has shown that. So I doubt that that is going to happen. The idea that in terms of back linkages this is going to work because you know what will happen is that these big corporates will be able to tie up with seed companies and provide seed to contract. Farmers have been contracted to grow a thing cheaper. They'll tie up with large scale fertilizer companies provide cheaper fertilizer. They'll have access to finance and etc. Okay let's take the case of Punjab. The point is in Punjab a study by Subpal Singh which was published in EPW shows us that in 2014 most of what farmers were buying were from traders. Whether it was except for fertilizer which was from corporates whether it is seed other than what seed they store themselves. Additional seed that they bought. Seed, pesticide, farm equipment, fodder everything they were buying already. So there are backward linkages already in the system. It isn't as if some traders are waiting for this massive thing to happen which they couldn't think of. So finally I want to give a quick question in terms of we have gone through various aspects and like we said I think the thing we both agree on is the fact that more Mondays and more stable and as well as robust MSP would be the simplest most intuitive way to address the issue. So why is it that these two are the things that are found nowhere in the farmers introduced by the Modi government? Because the Modi government doesn't believe in public spending. Number one it doesn't want to do public spending. It wants to transfer it on to corporates. The second part of it is that I think that if you look at the manufacturing and services sector it has reached its saturation point in and there. We know that corporates aren't making money. Their margins are being maintained entirely by cutting costs. So if their profit margins are expanding or being maintained it's because they're cutting costs. They're reducing all kinds of expenditure. Whatever their cash is they're putting into the financial sector. So financial instruments. So they're buying back shares. They're giving bonuses. So essentially they no longer need money. They're not raising money anymore to expand. Because manufacturing and services which delivered essentially to the middle classes that has reached its limit. It's not going to go. I mean you could have a huge house in Delhi but you will only have a relatively small driveway. So how many cars will you put in there? If you've bought four cars it's unlikely you're buying another. So all that has happened. The replacement demand stages already come. The only place where replacement demand is pretty quick is food. I mean you replace it every meal. So I think that the big capital wants to move into this last space of food production and trade. Because we know that trade restaurants trade and allied services is about 20% of the GDP. And food trade is a huge part of that process. 40% of I think one of the last IVF studies that I saw showed that 41% of all street vendors were actually vegetable sellers. So this is a very complex economy and a lot of people depend on it. Not just the big traders. We know that in Bombay a news news report showed told us that in Mumbai people have lost their jobs, taxi drivers, drivers, they're selling vegetables. So the number of vegetable sellers has gone up sharply in Mumbai. So this is a clear sign that there is a huge number of people involved in this wholesale and retail trade of vegetables and crop and food. And that is where it is a good space to take over and earn more profits from that. Accumulation and extraction of surplus of various kinds. Whether it's surplus value or surplus itself. So that is probably the thing that they're waiting to do. Right. So what we're likely to see is a lot of new chains coming up across the sector and a complete change in the market scene as well. And there will be some kind of gains to groups of farmers and there will be other groups of farmers who will lose out. So what we'll see is a change in the rural area and it's not going to be that easy. There will have to be alliances on the ground that these big farmers will make at least with the local artyas. If there are 10 artyas they will have to make an alliance with the top. It's not going to be otherwise it's not going to happen. Thank you so much for talking to us. Thanks a lot. That's all we have time for today. We'll be back on Monday with more news from the country and the world. Until then keep watching news click.