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Monopoly In Farm Sector:MNCs PLAYING HAVOC,Shivaji Sarkar,4 February 2011 Print E-mail

Economic Highlights

New Delhi, 4 February 2011

Monopoly In Farm Sector


By Shivaji Sarkar


The US has suffered and leads a global meltdown. India may set a global trend in pawning agriculture to lobbyists who are using price rise in a conspiratorial way to dismantle a significant tool, the Agriculture Produce Marketing Committee (APMC), created for ensuring fair prices to farmers and create food security for the country.


Scandalously, food inflation continues to hover around 17 to 18 per cent. It had touched 20.56 per cent a year back. One needs to realise that the present steep hike is over the figure last year. Since the lobbyists are having support of the Planning Commission’s Deputy Chairman Montek Singh Ahluwalia, the country may be in for severe trouble.


The poor might die of hunger and the rest of the population could suffer severe nutritional issues. Ahluwalia’s statement that prices must not be curbed “as it signifies affluence” is a crude way to pave the mode for companies who are keen on capturing the farm trade and creating monopolies.


Recall, India’s first Prime Minister Nehru had set-up the Planning Commission for ensuring creation of infrastructure, quality of life, stopping exploitation of people and equitable distribution of wealth. In the initial decades it contributed significantly by achieving the objectives. But of late, it has started speaking a language that is certainly not pro-people.


Ahluwalia’s view that the solution does not lie in imposing price or monetary restriction but lies in exempting horticulture and vegetable produce from the ambit of the APMC Act is certainly not a pro-people view.


It also exposes the present Government’s mindset of how it wants to act for the benefit of large companies who see agriculture trade as cash cow. The Planning Commission should be well aware of its dangers. Not all experts in the Commission think the way Ahluwalia thinks. They have expressed the dangers of his moves of opening up the farm and retail trade to multi-nationals (MNCs).


The MNCs have partially succeeded in eroding the market structure by manipulating their controls in the butter trade and trading of some vegetables like tomato. It is apprehended that even in jacking-up onion prices they have played a significant role directly or indirectly.


The Planning Commission does not see these as danger signals as big money flows. However, mandis created in the mid-1960s for marketing agricultural produce have come in the way of this laundering. So a concerted move is on by the MNCs backed by industry organisations like FICCI and CII. As the Government was not expected to toe their line.


Notwithstanding poor management, mandis have played a critical role in ensuring remunerative prices and timely purchases for the benefit of farmers. The system needs to be strengthened and not dismantled.


Before the creation of mandis, farmers were paid low prices at the time of harvest and distress sale was a normal phenomenon. The green revolution backed by procurement prices --- minimum support prices for wheat, rice, cotton and other crops --- helped farmers earn not only a remunerative price but also filled Government warehouses for effective intervention for keeping prices under check.


The mandis created in 1966 provided an assured market for farm produce. During the global food price increase in the 1980s, India remained insulated. It also ensured that food reached the poor through the PDS which contributed to the national growth.


Ahluwalia’s suggestion for a free rise of prices is apparently becoming a reality. Rating agency Crisil’s chief economist DK Joshi says, “Overall inflation will remain high for the rest of 2011 as non-food inflation will dominate the months ahead”.


Importantly, price rise of essential commodities and food should be treated as a grave concern. As it affects the overall quality of life and makes living expensive. But that is for the common man. For the large companies it ensures huge profits. Yes, the higher the prices the fatter are their coffers.


This is not all. During the past few years the companies have been subverting labour laws. This has reduced the average working life of not only a blue collar worker but even in most cases hit the white colour employees. Thus, the quality of life is decreasing.


A Government is elected by the people, the working class, and is expected to protect it. It needs to note that large corporate profits have driven countries like Brazil, Argentina and Mexico to most severe inflationary trends. Markets in these countries are controlled by US multi-nationals. Is India now repeating what has happened in Latin America? If that is so the kind of unrest these countries have seen may not escape us as well.


The way the Planning Commission as well as the Agriculture Ministry are trying to dismantle the procurement structures and are looking for an early opportunity to hand over the mandis to private companies may put the last nail in the comfort the nation enjoyed on the food front.


Remember, the 2005 amendment to the APMC Act allowed private traders to bypass the mandis. The present price situation is a result of this anti-farmer provision. Whereby, it is actually passing on the control of food into the hands of a few big players, who are manipulating prices at will. The nation needs to understand the dangerous game being played.


In 2006-7, companies like Rallis, Hindustan Lever, ITC, the Australian Wheat Board and Cargill had purchased wheat directly from farmers. Since the companies purchased directly from the farmers, the Government godowns remained empty. To meet the requirement for the PDS, India had to import roughly 8 million tonnes of wheat.


Ahluwalia’s advocacy for exemption of onions, apples and vegetables from the APMC laws would ensure double exploitation of the farmers and as well as the consumers. It is likely to kill the procurement system. He is suggesting the destruction of the foundations of food self-sufficiency built over the past five decades.


Certainly, the APMC law is not responsible for food inflation. Instead, its subversion by the MNCs is. Let us protect what the people-oriented leaders of the 1950s and 1960s have created and start the process of cleansing the “think tanks” like the Planning Commission and its lobbyists. The country needs be led by leaders like those in Bihar or Gujarat and not “experts” unconcerned with realities. ---- INFA


(Copyright, India News and Feature Alliance)

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