Hindustan Times (East UP)

The distinct nature of agricultur­e in Punjab

- Ajit Kumar Singh (The author is an economist and former director of the Giri Institute of Developmen­t Studies.)

For two months, thousands of farmers, mostly from Punjab, sat on dharna on the roads on the Delhi border, braving the chill. The question is often raised why mainly farmers from Punjab were on the war path, demanding repeal of the three laws dealing with reform of the agricultur­al markets. The answer to this question lies in the distinct nature of agricultur­e in Punjab.

The land distributi­on pattern in Punjab is significan­tly different from the rest of India. The average size of holding is much larger in Punjab at 3.5 hectares against the Indian average of 1.08 hectare. Only one-third of holdings are below two hectares in Punjab with a share of about 10% in land holdings. On the other hand, medium and large holdings constitute one-third of holdings but operate about two-thirds of the area. Against this, 86.07% of holdings in India are below two hectares with a share of 46.94% in the area. As a result, the marketable surplus is much higher in Punjab, as compared to other states. The Punjab farmer mainly produces for the market, whereas in most of the other parts of the country, agricultur­e remains subsistenc­e oriented.

The cropping pattern in the state is dominated by wheat and paddy, which account for 39.4% and 44.7% of the gross cropped area in the state. Only 16% area is under other crops. As a result, the Punjab farmer is the biggest beneficiar­y of the public procuremen­t system. Nearly 89% of paddy and 95% of wheat produced in the state is marketed, all of which is procured by the government or other agencies.

The gross value of procuremen­t of the two crops in Punjab in 2018-19 was Rs 6,17,44.24 crore, which comes to Rs 5,65,055 per farmer. Thus, their stake in continuing with the present marketing regime is quite understand­able.

Punjab contribute­d 37.8% of paddy and 35.46% of wheat to the central pool in India in 2018-19. Haryana was another major contributo­r to the national pool contributi­ng 27.3% of paddy and 24.5% of wheat procured in the country. Thus, PDS is heavily dependent on the production of paddy and wheat in Punjab. Punjab acts like a bulwark of the food security system in the country. Punjab has the best rural infrastruc­ture among Indian states in terms of roads and markets.

One has also to understand the special role that the arhtiyas (commission agents) play in agricultur­al marketing in Punjab. The arhtiya facilitate­s the transactio­n between a farmer and actual buyer. In addition, he extends credit without collateral both for investment and consumptio­n purposes. Often, he supplies agricultur­al inputs like seeds, fertiliser­s, pesticides etc. It is estimated that arhtiyas provide 36% of total loans to the farmers in Punjab. They recover their loans from the proceeds from the produce sold. According to many scholars, the interlocki­ng of the credit, input and output markets by the arhtiyas in the state makes the system of marketing noncompeti­tive. However, the commission agents perform an important function in providing credit to farmers and facilitati­ng marketing of their produce.

Arhtiyas are paid 2.5% of the value of the total procuremen­t by agencies for crops such as wheat and paddy. Their gross commission on sale of these two crops amounted to Rs 1,236 crore in 2018-19. Punjab has 47,000 registered arhtiyas. They wield considerab­le political clout. They have high stakes in the continuati­on of the present APMC (agricultur­e produce market committee) system and are supporting farmers’ agitation through funds and logistic support. But it would be inappropri­ate to label the farmers’ agitation solely due to machinatio­ns of the commission agents.

The prosperity of the Punjab farmer is dependent on the present system of APMC and procuremen­t, which assures a ready market and remunerati­ve price for their produce. They fear that their economic well-being will be threatened if the system is changed and thrown to the mercy of private traders with gradual withdrawal of procuremen­t and MSP (minimum support price) regime.

Views are personal

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