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India’s Billion Dollar Food Program At The Center Of Farmers’ Protests | India News

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NEW DELHI: Thousands of farmers angered by farm laws that they say threaten their livelihoods have intensified their protests by blocking roads and camping on the borders of Delhi.
The government led by Prime Minister Narendra Modi and the leaders of the protesting farmers’ unions have held several rounds of talks but have made no progress in breaking the deadlock on the set of laws passed by parliament in September.
Although several farmers’ unions have supported the protest, the agitation is largely led by farmers in the relatively affluent states of Punjab and Haryana.
Every year the government spends billions of dollars buying millions of tons of rice and wheat from Punjab and Haryana, and the world’s most expensive food purchase program has become the centerpiece of the largest protest in Indian farmers in years.
HOW IS INDIA DIRECTING ITS MAMMOTH FOOD PROCUREMENT PROGRAM?
After calculating the cost of the crop, the state-run Commission on Agricultural Costs and Prices (CACP) announces Minimum Support Prices (MSP) for more than 22 commodities a year to establish a benchmark.
Although each year the CACP announces MSPs for most crops, the Food Corporation of India (FCI), the main state grain procurement agency, buys only rice and wheat at those prices due to lack of storage and funds.
After purchasing rice and wheat from farmers in the MSPs, the FCI sells staple foods at highly subsidized prices to the poor. The government compensates the FCI for its losses.
HAS THE STATE ACQUISITION PROGRAM PRODUCED AN OVERPRODUCTION OF RICE AND WHEAT?
The guaranteed prices offered by the FCI encourage farmers to produce large quantities of rice and wheat. Increased production puts pressure on the FCI to buy additional supplies from farmers, resulting in overflowing state warehouses and a growing subsidy bill that often increases the budget deficit.
Despite sitting on huge mounds of rice and wheat, the FCI finds it difficult to export, as the annual increase in MSPs and its own storage costs make FCI’s rice and wheat more expensive than world prices, which makes foreign sales unprofitable.
From time to time, the Indian government delivers small quantities of rice and wheat to other countries through diplomatic agreements. Still, FCI warehouses are blocked.
WHO BENEFITS MOST FROM THE FCI SAFETY NET?
Ironically, the safety net covers relatively well-off farmers in the northern states of Punjab and Haryana, forcing their poorer counterparts in Bihar and other underdeveloped states to sell at a discount.
Every year, farmers in Punjab and Haryana sell almost all of their produce to FCI in MSPs thanks to well-developed market yards and efficient procurement centers, far removed from Bihar’s underdeveloped grain procurement infrastructure.
Furthermore, unlike the poor farmers of Bihar, the rich and politically influential farming community of Punjab and Haryana ensures that the FCI continues to purchase large volumes of rice and wheat in their states, where agriculture is a fundamental pillar.
While Punjab and Haryana sell almost all of their rice and wheat production to FCI, acquisitions by the government agency in Bihar have remained at less than 2% of the state’s total production.
Left out of the safety net, the majority of Bihar farmers are forced to sell at a 25-35% discount.
Already deprived of assured returns, Bihar farmers have not explicitly opposed new laws that farmers in Punjab and Haryana fear will eventually pave the way for the FCI to stop buying their beans at guaranteed prices, leaving them at the mercy of buyers. private.

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