The Punjab government is preparing to introduce a formal resolution against the Centre’s proposed draft policy on agricultural marketing. The move reflects growing concerns among Punjab’s policymakers, farmer organizations, and agricultural stakeholders over the potential impact of the proposed changes on the state’s agrarian economy and its farmers’ livelihoods.

Background: The Centre’s Draft Policy on Agricultural Marketing

The Central government has recently put forth a draft policy aimed at reforming India’s agricultural marketing system. The policy proposes several changes designed to modernize agricultural trade, increase efficiency, and enhance market access for farmers. It includes provisions that seek to open up agricultural markets to greater private sector participation, introduce digital trading platforms, and encourage contract farming.

While the Centre argues that these reforms will empower farmers by providing them with more choices and better price realization, many state governments, especially Punjab, have expressed concerns. Punjab’s economy is heavily reliant on agriculture, and its existing mandi (wholesale market) system, regulated under the Agricultural Produce Market Committee (APMC) Act, plays a crucial role in ensuring price stability for farmers. Any disruption to this system could have far-reaching consequences.

Key Concerns of the Punjab Government

The Punjab government’s objections to the Centre’s draft policy are based on multiple concerns, particularly regarding its impact on the state’s agricultural economy, the welfare of farmers, and federalism.

1. Threat to the Existing Mandi System and MSP Mechanism

Punjab’s agricultural marketing system is built around APMC-regulated mandis, where farmers sell their produce through a transparent auction process. The Minimum Support Price (MSP) mechanism, which ensures that farmers receive a guaranteed price for their crops, primarily wheat and paddy, is closely tied to these mandis. The Punjab government fears that opening up agricultural marketing to private players without strict regulations could weaken the mandi system and gradually phase out MSP, leaving farmers vulnerable to market fluctuations and exploitation.

2. Increased Corporate Control Over Agriculture

The draft policy encourages private sector involvement in agricultural trade, allowing corporations to procure directly from farmers without going through APMC mandis. While this may seem beneficial on the surface, many in Punjab believe it could lead to monopolization, where large agribusiness companies dominate the market, dictate prices, and push small and marginal farmers into financial distress. Without proper safeguards, farmers may lose bargaining power and face unfair trade practices.

3. Erosion of State’s Authority Over Agriculture

Agriculture is a state subject under the Indian Constitution, and Punjab sees the Centre’s draft policy as an encroachment on its rights. By proposing a uniform national framework for agricultural marketing, the Centre is effectively reducing the autonomy of state governments in regulating their agricultural markets. Punjab’s leaders argue that the state government, being more attuned to local agricultural realities, is best placed to make decisions regarding marketing and pricing mechanisms.

4. Impact on Farmers’ Income and Rural Economy

Punjab’s rural economy is closely linked to agriculture, and any disruption in the marketing system could have a cascading effect. The introduction of corporate buyers without strong regulations could lead to volatile prices, delayed payments, and contract disputes, ultimately reducing farmers’ incomes. Moreover, if private buyers offer lower-than-expected prices, farmers may struggle to meet their production costs, pushing them deeper into debt.

5. Risk of Digital Divide in Agricultural Trade

The draft policy promotes digital trading platforms for agricultural commodities, which could potentially exclude small and marginal farmers who lack access to smartphones, internet connectivity, and digital literacy. In Punjab, many farmers, especially those from economically weaker backgrounds, rely on physical markets and traditional trading mechanisms. A shift towards digital platforms without adequate training and infrastructure support could marginalize a significant section of the farming community.

Punjab’s Plan of Action: Introducing a Resolution

To counter the Centre’s draft policy, the Punjab government has decided to introduce a resolution in the state assembly. The resolution will highlight the state’s objections to the proposed reforms and demand either significant modifications or a rollback of the policy. This move is in line with Punjab’s history of taking a strong stance on agricultural issues, as seen during the farmers’ protests against the now-repealed farm laws.

The resolution is expected to:

• Assert Punjab’s Constitutional Right to Regulate Agriculture: The state government will emphasize that agriculture falls under the State List and that any reforms in agricultural marketing should be made with the consultation and consent of the states.
• Demand Protection for the MSP and Mandi System: The resolution will call for the Centre to provide legal guarantees for MSP and ensure that APMC mandis continue to function as the primary marketplaces for agricultural trade.
• Urge Safeguards Against Corporate Exploitation: The Punjab government will demand strong regulations to prevent corporate monopolization and ensure fair pricing mechanisms for farmers.
• Highlight the Need for Inclusive Digitalization: The resolution will stress the need for policies that bridge the digital divide in agricultural marketing and ensure that small farmers are not excluded from new trading mechanisms.

Support from Farmer Organizations and Opposition Parties

Farmer unions in Punjab, which played a significant role in the protests against the 2020 farm laws, have welcomed the state government’s decision to oppose the Centre’s draft policy. Organizations such as the Bharti Kisan Union (BKU) and Samyukt Kisan Morcha (SKM) have warned that the new policy could be another step toward corporate control over agriculture and have pledged to support the resolution.

Several opposition parties in Punjab, including the Shiromani Akali Dal (SAD) and the Aam Aadmi Party (AAP), have also expressed their concerns about the draft policy. They argue that any policy changes affecting farmers should be made only after thorough consultations with stakeholders.

Centre’s Response and Possible Outcomes

The Centre has defended its draft policy, stating that the proposed changes aim to modernize agricultural trade, increase transparency, and improve price discovery. However, given the resistance from Punjab and potentially other states with strong agrarian economies, the Centre may face pressure to reconsider some of its proposals.

If the Punjab government successfully passes the resolution, it could set a precedent for other states to follow suit. The collective opposition from multiple states could force the Centre to engage in discussions and make amendments to the draft policy. Alternatively, if the Centre proceeds without accommodating state concerns, Punjab and other opposing states may explore legal options or organize large-scale protests, similar to those seen during the farm law protests.

The Punjab government’s decision to bring a resolution against the Centre’s draft policy on agricultural marketing underscores the deep concerns about the potential negative impacts on farmers and the state’s agricultural economy. By taking a firm stand, Punjab aims to protect its farmers from market uncertainties, corporate dominance, and policy centralization. The coming weeks will be crucial in determining how this conflict unfolds and whether the Centre will engage in meaningful dialogue with the states to address their grievances.