Bhavantar Bhugtan Yojana Fails In Helping Distressed Farmers Of MP

Madhya Pradesh is among the top states with the third position in India when it comes to farmers’ suicides. Currently, the farmers in the state have lost over Rs. 22,000 crore as a result of faulty schemes by the government, and a total of about Rs. 30,000 crore due to natural calamities damaging the crops in the state, contributing to the farmers’ distress.

Amidst the growing anger of the farmers post the death of five farmers in the protests last year, the government of Madhya Pradesh had introduced its ambitious Bhavantar Bhugtan Yojana in October 2017, as a last-ditch effort to appease the farmers right before the elections in the state scheduled to take place later this year.  

The model of the project, based on the United States’ price deficiency payment scheme, hoped to provide support to the farmers by compensating the farmers for the difference between the minimum support price (MSP) of the produce and the price at which the farmer sold its produce in the market, called ‘modal price’. On the face of it, the scheme looked like a progressive step towards relieving the distressed farmers. However, it was far from any relief. The latest victims of the Yojana have been farmers from Rajgarh in Madhya Pradesh. The farmers, who had sold their rabi produce, were taken aback when the news of the crop being returned by their mandi (market) broke this week. Return slips of over 350 quintals of rabi produce were handed over to the farmers as the details of the farmers could not be successfully logged into the government portal. The quality of the crop depreciated tremendously from the quality that it was sold in April, incurring not just losses, but a renewed disappointment to the farmers. This instance is just one of the multiple problems faced by the farmers in the name of the ‘game-changing’ Bhavantar Bhugtan Yojana. 

Also Read: PMFBY – Insurance Companies Make Super Profits, Farmers Suffer

The Yojana wanted to tackle the failures of the MSP system, by crediting the difference between the selling price and the modal price directly to the bank account of the farmers, after their successful registration with the government portal. The scheme bases itself in two unrepresentative parameters, the MSP that is calculated by the government is deemed problematic as it focuses only on the demand-supply metric to determine the price the farmers should get. The scheme took a step further by incorporating another unrepresentative parameter- the modal price. This price is determined by a Mandi board which meets every 15 days, in this meeting the average difference is calculated between the MSP and the market price. In other words, both the parameters of the MSP and the modal price used to give their due to the farmers are problematic and add up to the losses of the farmers. The scheme ends up fixing the cap on the modal price on the basis of an average taken from three different mandis in different states where the crop is grown. At a conceptual level, the scheme was flawed in assuming that the cap on the modal price effectively represents the production and the opportunity cost put in by the farmer. This cap has led to a disappointment in the farmers as it ended up being lower than their expectation. 

For Example, if MSP for maize is Rs. 3,000 per quintal and the modal rate is Rs. 2,500 per quintal, and if a farmer sells the crop at Rs. 2,600 per quintal in a mandi, the government will pay Rs. 400 for every quintal sold, directly to the farmer’s bank account. However, if the crop is sold at Rs. 2,200 per quintal, the state will transfer only Rs 500 per quintal of produce sold, or the difference between MSP and the modal price. The modal price being an average is not representative of the costs of production incurred by the farmers. 

Logistically, on the ground, to avail the benefits of the scheme the farmers were required to sell the ‘notified’ crops in the ‘notified’ mandis, with the price cap to be determined through a system of competitive bidding. As such the farmers, who do not hold any collective bargaining power against the big traders, end up selling their produce at a much cheaper cost. 

Pointing to the problems of calculating average production, social activist Dr. Sunilam says, “For example, the farmer cultivates one hectare which can produce up to 60 quintals, the model price which is fixed ends up paying the amount worth about 20 quintals, the farmer will then have to sell the remaining 40 quintals to the traders at a much lower price.” In this sense, the scheme fails in its essence of being ‘Bhavantar’ or paying the rightful difference. 

The implementation of the scheme on the ground has sparked both despair and aggression among the farmers currently campaigning to solidify the movement to ensure a transparent system. Kedar Sirohi, a leader of the Kisan Union explained that the scheme is a “sellout to the industry, benefitting only big traders”. The farmers from the smaller, remote areas end up bearing transportation costs, to reach the notified mandis, only to be left disappointed with the rates being offered in return for the high production value of their produce, determined by the big traders. The information asymmetry between the traders and the farmers prevents them from gauging the demand and supply metric in the market. Due to this, many end up selling their produce at a substantially low amount, when compared to the MSP. 

Even when the farmers have sold their crops at the prescribed MSP, the structural problems in receiving their payments have added to their woes as seen in the case of the Rajgarh farmers, who sold their produce in April, and are yet to receive their payment. Pointing to the insecurities of the farmers, Dr. Sunilam adds that many farmers don't end up registering themselves for the scheme as it directly clashes with the Fasal Bima or the revenue loss mechanism. If one farmer cultivates four different crops on one hectare and three crops fail, he can get the average difference through Bhavantar scheme for one crop and may run the risk of not availing the insurance for the other three failed crops. 

In many instances, traders have also created a situation in the market by manipulating the rates of the produce, making it much cheaper. They also regularly use the loopholes in the scheme to their benefit by buying the produce at dirt-cheap rates from the farmers and tricking them into availing the benefits of the Yojana. In some cases, they have themselves bought produce from other states at cheaper prices and made false entries in the names of uneducated farmers to avail the benefits of the Bhavantar scheme. Dr. Sunilam adds, “The scheme is an instrument to fool the farmers to benefit corporate entities.” 

Explaining the gravity of these losses, Jaswinder Singh, from the All India Kisan Sabha says, “The scheme has only increased the burden of the farmers”. Giving the example of the soybean crops in the state last year he said, “As soon as the scheme was announced the prices of the crop fell in the market; this, in turn, ended up benefitting the big industrialists who invest in agriculture in the state, such as the Adanis”.  

In the light of these developments, a strong political movement is in motion in the fields of Madhya Pradesh. To give voice to the frustration of the farmers, the Kisan Union on the ground is organising mass meetings and a campaign against the scheme as well as the government, ahead of elections. Sirohi said, “We will now have a vote bandh campaign, we will take down leaders who have refused to negotiate with us and lend an ear to our demands of transparency.” Dr Sunilam adds, “Before the election, we are doing a massive pradarshan in mandis across the state in October to put an end to this loot.”
 
The scheme, which is currently being studied as a model to be adopted by other states, favours the powerful traders, who end up making the most profit at the behest of the farmers. The monetisation of farmers’ pain in a state with a history of agrarian distress comes across as the best example of vote bank politics in a poll-bound state. The scheme has provided the government with an opportunity to brush off its responsibility of farmers’ welfare by reducing the financial burden of the state as the government paid only the difference and not the entire MSP to the farmers, making Bhavantar Bhugtan Yojana merely a token policy.