The TLDR: The government submitted a written document listing the concessions it is willing to make. Farmer unions have turned down the proposal—saying it was exactly the same offer they have rejected several times before. And they have promised to escalate the protests over the coming month.

The background

If you are just tuning into the protests, we recommend reading our explainers on:

• The three farm laws that the farmers want repealed.
• Previous negotiations between the two sides.
• The meeting with Amit Shah that led to this proposal.

The government’s proposal

You can read the full text here, but the 20-page document essentially reiterates what the government has offered before. There will be no repeal of the laws, but instead specific amendments that address the farmers’ concerns. And the changes are exactly the same as reported before:

One: Under the current law, buyers at government mandis have to pay a market fee and a rural development fee. But there are zero fees imposed on private mandis. The government says that individual state governments will have the right to impose and collect fees on private mandis.

Two: Currently, all disputes between farmers and private buyers must be referred to special boards created by local bureaucrats. Farmers worry that IAS officers are more likely to take the side of big companies. So the government is willing to give farmers the option to take their case to court.

Three: In government mandis, they have to offer a bank guarantee, and can lose their license if they default on payment. But in a private market, a buyer only has to submit a PAN card to become accredited. The farmers insist this will leave them vulnerable to fraud. Government says state governments are free to require additional documentation.

Four: The law encourages big companies to enter into contract farming agreements— wherein the farmer agrees to grow a certain amount of produce at a preset price. The government says there is already a clear legal stipulation saying farmers’ land cannot be acquired in case of a dispute. They are willing to clarify this point if needed.

Five: Farmers are also upset about new laws that impose huge penalties for stubble burning, and potentially losing their electricity subsidies. The government says there will be no change in the present system of how farmers pay their electricity bills. On stubble burning, the language is vague: 

“The objections of the farmers will be addressed appropriately regarding the provision for stubble burning under the Air Quality Management of NCR Ordinance, 2020.”

The big picture: The government has indeed made concessions on key points, but also passed the buck to individual state governments—which may or may not exercise these options. So farmers in each state will have to press their government separately.

Also, the biggest sticking point—minimum support price—has been left untouched.

The Minimum Support Price problem

The government’s offer: On this, the proposal reiterates: “The Central government will give written assurance regarding the current procurement system of MSP.” Translation: the government will continue to pay a minimum support price in government mandis—as it does right now.  

The farmers’ demand: Back in July, farmers had sent a list of written demands to PM Modi. It includes something called a “guaranteed remunerative MSP” (GRMSP). And here’s what it means:

• Every farmer throughout India will be entitled to a guaranteed minimum price on every agricultural commodity.  
• No buyer—government or private—will make a purchase under this price. And doing so will be illegal—and the offence will be punished with fines and jail time.
• The minimum price will be fixed by a newly created commission—which will arrive at the price after factoring in all costs borne by the farmer. 
• The recommended price will ensure at least a 50% profit margin.

In other words, they do not want private buyers to start buying in private mandis or via contract farming—while the government continues with MSP as usual in government mandis. And here’s why:

One: The union government only pays in MSP on certain core commodities—like wheat and rice. And as one farmer points out: But in the current system, hardly any state other than Punjab and Haryana get MSP for their crops. What about in Uttar Pradesh where farmers get paid below the MSP?”

Two: Crops not covered by MSP are vulnerable to huge price fluctuations. As Mint points out, many farmers already depend on private buyers—and not the government—to sell their produce. And they have not fared well:

“In private agri markets, price risks are high and recurrent. Prices of commodities like cotton are determined by global trends, while  those  of  perishables  fluctuate depending on seasonal factors, weather and demand-supply dynamics. Due to their weak bargaining power in the private market—a result of their inability to store, process or time sales—farmers often dump their perishables or sell them dirt cheap.”

The result: Farmers fallback on crops with MSP to the detriment of everyone:

“This is why the Punjab farmer is addicted to paddy, even though its cultivation has depleted groundwater tables. The same is true for sugarcane where the Centre announces a fair price. The lopsided price incentives, coupled with risks in alternative crops, force a water-stressed region like Marathwada to grow cane.”

Three: Contract farming for big buyers has led to disaster without a price support system. Here’s one example cited by farmers:

“A multinational chips company signed a contract promising to procure potato at Rs 10 per kilo. The promise was broken within a year, with the company paying Rs 4 per kilo. And a year later, as potato prices crashed, they chose to buy potato from the market at much lower prices. Today I am in debt. Farmers don't break their agreements, the corporates do.”

While the government offer protects the farmers’ land, it offers no legal safeguard against these kinds of scenarios.

Four: There is already evidence that bringing in private buyers without offering price protection hurts farmers. Example:

“In Bihar, for instance, which abolished regulated markets in 2006, and where purchases at MSP are negligible, farmers sell paddy and maize at a large discount to support prices. In fact, private traders often purchase paddy and wheat cheaply in Bihar and sell in Punjab and Haryana at MSP where the procurement infrastructure is robust.”

Five: One of the laws removes all restrictions on stockpiling essential commodities. So a big company can potentially buy vast quantities at low prices during a bumper harvest year. Store it for a long period, and then sell the produce at higher prices when there is a drought or flood. Hence, the farmers’ new slogan: “Sarkar ki asli majboori — Adani, Ambani, jamakhori” (The government is helpless before Adani, Ambani and hoarding). 

A farmer explains how hoarding will hurt everyone here:

What’s next?

The farmers plan to intensify their agitation. Plans include:

• Block the Jaipur-Delhi highway and the Taj expressway from Agra to Delhi on December 12. 
• That’s also when all toll plazas will be “freed” across the country—i.e. farmers will prevent collection of tolls to allow vehicles to pass free of charge.
• Picket businesses of Mukesh Ambani and Gautam Adani and boycott their products—including Jio phones and sims.
• BJP offices will be gheraoed in every district.
• On December 14, there will be another nationwide dharna—where farmers in North India will head to Delhi, while others protest in their home states.  

The government’s attitude: is best summed up in this part of Indian Express’ report:

A section of officials in the Government attributed the hardening of the farmers’ stand to the presence of Left leaders in the negotiating team. 'They have a strong ideological opposition to the Government,' said an official. 'They will never yield, there are more than 35 representatives and Left leaders are dominating the discourse.'

 

The government hopes it can peel off some of these groups from among the 35 but given the united front they have presented in rejecting the Government’s assurances and asking for a repeal, that may be a challenge.

Reading list

The Hindu offers a balanced take on the latest developments. The Telegraph has the farmers’ point of view. The Indian Express report makes the government’s position clear. Also must read: Mint and Indian Express on why MSP is critical to the farmers. The Print lays out their demands regarding MSP. One of the leaders also offered a blow-by-blow account of the encounter with a very polite and ‘not threatening’ Amit Shah. Watch it here.