The Indian Parliament passed four bills on agricultural reforms—Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill 2020, Farmers (Empowerment and Protection) Agreement of Price Assurance, Farm Services Bill 2020, and the Essential Commodities (Amendment) Bill, 2020—during its monsoon session culminating on September 23 to relieve the ordinances issued during the lockdown.
The contentious bills were passed amid protests by the Opposition parties, without discussion in Parliament. The Bills are part of the Modi government’s commitment to double farmers’ income and follow its credo of minimum government and maximum governance.
This is a massive structural change, and the grand idea seems to have been met with outcries of distrust in specific terms of the bill and its implementation by the opposition and farmers alike.
Amid the stiff opposition, there have been responses including that of the Prime Minister on social media urging farmers not to believe in rumors about the bills. So to highlight the main points in the noise around the topic, let’s start with why this even came about to be.
Why? - Backdrop of the Farmers Bill 2020
In 1947, when India gained independence, the urban-rural income ratio was estimated to be 2:1. Today, it stands at about 7:1. The decline came even as farm production grew to the point that India became self-sufficient in food production, and also exporting some food crops.
The issue lies in the lack of structure and development in the post-production side of things forcing farmers to give in to whatever comes their way. No thought was given to processing, value-addition or marketing, and trade of farm produce to make the Indian farmer self-sufficient. Public investment in agriculture has been below 5% resulting in low capital formation and low private sector investments, leading to poor infrastructure, as reported by the Indian Express. No policies were drafted to allow farmers to market their produce and earn the profits that an open, competitive market would have allowed them to make. It is against this backdrop that the government pushed for the three bills collectively referred to as the “Farmers Bills” by the common man.
Terms of the Farmers Bill
The three pieces of legislation will create a system in which farmers and traders can sell and buy agricultural products on their terms. While there are terms that have been widely accepted by the public, the ones across the 3 bills whose consequences have been marked unfavourable by the farmers thus causing protests and wreaking havoc are as follows:
● Promotes barrier-free intra-state and inter-state trade of farmer’s produce.
● Allows farmers the freedom to trade anywhere outside state-notified APMC markets [1], and this includes allowing trade at farm gates, warehouses, cold storages, and so on.
● Prohibits state governments or APMCs from levying fees, cess, or any other charge on farmers’ produce.
● Gives freedom to produce, hold, move, distribute, and supply produce, leading to harnessing private sector/foreign direct investment in agricultural infrastructure.
(as reported by Qrius)
The crux of the bills is that they aim at removing fears of private investors of regulatory influence in their business operations. But as seen through the brawl raised by the opposition in the Rajya Sabha which led to them being silenced, a number of farmers have fears and issues with this paradigm shift that the government is introducing and have voiced their distrust in the implementation of the apparent goodwill behind the bills.
Concerns of the Farmers:
On Friday, September 25, farmers’ organizations across the country gave a call for a bandh to protest the three bills passed by Parliament. The main points of their concern are as follows:
1. APMC Mandis:
While most farmers would agree that the functioning of the mandis is inefficient, opaque, politicized, and often controlled by cartels, the same people are now on the streets fighting for restoring the primacy of the mandis in agricultural trade as these are essential to the agricultural trading ecosystem. Farmers share a symbiotic relationship with the middlemen and the mandis extending beyond matters of transaction in agricultural produce. The middlemen are a source of information, inputs, and sometimes credit without collateral.
Further, unlike earlier reforms where the focus was on strengthening the functioning of APMC mandis while allowing for greater private market access and participation, the current FTPC bill bypasses the APMC altogether, creating a separate structure of trading.
The new bill states that the food grain trade will be in the hands of private traders, but with no system to safeguard the farmers. The majority of farmers in India are small and marginal farmers that don’t have the capacity to trade the food at distant places. Giving private players the freedom of food grain trade without any regulation will eventually lead to the emergence of monopolies, oligopolies, or a cartel system
Government procurement will also be affected as farmers will be inclined towards private markets. As the volume of purchase increases in the new system, the government will reduce its purchase target. Eventually, government procurement will be negated and in such a situation, the prices of crops in private markets will be reduced. With unequal and differentiated terms of engagement, the decline and disappearance of the APMC is only a matter of time.
The fight to retain the APMC despite its shortcomings is also a fight to get a commitment from the government on maintaining state support to the agricultural sector, keeping markets regulated and having the government invest directly into the agricultural ecosystem.
2. Fear of the MSP vanishing:
With government investment in agriculture declining in real terms and rising input costs, farmers fear the withering away of the last remaining instrument of state support in the form of the Minimum Support Price (MSP) regime. The MSP is a safety net for farmers that assured them a minimum price for their harvest and allowed them to plan their investments and returns based on this base price set by the government. MSP-based procurement did not benefit the majority of farmers as its effectiveness laid in two crops—wheat and paddy; however, it worked as a lifeline for farmers in the states with this regime as most of all, it provided assurance that the state was willing to step in when required. The MSP vanishing is seemingly a nightmare for these poor farmers who are not skilled enough to gauge and anticipate markets like a professional agent.
3. Contract Farming:
These fears are compounded by the Contract Farming Bill and amendments in the Essential Commodities Act. Contract farming is not a new concept to the country’s farmers with informal contracts for food grains, and formal contracts in sugarcane and poultry sectors being common.
Farmers are apprehensive about contractual obligations owing to the unorganized nature of the farm sector and lack of resources for a legal battle with private corporate entities.
The Price Assurance Bill, while offering protection to farmers against price exploitation, does not prescribe the mechanism for price fixation. There is apprehension that the free hand given to private corporate houses could lead to farmer exploitation.
4. Food security being undermined
Punjab Chief Minister Amarinder Singh, on the easing of regulation of food items, said it would lead to exporters, processors, and traders hoarding farm produce during the harvest season when prices are generally lower, and releasing it later when prices increase. He said it could undermine food security since the states would have no information about the availability of stocks within the state, as reported by The Hindu. With the lack of regulation, one can anticipate irrational volatility in the prices of essentials and increased black marketing.
Conclusion
The Farmers Bill 2020 is an ambitious step taken by the government that stems out of the goodwill to alleviate farmers’ problems in the middle of this pandemic. As ambitious as it may seem, the farmers have also expressed their concerns with the bills. Like every bill that’s introduced in this country, it’s all going to come down to the implementation. While politicians debate the terms of these bills in a room in Delhi and lakhs of farmers express their individualistic problems on ground, what is needed right now is a solid bridge of structured implementation. What the farmers need is a clear plan of action to make these terms on a paper a reality.
Article by-
Anupama Nhavalore,
PES MUN Society
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