Can Anyone Explain What’s Wrong With Farm Bills in India?

 Can Anyone Explain What’s Wrong With Farm Bills in India?

The Kerala government has called for a special session of their assembly to protest against the farm laws that were introduced in the parliament on December 31, 2020. It's quite unclear how the farm bill is even affecting Kerala, one of the major demands of the farmer’s protest in Delhi is to do away with the amendments in APMC laws. APMC’s doesn’t exist in Kerala. 

Three Farm Bills were tabled in the Monsoon session of the parliament, Essential Commodities Act (Amendment) Bill, 2020, The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, Farmers (Empowerment & Protection) Agreement of Price Assurance and Farm Services Bill, 2020

Let’s look into each of them separately,

1. Essential Commodities Act (Amendment) Bill, 2020

The essential commodities act was introduced in 1955 inorder to stop hoarding of essential commodities which would result in price rise of these commodities and which in turn would affect the normal life of the people. The Act empowered the central government to control the production, supply, distribution, storage, and trade of those commodities considered 'essential'. The 2020 amendment to this sought to remove those items from stock limitations and only will be reintroduced in case of exceptional circumstances such as famine or other calamities. The 1955 act was important as India was a state which resulted in the import of food and other essential items, in the course of the next 65 years India became a food surplus state. 

2. The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

The second Act, The Farmers' Produce Trade and Commerce (Promotion and Facilitation) bypasses the Agricultural Produce Market Committee(APMC) altogether, creating a separate structure of trading. APMCs are regulated by states through their adoption of an Agriculture Produce Marketing Regulation (APMR) Act.  

The APMC Act was introduced because there came a need to protect the interest of farmers and to provide them incentive prices to augment the production of agricultural commodities. Common throughout the country were problems of local money lenders extorting high amounts of foodgrains from the farmer, at throwaway prices, as interest. Recognizing the defects that farmers faced—such as losses in terms of undue low prices, higher costs of marketing, and considerable physical losses of the produce in the agricultural marketing system—the Indian Government introduced several mandatory regulations in hopes of establishing a mechanism to monitor the market conduct. Regulation and development of primary agricultural produce markets were taken up as an institutional innovation, and construction of well laid out market yards was considered as an essential requirement for regulating the practices in primary wholesale markets. 

In the initial years, APMC acts helped remove malpractices and freed the farmers from the exploitative power of middlemen and mercantile capital. The golden period for APMC markets lasted till around 1991. With time, there was a palpable loss in growth in market facilities and by 2006, it had declined to less than one-fourth of the growth in crop output after which there was no further growth. This increased the woes of Indian farmers as market facilities did not keep pace with the increase in output and regulation did not allow farmers to sell outside APMC markets.

The farmers were left with no choice but to seek the help of middlemen. Due to poor market infrastructure, more produce is sold outside markets than in APMC mandis. The net result was a system of interlocked transactions that rob farmers of their choice to decide to whom and where to sell, subjecting them to exploitation by middlemen.

Parliamentarians inside farmers outside the parliament were speaking against this middlemen culture in APMCs for some time now. In fact, Congress Party in their 2019 general election manifesto pointed out that they will amend the APMC Laws once they are brought into power. In that sense, it’s quite hypocritical of Congress to oppose the laws.  

The new Farmers' Produce Trade and Commerce (Promotion and Facilitation) was introduced to counter this APMC system and to enable the farmers to sell their products anywhere they seem fit, anywhere in India. Hence the new laws would benefit farmers by empowering them to decide the price of their produce, which was earlier determined by traders.

 

3. Farmers (Empowerment & Protection) Agreement of Price Assurance and Farm Services Bill, 2020

Contract farming has been going on in the country for a long time now, both in formal as well as informal manner, but the Central government has given it a legal basis through a law. Farmers Agreement of Price Assurance Bill provides a framework for farmers to engage in contract farming. The law will specify the quality, grade, price of crops, and conditions of services. Apart from this, the contract will be from one year to five years. The third important feature of the law is that if the price of the crop is more than the price fixed in the agreement, then the market price will be considered as the standard price. 

The farmers are not aware of the prices after harvesting the crops, but in the contract farming agreement, the prices will be fixed in advance so that farmers can be assured of getting a fixed price. Farmers will get extension technology through which they will get to know which crop to produce and what variety to produce considering the demand. The responsibility of the service will be taken up by the sponsor or buyer. For example, the sponsor may take up the responsibility for water management, waste management, etc. The contract will not be of the land, but only for the crop. In case of any dispute, it will be settled at the gram panchayat level and if it is still not resolved, the matter will be settled at the SDM level.

Now as we have understood what the laws are and what’s the reason and circumstance for bringing them in, let's look into some allegations against the laws.

Allegation 1: Through these Farm Bills the Central government is planning to scrape Minimum Support Price

Truth: None of the bills make any mention of the Minimum Support Price System because these bills are about entirely different issues. On the matter of MSP, the Union Minister of Agriculture, Narendra Singh Tomar has explicitly expressed in the parliament that MSPs will not be affected by these legislations. Prime Minister Narendra Modi has himself reassured the farmers that the government purchase of their products coupled with the Minimum Support Price (MSP) mechanism will continue after the passage of the three agriculture and farm sector bills.

Allegation 2: In regard to contract farming legislation the corporate companies have the right to withdraw the agreement and this cannot be challenged in courts.

Truth: Government is neither imposing any draft agreement nor mandating any particular clause to be present in the contracts. Farmers and their clients/buyers/sponsors are free to choose and agree mutually on the clauses and terms according to their own needs. This protects the interests of both parties. Given the competition and options available for both the farmers and their clients, the agreement thus reached, could be fair for the farmers and their clients.  It is false that the agreements cannot be challenged. In case of any dispute, the act prescribes a farmer-friendly mechanism for the quick redressal of disputes. 

Allegation 3: Farmer’s Bills ask for the APMCs to be removed or the functioning of the APMCs to be stopped.

Truth: No, none of the Bills state that the APMCs will be restricted or stopped from functioning by the Central Government. Under the new system, farmers will now have the option to sell their produce at other places such as farmgate, cold storage, warehouse, processing units, etc.  In addition to the already existing Mandis, The Bills allow farmers to either approach the APMC Mandis or sell outside to other buyers, depending on where they are able to secure a better price for their produce. 

Allegation 4: The Three Farmer’s Bills together will make it mandatory for farmers to sell produce on their farm only through the mode of contract farming

Truth: The Bills do not enforce contract farming on the agriculturalists and only remove restrictions on sale and transportation of farm produce to enable them to enter into contracts with large scale retailers, processing industries, or for export purposes at an assured price as and when they want. The farmer will have full power in the contract to fix the sale price of their choice for the produce.  The agreement will also include provisions for change in price, especially in the case of unforeseen market price variations, for the farmers to be able to capture some value. 

Allegation 5: Farmer’s Bills do not account for market unpredictability and remove the provisions for insurance and credit?

Truth: Section 9 of ‘The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020’ clearly states that a farming agreement may be linked with insurance or credit instrument under any scheme of the Central Government or the State Government or any financial service provider to ensure risk mitigation and flow of credit to farmer or Sponsor or both.

Allegation 6: The Essentials Commodities Act amendment will enable corporate companies to hoard their stocks resulting in a cheaper price for farm produces in subsequent years.  

Truth: No limitation on procurement will ensure a steady demand and subsequent supply mechanism, thereby protecting the prices even during the rich harvest seasons. Stocking up of sufficient seasonal produce during bumper harvests to ensure price and income stability was a long-standing demand of farmers that has finally been fulfilled. This provision enables retailers and processing industries to stock up without getting harassed in the form of raids and thus prevent wastage and income loss for farmers. 

So, after all this, can the reader say, what’s wrong with the three farm bills that were introduced? I can find only one, i.e. it's introduced by BJP and Narendra Modi. For states like Kerala and the grand(!) opposition in the country, it's just another subject for a protest, and it's sad that for simple political gains they are betraying the farmers by misguiding them.