Farmer unions, that are protesting against the newly introduced Farm Bills, had announced Bharat Bandh on December 8 2020. This bandh, which was largely peaceful but at times violent, came at the backdrop of the farmer agitation and the massive Dilli-Chalo Andolan initiated by farmers around the nation. While stepping at the Delhi borders, our national feeders were greeted with water cannons and some often-speculated booby traps, which obviously these farmers were strong enough to withstand. Their enthusiasm could clearly reflect their discontent with the present establishment.
However, for some, who have been highly aligned to their belief of supporting the newly amended laws, these laws were a gift to farmers and the one’s protesting are incited to do so by some cruel demagogues with crony instincts.
A Brief Background To Farm Bills
President Ramnath Kovind, on September 2020, gave assent to the Agreement on Price Assurance and Farm Services Act, 2020 (FAPAFS), the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (FPTC) and the Essential Commodities (Amendment) Act, 2020 (EC). It was touted as the watershed moment by our honourable Prime Minister Narendra Modi. Let’s quickly look at what each these amendments entail:
- Price Assurance and Farm Services Act, 2020 (FAPAFS):
This act focusses on creating a national framework for “contract farming through an agreement between a farmer and a buyer before the production or rearing of any farm produce.” The act provides a three-level dispute settlement mechanism by conciliation board, Sub-Divisional Magistrate, and Appellate Authority. It was asserted that the act can help farmers to engage with agribusiness firms, processors, wholesalers, exporters, or large retailers for farm services.
However, this act was met with criticism from the side of farmers mainly because of the lack of regulations which might keep farmers in a disadvantageous position as compared to private firms. Further, the Appellate Authority is the highest level of appeal for the farmers which would therefore prevent them from moving to Supreme Court.
- Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (FPTC):
This act permits intrastate and interstate trade of farmers’ produce beyond the scope of the Agricultural Produce Market Committee (APMC) market yards (mandis). It permits the trade of farming products in “outside trade areas” ( farm gates, factory premises, warehouses, silos, and cold storages). Further, this act imposes restrictions on the State government’s power to impose any market fee or cess on farmers, traders, and electronic-trading platforms in these trading areas. However, this gives an impression that the traders and private entities buying products from them can easily monopolise farming markets in the favour of large corporates.
- Essential Commodities (Amendment) Act, 2020 (EC):
This is an amendment to the earlier Essential Commodities Act, 1955, which was to regulate the production, supply, and distribution of a whole host of commodities that it declares ‘essential’. Under the amendment, the government deregulated certain agricultural products like pulses, onion, potato and cereals, edible oils, and oilseeds, with the aim of realizing better prices for farmers in an attempt to realize better prices for the farmers.
The Obvious Conclusion
On the first look, it seems that the farm amendments were an attempt to help farmers break free from the shackles of the local mandis and help them gain competitive profits. This seems to be an attempt to weed out middlemen and deregulate agricultural produce so that the farmers can easily sell their products at the price they find convenient and at the place they find suitable. However, the fact that there has not been any provision for Minimum Support Price (MSP) clearly portrays the lack of structured support these bills give to the farmers and the extent to which corporates can exploit the farmers.
APMC regime did have its own faults but in those states where it wasn’t implemented properly. One example is Madhya Pradesh where the post-2016 Bumper Crop prices of farming products like potato, onion, garlic, tomato and green peas hit a record low. There were instances when farmers straight away dumped their produce and went back home. The heavy rising burden back then forced MP farmers to protest against State Government. However, only a few of their demands were met.
There were instances in APMC when middlemen and traders started hoarding the agricultural produce. Farmers also received only a part of the price paid by the final customer, while middlemen were collecting a large portion of that profit.
Another argument, in the favour of farm bills, is that it can incentivise diversification of crops like vegetable oils, edible oils and oilseeds and in a parallel, shift away from wheat and rice. There have been arguments presented that the mandi system was of British origin and the MSP was the origin of hundreds of colonial medieval centuries and such systems might not work in favour of farmers, especially in the modern times.
The Other Side Of The Coin
“Jio came in, they gave free phones. When everyone bought those phones and got dependent on these phones, the competition was wiped out and Jio jacked up their rates. This is exactly what the corporates are going to do [with agriculture]”.
-Akali Dal leader, Harsimrat Kaur Badal (who resigned from Narendra Modi Government lately)
The state opposition towards these bills is directed so because the local mandi markets are controlled by the state. If at all these mandis are going to go insignificant, which seems very likely in the amended acts, then the state’s power on the farmers is going to go down. Further, the intrusion of the private sector into the deregulated market is in itself a signal of a threat as there have been instances in the past when the open-handedness of the private sector has been largely detrimental to the agricultural sector.
One such example is when the management of the crop insurance scheme against natural disasters, introduced in 2017, was handed over to one of Anil Ambani’s companies. Farmers however did not benefit out of it. Moreover, there are countries around the world that have been providing subsidies to their farmers, for example, US, EU to name a few. If most of the western countries are moving towards supporting their farmers and providing subsidies to them, why should India move towards liberalisation?
Farm Laws: Atmanirbhar Much?
These bills contradict the previous agricultural structures in a way that it deregulates the entire farming system. The previous regulatory frameworks created local mandis and made markets easily accessible to the farmers. However, this new framework might take mandis away from farmers. Though there have been attempts to deregulate and privatise the agricultural markets in India since 1991, the question is why do this during the post-COVID-19 coronavirus economic crisis, when every citizen of this country needs economic support and you just can’t leave anyone behind?
This farm law, however, is leaving 86.2% of all the cultivators, who are actually the “smallholder and marginal farmers” behind, as it would be inconvenient for them to carry their produce to other states or far-off places. Such an attempt that disregards the needs of small business owners clearly contradicts the vision of “Atmanirbhar Bharat” initiated and incited by our honourable Prime Minister Narendra Modi.
While India is advancing towards so-called economic liberalisation, breaking the shackles of our farming community is the first necessary step that has to be taken. When our government is pushing the idea of “Vocal for Local” deep within the country’s horizons, the question is, why is the government trying to bring in the reforms that could potentially weaken the local mandis instead of regulating them?