Farm Bills 2020: Exposing the farmers to the vicissitudes of the market

By Dr. Santosh Kumar Mohapatra*.

On September 20 this year, two of the three contentious Farm Bills  were passed in Rajya Sabha by voice vote amid unprecedented uproar and protests. What is undemocratic, anti-federal is that despite agriculture being a state subject, states were not consulted properly. The arrogance of the ruling dispensation is reflected the way the demand of the opposition, that the bills be sent to a select committee for further discussion, was not heeded by the government.

It may be noted that on 17 September, the Centre had introduced the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and The Essential Commodities (Amendment) Bill to replace the ordinances promulgated in June.

All three bills have already been passed by Lok Sabha. Now the first two bills passed in Rajya Sabha will be sent to President Ram Nath Kovind for his assent. A third bill, the Essential Commodities (Amendment) Bill, 2020 which is already passed in Loka Sabha, and is to be moved separately in the upper house, seeks to remove commodities like cereals, pulses, oilseeds, onion, and potatoes from the list of essential commodities and will do away with the imposition of stock holding limits.

The bills have triggered protests by farmers at several places. These bills have been touted as “anti-farmer” bills by opposition parties. The issue has also seen a BJP ally and minister in the ruling front Harsimrat Kaur Badal resigning as the minister of food processing in protest against the “anti-farmer” laws.

The National Democratic Alliance government termed the two Farm Bills passed by Parliament to liberalize the agriculture sector as “historic”, and propagate that reforms will bring a change in the lives of the farmers add impetus to the efforts to double the income of farmers and ensure greater prosperity for them. Prime Minister Narendra Modi said the passage of the three farm sector bills is a watershed moment in the history of Indian agriculture.

But farmers’ groups and activists opposing them allege the bills will create a system lacking adequate oversight and make cultivators vulnerable to exploitation. The farmers insist the proposed laws are “anti-farmer” and will also affect commission agents and farm laborers.

All India Kisan Sangharsh Coordination Committee (AIKSCC), a coalition of about 200 farmer organizations, has called for a nationwide bandh (shutdown) on September 25 to protest against three agriculture-related Bills AIKSCC sees it as pro-corporate and anti-farmer acts of the Central government. It also opposes the New Power Bill 2020 meant to privatize electricity distribution across India.

Congress has targeted the government on the issue of Minimum Support Price (MSP), calling the farmer bills introduced by the government as “black laws”. “Why the government is running away from providing legal obligation for MSP? Who will take a guarantee of MSP outside ‘Mandi’?

Congress leader Partap Singh Bajwa, who hails from Punjab, describes the proposed laws as “ill-conceived and ill-timed” and says his party “completely rejects” them. He says the bills are against landowners across the country, especially those of Punjab, Haryana, and western Uttar Pradesh. Left parties strongly oppose Bills and according to them, those corporatize the agricultural sector in India.

Parties such as the Congress and Biju Janata Dal said the government ought to have included federally-fixed “minimum support prices” as the benchmark for any farm trade. The lack of any mention of MSP, which is considered as a basic remunerative price mandated by the government and federally fixed, in any of the legislation has given rise to a suspicion that the new system will weaken the existing MSP regime.

According to the former Finance Minister P Chidambaram, FarmBbills challenge the three pillars of our still-imperfect food security system such as Minimum Support Price (MSP); public procurement; and Public Distribution System (PDS). He further added that the “grave flaw” is that they don’t specify that the price which the farmer gets “shall not be less than the MSP.” He also noted that farmers in Tamil Nadu had told him “they are selling paddy at Rs 850 to private traders against an MSP (minimum support price) of Rs 1,150”.

Supporters of the Bills argue that the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 aims to ease all restrictions on the trade of agriculture produce. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, lays down a new architecture for contract farming in the country so that agribusiness and farmers can engage with one another more confidently, enable modern supply chains and investments by agribusinesses in cultivation.

As per the Modi government, these three bills will help small and marginal farms by allowing them to sell produce outside mandis; allowing them to sign agreements with agri-business firms; and doing away with stock-holding limits on key commodities.

According to the government, the three farm bills — two on Agri market reforms and one on contract farming — aims to help small and marginal farmers. The Bill on the Agri market intends to allow farmers to sell their produce outside APMC mandis to whoever they want. Anyone can buy their stock from farm gates. Farmers would get better prices but commission agents of the mandis would lose out on commission and mandi fees.

In other words, supporters of Bills think that the proposed laws are expected to provide barrier-free trade for farmers’ produce outside notified farm mandis, and empower them to enter into agreements with private players for the sale of agri-produce even before production.

By contrast, critics say the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, which brings a new contract-farming regime, doesn’t adequately protect the farmer. They cite crucial loopholes in Farm Bills.

Farm produce, under a decades-old system, is sold and bought in wholesale markets run by so-called agricultural produce marketing committees, or APMCs, under state laws. This is the mandi system. The bill enables food traders to buy farmers’ produce from any market, outside the purview of APMCs, rather than be bound to a specific market where they are licensed to operate.

Ushered in during the 1960s, APMCs were originally meant to protect farmers from distress selling by creating a system of notified markets that records all transactions and prices. Over time, however, these have often acted as monopolies, evidence suggests.

While the APMC system is cartelized, bypassing it all together will leave farmers vulnerable to big food corporations and the country will have no way of knowing what is being traded and at what price, critics argue.

Contract farming would be ‘detrimental’ as currently, the genetically modified (GM) crops are not allowed to be cultivated in some states like Kerala. With the advent of contract cultivation, the company which gets the contract will be able to cultivate GM crops. The corporates that would fix the price of the crops will reap the benefits.

Along with the promotion of contract farming, the effect will be to enable agribusiness companies and big traders to buy produce from farmers at prices dictated by them. What is being touted as “freedom for the farmer” will in reality be freedom for the big traders-corporates to dictate prices to the farmer?

The amendment of the Essential Commodities Act eliminates cereals, pulses, edible oils, onions, and potatoes from the list of essential commodities and stockholding limits. Limits can be imposed only in the case of exorbitant price rise, war, or other extraordinary events. The obverse side is that it will lead to a price rise in these commodities for consumers.

In reality, the three Bills/ Acts will completely stop government procurement of crops, bringing to a grinding halt the price security for peasants as private mandis shall be set up. This amendment will only help stockpiling and hoarding by big traders, corporates, aggregators, and processors and will be utilized for speculation in futures trading.

All taken together, they are a contract for the exploitation of the farmers by big traders, agribusiness, and corporates. The govt is abdicating all oversight responsibility. “Nor does it want to build a price intelligence system even as it weakens the mandi system. The Bill which was passed despite strong opposition will be a death knell to the farmers. It is aimed at handing over large tracts of land to corporates and to oust poor farmers from their own lands,” only the land mafia and food industry giants would stand to benefit from the Bill.

BJP president J P Nadda hailed Parliament’s nod to two farm sector reform bills, saying they will give farmers freedom in selling their produce and rid them of middlemen. Prime Minister Narendra Modi tweeted: “For decades, the Indian farmer was bound by various constraints and bullied by middlemen”.

The Bills passed by Parliament liberate the farmers from such adversities. But in reality, in India farmers typically are “locked” in with middlemen because the latter provides loans to farmers to meet cultivation costs, even in case of any family problems/functions with an assurance to buy their produce.

Agricultural input markets, such as seeds, pesticides, etc. have seen a large-scale corporatization in the past decade, but this has been accompanied by a sharp rise in prices of intermediate inputs in agriculture. Data from the ministry of agriculture shows that a rising cost of intermediate goods has been the biggest reason for stagnation and eventual decline in terms of trade for farmers.

The farmers are languishing under poverty and starvation and debt trap. Farmers are committing suicide due to lack of remunerative prices of their products, rise of the cost of inputs, being unable to defray the growing health and education expenditure, lack of availability of formal credit, and getting exploited by village money lenders.

World over, in all countries, barring none, price security for farmers’ produce is always provided for by Government, not by companies, which only buy cheap to sell dear and earn huge profits. Crop once produced has to be sold; otherwise, it will perish and lose value. More food grain requires more Government procurement, without which companies will bring down prices even faster.

Given this experience, the distrust towards a growing footprint of big capital leading to a squeeze in earnings cannot be dismissed just as dogma. Farmers are often hard-pressed for resources against traders and end up selling their output when prices are lower. Replacing local traders with big capital will only enlarge this gap in bargaining power. Actually, farmers will be more susceptible to the vicissitude of the market.

The Bills’ will promote the corporatisation of agriculture, facilitating the integration of Indian agriculture with the global market and undermining the minimum price based procurement/MSP mechanism which will lead to the erosion of food security. It will enhance the corporate profit by opening up the entire food chain for them.

It will also affect the state finances as they will lose revenues which they get by imposing a tax on mandis. Hence, the government should ensure that MSP is augmented every year and farmers get minimum support price on their produce.



*The author is an Odisha-based eminent columnist/economist and social thinker. He can be reached through e-mail at [email protected]


DISCLAIMER: The views expressed in the article are solely those of the author and do not in any way represent the views of Sambad English.


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