The Farm Bill 2020: Historical or Agitative

The Situation and The Story

Farmers took to the streets, protesting against three Bills on agricultural market reforms passed by Parliament last week and will become law once signed by the President. In Punjab and Haryana, bandhs, with restricted roads and rallies were considered. Opposition groups and peasant groups across the political arena expressed concern that these laws could include agriculture, threaten the current financial and state network and tarnish the government’s procurement system at guaranteed prices. In a popular recently introduced Farm Bill, three bills have been approved by the Indian Parliament with a view to introducing reforms in the agricultural sector. The importance of change can only be realized after considering that more than 60% of the population work in the agricultural sector. The sector also contributes about 18% of the country’s GDP[1]. The funds are currently facing stiff opposition from opponents in both houses. The debt has also led to intensified farmers’ protests in provinces such as Punjab, Haryana and Madhya Pradesh despite COVID-19.

On September 17, 2020, SAD leader Harsimrat Kaur Badal resigned from the union’s cabinet in protest of a bill she said was against farmers and would damage the agricultural sector in the Punjab.

The rich and the current system that farmers had been facing a number of problems in the late 1800s. These problems included overproduction, lower crop prices, higher travel costs, higher interest rates, and rising debt . Farmers have worked to reduce these problems. Another major issue with the MSP-based procurement system is the intermediate performance of intermediaries, commissioners, and the red-tapism of APMC (Agricultural Produce Marketing Committee) officials. The average farmer finds it difficult to reach these mandis and depends on the market to sell the farm produce. More than 90% of farmers have lost their MSP-based procurement system. Even the MSP has always been a farmer-oriented political issue. The statistics show that only 6% of farmers have access to an MSP-based procurement system[1].

The Laws and The Lacking

•           Farmers Produce Trade and Commerce (Promotion and Facilitation Act), 2020

This law allows farmers to sell anywhere in the country under the concept of ‘One Nation- One Market’. The ECA initially barred farmers from selling elsewhere other than government-mandated mandi’s. These government-mandated mandis are called ‘Agricultural Product Market Committees’ [APMC]. APMC is a market used by the government where farmers are allowed to sell their produce to retailers or middlemen. These middle-aged people then sell their product to consumers across the country.

APMCs also provide farmers with information on prices. This is done with MSP’s. MSP (Minimum Support Price) is the lowest price that can be sold by farmers. MSPs set by the government. Such a price tag ensures that farmers do not get too low prices. But unfortunately for farmers, the prices in APMCs even though they are higher than MSP, are controlled by middlemen cartels. These cartels enter into an agreement at a pre-determined price.

The new bill has also passed

(i) reduce the application of APMC rules for regional market premises;

(ii) Allows independent parties to establish online trading platforms for agricultural commodities

(iii) Establish a dispute resolution mechanism for consumers and farmers to be used by the subsection magistrate.

The new bill however does not abolish APMC’s. If farmers still want to, they can continue to sell their product to APMC’s and receive MSP support. But they are free to trade elsewhere and get high prices but are at risk of not having MSPs.

•           Essential Commodities (Amendment) Bill, 2020

Of all the 3 bills approved, it was the ECA that was overdue. The ECA is based on WW2 where laws were enacted by the British to exploit the country’s supply chain. The bill restricts the storage of essential commodities such as pulses, oilseeds, onions, etc. But now it has been amended. The amended ECA reduces the capacity and the institution has.

•           Farmers (Empowerment and Protection) Agreement of Price and Assurance Farm Services Bill, 2020

The Bill guarantees that farmers are allowed to enter into agreements with consumers. Here farming is done on the basis of an agreement between buyers and producers. One of the biggest benefits farmers get from this law is to guarantee the price even before planting their crops.

The scope of contract farming is huge as MNC’s regularly enter into agreements with farmers to ensure they receive certain types of product. For example, the McDonalds only use a certain type of potato in their Fries and make it grow properly. Similarly, some chains also require a specific product and would prefer to have direct contact with farmers rather than traders to ensure they are healthy and clean.

Reason to Such Ferocious Protests In The States

More than half of all government purchases of wheat and paddy over the past five years have taken place in Punjab and Haryana, according to data from the Department of Agriculture. More than 85% of wheat and paddy grown in the Punjab, as well as 75% in Haryana, are purchased by the government at MSP prices. Farmers in these countries fear that without MSPs, market prices will fall[1]. These states are also heavily invested in the APMC system, with a strong mandi network, an oil-rich system of arthiyas or commissions that help buy, and connect roads that connect many towns with well-known markets and allow farmers to easily deliver their produce. The Punjab government charges a tax of 6% (plus 2.5% for centralized procurement’s management) and earns an annual income of about Rs.3500 crore on these costs.

Conclusion

One of the reasons why there is so much commotion throughout the country is because of the unconstitutional way in which laws are passed as it is the governments of the world that control these factors. The state government had to form an opposition group and address the voice of farmers to fill the gaps in debt.

This will not only create a viable business venture but also prevent further exploitation. Unfortunately, the debt because it was not properly disbursed created a climate of mistrust between the decision, the opposition and farmers.

The simplest solution to farmers’ protests over farm debt could involve legal support for lower prices and the purchase of a new fear-inspiring bill. Giving farmers the opportunity to sell themselves without the help of intermediaries will only be of great benefit if there are roads linking villages and markets, meteorological storage facilities, electricity supply is made reliable and available to generate those facilities, and food companies competing to buy their produce.

AUTHOR: Anoushka Singh, Research Board Member.


[1] https://www.thehindu.com/news/national/other-states/farmers-fear-end-of-msp-regime


[1] https://niti.gov.in/writereaddata/files/writereaddata/files/document_publication/MSP-report.pdf


[1] https://www.prsindia.org/report-summaries/economic-survey-2019-20

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