The Government of India brought three new legislations that were aimed to bring substantial changes in the Indian agricultural sector. The Farm Laws, as they are often referred to, have been a matter of serious political and legal discussions. The laws aim at providing freedom to the farmers and thereby increase their welfare. But a large section has raised concerns regarding the provisions of the laws. Several farmers’ outfits are agitating against these laws and demand that the laws be repealed. This movement has grabbed global attention. This article highlights the provisions of these three Acts and tries to lay emphasis on the concerns of the farmers regarding the acts.
Farm laws, Farmers’ protests, Contract farming, MSP
FARM LAWS 2020
Our agrarian system is not perfect. It’s a reality that we have been escaping for a long time now. Attempts have been made to reform it since Independence. Starting from the Green Revolution in the 1950s to the contentious Farm Laws, there have been serious efforts to improve the status quo. In 2017, the Union Government released Model Farming Acts. The Standing Committee on Agriculture (2018–19) found that the reforms suggested were not implemented by the states. In 2019, a committee of seven Chief Ministers was formed to discuss the implementation.
On June 5, 2020, the Union Cabinet promulgated three ordinances that would have brought significant changes in the agricultural sector. Later in the monsoon session of the parliament, the Union government introduced three bills to replace these ordinances. They were passed by the parliament by September 22, 2020. The bills received Presidential assent on September 27, 2020.
The three legislation aims at providing more freedom for the farmers to sell their farm produce, by removing restrictions like license or stock limit, so that it would lead to better income and thereby lead to the overall welfare of the agrarian community
The three laws are:
● The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020.
● The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020.
● The Essential Commodities (Amendment) Act, 2020.
These laws try to remove the barriers on the trade of farm produce, and further look to facilitate contract farming based on written farming agreements. These three acts have been a matter of serious discussions and debates. The farming community has been agitating against it since the time it was introduced as ordinances.
THE FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) ACT, 2020
According to the preamble of the Act, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 aims to
● Create an ecosystem where the farmers are free to make decisions relating to the sale and purchase of the farm produce;
● Provide to the farmers remunerative prices for their produce through competitive alternative channels;
● Remove restrictions on interstate and intrastate trade and sale of produce outside the markets notified under the various state agricultural produce market legislations; and
● Facilitate a framework for electronic trading transaction platform.
The above-mentioned act allows barrier-free trade of agricultural produce within and between states. Earlier, the farmers sold their produce at notified wholesale markets, or mandis, run by the Agricultural Produce Market Committee (APMC). The APMCs operate to prevent the exploitation of farmers by money lenders. Each mandi had licensed middlemen, called hathiyars. The farmers would sell their produce to the hathiyars through auctions. Wholesale traders and big companies could not buy directly from the farmers. Though this Act removes the geographical restrictions, the small and marginal farmers may still not have enough resources like capital and storage facilities to transport their produce to markets outside the areas they were already trading in.
With the Act, the farmers have the option to eliminate the middlemen and sell directly to businessmen and corporates at prices agreed between them. But farmer organisations have reservations about this. The farmers are worried whether the provisions would lead to the establishment of a monopoly of private players. The small and marginal farmers would not have the resources to counter such a monopoly, if it indeed happens.
Another fear is whether the entry of private players would lead to the end of mandis. All those people who are employed courtesy the mandi yards will lose their livelihood. A tax is levied by the states for trading in mandis. If this system ends, then it will also result in a loss of revenue for the state.
THE FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES ACT, 2020
This legislation seeks to offer farmers the choice to enter into agreements with agribusiness firms, processors, wholesalers, exporters, or large retailers for the sale of future farming produce at a pre-agreed price fair and in a transparent manner.
● Generally, the minimum and maximum period for the agreement will be one production cycle of livestock or one crop season and five years, respectively. The prices for the produce will be decided and mentioned in the agreement itself.
● In case the agreement relates to seed production, the sponsor, who is the person who enters into the farming agreement with the farmer to purchase the farming produce, should make payment of not less than two-thirds of the agreed amount at the time of the delivery of the and the remaining after due certification. In the case of other produce, the sponsor should, at the time of delivery, pay the agreed amount and issue a receipt slip. The State Government may prescribe the mode and manner by which payment shall be made to the farmer.
● The farming agreement should not be entered into for any transfer, including sale, lease and mortgage of the land or premises of the farmer.
● There will be a three-level dispute settlement mechanism. The disputes related to the agreement shall be first referred to the conciliation board, which shall consist of representatives of the parties to the agreement. If there is no settlement within 30 days, then the party can approach the Sub-Divisional Magistrate who shall be the Sub-Divisional Authority for such disputes.
One of the major concerns put forward by the farmers in respect to this act is that the small and marginal farmers may not have enough negotiating power and resources to ensure a good price from the private individuals or businesses for their produce.
The farmers fear the new laws would end the Minimum Support Price Systems. Minimum Support Price is a price fixed by the government which will be paid to the farmers when the government procures it. These prices are fixed before the sowing season and act as a security net for the farmers. MSP protects the farmers from price fluctuations and promotes more investment in agriculture. The farmers demand that MSP be linked to contract prices.
Also, in case of disputes, the parties to the farming agreement cannot approach civil courts. Thus, the farming agreements are outside the ambit of civil courts.
THE ESSENTIAL COMMODITIES (AMENDMENT) ACT, 2020
The Essential Commodities (Amendment) Act, 2020 amended the Essential Commodities Act, 1955. The 1955 act provides for the control of production, supply and distribution, and trade and commerce of certain commodities, in the interest of the general public.
The amendment inserted Section 3 (1A) by which the central government will regulate the supply of certain food items only under extraordinary circumstances. The food items specified include cereals, pulses, potatoes, onions, edible oilseeds and oils. Circumstances mentioned include famine, extraordinary price rise, and grave natural calamity.
● According to the amendment, a stock limit shall be imposed on price rise and it shall be imposed only if there is a 100% increase in retail price in case of horticultural produce 50% increase in the retail price of non-perishable agricultural food items.
● This would be calculated based on the price prevailing in the immediately preceding twelve months or the average retail price of the last five years, whichever is lower.
● Such stock limit shall not apply to a processor or value chain participant of any agricultural produce if the stock limit of such person does not exceed the overall ceiling of installed capacity of processing or the demand for export in case of an exporter.
A serious issue raised concerning this amendment is regarding the fear of whether it would lead to hoarding. The economic agents could stock without the fear of getting prosecuted. The hoarders can stock the items during harvest and wait till its supply is less in order to earn more profits. Hoarding or stocking may also lead to price fluctuations and low returns for farmers. Food items like edible oils and other vegetables are part of the day-to-day life of a person and thereby such commodities are hoarded more frequently.
Although the amendment has the potential to increase farmers’ income, it can also seriously affect the public distribution system. The government will not have information regarding the availability of stock.
CONSTITUTIONALITY OF THE LAWS
A serious issue concerning the constitutionality of the farm laws was whether the parliament was competent to make a law on agriculture. The seventh schedule of the Indian constitution specifies the division of power between the Union and the States. The Parliament has the exclusive power to legislate on matters that come under the Union list. As for the State list, the respective states have the exclusive power to legislate on matters in that list. For items in the third list, the Concurrent List, both the Union and the States can make laws on the items but in case of a conflict, the law made by the Parliament prevails. The three Farm Acts were passed by the Central Government under Entry 33 of the Concurrent List. Entry 33 of the Concurrent List mentions trade and commerce, production, supply and distribution of domestic and imported products, including oilseeds and oils, cattle fodder, raw cotton and jute. But agriculture comes under the state list. The State List contains eight entries with terms concerning agriculture. The state legislature enjoys exclusive power over matters concerning agriculture. Any infringement of the list would violate the federal structure of our constitution.
The 3 farm laws introduced by the Union Government did not go well with a large section of the Indian farmers. They had their reservations and soon after the new acts were introduced, farmers mainly from Punjab started to protest. These protests were at a local level. It included sit-in and rail roko agitations which led to suspension of train services to Punjab.
After a few months, when the ordinances were replaced by laws the farmers from Haryana and Punjab gave a call for ‘Delhi Chalo’ march. The farmers were met with tear gas and water cannons at Ambala. Even though they were denied entry into the city due to the pandemic, thousands of farmers arrived on their tractors and other vehicles and reached the border. The Government agreed to hold talks with farmers as soon as they moved to Burari vacating the Delhi borders. The farmers rejected this offer and demanded to hold protests at Jantar Mantar. As the talks between farmers and the government failed to arrive at a solution the farmers held a national strike on December 8, 2020. The shutdown received support from many trade unions and political parties.
The various demands put forth by the farmers include:
● To repeal the three laws;
● To make MSP and state procurement a legal right;
● To implement Swaminathan Committee’s report;
● To repeal of Commission on Air Quality Management in NCR and removal of punishment and fine for stubble burning;
● To reduce the diesel price for agricultural;
● To withdraw all cases against the farmer leaders and thereby release them; and
● To withdraw the Electricity (Amendment) Bill.
On January 12, 2020, the Honourable Supreme Court stayed the implementation of the three farm laws and set up a four-member committee to make recommendations to the farm laws after listening to the grievances of the farmers and views of the government. During the tenth round of talks, the government proposed to stay the implementation of the laws for 18 months. The farmers rejected this proposal.
On January 26, the tractor rally organised by the protesting farmers deviated from the decided routes and it led to chaos in the national capital.
The three farm laws if implemented efficiently will bring revolutionary changes to our agrarian society. The acts will provide the farmers with more freedom and enhance their income. But it all depends entirely on the implementation and effectiveness of the three legislations.
The acts as of now have considerable lacunae and loopholes, which if not addressed properly could be disastrous for the farming community. The government should therefore discuss the laws with the stakeholders. This would not only help to strengthen the laws but also win the trust of the farmers. The Government should also ensure that the laws would not lead to exploitation of the farmers.