Farmers at risk from new farm laws

Farmers at risk from new farm laws

The three controversial Bills that Indian Parliament passed in September were: Farmers (Empowerment and Protection) Agreement on Price Assurance Bill; Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill; and Farm Services Bill and Essential Commodities (Amendment) Bill. These are supposed to constitute a big agricultural reform and to pave the way for structural change in Indian agriculture production and marketing. The stated aim is to boost corporate investment in agriculture so as to provide more benefits to farmers and improve their price spread and marketing margins. The new farm laws will offer, it is said, such an environment where traders and farmers have adequate freedom of choice pertaining to sale and purchase of their produce, enabling remunerative prices by way of competitive alternative marketing and trading channels. Such an environment will also promote, it is claimed, barrier-free, well-organised, and clear interstate and intrastate business for the produce of farmers outside the physical market premises set up under many state agricultural goods market legislations. It should hence provide a facilitative structure for trading in electronic manner and its allied matters.
But, farmers are of the opinion that the new system could dominate agriculture in particular and the economy in general, in such a way as increases the gap between farmers and moneylenders on one hand and farmers and corporates on the other. It is not that only small and marginal farmers may lose but large farmers, too, as their commission and interest income will be squeezed.
The new Farmer Bills go beyond what is seen and observed in practice, as they will be exterior to the Agriculture Produce Market Committee (APMC) Mandi and hence the transactions in such trading places will be free of cess or APMC market fee. The new laws will prevent state governments from collecting cess or a market fee for goods external to APMC markets. It does not mean these committees or boards will be non-operational from now but they will have to gear up to compete with different substitute platforms as farmers would now have choice beyond them. The APMCs will not stop functioning but will have to compete with these alternate platforms. It is like permitting more and more private competition. Farmers predict that gradually the Mandi system will end and they will be left at the mercy of big corporations who will exploit them to maximise their own profit.
The new farmer laws do not envisage suspending Minimum Support Price (MSP) to farmers. There will be coexistence of the Mandi system with other substitutes that will benefit farmers. A minimum support price means that even if the market price falls to low levels, there will be a minimum assured price. It is an incentive to farmers in times of losses during economic crises or a calamity. But even though the new rules do not clearly visualise suspending MSP, they also do not guarantee minimum price for any product. Hence, farmers have apprehension that the existing MSP will vanish in the long run. It will be a great setback to farmers who depend directly upon crops that qualify for MSP.
Let’s keep in mind that these new farmer bills have the capacity to reduce the number of intermediaries involved in marketing channels. It gives ample scope and power to the farmer to directly sell produce to exporters or corporates who buy in bulk. We know Indian agriculture markets are full of hitches and glitches. There is a big gap between the farm gate prices of agricultural goods and the market prices of agricultural goods (dominated by a large number of intermediaries). The bills can reduce this gap if such direct sale is fair enough and if farmers can enter into efficient forward contracts. But farmers believe that contracts on paper will go against them. It will be very difficult for farmers to put their point across in court and win legal cases because generally their access to legal aid and understanding of contract law is very poor. One of the new provisions in the farm bills is that in order to resolve any dispute a farmer will have to knock on the door of a district-level authority or a conciliation board, which means that the matter cannot be taken to court.
India is predominantly an agricultural economy in which the majority of cultivated land is held by small farmers who fear that they will stand to lose if left at the mercy of big corporations. They know they have weak bargaining power due to their low economic and educational status. Hence, farmers (mainly from Punjab and Haryana) have come out on the streets to protest. They are demanding repeal of all the three new farm bills by calling a special session of Parliament. They want MSP to be a legal right and full assurance of the continuance of traditional procurement ways. They also want implementation of the Swaminathan Panel report that aims at resolving existing problems in Indian agriculture in general and for farmers in particular. In addition they demand decentralisation of powers involving multi-level frameworks for sustaining developmental goals.

The writer is an ICSSR Doctoral Fellow at Department of Economics, Central University of Kashmir. qadribinish@gmail.com

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