Monday, April 22, 2024

Farm bills Explained: Is this a watershed moment or subterfuge?

There has been a lot of hue and cry over the Farm Bills that the Union government had formulated and pushed through Rajya Sabha. The Opposition protested and protesting farmers, especially from agriculture dominated states like Punjab and Haryana, took to the streets. However, what exactly is the grouse of the farmers?

During the current monsoon session of Parliament, of the three contentious farm bills the Lok Sabha, through voice vote, passed the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020. The Essential Commodities (Amendment) Bill, 2020 was passed earlier thisweek.

The bills were passed amid an uproar and highpolitical drama, both inside and outside Parliament. While Prime Minister NarendraModi hailed the farm bills and called their passage a ‘watershed moment’ for Indian farmers, the Opposition termed the bill anti-farmer and compared them to a death-warrant. On this issue the unruly behavior of few MP’s was on display after the opposition MPs stormed the well of the house , threw their microphones and tore up papers which ultimately led to their suspension for a period of 7 days, by Deputy Chairman Harivansh NarayanSingh. 

What are these bills all about?

Notes PRS Legislative Research (PRS): “(The) Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 seeks to allow barrier-free trade of farmers’ produce outside the physical premises of the markets notified under the various state Agricultural Produce Marketing Committee laws (APMC Acts).  The Bill will prevail over the APMC Acts in the area outside such markets.

The Bill allows barrier-free intra-state and inter-state trade of farmers’ produce outside: (i) the physical premises of market yards run by the state APMCs and (ii) other markets notified under the state APMC acts, such as private market yards and sub-yards, collection centres, and farmer-consumer markets. Under the Bill, the trade of farmers’ produce can be undertaken anywhere outside such markets, such as in places of production, collection, and aggregation, including: (i) farm gates, (ii) factory premises, (iii) warehouses, (iv) silos, and (v) cold storages.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 also contains a provision of setting up of electronic trading platforms. As per PRS,

The bill provides for setting up of electronic trading platforms to facilitate direct and online buying and selling of farmers’ produce, resulting in physical delivery of the produce. The following entities can establish and operate such platforms: (i) companies, partnership firms, or societies, having a PAN card under the Income Tax Act, 1961, or any other document notified by the central government, (ii) FPOs, and (iii) agricultural cooperative societies.

A section of this bill says no fees will be levied by the states. The Bill prohibits the state governments and APMCs from levying any market fee, cess, or any other charge on the trade of scheduled farmers’ produce outside the APMC notified markets.

The bill on agri markets seeks to allow farmers to sell their produce outside APMC ‘mandis’ to whoever they want. Farmers are expected to get better prices through competition and cost-cutting on transportation. 

So why are there protests?

The farmers say that they are apprehensive about not getting the government-promised Minimum Support Price (MSP) for their produce and are also concerned about the upper hand that huge agri-business companies and big retailers would have during negotiations. Moreover, it may actually lead to the reduction of benefits accruing to small farmers, because these huge companies will easily dictate the price at later stages.

But farmers are concerned that this will eventually lead to the end of wholesale markets as they have known it for ages, and also the end of assured prices. That will leave them with with no back-up option. That is, if they are not satisfied with the price offered by a private buyer, they cannot return to the mandi or use it as a bargaining chip during negotiations, once the mandis are abolished by the state governments, because the existence of empty mandis will not serve any purpose to the government.

The government has said the mandi system will continue, and they will not withdraw the Minimum Support Price (MSP) they currently offer either. But farmers are suspicious. Perhaps the government needs to come out with a written law that they will not withdraw the MSP or the mandi system. These pros and cons vary from one farmer to another and person to person. Besides, this Bill could mean states will lose ‘commissions’ and ‘mandi fees’.

Contract farming

Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 provides a framework for farmers to engage in contract farming, i.e. farming as per an agreement with the buyer before sowing, under which farmer promises to sell his produce to the buyer at a pre-determined price.

PRS says: 

The Bill provides that the delivery (i) can be taken by sponsors at farm gate within the agreed time, or (ii) can be made by (sic) farmer.  In case of deliveries by farmers, the sponsor will be responsible for all preparations for the timely acceptance of deliveries. The Bill specifies that, before accepting deliveries, the sponsor may inspect the quality of the produce as defined in agreement. In case the produce is not inspected by the sponsor, he will be deemed to have inspected the produce and will have to accept the delivery within agreed time.

The bill allows private buyers to hoard essential commodities for future sales, which only government-authorised agents could do earlier; and they outline rules for contract farming, where farmers tailor their production to suit a specific buyer’s demand. One of the biggest changes is that farmers will be allowed to sell their produce at a market price directly to private players like agricultural businesses, supermarket chains and online grocers. Most Indian farmers currently sell the majority of their produce at government-controlled wholesale markets or mandis at assured floor prices.

Read Also: Plea in Supreme Court wants retirement age of subordinate judges in MP to be raised to 62, like state government employees

Essential Commodities Amendment Bill

Essential Commodities Amendment Bill 2020 makes provisions for the removal of items such as cereals and pulses from the list of essential commodities and attract foreign direct investment in the sector. Some sections have raised the fear that this will compromise on food security. The bill is aimed at legitimizing what would otherwise be called as hoarding, without the government even having the capability of knowing which stock of which grain exists with who. Even the place and time of such stock would not be known. 

The overall analysis of the agriculture bills makes it appear that these reforms will weaken rules around sale, pricing and storage of farm produce – rules that have protected India’s farmers from the free market for decades.

By IL News Service


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