Indian farmers are facing a cocktail of issues. Various unresolved issues have culminated into a myriad of problems including such as small landing holdings, lack of mechanisation, scarcity of capital, environmental degradation. As per the data of the Food and Agricultural Organisation (FAO), over 80% of Indian farmers belong to the small and marginal category. A majority of these farmers neither own land, nor have sufficient resources. In the past, farmers heavily relied on loans from zamindars and landowners to buy seeds and fertilisers. Having an upper hand, these zamindars charged high rates of interest from farmers. Unable to repay the Zamindars, farmers were forced to sell their produce to these Zamindars at nominal rates. This led the farmers to seek further loans from the Zamindars to buy new seeds and fertilisers. This vicious load-debt cycle left farmers in a perpetual state of poverty and deficit. Although the Zamindari system was abolished in 1950, usury persisted till long afterwards.
To get rid of this exploitative loan-debt cycle, the Indian Government introduced the Agricultural Produce Market Committee Act, 1963, under which “mandis” (markets) were set up for the first sale of agricultural produce from farmers to the middlemen. Once farmers sold their produce in these APMC mandis, these middlemen further supplied the goods to retailers and other bigger traders. These mandis are under the jurisdiction of respective state governments who earned revenue from them. Although not all states follow the APMC model, however since state governments regulate agricultural markets, hence different states have different approaches. Further, to safeguard the interest of farmers, the Government set up a uniform MSP (Minimum Support Price) rate at which these middlemen could buy these goods from farmers. The government then bought any product these middlemen did not buy that at MSP. The MSP system was introduced to ensure that farmers receive a fair price and a uniform rate was decided for each type of produce. However, with time problems arose within these APMC mandis. The middlemen formed cartels and started exploiting the farmers by buying the goods at MSP and reselling them at a higher price to the traders. There have been many farmer agitations in the past for resolving these issues in the APMC Act. However, the NDA government, instead of fixing the loopholes of the present act, brought three new farm acts in 2020- Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act; Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act; and the Essential Commodities Amendment Act.
The first act, i.e., Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, envisions freedom of choice of farmers under the ‘One Nation-One Market’ concept. Under this Act, farmers can now sell their produce anywhere in the country, even on an online platform. Earlier, farmers could sell their produce only in the APMC mandis. However, since over 80% of farmers are marginal, they lack the resources necessary to transport the produce to different parts of the country. The Government blatantly overlooks the hardship and lack faced by farmers by assuming that all can uniformly avail this provision. Earlier, it was the middlemen of these APMC markets who dealt with the distribution of the produce after the first purchase from farmers. Since APMC is an organised body, it has the resources to transport goods from one place to another. The same, however, cannot be expected of a poor farmer.
The second act, i.e., Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act provides for farmers to get into contracts with any person or company. This facilitates big corporates to enter into contracts with farmers for buying their produce, even future produce. This is not a new concept altogether. Several multi-national companies like McDonald’s, PepsiCo, etc. already have contracts with farmers for the production of specific types of potatoes for their fries and chips. The Government believes this will give more freedom to the farmers regarding who they sell to. The Government also claims that farmers will earn better than they did in the past. However, the fear amongst farmers is that with no sort of governmental control, these corporates may have the freedom to set the price, quality, and other specifications of goods. The Government again overlooks the fact that since a majority of farmers are in the marginal category, they will have a lesser negotiating power with big corporates and might end up getting the short end of the stick.
The Essential Commodities Act, 1955 controlled the production, supply, and distribution of essential commodities such as medicines, fertilisers, food products such as oil, cereals, seeds. However, because of the recent amendment, food products such as rice, wheat, potato, cereal, pulses, edible oil, and oilseeds are no longer under government control. The Government can no longer impose a stock limit, which makes it favourable for corporates to over-stock and hoard these food products. Further, with the Government’s non-interference policy unless there are extraordinary price rise situations like war or famine, farmers fear that big corporates may have the power to fluctuate market prices for profit.
The Government further implemented these laws without discussing it with the states which will be most affected, especially the ones which were exclusively using the APMC market model like Haryana, Punjab, and Uttar Pradesh. These acts have brought forth the fear that even though the mandis have not been made redundant by the acts, their gradual inactivity in the view of these new acts will cause them to die out. This means that the state governments will lose out on the revenue collected from these mandis/ APMC markets. This has led many state governments to oppose the new farm acts. Further, there is no provision in the acts specifying any rate equivalent to the MSP, meaning that corporate bodies may decide to pay any amount they choose. Further, privatisation of the agricultural sector will render farmers vulnerable to one-sided contracts being unable to bargain or negotiate. As per the Acts, the dispute resolution authority in case of any farmer-buyer tension will be the sub-divisional magistrate. A poor farmer without proper resources may be unable to successfully navigate through the various bureaucratic complications, giving an edge to the corporates.
The Opposition parties, on the other hand, are criticising how the acts were passed in the parliament with only voice vote despite the demand for a recorded vote by the opposition. The Government also flouted the parliamentary convention of referring bills to the parliamentary standing committees. Thus, the new farm acts lack legislative scrutiny. Ever since coming into power in 2014, the NDA government has been avoiding the deliberative and consultative process in pushing various bills in the Parliament such as the bills concerning the Constitution Amendment, Citizenship Amendment, Unlawful Activities (Prevention). The opposition also alleges that the NDA government has taken advantage of the prevailing atmosphere created by Covid-19 to pass the acts without proper legislative deliberations.
Farmers fear that the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act will eventually weaken the APMC market system. This weakening of the mandis may mean an eventual decline of the MSP, which was like a safety net for farmers. However, instead of fixing the holes in the net, the Government has unilaterally implemented new laws. Besides this, the fear of exploitation and lack of negotiating power has fuelled the farmers’ agitation. Farmer bodies, and the Opposition, allege that these new acts favour the corporates rather than farmers.
Farmers are already neck-deep in severe problems like failure of crops, debts, etc. These issues have plagued the Indian agricultural sector since the 1990s and have continued to this date. Farmers have long been the victims of exploitation, leading many to suicide, the rate of which is rising annually. Before the 2014 elections, Narendra Modi promised that once coming into power the government will seek to implement the suggestions of the 2006 Swaminathan Report regarding the improvement in the implementation of MSP. In the said Report, it was suggested that MSP should be at least 50% more than the weighted average cost of production. However, even at present, a majority of farmers are forced to sell their produce at rates lower than MSP. Despite many promises from the Government, there has been no shift or transformation in their circumstances. In the wake of rising tension in the nation, the Supreme Court recommended that the three laws be put on hold, which was refused by the NDA government. This has created a mixture of fear and mistrust in the minds of farmers. Although the Government boasts of these new Farm acts as a masterstroke, similar to the demonetisation drive, increasing protests makes it evident that the Government is failing to win the trust of the farmers of the nation. Being the intended group, the Government should have held discussions with farmers and farmer bodies regarding the various provisions before the implementation of the Acts. At present, despite holding meetings with farmer leaders, the Government has yet again failed to pacify the farmers by failing to clarify the “benefits” of the Acts as claimed.
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