Will the farm bills benefit farmers?

Will the farm bills benefit farmers?

Context:

• President Ram Nath Kovind gave his assent to all the three contentious farm bills, which opposition parties say are anti-farmer and corporate-friendly, after they were recently passed by Parliament during its monsoon session amid vehement protests.

Those 3 bills are:

1. The Essential Commodities (Amendment) Bill,
2. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill (commonly referred to as the APMC Bypass Bill), and
3. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill were cleared by Parliament amid protests from the Opposition.

Issues of these bills

These Bills represent fairly important changes in marketing regulation and are what many were asking for because of the flaws in the APMC [Agricultural Produce Market Committee] system.

2 issues :

• The first is in what they say. The Bills have lacunae: lack of regulation, regulatory oversight and reporting. They’re somewhat non-transparent.
• The second is what they do not say. You can’t have marketing Bills that are devoid of the larger context of State intervention in agriculture, and agricultural policy.

Critics say are anti-farmer and corporate-friendly:

• Agriculture falls in the State list, and hence many argue that the Centre should not be making legislation on this subject at all, as that will compromise on the state’s ability to Tax and Regulate agriculture sector.
• The APMC bypass Bill is the most controversial. This Bill actually assumes that private players don’t exist today and the APMC is a monopoly.
• That is a flawed assumption. Private players actually look to the APMC for a reference price to conduct their own transactions.
• Now through these bills, trying to create an alternative that’s outside the APMC, which is on advantageous terms where you don’t have to pay mandi fees or taxes.
• A system of arthiyas or commission agents facilitates procurement, and link roads connecting most villages to the notified markets and allowing farmers to easily bring their produce for procurement.
• Farmers fear that encouraging tax-free private trade outside the APMC mandis will make these notified markets unviable, which could lead to a reduction in government procurement itself.
• Most of the slogans at the farmers’ protests revolve around the need to protect MSPs, or minimum support prices, which they feel are threatened by the new laws.
• Farmers are also demanding that MSPs be made universal, within mandis and outside, so that all buyers government or private will have to use these rates as a floor price below which sales cannot be made.

Arguments in favour of these acts:

• They have the power to sell their fruits or vegetables to anyone, and anywhere.
• It is this power which is the foundation of their growth, now the same power has been given to farmers across the country.
• They have got the freedom to sell not only fruits and vegetables but grains, sugarcane, mustard and anything that they grow, they can now sell to anyone and anywhere they like.
• The Centre has taken the steps to ensure that farmers get the right price for their produce.
• The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, seeks to give freedom to farmers to sell their produce outside the notified APMC market yards (mandis).
• The government says this is aimed at facilitating remunerative prices through competitive alternative trading channels.
• The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020, seeks to give farmers the right to enter into a contract with agribusiness firms, processors, wholesalers, exporters, or large retailers for the sale of future farming produce at a pre-agreed price.
• The Essential Commodities (Amendment) Act, 2020, seeks to remove commodities like cereals, pulses, oilseeds, onion, and potato from the list of essential commodities and will do away with the imposition of stock holding limits.

Impact on MSP:

• The FCI was formed in 1965 as a response to a significant food shortage in the country.
• From that point, we have made progress in food production. In the early 1990s, we were not facing food shortages.
• That did not mean that the problem of hunger was addressed. It continues to persist because there is mal-distribution of food grain. And that is happening in spite of the PDS.
• One has to recognise that we have a different political-economic regime than the time the FCI was set up.
• Post-liberalisation, private players and capital have a much greater role to play in the economy, which is fine. But then you also need regulations for those players.
• MSP question is larger, more complex, and deserves a very serious consultative process, and its own dedicated Act.
• One suggestion was, if the APMCs were functioning as they would under the old regime, then you would ensure that all bidding starts at the MSP, which ensures that the MSP starts as a floor price.
• We’ve lost that opportunity now because now if you say APMC has a MSP, but outside it, you can do whatever you want, then it makes no sense any more.

Way forward

• Even if some experts believe that the newly passed farm bills will improve India’s agricultural sector, trusting the government seems to be the real hurdle for the country’s farmers.
• Without strong institutional arrangements, the free market may harm lakhs of unorganised small farmers, who have been remarkably productive and shored up the economy even during a pandemic.