The Indian parliament recently launched the famous Farm Bill 2020, consisting of three bills aiming at introducing reforms in the agricultural sector. Considering the fact that this sector contributes to about 18% of India’s GDP and over 60% of the population is engaged in the agricultural industry to earn their livelihood, these reforms hold immense importance. The reforms in any country are implemented with the intention of bringing positive changes or improvements to its people concerned. However, the above three bills have not only faced extreme objection by the opposition in both the houses, but have also led to intensifying protests by farmers in states like Punjab, Haryana, and Madhya Pradesh despite prevailing situation of COVID-19.
What are the three farm bills passed by the Government?
The three bills passed by the Indian Parliament aiming at introducing reforms in the agricultural sector in Farm Bill 2020 are:
Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
Essential Commodities (Amendment) Bill, 2020
The laws are said to connect farmers closer with the market in terms of where and whom to sell their produce, the ability to store produce, and whether they can enter into contracts with big agri-business-based firms etc.
Provisions under the farm bills and Controversy around them- Pros & Cons
Farmer's Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
Through this Bill, farmers will now be able to enter into ‘written agreements’ with anyone, including an Agri-based company, and sell them their produce for a given time period, for set price for the produce, the standards and qualities, and other legalities, as per the pre-designed conditions of the contract.
The following are the key provisions of the Farmer's Produce Trade and Commerce (Promotion and Facilitation) Bill:
It aims to create an ecosystem where farmers and traders enjoy the freedom to sell and purchase farm produce outside the registered 'mandis' under states' Agricultural Produce Market Committee (APCM).
It seeks to promote barrier-free inter-state and intra-state trade of farmers' produce
It is said to reduce marketing/transportation costs so as to help farmers in getting better prices for the produce, and
provide a facilitative framework for electronic trading.
According to the government, the contract will ensure protection and empowerment farmers to sell to anyone – a wholesaler, a retail giant or even an exporter. They will have written contracts which will protect them if the buyer tries to cheat them, and they will have the option to sell future produce today.
Resenting the above bill, the opposition says that if farmers sell their produce outside registered APMC markets, States will lose revenue as they won't be able to collect 'mandi fees'. The bill also raises concern for the poor 'commission agents' in states as they will lose upon their income if entire farm trade moves out of mandis. It may even put an end to the age-old MSP-based procurement system which was formulated for the benefit of the farmers to save them at the hands of corrupt buyers. Also, electronic trading like in e-NAM that uses physical 'mandi' structure will be destroyed if the trading is discontinued there causing a loss to many.
Critics point out that the bill does not mentions any mechanism of fixing a price of the produce, they raise questions like, what will happen if the buyer says the contract cannot be fulfilled because the quality of crop is not what was agreed? What protection will the farmer have in that case? Experts say that most of farmers in India are small, uneducated and marginal that are not likely to engage a lawyer or go to the court against massive supermarket chains and therefore, it is apprehended that the farmers could be exploited at the free-hand given to private corporate houses.
The Farmer (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
According to the Marketplace law, the State governments can set up Agriculture Produce Market Committee (APMC), which in turn sets up markets or mandis, in several places in the state. It is at this place where farmers bring their produce, and wholesale and retail traders come to buy the produce through auctions. The APMC’s across the country make sure that farmers get a fair price for their produce, and aren’t forced to make a distress sale. The buyers and commission agents are also regulated by the APMCs by providing them licences, levying market fees.
Now, the new Food Bill says that farmers can sell their produce anywhere and not just in the APMC approved marketplace. They can either sell inter-state or intra-state or even online. Following are its key provisions:
Farmers can now enter into a contract with agribusiness firms, processors, wholesalers, exporters or large retailers for sale of future farming produce at a pre-agreed price.
The Marginal and small farmers that account for 86% of total farmers in India, having less than five hectares land, will gain via the aggregation and contract facility.
The bill further enables farmers to transfer the risk of market unpredictability to sponsors.
In addition to that, it will help farmers to get access to modern tech and better inputs used by the big firms
Farmers can engage in direct marketing by eliminating intermediaries for full price realisation which shall in return help reduce cost of marketing and boost farmer's income.
the bill is also aimed at providing effective dispute resolution mechanism with redressal timelines.
According to the government, the law will give Freedom of Choice to farmers. They will have a variety of marketplaces to sell their produce as per their own needs and requirements.
The opposition views that agriculture marketing is a State subject under Schedule 7 of the Constitution and thus, the Centre has no business making this law. Moreover, APMC markets currently ensure that farmers get the Minimum Support Price for their produce, which is a small amount. Activists and farmers worry that if they have to conduct trade outside of the APMC marketplace, they won’t even make this much. Also, setting the MSP in the law is seen as problematic by some because it will have to change frequently, and changing the law again and again is a difficult. Others point out that the law can at least say that the trade will have to be above MSP. Experts opine that freedom of choice would not be of any value if they are unable to protect their interests.
The Essential Commodities (Amendment) Bill, 2020
The Essential Commodities Act was first introduced several decades back, in 1955. The Act basically regulates the production, supply and distribution of certain commodities that are considered ‘essential’. So, if an item falls under this Act, for instance a food item, or an important drug, then companies and supermarkets etc cannot hoard these items or artificially increase the price during the time of shortage.
The essential provisions of the bill are:
It will remove commodities like cereals, pulses, oilseeds, onion and potatoes from the list of essential commodities.
It will forbid the imposition of stockholding limits on such items except under "extraordinary circumstances" like war, famine etc.
The provision aims to attract private sector/FDI into farm sector as it will result in lesser fears of private investors of excessive regulatory interference in business operations.
It seeks to bring investment for farm infrastructure like cold storages, and modernising food supply chain
The bill is said help both farmers and consumers by bringing in price stability as well as help them in creating a competitive market environment.
Critics state that the list of Essential Commodities as per the original Act, includes: Drugs (medicines), fertilizer, whether inorganic, organic or mixed; foodstuffs, including edible oilseeds and oils; yarn made wholly from cotton; petroleum and petroleum products; raw jute textiles; seeds of food-crops and seeds of fruits and vegetables; seeds of cattle fodder and jute seeds. However, the new Essential Commodities Amendment removes foodstuff such as cereals, pulses, potato, onions, edible oilseeds and oils, from the list of essential commodities – unless there are dire circumstances, like a war or famine, or an “extraordinary” price rise.
In addition to that, the new amendment says the government shall impose a stock limit i.e. it cannot stop a supermarket chain or any other retailer from hoarding unless there is a 100% increase in price of perishable goods, or 50% increase in price of non-perishable goods. Opposition is therefore of the view that this Amendment will only lead to increased hoarding, and an artificial price rise of things of everyday use.
The reasons for widespread protests- Demands of the Farmers
Farmers in Punjab and Haryana have lately been protesting against three farm reform bills. Union Minister Harsimrat Kaur Badal, an MP of the Shiromani Akali Dal (SAD), one of the BJP’s oldest allies, also resigned from PM Modi’s Cabinet, in protest against the bills. The farmers demand revocation of all three ordinances turned bills and most of the pleas at the farmers’ protest revolve around the need to protect MSP’s, which they feel are threatened by the new law. However, none of the bills were revoked and the Lok Sabha passed the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 & The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 amidst the protests.
They further demanded that the mandi system should remain intact and their loans be cleared. Moreover, as per the 2006 Swaminathan report by ‘The National Commission on Farmers’ a law must be promulgated for MSP to be at least 50% more than the weighted average cost of production and if the MSP is not paid, it must be a penalized. Also, legislation should be drafted that guarantees payments from the buyers through middlemen as they also money by selling the product for more than its purchase price.
One of the main reasons of uproar throughout the country is due to the unconstitutional manner in which the laws were passed as it is the state governments’ duty to regulate such aspects. The government should consider the views of opposition and also take into account the voice of farmers in order to fix the lacunae in the bills. This would not only create a channelised systematic approach towards privatizing the agriculture sector but would also avoid its exploitation.