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The Good, The Bad and The Ugly of the Farm Bills, 2020

  • OPINIONS
  • Editor | Team PresentMirror | Updated: Dec. 13, 2020, 8:49 p.m.




On 5th June 2020, amidst growing concern over the seismic collapse of the economy and the spread of the Covid-19 pandemic, the Government of India promulgated three ordinances relating to agricultural marketing, further promising a dynamic improvement in the present condition of our farmers. Since then, this has led to a political slugfest and hysterical protests all over the country, while the opposition riding on a hypocritical past, is often seen touting the bills as 'anti-farmers' bills.


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The Bharatiya Janata Party (BJP) government led by Prime Minister Narendra Modi has got two bills and one amendment to a pre-existing bill⁠ that aim to liberalise the farm sector—

• The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020

• The Farming Produce Trade and Commerce (Promotion and Facilitation Bill, 2020)

• The Essential Commodities Amendment, 2020

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Image File : A look at the changes proposed in the 3 bills

The Good is the outcome, but the will towards change is needed

As the name suggests, the first bill is directed towards protecting the farmers' interests by means of a legal agreement and freeing them from exploitation often drawn by a change of thoughts in purchasers. It is based on the concept of contract farming where a legal agreement between the buyer and the seller will outline all the necessary conditions for the production of farm products and delivery requirements and the farmer will accordingly produce crops meeting the quality standards, thereafter be able to sell them at a predetermined price.

Where there is a law, there is always a loophole and that is exactly where the poor, naive farmers are afraid to embrace the change. They fear that a powerful corporate investor would easily dominate the farmers and put the liability causes on them.

The second bill promotes trading of farmers goods outside the physical premises of Mandi or APMC (Agricultural Produce Market Committee) yards and further eases intra-state and inter-state trade for farmers without levying extra taxes. These Mandis have always been controlled by the state government through APMC and states like Punjab and Haryana could lose big on state revenue once the act is implemented. Earlier farmed products came with a minimum support price (MSP) that was decided by the government and authorised by APMC and assured them of a fixed price for their crops, 1.5 times of the cost of production. The MSP has now become the main bone of contention in the current protests. Nevertheless, this act will be beneficial to the big farmers as they can now start selling to the private players and reach out to consumers without getting middlemen involved and enjoy all the advantages and 'disadvantages' of a free market.

The third and the last bill hasn't attracted much controversy yet, however it is the one that requires more attention. The Central government has removed certain daily essentials including cereal, pulses, potato, onion, edible oilseeds and oils from the list of Essential Commodities, thereby removing all possibilities of government interference in trade of such products. Government will only regulate their supply and prices in cases of War, Famine, High Price Rise or natural calamities.

No Mango comes without the hard Guthli. If the Government decides to keep itself out of the agricultural business, in the free market farmers' income will also depend upon the ups and downs of the market and there's a chance that a farmer might get squeezed between rising costs of cultivation and low prices due to a low demand. Under the condition of high price rise, non-perishable items like pulses, cereals, edible oilseeds and oils will be brought back to the list only if there is a 50% rise in their retail price, and the basis becomes 100% for perishable items.

While on one hand, it does boost farmer's income but on the other, increases the risk of hoarding and monopoly of certain private firms. As per the Modi government, these three bills will help small and marginal farms by allowing them to sell produce outside mandis- interstate or intrastate -- beyond APMCs. The state governments can't levy any fee or cess on farmers in this case. The law also provides provisions for contract farming, meaning farmers and buyers can reach an agreement before procuring harvest. But everything cannot be gauged in a black and white manner.

Technically, MSP is the floor price at which the government would buy the farmer's produce if they couldn't find better rates in the open market. And the APMC mandi is the mechanism through which the state would procure the produce at a pre-announced price. Right now, only paddy and wheat is procured by government agencies, along with some amount of cotton, oilseeds and a few daals (pulses). For the remaining crops, there is hardly any procurement even at MSP rates. So even in the APMC mandis, farmers end up selling most of their produce below government-mandated prices. This is especially the case for non-MSP crops, such as fruits and vegetables.

While this amplifies the pitiful situation of the farmers, it's the middlemen and commission agents who control the mandis - in collaboration with local netas and dadas - and get fat. The law aims at getting rid of these middlemen, which appears to be the best thing since sliced bread. However, the lack of any mention of MSP, which is considered as a basic remunerative price mandated by the government and federally fixed, in any of the legislations has given rise to suspicion that the new system will weaken the existing MSP regime.

The difference in annual income of farmer and a nonfarmer worker, which stood at Rs 25,398 in 1993-94 further widened to Rs 54,377 in 1999-2000 and in the next decade it further increased to more than Rs 1.42 lakh suggesting the gravity of the worsening condition. The dairy and fisheries sectors are growing at an annual rate of 4% to 10%, while the growth in food grain sector, where regulations were seen as excessive, has been at an average of 1.1% annually after 2011-12. So, these bills were necessary and a change in this sector have been due, as very little was done by the Green revolution.

The Bad propaganda : Myths Pertaining to the Farm Bills busted.

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Image File : Myths and Realities, Farm Bills, 2020

APMC Mandis will be abolished?

The APMC regulates the mandi (marketplace) where farmers bring their produce, and therefore, guarantees that they receive the promised minimum support price (MSP). The Modi government has assured that APMCs will continue to exist. Only the farmers have the freedom to not go there if they so desire. Their right to choose is well protected.

Farmers were not always ensured of MSP?

Farmers get the assured minimum price in states like Punjab and Haryana, where the government buys nearly the entire produce. However, in many other states like Tamil Nadu, Karnataka, Uttar Pradesh, and Rajasthan to name a few, farmers are known to often sell below the MSP.

Many APMCs also levy an additional charge for entering the market. The money is meant to improve the infrastructure and make the mandi more efficient. Nothing could be farther from the truth. In reality, it is just another rent in disguise.

MSP is beneficial for all farmers?

Over 80% of all land holdings in the country are small and marginal with less than 2 hectares of farm land. The precarious situation often forces small farmers to buy food for their own consumption and selling the produce at MSP becomes no less than a toxic headache. However, the government has assured that it is not doing away with MSP under the new laws.

The Ugly Truth

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Protests across the country against the farm bill owing to misinformation; Image Credits: free press journal

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Image File : The antinational elements in the protest demanding release of Urban Naxals, convicted in riots.

The Politics after the change is only getting uglier. While the allegations of the protests being infiltrated by Kisaan organisations backed by Congress Party like BKU, anti-national elements like Khalistanis and PFI is ripe, the political chronology of all parties suggest that at one point or the other, they all advocated for these reforms.

Norman Borlaugh pioneered a variety of wheat which needed three times the fertiliser and gave ten times the yield. This was beginning of the Green revolution and the APMC act, in all the beginning of License Quota Raj. The state of Punjab was chosen as the central battlefield to fight hunger, enterprising farmers and creating a system for the first time. As an assurance to the farmer for their hard work, Minimum Support Prices (MSP) were guaranteed. No matter the amount of produce, government would pick it up and provide farmers with a minimum amount as compensation per quintal. As the Niti Ayog Chairman said that this country is too much of democracy, what he missed is that the country is also too much of bureaucracy. Transacting money out of the sarkari treasury is a dirty process leading rise to the the breed of middle men who walked the corridors of bureaucracy, government and flourished under the scam called Green revolution.

While Green revolution was necessary for the time then, with time it became a network of middlemen controlling the Agricultural industry, these men were called Adityas or Adhatis. According to an estimation, there is one Aditya every 220 people in Punjab today, earning commission as high as 8 percent. The chronology after the Green revolution establishes the reasons and concerns of most of these protests.

The APMC system is ladened with drawbacks, one being severe wastage of food grains. The Jamkhedkar committee states that over 40% of the grain acquired under MSP by FCI is either unfit for consumption or is simply wasted. As per an RTI reply , 62,000 tonnes of foodgrains, equivalent of feeding 8 lakh poor people for an year (mainly rice and wheat) have been damaged in the godowns of the Food Corporation of India (FCI) in the last six years, with Maharashtra and Punjab at the top in this list.

While the Congress may act like the holier than thou in this episode, they were themselves gunning for the same reforms they are now on the streets opposing. Shadowing the mirrors of the hypocritical past of December 2012, Congress Leader Kapil Sibbal said in the Parliament that a farmer only gets 15 to 17 percent of the profits of the produce and the mandis and middlemen eat up rest of the profit.

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Image File : Letter by Sharad Pawar to Different CMs, stressing on the need of private sector participation in Agriculture

NCP Supremo Sharad Pawar who has met President opposing the bills, then personally wrote to all the Chief Ministers in August 2010, requesting them to implement the reforms on the lines of the model APMC Act 2003. Quoting his words in the letter the then Minister of Agriculture Pawar said, “the need to amend the present APMC act on the lines of Model APMC Act 2003 to encourage the private sector in providing alternative competitive marketing channels in the overall interest of farmers/producers and consumers cannot be overemphasized”.

The Patil Committee constituted by then Agriculture Minister of UPA, Sharad Pawar, which had been set up in 2010 submitted its report in 2013 which among other things, suggested simplification of procedure of contract farming, investment in development of post-harvest infrastructure, barrier free national markets, waiving off of market fee on fruits and vegetables etc.

In the 15 years preceding 2014, Sharad Pawar’s party was in power in Maharashtra, while for 10 years during this period he was also the Union Agriculture Minister, ironically spent just Rs 450 crore in purchasing food grain from farmers of Maharashtra. In contrast, during 2014-19, a period of just 5 years, the NDA government purchased food grains worth Rs 8,500 crore under the APMC act.

Implementing the suggestions of the Swaminathan Committee, the Modi Government did increase the MSP. The MSP for Tur dal was increased from Rs 4,300/quintal in 2013-14 to Rs 6,000/quintal in 2020-21. Not only the MSP declared for Tur dal is 55% higher, the procurement of pulses too has gone up almost exponentially. During 2009-14, the UPA government procured only 1.52 LMT of pulses, whereas during 2014- 19, the Modi government procured 112.28 LMT of pulses at MSP. This is a 74-fold rise!

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Image File : A list of companies opened by Adani Group all over the India

The three bills also has something for the Private players. It is being claimed that the acts were implemented to aid private players like Adani and Ambani in the Market. The politics may tell you a story but can importance of private players in a growing economy like India be denied? While there were allegations being raised on the Adani Group that they formed companies for food storage just before the bills and bought land from farmers all over India, the group has come forward refuting the allegations, saying they bought lands at market prices as per tenders floated legally. If the process is fair and legal, then rise of Private players cannot be questioned in an open market.



All these three changes were needed to enable the entry of large private players into farming. And all governments in power and relevant committees formed have gunned over these reforms. Private players are also the key to a Nation’s economy and their entry into a fair open market was due. However, every change has the grey area. If APMCs are the go-to for large farmers, then private procurers will not be able to compete. Unless large-scale contract farming is allowed over contiguous farms, there can be no right mechanization of an economy like ours. These are actions set out to aggrandise the sphere of Indian agriculture. Nevertheless, things won't be very simple if history is taken into account. Private investment is likely to float more money in the agricultural business, no doubt but unless contract farming heeds to accommodate small and marginal farmers, the exercise is fruitless.

Passing a few laws and holding press conferences is just the first step towards the great cause that the central government claims to be working for. The success of liberalising the farm market will hinge on effective implementation, constant monitoring and timely action. The detailed Press conference by the Piyush Goyal and Narendra Singh Tomar, suggests that the government is open to discussion.



However, the political skull-duggery, the farcical scaremongering and a lack of genuine information and pronounced knowledge, have added to the encumbrances that anyway comes with change. None of us are inured to changes, and so is the case for our farmers. The concept of new laws being rolled out have rightfully concerned them and it is the responsibility of the government in charge to talk to them and assuage their fears, to listen to them and address their demands, as many times as required, if they indeed want what they say they want. At the same time the citizens should be aware that the vicious propaganda in this nation have forever been used to make a Mountain out of the Molehill.

The article uses inputs and research by Adrija Ray Chaudhury

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