India, a country of more than a billion people, finds itself amid large-scale protests; the protestors being the great farmers of our beautiful nation. It makes one wonder why would the agrarian population, which consists of almost 58% of the country’s populace, come on the streets in their tractors and start protesting? It’s ironic that a sector that contributes almost 18% to the Indian GDP is neglected by the Central government as much as if it doesn’t exist.

It is to be noted that the majority of farmers in India are small and marginal with more than half of them burdened with debt.[1] The reasons behind these large-scale protests, especially in states like Punjab and Haryana, are three bills introduced by the Government of India. Farmers are the backbone of our nation’s economy and these bills might weaken those very backs.

To reform the existing agricultural market, the Union government introduced these three bills which the parliament passed despite the protests: (i) The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; (ii) The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 and (iii) The Essential Commodities (Amendment) Bill, 2020.[2]

Of these three bills, the first one is most controversial. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 has been dubbed “anti-farmer” by the opposition parties as well as by the former Union minister of Food processing industries, Harsimrat Kaur Badal, who resigned from the cabinet to maintain solidarity with the farmers.[3]

The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Bill, 2020

This bill paves way for barrier-free inter-state and intra-state trade. Instead of buying produce through the Agricultural Produce Market Committees (APMCs), a buyer can directly trade with the farmers privately. The bill also omits market fee on transactions taking place outside the APMCs. This, in my opinion, is a betrayal of farmers’ trust. The farmers think, this provision will lead to the eventual redundancy of the APMC system and also threatens the Minimum Support Price (MSP)[4] provided to them.

The APMCs are statutory committees constituted by state governments to trade in certain notified agricultural products under the APMC Act. These APMCs authorise agents/traders to carry out procurement and distribution activities, provide required facilities to market notified agricultural produce which includes livestock, regulate and supervise auctions, ensure that farmers are paid on the same day trade takes place and take measures to prevent products from being sold below the Minimum Support Price (MSP).

The primary demand of farmers is for a statutory minimum support price. The farmers believe that opening up of agricultural sales and marketing beyond regulated APMC-mandis will kill the mandis and allow private players to exploit the farmers by setting the terms of purchase. At present, only two crops - wheat and rice – are procured by the government agencies at MSP. Thus, the weakening of the established mandi system will further weaken the system of assured procurement at MSP set by the government.

These changes will affect the small farmers the most because their low output does not allow them any bargaining power. There is evidence to substantiate the claim that inequality has increased in India after liberalisation.[5] Small and marginal farmers tend to get lower prices for their produce than big agriculturists, and as small farmers are more in number, this bill is detrimental to farmers’ interests. According to Food Corporation of India, over 65% wheat (2019) is procured from Punjab and Haryana at MSP.

This is why the new laws affect farmers of these states more. The new laws affect those farmers, the most, who bank on the APMC-MSP model. The removal of restrictions takes away all protections – of an assured, minimum price, of dealing with licensed agents and of dispute settlement by the APMC officers. By loosening their grip on APMCs, government risks the chances of farmers receiving prices below the Minimum Support Price (MSP).

This is similar to the Bihar model of APMCs where the APMCs were deregulated in 2006 on the pretext of liberalising the market.[6] 14 years later, farmers haven’t had a favourable market there. Critics of APMC system had promised that abolishing it would ensure better prices for the farmers and attract large sums of private investment in its market infrastructure. According to a study by National Council for Applied Economic Research in 2019, there was an increase in volatility in grain prices in Bihar after 2006, which negatively affected the choices of crop and farmer decisions to adopt improved cultivation practices.[7]

The infrastructure necessary to procure agricultural produce in Bihar was not developed by the private sector and in time, existing public sector facilities deteriorated. The number of mandis reduced and the farmers were left at the hands of private players who paid low prices. Before repealing the APMC act, farmers were exploited by middlemen who charged commissions that reduced the price realisations of farmers. After its repeal, farmers continue to be exploited by proponents of crony capitalism.

The bill creates a power vacuum in the market, which leads to uncertainty in production market. The government doesn’t have an alternate price setting mechanism, if the APMCs were to collapse. Assuming that big corporates won’t exploit marginal farmers is a utopian assumption. As the Centre allows for both verbal and written contracts, it places the farmers at a vulnerable position as most of the marginal farmers do not have the skills or resources to understand big contracts or seek proper legal discourse. Placing the market in the hands of giant private players puts the farmers as well as the consumers in risk of being exploited.

The bill also aims to set up conciliation boards by the Sub-divisional Magistrate to solve any disputes arising between farmers and traders. Presently, the farmers can approach the local APMC officers for any disputes. This change will not be favourable for the farmers considering their financial constraints and lack of resources.

How To Reform The Bills The Farmers’ Way?

In my opinion, state supervision is a must to protect the interests of the farmers and the consumers as how the reforms are implemented will decide the efficiency and benefits of the reforms. State intervention gains importance to prevent exploitation by private entities, assurance of a fair price for their produce and reducing indebtedness in a state like Punjab where the issue of farmer suicides is continuously on the rise.

As majority of farmers in India are small and marginal, there should be a legal backing of Minimum Support Price if the government wants to earn the trust of the agricultural sector. The Swaminathan Committee had suggested fixing the MSP at 50% higher than the cost of production. Even now, the government does not calculate the cost of production from the method recommended by the Swaminathan Committee.[8]

Agriculture in India is prone to natural calamities like floods, droughts and cyclones. Thus, there should be legislations to protect the farmers from the damage caused to the crops because of these calamities by ensuring state-supported income during such difficult situations.

Instead of supposed reforms which end up stifling the whole APMC system, there should be strengthening of the existing APMC system. As marginal farmers lack the resources to attract corporate players and also remain vulnerable to exploitation, the mandis should be reformed to improve the APMC infrastructure.

As the majority of farmers have small landholdings and outputs and as there is no realistic investment in the agriculture infrastructure, majority of farmers cannot contribute to market-driven agriculture. Thus, better road connectivity, transport facilities, climate-controlled storage facilities, electricity supply are prerequisites for drastic improvements in agriculture.

Moreover, environmental concerns arising from agriculture like greenhouse gas emissions, stubble burning and depletion of underground water tables also contribute to climate change and necessitate reforms in agricultural practices. Thus, immediate action is required to be taken by the government to encourage organic farming, give incentives and subsidies for adopting sustainable agricultural practices.

Conclusion
Agriculture in India has been a subject to a lot of pressure due to a number of factors including low productivity, lack of storage and transport facilities, heavy indebtedness and fragmented landholdings. Only market forces determining the fate of these small and marginal farmers is unfair and certainly not a way to uplift the agrarian economy. The corporatisation of agriculture will further oppress the farmers and create a larger unequal divide.

There is an urgent need to prioritise the concerns of the stakeholders and reform the existing model. By only attempting to shift trade away from APMC to non-APMC areas, without a regulatory framework, the new law is unlikely to ensure better price realization for farmers.

Not only does the Agricultural sector augment food supply, it also generates employment opportunities, improves livelihood opportunities, and causes poverty alleviation. If these laws aren’t reformed, they won’t be able to double the farmers’ income in two years[9] as promised and will instead, end up widening the inequalities as happened in Bihar. This will only make the farmers angry and the magnitude of protests will keep on increasing.

End-Notes:

1. https://www.thehindu.com/news/national/half-of-farm-households-indebted-nabard-study/article24731947.ece
2. https://thedailyguardian.com/understanding-new-farm-bills/
3. https://www.thehindu.com/news/national/other-states/harsimrat-kaur-badal-quits-union-cabinet-in-protest-against-two-agri-bills/article32632373.ece
4. https://indianexpress.com/article/explained/minimum-support-price-msp-farmers-explained-6706253/
5. https://scroll.in/article/811691/25-years-after-liberalisation-india-is-richer-but-has-more-inequality
6. https://www.hindustantimes.com/india-news/14-yrs-on-apmc-abolishment-yields-mixed-results-in-bihar/story-dP9PLxWuVe41I27YZMgIPK.html
7. https://www.hindustantimes.com/india-news/reforms-alone-can-t-raise-farm-growth-bihar-example-shows/story-MpXftOn8Jbq7mw7dkJyOrN.html
8. https://www.downtoearth.org.in/news/agriculture/new-msp-govt-fails-to-meet-swaminathan-standards-yet-again-61031
9. https://www.business-standard.com/article/pti-stories/govt-confident-of-doubling-farmers-income-by-2022-120030301388_1.html