KEYWORDS: APMC, Minimum Support Price, State Subjects, Article 301
INTRODUCTION:
The agriculture sector in India is paramount among other sectors that require expeditious vigilance as it is the backbone of the Indian economy. According to the Economic Survey 2020-21, the sector contributes 19.9% to the GDP growth as compared to 17.8% in 2019-20. Besides huge increment in employment; economic growth, another factor that makes it the backbone of the economy is that India earns foreign exchange by exporting agricultural products in bulk to non-agricultural countries and approximately 60% of the Indian population directly or indirectly depends on agriculture. Therefore, the growth in the agriculture sector is directly proportional to India's GDP growth. The resilience of the farming community in the face of adversities made agriculture the only sector to have clocked a positive growth.
The three ambivalent agricultural bills commonly referred to as Farm Laws in India, videlicet; Farmers' Produce Trade and Commerce ( Promotion and Facilitation ) Act, Farmers' ( Empowerment and Protection ) Agreement on Price Assurance and Farm Services Act, and Essential Commodities ( Amendment ) Act, 2020 came into force on September 2020. In particular, the approval of the Lok Sabha and the Rajya Sabha was granted on 17 September and 20 September respectively. The President of India, Ram Nath Kovind gave his assent on 27 September 2020 and was notified in the gazette bringing the initiated bills into force. As soon as the bills came into force, the new farm laws became a bone of contention and protests arose in most of the states within the territory of India namely, Punjab, Haryana, Rajasthan, etc. The exasperated farmers are laying siege to the national capital in their ongoing protests against the three bills.
THE SCOPE OF THE FARM ACTS;
a. Farmers' Produce Trade and Commerce ( Promotion and Facilitation )Act: The most disputed ordinance of all three attempts to escalate the scope of trade areas of farmers' produce i.e., market chain, from selected areas to, " any place of production, collection, aggregation" is quite rightly stated as a contentious move. It is a solid attempt to eradicate or bypass APMCs that stands for Agricultural Produce Market Committee or popularly referred to as “Mandi System" regulate the agricultural trade within the states which includes issuing or granting Mandi-specific licenses, some of these laws were introduced in the 1960s due to the ramifications of the Second World War i.e., severe famine which broke out ensuing 1947. Secondly, allows electronic trading and e-commerce of scheduled farmers' produce. Thirdly, prohibits state governments from levying any market fee, cess, or levy on farmers', traders, and electronic trading platforms for the trade of farmers' produce conducted in an "outside trade area".
b. Farmers' ( Empowerment and Protection ) Agreement on Price Assurance and Farm Services Act: The second ordinance firstly, provides a legal framework for farmers i.e., contract farming to enter into pre-arranged contracts with buyers upon agreed prices. Secondly, define a dispute resolution mechanism.
c. Essential Commodities ( Amendment ) Act: The third ordinance often contended as "draconian" remove foodstuff such as cereals, pulses, potato, onions, edible oilseeds, and oils, from the list of essential commodities, removing stock holding limits on agricultural items produced by Horticulture techniques except under "extraordinary circumstances'' i.e., attempts to eradicate hoarding. Secondly, requires that imposition of any stock limit on agricultural produce only occur if there is a steep price rise.
The three vexatious bills have been promulgated as "unconstitutional" by various critics and opposition parties as these farm bills were initiated by the Parliament amidst the growing concerns over the derailed economy during the horrendous covid pandemic that struck the nation at large. It demonstrated its willingness to use the covid crisis to unilaterally push through reforms, without the explicit involvement of the state government. The Agricultural markets are the responsibility of the states "Agriculture", "Markets and Fairs" and " trade and commerce within the state" are all state subjects[1] under the Constitution of India ( Entry 14, 26, 28, List 11, Seventh Schedule ). Article 301[2] states that it is the responsibility of the central government to ensure "freedom of trade, commerce, intercourse".
The new laws were introduced for a further fundamental reorientation of the existing regulatory reforms. These are 1991 liberalization moments for the agriculture sector.
To elucidate the existing agricultural laws, it provided the farmers with APMC or Mandi system to ensure organized markets and the interests of the farmers and consumers. However, it had its flaws i.e., the "Middlemen" or the "Landlords" were the actual parasites of the market system. The farmers and their lands were at the mercy of the middlemen. The most indispensable concern of the farmers is and has always been the MSP which stands for "Minimum Support Price".
IS MSP PROFITABLE TO THE FARMERS?
The Commission fixes the MSP based on the cost of production, demand, supply, change in prices, variable costs, national and international market prices. In India, a common MSP is allotted to all the states based on the average expenditure irrespective of the expenditure incurred. Even though the cost of production of every crop varies state-wise. For certain crops, the MSP does not even cover the cost price. According to the report, the total cost of production of paddy cultivation over one hectare in Andhra Pradesh is Rs. 80,303. In Uttar Pradesh, of the same area is Rs. 58,429 whereas, in Punjab, it is Rs. 76,079. Unfortunately, this system of providing a common MSP to every state in the country regardless of the cost of production indubitably does not oblige the farmers. On the contrary, this system had been introduced to preserve the interests and needs of the farmers. The crux of the situation being the farmers incur heavy losses, the paramount reason being; the so-called middlemen usurp their profit or remunerations and to curtail those losses, even if the price of crops falls, in such circumstances the central government procures the crops from the farmers at the fixed MSP.
PRODUCTION AND PROCUREMENT
Total of 23 crops are covered under the MSP by the government.
Figures reveal that the government mainly procured two crops namely, rice and wheat.
Rice and wheat from Bihar and UP reach Punjab and Haryana because MSP is high.
The data shows that farmers do not avail any benefits of the fixed MSP.
According to the ‘Organisation of Economic Cooperation Development and the Indian Council for Agricultural Research’[3], the farmers have incurred losses up to Rs 45 Lakh due to improper pricing of the product between 2000 and 2017. Therefore, certain stringent supervisions and revisions were required to make this system function efficiently such as allotment of MSP based on the state-wise expenditure.
According to the report, there are approximately around 14.5 crore farmers in India and of which only
6% of the farmers are conscious about the concept of MSP and thus gain profit from it whereas 94% of the farmers do not have a clear insight into the actual concept, its impact and thus incur losses.
A report mentions that protests were initiated in 2019 by the farmers in Madhya Pradesh to increase the MSP rate and even though after incrementing in the rate by the government twice, losses were incurred which testifies that hardly any profit was gained by imposing higher rates of MSP. In 2018-19, the union budget proclaimed that the MSP for crops is kept at 1.5 times the production cost to double farmer income by 2020. Accordingly, the government had increased the MSPs for marketing sessions 2020-21 for Kharif, Rabi, and other commercial crops. As remarked by Modi, the government is adamant to keep the MSP in the new laws passed as well.
The data shows that the farmers are not reaping benefit of MSP
[ Andhra Pradesh Mandi]
ANALYSIS OF NEW FARM LAWS:
The new farm laws on the other hand, by many, have been hailed as a "watershed" or "death warrant" of the farmers. Others including former Prime Minister H.D. Deve Gowda have critiqued the new reforms on the basis that they were unilaterally pushed by the parliament in haste without the involvement of the state government even though control of the agriculture sector is under the state subject whereas others have critiqued on the basis that it is paving the path for big businesses or private sector to flourish in the economy. No doubt, the new laws aim at privatization or industrialization of the sector leading to development, infrastructure, private investment as well as GDP growth. Contract Farming can be defined as agricultural production carried out according to the agreement between a buyer and farmers. It would open up new markets which would otherwise be unavailable to small farmers, initiate global trade, reduce marketing and transaction costs, it would assure negotiated prices reducing the possible risk of fluctuating market prices and, will ensure better quality produce, incentives, and developed technical guidance to the farmers.
However, along with the merits, there are certain demerits as well. If appropriate variations in the legislation for curtailing the demerits are not made by the government, then unfortunately it would pave the way to an era dominated by the private players, the 'AMBANI AND ADANI ERA’ will be a reality quite soon. For many, the answer to this apprehension would be " FARMERS’ AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES ACT provides a legal framework for farmers i.e., pre-arranged contracts". However, in India breach of contract does not provide stringent rules or legal protection as observed in other countries. Reminiscing the Modi Era, in various circumstances such as verdicts held by Ranjan Gogoi fulfilling the majoritarian agenda of the Modi government, the judiciary has been observed as a mere puppet of the government. Secondly, even if the right is provided to the farmers to sue the buyer in case of the infringement of the contract; DO YOU THINK THAT THE FARMERS WILL BE IN A STATE TO AFFORD A LEGAL PROCEEDING AGAINST THESE INDUSTRIALISTS? Of course not. They would rather think of earning enough to support, feed their family, and consolidate their survival. These reforms without improvisation would be ineffective in a country like India which is home to 313 million illiterate people and of which 59% are women according to 2019-20 statistics. Most importantly, what makes one think that their demands would be heard and their skills would be effective before those shrewd, business minded industrialists. In India, it seems to be an ideal form of system which looks intriguing on a mere piece of paper. According to the new legislation, there is nothing certain regarding the negotiations. It is prima facie evident that if this era emerges, the poor farmers and their lands would be at the mercy of the players and would have to accept the said price i.e., it would significantly diminish their ability to negotiate prices on equal terms. For Example; considering the contemporary scenario, firstly, the crop bought for Rs 1or2/kg is sold at Rs 250/- in the Reliance store causing inflation.
Secondly, Bihar was the first state to abolish APMCs in 2006 but unfortunately there is no evidence which testifies that the distressed condition of the farmers has improved.
Even though agricultural productivity has increased. Between 2011-12 and 2018-19, India’s growth rate was 7.5% and in Bihar it was 13.3%. However, the majority of farmers claimed that after the
abolition of APMCs, the middlemen and local traders were profiting, procuring crops at the rate below MSP i.e., at throwaway prices. Neither they are reaping any benefit nor getting their payments on time. The Economist DM Diwakar remarks “they do not even get back their investment”. It is ironic to say that these are “Farm Laws' ' because the ones who are availing the benefit of the policy are not farmers but middlemen, traders and private companies.
CONCLUSION
For the laws to work efficiently it is indispensable for the government to consider their demands so that the agricultural sector flourish otherwise inefficiency would creep in and India would be asserted as no less than a "LAND OF CORRUPTION”. Regrettably, the proceedings in Parliament have turned out to be vastly inadequate in accentuating the potential ramifications of the bills and in redressing their many lacunae. To conclude and suggest that protesting farmers are misled and confused is to evade these crucial issues. If the distressing situation is not curbed, it will lead to an increase in income inequality which is “Rich getting richer and poor getting poorer”. According to 2018-19 reports, India’s one percent holds 73% of the country’s wealth and the period between 2009-19 reveals a tremendous increase in rising billionaires. The government is being satiated with incredibly huge taxes flooding into the economy, whereas India ranks 103rd in the Global Hunger Index. It is indispensable for the authorities to establish an enquiry committee and consider the demands of the farmers which must not be detrimental to the interests of the society. It is the voice of every protesting farmer that the way forward for the government is to revisit and rethink the newly enacted legislation, address the apprehensions, provide clarity, transparency, and certainty on the vision it has for Indian agriculture. Reforms must be made by involving the states and their farmers not by neglecting them.
Written By : Gurleen Kaur
(Punjab University, Chandigarh)
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