India is an agriculture rich country. Majority population is engaged in agricultural activities. They earn their hard earned bread and butter through farming and it can be regarded as the only source of income. Government has introduced many reforms and legislations to help the farmers especially those who come under the ambit of marginalized farmers. These range from regulating the food and farm systems, covering programmes ranging from crop insurance for farmers to quality food access for low-income families, from launching agricultural education to supporting sustainable agricultural practices. However, instances have been seen where even after such ample regulations farmers’ stands disappointing. This is because the laws do not get executed the way they should. Likewise, The President has given his assent on the three farm Bills: Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 and Essential Commodities (Amendment) Bill, 2020. These bills are facing very harsh criticism from farmers and oppositions. Despite that the bills are passed in the parliament. This article discusses the general framework of the new farm bills along with their pros and cons.
- 1 Introduction
- 2 ‘Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill‘, 2020
- 3 ‘Farmers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill‘, 2020
- 4 ‘Essential Commodities (Amendment) Bill‘, 2020
- 5 Arguments against the farm bill
- 6 Arguments for the farm bill
- 7 Conclusion
Three controversial bills that would modify the way Indian farmers do business have roiled the parliament of the nation and triggered protests that have burst onto the ground. All the three bills have further become laws with the assent of President Ram Nath Kovind. Addressing them as “historic” agri-sector reforms, the Centre said it will benefit farmers in the 21st century, allowing them to get good rates for output. They are said to be aimed at implementing reforms in the agriculture sector.
Only after realizing that over 60 % of the population works in the agricultural sector can the significance of reforms can be recognised. The agricultural sector also contributes to approximately 18% of the GDP of the nation. Despite such uplifting statements of the government, these bills faced extreme protests from the opposition in both houses. Even now, after becoming laws, they have contributed to ramping up agitation by farmers in states of Punjab, Haryana, and Madhya Pradesh and opposition parties across the nation
The three bills passed by the Indian Parliament aiming at introducing reforms in the agricultural sector in Farm Bill 2020.
‘Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill‘, 2020
It is not the law on certain occasions, but what it seems to express and the context in which it is framed that holds significance. So is the case with Farmers’ Produce Trade and Commerce (Promotion and Facilitation).
• The new legislation provides for the establishment of an environment where farmers and traders enjoy the freedom of choice regarding the selling and purchasing of produce from farmers,
• Also,promoting remunerative prices through competitive alternative trading channels; to facilitate effective, transparent and barrierfree exchange and trade of produce from farmers beyond the physical premises of the inter-State and intra-State.
• The farmers will not be charged any cess or levy for sale of their produce and will not have to bear transport costs.
• The Bill further recommends electronic trading on a transaction portal to electronically guarantee smooth trading.
• Free exchange at the farm entrance, cold storage, factory, processing plants, etc., in addition to mandis.
• Farmers would be able to invest in direct marketing, thus removing intermediaries that contribute to maximum price realisation.
‘Farmers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill‘, 2020
• The new law would enable farmers on a fair competition to engage with processors, wholesalers, aggregators, major retailers, exporters etc.
• Price guarantee for farmers even before crops are sown. In case of higher market price, farmers will be entitled to this price over and above the minimum price.
• The probability of market unpredictability will be passed from the farmer to the sponsor. Because of prior price formation, farmers will be safe from the rise and fall of the market prices.
• It would also allow farmers to have access to new technologies, improved seeds and other inputs.
• It would reduce selling costs and increase farmers’ earnings.
• With reasonable time frames for remedy, an appropriate dispute resolution process has been established.
• Impetus for research in the agricultural field and emerging technologies.
‘Essential Commodities (Amendment) Bill‘, 2020
In all the three bills signed, it is the ECA that was long past due. In WW2, where laws were imposed by the British to exploit the supply within the region, the ECA has its foundation. The bill limits the storing of essential items such as pulses, oilseeds, onions, etc, although it has now been revised. The amended ECA reduces the control of the states and the centre.
The amendment comes with provisions to remove commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities however It has been provided in the Amendment, that in situations such as war, famine, extraordinary price rise and natural calamity, such agricultural foodstuff can be regulated. The Bill states that such order for regulating stock limit shall not apply to processors and value chain participant of any agricultural produce under a condition.
It further helps to eliminate concerns of undue government interference for private investors in their corporate activities. The freedom to produce, hold transport, export and supply will lead to economies of scale being accessed and private sector / foreign direct investment being drawn to the agricultural sector. It will further accelerate improvements in cold storage and food supply chain modernization.
Arguments against the farm bill
According to a new survey in 16 States conducted by Gaon Connection Insight, more than half of Indian farmers condemn the three farm reform laws enacted while just 35 per cent endorse them. This clearly gives a picture that a majority section of the agricultural society is not satisfied with the rolling of such laws which would be a hurdle for them in their occupation.
The protesting farmers worry that large investors would tie them to unfair contracts drawn up by large corporate law firms, with liability provisions that in most cases would be beyond weak farmers’ comprehension. On the opposite, by allowing private traders, even companies, to enter into private transactions and by setting up a cumbersome and complex dispute settlement system (excluding civil courts), the government has even further tipped the scales against farmers.
In addition, there would be a significant opportunity for traders to de-register themselves from the APMC until private uncontrolled trading outside the APMC is legalized. Even the opposition has shown concerns regarding the same. Some arguments which highly related to the subject are as follows:
The statute governing competition law in India is the Competition Act 2002, which establishes the Competition Commission of India and does the following:
• Ensures fair market competition.
• Eliminates practices which hinder fair competition, protection of the interests of consumers and freedom of trade.
While there is no clear clause of the Act relating to or restricting the applicability to the agricultural sector of competition law, the preamble notes that it extends to all markets, including those of the agricultural sector. Thus, the new farm bills will overshadow this act because of many fears that the farmers will face unfair competition.
Congress increased its intensity against the Modi administration, calling the bills a plot to suppress the Green Revolution. Congress leader Gaurav Gogoi, bashing the government, said:
“This government has been eyeing, how they can take the farmers’ land to benefit their capitalist friends, whether is the Land Acquisition Act, whether in the industrial system through weakening the labour courts and now this three-pronged attack on the Indian agricultural system through the two bills on farming – one related to APMC, the other one is related to contract farming and the third bill which is on essential commodities… a three-pronged attack on the Indian farmers.”
Arguments for the farm bill
The government claims that these laws would change Indian agriculture and draw private investment. The Farmers (Empowerment and Protection) Act, 2020, provides for contract farming, under which for a mutually agreed remuneration, farmers will produce crops as per contracts with corporate investors.
The Standing Committee on Agriculture (2018-19) noted that the provision of a marketing mechanism that is open, readily available and competitive is a requirement for ensuring that farmers earn remunerative prices. Entry to government procurement services and APMC markets is missing for most producers. It noted that, where sufficient infrastructure facilities are established, small rural markets will emerge as a feasible alternative to agricultural marketing. The new laws do the needful.
APMCs must also be phased out because they are import barriers, while they have fulfilled a valuable function by being a safety net for a portion of the farmers. The APMCs are not ideal markets do not represent all farmers, collect too high a rent for reasons that have been well established, and are, in some cases, under the influence of merchants and intermediaries.
Earlier, coteries were established on the APMC markets by the Arthiyas, the commission agents or intermediaries, and acquired influence over the management of APMCs while the farmers did not find participation in the operation of those markets. However, APMCs continued to have a monopoly over the trade of agricultural commodities and the non-issuance of new licences to traders stopped the entry of new entrepreneurs.
Non-integration of APMCs also ensured that there was no smooth flow of commodities from farmers to consumers and the multiple intermediaries in between resulted in higher prices of commodities without bringing commensurate benefit to farmers. This is no case favoured farmers but the new laws definitely do.
The unconstitutional manner in which the laws were enacted is one of the factors why there has been a lot of controversy around the nation, as it is the state governments that control these aspects. In order to close the gaps in the bills, the government should have included the opposition and even taken into account the voices of farmers.
Not only does this establish an aided solution to the sector’s privatisation, but it would also prevent further exploitation. But sadly, since the bills were not adequately discussed, a scenario of dishonesty between the ruling, the opposition, and the farmers are established.
Without prior consultation or proper discussion, and without a vote by division as necessary, the breaking rush with which ordinances is enacted and substituted by Acts requires in-depth examination. The underlying intent of the government lies under a haze in enacting these divisive laws.