The Union government passed three bills to replace the three ordinances that were enacted during the COVID-19 lockdown. These three bills, expected to bring revolutionary changes to agrarian(characteristic of farmers or their way of life)context and help double farmers’ incomes are:
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020.
- The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020.
- The Essential Commodities (Amendment) Bill, 2020.
Let’s a close took on the 3 farm bills clearly.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill:-
It seeks to completely open up the sale of produce outside the Agricultural Produce Market Committees. It not only creates an e-highway for trading and transactions, but also creates a structure for e-trading of agriculture produce. Farmers are allowed to sell their produce outside of the APMCs, and that creates a possibility for more competition and better pricing for farmers. In other words, the market is thrown completely open for the private players to come in the agriculture sector and deal directly with the farmers.
The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
It creates a framework for contract farming. It provides a template at the national level of farming agreements, with regard to agribusiness, processing, and the entire range of services including wholesalers, exporters and large retailers for sale of farming produce at a mutually pre-agreed price.
The Essential Commodities (Amendment) Bill, 2020
it takes away cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. Therefore, these commodities are now free of the Essential Commodities Act restrictions and stand deregulated. However, the central government has retained the right to regulate them under extraordinary circumstances, such as in case of a war, famine, natural calamity, and impose stock limits if there is a steep rise in prices.
AGRICULTURAL MARKETING IN INDIA.
Agricultural market reform in India has historically been a vexatious issue. “Agriculture”, “markets and fairs” and “trade and commerce within the state” are all state subjects in the Constitution (Entry 14, 26, 28, List II, Seventh Schedule). Agricultural markets have therefore been the responsibility of the states. At the same time, the centre has an overarching responsibility via Article 301 to ensure that there is free trade within the country: of ensuring “freedom of trade, commerce and intercourse”.
State-specific laws under the Agricultural Produce Marketing Committee (APMC) Acts thus regulate agricultural trade within states. These typically mandate that purchase of certain ‘notified’ agricultural commodities be through government-regulated markets (mandis) with the payment of designated commissions and marketing fees. Traders and intermediaries (commission agents) typically require a licence to operate in these mandis. In many states these are mandi-specific licenses issued by the APMC. Many of these acts were introduced in the 1960s to ensure that farmers had access to organized markets. The markets had the benefit of oversight by the government to minimize the risks of exploitation by traders and middlemen.
Though the APMC Act was designed to protect farmers’ interests, it perversely rendered farmers dependent on middlemen, who were financiers, information brokers and traders, all rolled into one. Middlemen perform a critical role that formal institutions have found hard to replace or dislodge. Agents and traders are not all mercenary and trade in the APMC markets is in fact auctioned or tendered in closed bids to the highest bidder. But the nexus between traders and commission agents tends to keep out competition and often leaves the farmer with little bargaining power. Commodities change hands as many as five-six times from the farmer to the end-consumer. One estimate suggests that removing inter-state barriers to trade can increase farmer prices by 11%.
Agents are known to charge “more than just a commission” for the services they render. Many studies document non-transparent price discovery processes, often through collusive trader behaviour or hoarding as in the case of onions (Banerji and Meenakshi, 2004, 2008; Madan et al, 2019). Consequently, farmers are reported to receive but a fraction of the price paid by the final consumer with middlemen cornering a large part of the rest (Mitra et al., 2013). More critically, the prices farmers get, coupled with low yields, are often inadequate to cover their costs or for servicing debts and meeting their consumption needs. Research on agricultural markets in India has typically concluded that they are inefficient, characterised by a high level of wastage (Mattoon et al., 2007; Umali-Deininger and Deininger, 2001 are examples).
Further, the large variation across states in the scope and stringency of these APMC Acts has led to fragmented markets that have impeded the emergence of a single national market. Consequently, commodities change hands as many as five-six times from the farmer to the end-consumer. One estimate suggests that removing inter-state barriers to trade can increase farmer prices by 11% (Chatterjee, 2018).
While states have jurisdiction over the APMC, the Essential Commodities Act (1955) bestows the centre with wide-ranging powers to impose restrictions on storage and movement of certain ‘essential’ commodities by private parties, mainly to protect consumer interests. State governments are free to set stocking limits based on the centre’s notifications. The ECA, often described as “draconian”, is seen as thwarting private investment in post-harvest storage, warehousing and processing, especially because these controls are implemented somewhat arbitrarily. Historically, ECA-related restrictions have been neither predictable nor infrequent. And since restrictions are imposed temporarily, typically, for six months or a year at a time, the attendant uncertainty hinders operations of agribusinesses, logistics firms and traders alike.
As for contract farming—the third area of reform—since the APMC Acts at the state level govern all forms of marketing transactions, the decision on whether to permit contract farming too was left to the state governments. Whereas some states have allowed contract farming for years, others continue to implicitly disallow it. Except for rare attempts by states like Punjab, which proposed a dedicated act for contract farming, contract farming has thus far not been governed by a special legislative framework.
Agricultural Produce Market Committees (APMC) is the marketing boards establishments by state governments to eliminate the exploitation of farmers by intermediaries; where they force to sell their produce at extremely low prices. Further, APMCs are physical markets where sales is through auction and meant to ensure worthy prices and timely payment to the farmers for their produce.
However, the ground reality of APMCs is that against the requirement of 42,000 mandies (markets) required for a country of our size, only 7000 exist. A huge percentage of the farmer population is unable to transport all of their produce too far off mandis and end up selling it to private parties while paying the mandi fee at the same time. Further, well-regulated mandis available at a 5 KM range from each village will assure a market for the farmers and at the same time, help in providing assured procurement price.
The present Act that overrides the provisions of the existing APMCs will only create a parallel market. It is with completely different regulations. APMCs is a market where traders will require get a license, pay a fee. Additionally, allow the government to obtain price intelligence. Similarly, the state government will lose its ability to regulate the trade of produce with the entry of private sponsors. Moreover, this will lead to the collapse of the mandis.
These Acts will not formulate in consultation with the actual stakeholders – the farmers. They fail to provide farmers with guaranteed prices (MSP), oversight of the players. Likewise, transactions, and prices and do not empower the state government to regulate the market.
CONSTITUTIONALITY OF THE LAWS.
The Seventh Schedule of the Constitution contains three lists that distribute power between the Centre and the States. The Parliament has exclusive powers to legislate on the subjects in the Union List; the states alone can legislate on subjects in the State List; the Concurrent List has 47 subjects on which both the Centre and states can legislate. But in case of a conflict, the law made by Parliament prevails.
The State List contains eight entries with terms relating to agriculture: Entry 14 (agricultural education and research, pests, plant diseases); 18 (rights in or over land, land tenures, rents, transfer agricultural land, agricultural loans, etc.); 28 (markets and fairs); 30 (agricultural indebtedness); 45 (land revenue, land records, etc.); 46 (taxes on agricultural income); 47 (succession of agricultural land); and 48 (estate duty in respect of agricultural land). However, the Union List and Concurrent List do not refer to matters relating to agriculture, giving state legislatures exclusive powers. Entry 33 of the Concurrent List mentions trade and commerce, production, supply and distribution of domestic; and imported products of an industry over which Parliament has control in the public interest; foodstuffs, including oilseeds and oils; cattle fodder; raw cotton and jute. Moreover, it cannot be said the ‘foodstuffs’ is synonymous with the term agriculture; that would make all the state-exclusive powers on the agricultural sector redundant.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 do not mention, in the Statement of Objects & Reasons, the constitutional provisions under which Parliament has the power to legislate on the subjects covered.
To determine the constitutionality of any legislation, the “doctrine of pith and substance” must be put into use. Further, the character of the legislation and the extent to which the legislation impinges on other Lists will have consideration. Moreover, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 flies in the face of Entry 28 of the State List (markets and fairs). And, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 impinges on Entries 14, 18, and 46 of the State List. Therefore, it can be inferred that the legislations do not hold up to the test of constitutionality. Hence, we must now await the Court’s decision which will decide the fate of the Indian Agriculture Market.
LOOP HOLES IN THE LAW AND ITS EXECUTION
Farm produce, under a decades-old system, are sold and bought in wholesale markets run by so-called agricultural produce marketing committees, or APMCs, under state laws. This is the mandi system. The bill enables food traders to buy farmers’ produce from any market, outside the purview of APMCs, rather than be bound to a specific market where they are licensed to operate.
Ushered in during the 1960s, APMCs were originally meant to protect farmers from distress selling by creating a system of notified markets that records all transactions and prices. Over time, however, these have often acted as monopolies, evidence suggests.
While the APMC system is cartelised, bypassing it altogether will leave farmers vulnerable to big food corporations and the country will have no way of knowing what is being traded and at what price, critics argue. Intelligence on price and stock are critical to protect farmers and consumer interests both.
CHAIN OF EVENT OF PROTEST.
Firstly the protest was start at sangha border where the thousand and millions of farmers are coming. Singha boarder has developed into a self-sustaining protest town with a number of langar’s providing hot meals, makeshift toilet complexes, medical camps run by NGOs, laundry facilities and sleeping accommodation, whether in tents or in tractor trolleys and after that the farmers from UP and Haryana came and start supporting the other farmers to change the 3 farm bills.
GOVERNMENT ACTION FOR FARMERS.
But the Indian government, including Prime Minister modii ji has reiterated that MSPs and government procurement would not be eliminated. Protesters are demanding the government guarantee that in writing.
“Anecdotal evidence shows that free market prices are generally lower than the designated MSPs. Farmers fear that corporatizing procurement would lead to lower prices.
With many agricultural inputs such as seeds, fertilizers, and machinery already controlled by private sector companies, data shows that cost of producing crops is rising at a much faster pace than the increase in their prices.
farmers also fear that the bills could be a pre-cursor to the government removing free electricity and water that farmers receive for their farm work. Not being able to price scarce natural resources leads to wastage at a time when India is facing water-scarcity and state-controlled electricity boards are facing losses.
PEOPLE PROTESTING FROM THEIR RESPECTIVE STATES TO DELHI.
After failing to garner support from their respective state governments, the farmers have decided to mount pressure on the Union government, due to which they are coming to Delhi. While Bjp governments in UP and Haryana have failed to convince farmers, governments of Rajasthan and Punjab have extended full support to their agitation. Farmers want the Union government to either withdraw the three legislations or guarantee them the MSP for their crops by introducing a new law.
WHY FARMERS ARE PROTESTING?
Farmers have been struggling for years due to low crop prices, rising cost and widespread droughts even though there have been generous government subsidies and income tax exemptions. Many farmers have fallen into debt that’s led to a rise in farmer suicide in recent year. One of the main concerns from the protesting farmers is that the bills do not mention anything about minimum support prices (MSP) and there is growing worry that India may do away with it altogether.
MSPs are essentially a safety net provided by the government in case prices drop for certain crops, mainly rice and wheat. The government would guarantee a certain price to farmers regardless of market conditions and government agencies would buy some of those crops at that price.
The worry is that if MSPs are dropped, large corporations could potentially set prices that would put farmers at a further disadvantage.
I think that the farmer was right at his own place because in 2014 our prime minister said to the farmer that things are to be change but this time the things are gone worst. Firstly, the farmer approach to their state government but when the state government not response then he started their protest to union government (Delhi) and also Supreme Court on Thursday said farmers have a constitutional right to continue with their “absolutely perfect” protest as long as their dissent against the three controversial agricultural laws did not slip into violence.
Farmers are protest basically for the MSP rates.
AUTHOR: YASH SHARMA