With the Farm Bills, the Government Has Abandoned Farmers to Market Forces

New Delhi: The haste with which two farm bills were passed in parliament on Sunday reinforces the fact that the truncated monsoon session of parliament was convened by the government to convert its plethora of ordinances into bills and complete its business of mainly getting stuck-up Bills passed.

The manner in which the government moved on the controversial agriculture legislations left little scope for democratic and opposition voices to be heard in a meaningful manner.

The first indication of a brewing storm came in the form of resignation by Union food processing industries minister Harsimrat Kaur Badal, the sole representative in the government of alliance partner, Shiromani Akali Dal. 

Even as SAD reviews its alliance with the BJP, her MP husband and party leader Sukhbir Singh Badal led a delegation to President Ram Nath Kovind urging him to return the Bills unsigned for legislative scrutiny in appropriate parliamentary committees. Back home in Punjab, SAD  is engaged in a pitched political tussle over the issue with rival Congress and Aam Aadmi Party. For the first time they appear to be on the same side fighting for what each claims to be its core constituency—the farmers.

In Rajya Sabha, where the BJP-led NDA is yet to reach a majority, the party’s calculations for support in the event of voting, went awry when the Biju Janata Dal which has normally extended issue-based support, openly came out against the two Bills, namely, The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill.

Unfortunately it never came to that and the Bills were passed by voice vote amidst pandemonium in the House.

Subsequently, the third Bill, Essential Commodities (Amendment) Bill that lifts stockholding restrictions on pulses, cereals, edible oil and some perishables was also been cleared by parliament. The government had announced in May, what it said were long awaited reforms in the farm sector, as part of its coronavirus package for farmers.

One issue that rankles most in the matter is that when agriculture is a state subject why is the Centre pushing legislative processes of the nature that impact farmers’ livelihoods and food security of millions of people.

This is reminiscent of the NDA government’s amendments to the Land Acquisition Act, 2013 by ordinances which sought to remove the two crucial provisions of seeking consent of those to be displaced and the social impact assessment of the project for which land needed to be acquired. The Bill was sent for legislative scrutiny to a joint parliamentary committee where unanimous consent emerged on retaining the two clauses.

The farm Bills are seen as a move to throw farmers to market forces which had been a contentious issue under the World Trade Organisation (WTO) norms. Citing “market distortion,” the WTO rules impose a limit on India’s price support-backed public food grains stockholding programme for sale at concessional rates to the poor through the Targeted Public Distribution System.

However, ignoring the fact that the world body is collapsing under its own weight, the Modi government seems keen on imposing its unequal rules on Indian farmers and consumers, by creating private markets – through these Bills – that are not legally bound to purchase farmers’ produce at the minimum support price set by the government.

Also read: Farm Bills and Labour Law Changes: Modi’s Big Gamble in the Middle of a Pandemic

While it is yet be seen how farmers will be impacted by the government move, it had been noticed in the past that private entities get away by paying much less than the official minimum support price for farmers’ produce. Small and marginal farmers, who lack storage capacity and other wherewithal are forced to immediately sell their produce at whatever rates offered. Their priority is to get on with the next sowing season and catch every drop of rain, as it were.    

Presently under the Agriculture Produce Marketing Committee (APMC) Act, farmers have to obtain a license for selling their produce in a registered mandi. The various taxes, fees and commission in mandis range from 1% in some states to 8.5% in Punjab. Committees, who have to raise their own funds, say that they use the money to provide infrastructure facilities for farmers and provide employment to lakhs of loaders, cleaners and traders.

Under the proposed system, APMCs will be hard hit with trade moving out of their jurisdiction to zero tax in the private trade zone.

It is felt that with the colossal revenue of mandis, (e.g. Rs 50,000 crore annual turnover in Maharashtra from 306 mandis), the introduction of parallel private trade is designed to snatch their revenue and in due course make the entire  APMC system collapse. What impact will this have on livelihood of farmers, traders and consumers is anybody’s guess.

Questions are also been raised on the timing of the Bills, when the country is reeling from the impact of COVID-19 pandemic.

Farmers organisations that have given a call for street protests on September 25 point out that absence of APMC mandis in Bihar had not shown any increase in the income of farmers, which is touted as the reason for the government bringing in the new Bills. They are demanding mandatory payment of MSPs to farmers outside of APMC mandis.

It is quite possible that the strong agitation against the Bills is also backed by well-entrenched mandi artiyas (commission agents) or traders who often are also local money lenders in a village. Farmers have a generational relationship with them as a necessary evil as they are ready to lend money at a short notice, albeit at enormous interest rates, but without surety or guarantee which is the fundamental requirement of banks and institutional lending agencies. There is also harassment involved.

It is well known that artiyas control the markets for seeds, fertilizers, pesticides and are an intrinsic part of the value chain on which farmers are totally dependent. Artiyas would loathe to  lose their control over the mandis and thus their source of income and with nearly 50% of farmers in debt of artiyas, it is naive to think they are ready to move out of mandis to private companies in open market.

Nothing visible has been done to address this informal mechanism of farmers’ financial dependence. Instead of pretending that artiyas will disappear in the face of private, competitive pricing arrangement, the government ought to have addressed the issue before raising a parallel purchase structure, confusing the farmers further.

Also read: Farm Bills: Opposition Walks Out of RS; House Passes 7 Bills in Under 4 Hours

Mandi taxes are a also source of huge revenue to state governments, especially in Punjab and Haryana where taxes are steep. The central government has neglected this issue which has made governments in Congress-ruled Punjab and BJP-ruled Haryana to jump into the fray, overtly or covertly. Even some of the BJP affiliate organisations have joined issue.

The provisions in the Bills tilt in favour of multi-national corporations and domestic companies for whom the government has opened the doors for exports, stockpiling (hoarding) without limits and contract farming without proper regulation. In other words, the government is backing a parallel food value chain that allows multi-national companies/private agents to purchase farmers produce at whatever price they ascertain and force farmers to get into diversified high-end, exotic, commercial farming.

This arrangement lacks the space for zero budget farming, natural farming and revival of nutrition foods, millets and coarse cereals. It is easy to see that if the provisions of the bills are implemented in the present form, at a future date MNC agents will become the new set of middle-men who will control farmers produce and pricing. Through contract farming, they will also control what the farmers cultivate and are paid leaving farmers with little bargaining power. Even now several farmers lose out on prices on the basis of the quality of their produce.

Companies who look at economies of scale will provide seeds, knowhow and dictate their terms according to their commercial interest and I daresay, will opt for mechanisation for customised produce which will hit the huge farm labour including women. The agriculture sector employs more than 50% of the total workforce in India majority of which has been rendered unemployed in the ongoing COVID-19 pandemic.

E-markets were supposed to allow farmers to sell their produce anywhere in the country by linking mandis, but the scheme has been so slow in picking up that it appears to have failed. Instead of setting that right, the government has shifted focus.

It must not be forgotten that 60% of country’s farmers practice rain-fed agriculture and 85% farmers are small and marginal, with a landholding of less than two hectares and with hardly any bargaining power. Farmers must not be pushed around into defending the government’s fast shifting goal-posts, whether it is digitalisation, contract farming, privatisation, corporatisation or dealing with a new set of polished middlemen with contracts in their hands. 

Contract farming and competitive pricing in itself has seeds of unequal farming which acts to the detriment of small and marginal farmers, who form the backbone of our economy and who have arrested the sharp fall in GDP through depressive COVID-19 times.

Any programme for them has to be sustainable and dovetailed into their specific region and soil and water conditions.

One cannot imagine the situation if farmers cannot deliver in the face of say, cartelisation by corporates or crop failure owing to inclement weather, disease and pests or a demonetisation or COVID-19-like situation.

Through these Bills the government cannot abdicate its responsibility and leave farmers to market forces.

Gargi Parsai is a Delhi-based senior journalist. She can be reached at gargiparsai@yahoo.com.