AN OVERVIEW OF THE FARM LAWS, 2020.

THROUGH A MILLENIAL’S P.O.V*

By removing risky intermediaries, encouraging better realizations for farmers attracting investment and enhancing technology in the sector, India’s agricultural sector has been liberalized and kind of privatised by the new Farm Laws 2020.

58 per cent of India’s population is employed by agriculture and contributes to 15 per cent of Indian GDP. In 2020, the sector grew by 4%

The Maharashtra Agricultural Produce Marketing Rules have specified in the past that only APMCs can market agricultural products

The commodity is passed to the area’s wholesalers, who allocate it to small retailers or peddlers in exchange. With every tranche, there is a price rise of Rs 4 to 5. The effects are that vegetables, many of which are purchased from farmers at Rs 2 or 3 per kilo, are sold to urban consumers at Rs 20 to 30 per kilo. For 25 to 30 years, this method has been going on.

Ergo, higher prices had to be incurred by crores of urban Indians and millions of farmers remained underpaid. Rising prices also do not lead to benefits for farmers. Millions of farmers would have earned at least Rs 4 or 5 more per kilo for their produce if open marketing was allowed and would have enjoyed better lives financially today. In reality, millions of farmers who are situated far away from cities are unable to transport due to higher transport costs. The new Farm Laws have been passed by the government to eliminate these loopholes.

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

MAIN PROVISIONS

• Farmers and traders can enjoy the freedom of competition to sell and buy agricultural goods. It would facilitate inter-state and intra-state barrier-free trade and trade beyond physical borders of the markets.
• Farmers would not have to pay any cess or levy for the sales of their goods and would not have to pay for transportation costs. An electronic trading platform has been proposed to ensure seamless trade.

In addition to mandis, farmers would enjoy the freedom to do trading at farmgate, cold storage, warehouse, processing units etc. Farmers will be able to do direct marketing thus eliminating intermediaries resulting in the realization of higher prices.

CONCERNS :

• “If it is optional to sell in mandis, will the mandis exist?”
• “What is going to happen to an electronic trading site like e-NAM for the government?”
• “Will the procurement at Minimum Support Price stop”

The farmers and the political parties of the opposition are protesting against the above allegations.

Farmers can sell their produce at MSP. As before, Mandis will be available, but farmers will also have the option to sell in other locations. The e- NAM trading mechanism in the mandis will be functional. Trading on electronic platforms would boost, which would increase transparency and time efficiency.

The Farmers (Empowerment and Protection) Agreement of Price Assurance & Farm Services Bill 2020

MAIN PROVISIONS

• The new legislation will give farmers the power to interact in a very competitive environment with processors, wholesalers, aggregators, wholesalers, large retailers, exporters and others.

• Even prior to the sowing of crops, price assurance will be given to farmers
• In the case of higher market prices, farmers will be entitled to a much higher minimum price for this profitable price.

• Due to prior price determination, farmers will be shielded from the volatility of market prices.

India’s small farmers comprise 78 per cent of all farmers (who own less than 2 ha of land), but own only 33 percent of the total cultivated land and produce 41 percent of the food grains of the country. Their production is marginally higher than that of medium- and large farms.

CONCERNS :

• Under contract farming, farmers would be dictated by corporations and contrary to their free will the former will not be able to set prices.

• How can small farmers do contract farming? Sponsors are not going to fund them.
• The new scheme would be of interest to farmers. Big businesses will have a say in the event of a dispute.

The farmers and the political parties of the opposition are demonstrating against the above concerns.

EXPLANATIONS GIVEN :

• Farmers would have full control under contract farming to decide prices for their produce.
• Within a period of 3 days, they accept payment. 10000 organizations of farmers are coming together across the world. These FPOs would push small farmers together and seek to implement a mechanism of remunerative pricing of farm produce. Farmers would not have to search out traders after signing the deal. The buying customer will directly pick up the product from the plant.

The Essential Commodities (Amendment) Ordinance, 2020

MAIN PROVISIONS :

Regulation of the production, procurement, distribution, trade and trade of such essential commodities as foodstuffs, including cereals, pulses, potatoes, onions, edible oilseeds and oils, may be regulated by the government only under exceptional circumstances.

These include:

1.War

2.Drought

3. Extraordinary price increase (stock limits may be set to a 100% increase in horticultural products and a 50 % increase in non-perishable agricultural food products)           

4. Natural catastrophe of extreme food products

According to the Procurement Policy, the Food Corporation of India would continue to operate as before and buy food grains from the farmers at the MSP.

CONCLUSION

The Shanta Kumar report of 2018 notes that even those who sold to the government received only 27- 35 per cent of their produce from the declared MSP.

Nearly 75 % of paddy and wheat growers didn’t even know about the existence of MSPs.

The solution that the Modi government has come up with by bringing in new Farm Laws is only appropriate if politicians are of the opinion that the private sector is more effective at managing the whole food marketing scheme. Yet we know that this cannot be confined strictly to the food trade. And it is only when manufacturers slash costs and decrease trade margins that they will sell to customers at lower rates.

So, it is only when the capitalist directly enters agriculture, introduces scale efficiencies and increases labour efficiency that costs can be lowered gradually and profits increased.

It is clear that this direction was chosen by the Modi government to solve the problem of slow agricultural growth in India, low farm incomes and volatile food prices.

That’s why the three Farm Laws were clubbed together. The first one practically makes APMCs pointless. At pre-agreed rates, the second sets the ground for contract farming. And the third excludes state control over the amount of cereals, pulses, oilseeds, potatoes and onions that traders and retailers will stock.

Up until now, Indian farmers have been openly oppressed by arhatiyas/political parties band APMCs’ and in the future, they will be open to oppression by more sophisticated dominators.

Companies will obviously prefer buying through vendors rather than meeting small farmers individually, so it doesn’t serve the purpose of one-step trading. Another concern is that, while contract trading when a breach of contract occurs the farmers are not provided with strong judicial support which puts the big companies in the good.

Even though this is a fairly legitimate and revolutionary Act, in a country like India where the agriculture is totally dependent on mother nature, implementation is difficult. Corruption in the system, bias towards the wealthy and other such phenomena are no good. Farmer’s fear of being controlled by the big companies after some seasons of cultivation can be experienced in today’s world of contract trading too.

• A way of avoiding this is keeping some intermediaries like quality checks, minimum price support alive and intact
• Farmers should be provided with strong judicial support in case of contract breaches
• Farmers should be allowed to cultivate on their own terms without any interference
• Crop patterns need to be studied in order to minimize market floods.
• Farmers can seek financial assistance from nationalized banks instead of money lenders.

*Point of View

Views are Personal.