India, a country of more than a billion people, finds itself amid large-scale
protests; the protestors being the great farmers of our beautiful nation. It
makes one wonder why would the agrarian population, which consists of almost 58%
of the countryís populace, come on the streets in their tractors and start
protesting? Itís ironic that a sector that contributes almost 18% to the Indian
GDP is neglected by the Central government as much as if it doesnít exist.
to be noted that the majority of farmers in India are small and marginal with
more than half of them burdened with debt. The reasons behind these
large-scale protests, especially in states like Punjab and Haryana, are three
bills introduced by the Government of India. Farmers are the backbone of our
nationís economy and these bills might weaken those very backs.
the existing agricultural market, the Union government introduced
these three bills which the parliament passed despite the protests: (i) The
Farmersí Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020;
(ii) The Farmers (Empowerment and Protection) Agreement of Price Assurance and
Farm Services Bill, 2020 and (iii) The Essential Commodities (Amendment) Bill,
Of these three bills, the first one is most controversial. The Farmersí Produce
Trade and Commerce (Promotion and Facilitation) Bill, 2020 has been dubbed
ďanti-farmerĒ by the opposition parties as well as by the former Union minister
of Food processing industries, Harsimrat Kaur Badal, who resigned from the
cabinet to maintain solidarity with the farmers.
The Farmersí Produce Trade And Commerce (Promotion And Facilitation) Bill, 2020
This bill paves way for barrier-free inter-state and intra-state trade. Instead
of buying produce through the Agricultural Produce Market Committees (APMCs), a
buyer can directly trade with the farmers privately. The bill also omits market
fee on transactions taking place outside the APMCs. This, in my opinion, is a
betrayal of farmersí trust. The farmers think, this provision will lead to the
eventual redundancy of the APMC system and also threatens the Minimum Support
Price (MSP) provided to them.
The APMCs are statutory committees constituted by state governments to trade in
certain notified agricultural products under the APMC Act. These APMCs authorise
agents/traders to carry out procurement and distribution activities, provide
required facilities to market notified agricultural produce which includes
livestock, regulate and supervise auctions, ensure that farmers are paid on the
same day trade takes place and take measures to prevent products from being sold
below the Minimum Support Price (MSP).
The primary demand of farmers is for a statutory minimum support price. The
farmers believe that opening up of agricultural sales and marketing beyond
regulated APMC-mandis will kill the mandis and allow private players to exploit
the farmers by setting the terms of purchase. At present, only two crops - wheat
and rice Ė are procured by the government agencies at MSP. Thus, the weakening
of the established mandi system will further weaken the system of assured
procurement at MSP set by the government.
These changes will affect the small
farmers the most because their low output does not allow them any bargaining
power. There is evidence to substantiate the claim that inequality has increased
in India after liberalisation. Small and marginal farmers tend to get lower
prices for their produce than big agriculturists, and as small farmers are more
in number, this bill is detrimental to farmersí interests. According to Food
Corporation of India, over 65% wheat (2019) is procured from Punjab and Haryana
This is why the new laws affect farmers of these states more. The new
laws affect those farmers, the most, who bank on the APMC-MSP model. The removal
of restrictions takes away all protections Ė of an assured, minimum price, of
dealing with licensed agents and of dispute settlement by the APMC officers. By
loosening their grip on APMCs, government risks the chances of farmers receiving
prices below the Minimum Support Price (MSP).
This is similar to the Bihar model of APMCs where the APMCs were deregulated in
2006 on the pretext of liberalising the market. 14 years later, farmers
havenít had a favourable market there. Critics of APMC system had promised that
abolishing it would ensure better prices for the farmers and attract large sums
of private investment in its market infrastructure. According to a study by
National Council for Applied Economic Research in 2019, there was an increase in
volatility in grain prices in Bihar after 2006, which negatively affected the
choices of crop and farmer decisions to adopt improved cultivation
The infrastructure necessary to procure agricultural produce in
Bihar was not developed by the private sector and in time, existing public
sector facilities deteriorated. The number of mandis reduced and the farmers
were left at the hands of private players who paid low prices. Before repealing
the APMC act, farmers were exploited by middlemen who charged commissions that
reduced the price realisations of farmers. After its repeal, farmers continue to
be exploited by proponents of crony capitalism.
The bill creates a power vacuum in the market, which leads to uncertainty in
production market. The government doesnít have an alternate price setting
mechanism, if the APMCs were to collapse. Assuming that big corporates wonít
exploit marginal farmers is a utopian assumption. As the Centre allows for both
verbal and written contracts, it places the farmers at a vulnerable position as
most of the marginal farmers do not have the skills or resources to understand
big contracts or seek proper legal discourse. Placing the market in the hands of
giant private players puts the farmers as well as the consumers in risk of being
The bill also aims to set up conciliation boards by the Sub-divisional
Magistrate to solve any disputes arising between farmers and traders. Presently,
the farmers can approach the local APMC officers for any disputes. This change
will not be favourable for the farmers considering their financial constraints
and lack of resources.
How To Reform The Bills The Farmersí Way?
In my opinion, state supervision is a must to protect the interests of the
farmers and the consumers as how the reforms are implemented will decide the
efficiency and benefits of the reforms. State intervention gains importance to
prevent exploitation by private entities, assurance of a fair price for their
produce and reducing indebtedness in a state like Punjab where the issue of
farmer suicides is continuously on the rise.
As majority of farmers in India are small and marginal, there should be a legal
backing of Minimum Support Price if the government wants to earn the trust of
the agricultural sector. The Swaminathan Committee had suggested fixing the MSP
at 50% higher than the cost of production. Even now, the government does not
calculate the cost of production from the method recommended by the Swaminathan
Agriculture in India is prone to natural calamities like floods, droughts and
cyclones. Thus, there should be legislations to protect the farmers from the
damage caused to the crops because of these calamities by ensuring
state-supported income during such difficult situations.
Instead of supposed reforms which end up stifling the whole APMC system, there
should be strengthening of the existing APMC system. As marginal farmers lack
the resources to attract corporate players and also remain vulnerable to
exploitation, the mandis should be reformed to improve the APMC infrastructure.
As the majority of farmers have small landholdings and outputs and as there is
no realistic investment in the agriculture infrastructure, majority of farmers
cannot contribute to market-driven agriculture. Thus, better road connectivity,
transport facilities, climate-controlled storage facilities, electricity supply
are prerequisites for drastic improvements in agriculture.
Moreover, environmental concerns arising from agriculture like greenhouse gas
emissions, stubble burning and depletion of underground water tables also
contribute to climate change and necessitate reforms in agricultural practices.
Thus, immediate action is required to be taken by the government to encourage
organic farming, give incentives and subsidies for adopting sustainable
Agriculture in India has been a subject to a lot of pressure due to a number of
factors including low productivity, lack of storage and transport facilities,
heavy indebtedness and fragmented landholdings. Only market forces determining
the fate of these small and marginal farmers is unfair and certainly not a way
to uplift the agrarian economy. The corporatisation of agriculture will further
oppress the farmers and create a larger unequal divide.
There is an urgent need to prioritise the concerns of the stakeholders and
reform the existing model. By only attempting to shift trade away from APMC to
non-APMC areas, without a regulatory framework, the new law is unlikely to
ensure better price realization for farmers.
Not only does the Agricultural sector augment food supply, it also generates
employment opportunities, improves livelihood opportunities, and causes poverty
alleviation. If these laws arenít reformed, they wonít be able to double the
farmersí income in two years as promised and will instead, end up widening
the inequalities as happened in Bihar. This will only make the farmers angry and
the magnitude of protests will keep on increasing.