An industry that feeds you is an industry worth fighting for. India is a country where more than 70% of the population is engaged in agricultural activities, but it is also an unfortunate fact that a hand that feeds the nation is entangled in the chains of hunger. In recent days you can see the agitation of farmers in various parts of the country. This is due to the introduction of two new bills, namely “The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020” and “The Agricultural Price and Service Guarantee Agreement (Empowerment and Protection) of the Farmer, 2020 ” by the Minister of Agriculture and Farmer Welfare, Rural Development and Panchayati Raj, Shri Narendra Singh Tomar of the Union on September 14, 2020 to replace the ordinances enacted on June 5, 2020. In addition, the other bill titled “The Essential Products (Amendment) Bill, 2020” has been approved.
On September 10, the Bhartiya Kisan Union asked the government to grant permission for a protest rally which was denied, pointing to the ongoing pandemic as the reason. However, the tractor rally took place where around 100 farmers showed up on the tractors and showed disagreement.
Understanding the Bills
Essential Commodities Amendment Bill
It is an amendment to the Essential Products Bill of 1955, which gave the central government powers to “control the production, supply, distribution, etc. of basic products.” After the amendment, certain edibles, including cereals, legumes, oilseeds, edible oils, potatoes, can only be regulated under extraordinary circumstances, such as price increases, war, famine, etc.
Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill
This bill seeks to allow farmers to sell their products outside the mandis or agricultural product markets, which are regulated by the Agricultural Products Marketing Committees (APMC), which in turn, are regulated by different state laws.
Previously, the APMC Act was created to protect farmers from being exploited by moneylenders and zamindars. It allowed farmers to have access to these mandis to sell their products through intermediaries or Angadias, to various buyers, as well as to the Government at MSP (Minimum Support Price). The APMC Act played an important role in the Green Revolution during the 1960s.
Farmers (Empowerment and Protection) Agreement of Price Assurance And Farm Services Bill
This bill grants permission for contract farming. According to its Preamble, it allows “a national framework on agricultural agreements that empowers farmers to interact with agribusiness companies, processors, wholesalers, exporters or large retailers for agricultural services and the sale of future agricultural products at a mutually agreed ‘remunerative price’.
A Closer look at the Bills
The agricultural industry contributes to 15% of the GDP of India and about 60% of the population depends directly or indirectly on agriculture and its related sector. With such a vast sector of the country, it was surely necessary to regulate it. The Modi government has introduced bills that are supposed to be beneficial to farmers, but are opposed. It makes the situation controversial and demands a closer look at the bills to reach a trial.
The mandis of the Agricultural Products Market Committee (APMC) were established to protect farmers from being exploited by moneylenders and powerful zamindars. Although this vividly helped the green revolution, it had its own loopholes.
A license is required to operate on APMC mandis. This gave the licensing authority a power to establish the infamous “Raj License”. In addition, licenses were granted to intermediaries with stores and warehouses in these APMC mandis, which required a lot of capital investment. These intermediaries captured their investment by exploiting farmers. The APMC mandis were often headed by MPs and MLAs who used their power and capital to exploit the poor. Also, taxes are mandatory in APMC mandis. It led the intermediaries to try to escape these taxes, without providing the farmers with sales tickets. In this way, farmers were unable to prove their exact income and apply for loans. These brokers / agents earned their commission and often had a monopoly on the market. The recent amendment to the law allows farmers to market their products even outside the APMC. It sounds beneficial. But is it that simple? If so, why are these farmers protesting?
The ordinances point to a nation, a market, that is, they allow farmers to have the monotony about the decision of where to sell the product. But this can lead to the privatization of the sector. Since no APMC Act taxes would apply to the sale and purchase of goods outside of APMC, corporations would prefer to purchase the products outside of APMC mandis. Thus, APMC would collapse as more and more people chose not to participate.
Speaking of MSP (Minimum Support Price), it only applies to crops that are sold in mandis, not outside of it. Despite the fact that we have a law for mandatory MSP in APMC mandis, only 6% of farmers obtain it. Now that we have laws, the situation of the farmer is deficient, imagine the situation outside the mandis where MSP is not applied. The amendment will increase the exploitation of these farmers by companies and decrease the proportion of MSP.
It will corporatize the agricultural sector through large companies whose main objective will be to obtain profits. That monopoly would flourish. Farmers would be left with nothing but legal battles that they cannot fight.
The government aims to maintain a free market. The idea of neoliberalism may seem quite attractive on paper, but the reality is different. The model India is aiming for right now was adopted by the United States and France long ago. As the model failed drastically, farmer suicide rates increased in these nations. The agricultural sector in these nations works mainly with subsidies. The question arises, why are we targeting a model that failed in large economies like the United States?
Apart from this, farmers also fear that the government will revoke the MSP, which Prime Minister Modi declared in his recent speech to the nation, would not be the case. However, there is no written proof of the same.
BJP claims that these bills are in the best interest of farmers. The opposition, however, does not believe that. The opposition does it as a protest to protect farmers’ rights, one can hardly believe that it is their only motive behind the measure. The taxes that are applied in APMC mandis are a significant income for all state governments. However, privatization would help establish large companies that would pay taxes to the central government. In a way, it can be a great loss to the state.
Union Cabinet Minister Harsimrat Kaur Badal resigned from the cabinet to show dissent. Congress is also raising questions about the Centre’s new bill.
Farmers demand that the government repeal the ordinances. They want to protect APMC across the country.
At this point, according to experts, it is preferred that the government make the MSP mandatory (inside and outside the APMC mandis), that is, that it requires the MSP as the minimum price of the crop. According to RBI (2016) reports, only 0.4% of the country’s GDP is invested in the agricultural sector, which is absurd as it is the largest sector. The government should invest more in the field of agriculture for the betterment of farmers and the country as a whole.
Whether these bills are a blessing or a nightmare for the country’s farmers is a controversial question. Although farmers are assuming every possible drop in the measure, the nation hopes it will be a success.