Thrissur Lok Sabha MP TN Prathapan has challenged the validity of the Farmers (Empowerment and Protection) Agreement on Price Assurance, and Farm Services Act, 2020. He seeks a declaration of the provisions of the Agreement on Price and the Farm Services Act, along with the related notifications, as illegal, unconstitutional, and void. He challenged on the grounds that these pieces of legislation have violated of Article 14, 15 and 21 of the Constitution of India and accordingly liable to be struck down as unconstitutional, illegal and void. It is contended that the Bills were passed hastily by Parliament, with not enough or adequate discussion on them. A bare reading of its provisions will reveal that it is not a progressive piece of legislation.
Sonia Gandhi has advised Congress-ruled states to explore the possibilities to pass laws in their respective states under Article 254(2) of the Constitution which allows the state legislatures to pass a law to negate the Anti-Agriculture Central laws encroaching upon state’s jurisdiction under the Constitution.
Describing the logic behind Mrs Gandhi’s advice, Jairam Ramesh said, “As Finance Minister Arun Jaitley got states to resort to Article 254(2) of the Constitution to override the provisions of the 2013 Land Acquisition law, a law he had fully supported as Leader of Opposition in Rajya Sabha. So States should now follow the same advice to undo the damage caused by the farm bills that have become Acts. Ramesh quoted the relevant provision of the Constitution under which the late FM asked states to override the provisions of the 2013 land acquisition bill.
The Central government has discretion, even in extraordinary circumstances to exercise regulation as can be understood from the use of “may”. Furthermore, “extraordinary circumstances” have not been clearly defined which “may” include famine, war, natural calamities of a grave nature and extraordinary price rise.
Such ambiguity in legislative drafting raises questions regarding the intention of the statute. It is pertinent here to refer to the recent ban on the export of onions amid the increasing price of onions. Such a decision casts doubt on the implementation of the Bill.
Social, economic, political, and cultural contexts of each state will determine the implications these Farmer Bills have on the farmers and states. Implementation of the reforms will play a major role in determining the efficacy and benefits of the reforms. State supervision will be necessary for protecting the interests of the farmers as well as the consumers.
Agriculture in India is subject to the twin problems of floods and drought simultaneously and in such circumstances, there is a necessity to protect the income of the farmers. Legislations protecting farmers from crop damage and loss caused by drought, floods, and cyclones and ensuring income in such calamities through state support are imperative in India.
The critical nature of remunerative prices for farmers must be realized and a statutory framework must be developed for guaranteeing the same.
The Commission for Agricultural Costs and Prices in its report had highlighted the role of government intervention for ensuring remunerative prices to farmers and suggested to make MSP a legal right.
The Union government has tried to alleviate the fears of the farmers by verbally guaranteeing the continuation of the MSP mechanism; however, it has been hesitant to add such guarantees to the text of the Farmer Bills.
Giving legal backing to MSP as a right of the farmers may go a long way in instilling trust in government policies. The Swaminathan Committee had advocated for increasing the MSP at 50% higher than the cost of production.
The aim of reforms, therefore, should be widening the scope of MSP and making it a legal right rather than making it redundant through new policies, which has been a continuous demand of the farmers for years.
It is also suggested that instead of slowly and indirectly destroying the APMC regime, what is required is strengthening of the existing system. Reforms should be introduced to improve APMC infrastructure as the small and marginal farmers, incapable of attracting corporate traders, turn to mandis as their last resort.
Better road connectivity, transport facilities, climate-controlled storage facilities, electricity supply are also prerequisites for drastic improvements in agriculture. Agriculture based on market forces is futile without realistic investment in agriculture infrastructure. Additionally, the majority of farmers cannot contribute meaningfully to market-driven agriculture as their landholdings and outputs are too small.
There is a need to reform the existing APMC markets and sub-markets, rather than dismantling it indirectly, and also for the creation of new markets so as to reduce the burden on existing ones.
In a state like Punjab where the issue of farmer suicides is continuously on the rise, state intervention gains importance to prevent exploitation by private entities, assurance of a fair price for their produce and reducing indebtedness.
One of the most important steps that need to be taken is a discussion with the concerned stakeholders. Time-bound, wide-scale consultations to address all concerns regarding the Farmer Bills, is a necessary step to conform to the spirit of democracy and cooperative federalism.
Climate change and pollution have also negatively impacted crop health and it is estimated that production of wheat, paddy, maize, cotton and potato and other crops is likely to be adversely affected.
Wheat production is likely to fall by 23% by 2050 in the absence of proper intervention. 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.
Immediate action is required to be taken by the government to encourage organic farming, give incentives and subsidies for adopting sustainable agricultural practices.
The basis for evaluating a policy must be its urgency and importance. Removing hunger among farmers, pulling them out of debt traps, ensuring fair remuneration for food produce, and maintaining the ecological balance are the most pressing issues at present instead of introducing new plans for attracting new investors. Selling the interest of the farmers to corporate is not likely to make India ‘Atmanirbhar’.
Agrarian distress has been persistent in India due to a number of factors including low productivity, lack of storage and transport facilities, heavy indebtedness and fragmented landholdings. Subjecting the fate of farmers to the vagaries of market forces cannot be the only way to uplift the agriculture sector.
Experience from other nations has revealed that corporatization of agriculture could further instigate the depression of the farmers. Replacement of one flawed model with another flawed model is not the solution.
The agriculture sector requires stability, whereas the new model will only introduce more price volatility by introducing market forces. Even in the existing system, as it will be in the new system, the farmer never gets to decide the price of his farm produce; it is decided by another person for him and is subject to extreme fluctuations. There is an urgent need to address the apprehension of the concerned stakeholders and to reassess of the existing policies.
The farmers are apprehensive about not getting the government-promised Minimum Support Price (MSP) for their produce and are also concerned about the upper hand that huge agri-business companies and big retailers would have during negotiations. It may actually lead to the reduction of benefits accruing to small farmers, because these big companies will dictate the price at later stages.
But farmers are concerned that this will eventually lead to the end of wholesale markets as they have known it for ages, and also the end of assured prices. That will leave them with no back-up option. That is, if they are not satisfied with the price offered by a private buyer, they cannot return to the mandi or use it as a bargaining chip during negotiations, once the mandis are abolished by the state governments, because the existence of empty mandis will not serve any purpose to the government.
The government has said the mandi system will continue, and they will not withdraw the Minimum Support Price (MSP) they currently offer either. But farmers are suspicious. Perhaps the government needs to come out with a written law that they will not withdraw the MSP or the mandi system. These pros and cons vary from one farmer to another and person to person. Besides, this Bill could mean states will lose ‘commissions’ and ‘mandi fees’.
Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 provides a framework for farmers to engage in contract farming, i.e. farming as per an agreement with the buyer before sowing, under which farmer promises to sell his produce to the buyer at a pre-determined price.
The bill allows private buyers to hoard essential commodities for future sales, which only government-authorized agents could do earlier; and they outline rules for contract farming, where farmers tailor their production to suit a specific buyer’s demand. One of the biggest changes is that farmers will be allowed to sell their produce at a market price directly to private players like agricultural businesses, supermarket chains and online grocers. Most Indian farmers currently sell the majority of their produce at government-controlled wholesale markets or mandis at assured floor prices.
Essential Commodities Amendment Bill 2020 makes provisions for the removal of items such as cereals and pulses from the list of essential commodities and attracts foreign direct investment in the sector. Some sections have raised the fear that this will compromise on food security. The bill is aimed at legitimizing what would otherwise be called as hoarding, without the government even having the capability of knowing which stock of which grain exists with whom. Even the place and time of such stock would not be known.
PRS Legislative Research, a non-government independent body that deals with matters relating to Parliamentary procedure says APMCs were set up with the objective of ensuring fair trade between buyers and sellers for effective price discovery of farmers ’produce. APMC can regulate the trade of farmers produce by providing licenses to buyers, commission agents and private market; levy market fees on such trade and provide necessary infrastructure within their markets to facilitate trade. However, the dismantling of the monopoly of APMCs is a sign of ending the assured procurement of food grains at the minimum support price
The new legislations are major structural changes brought in by the Narendra Modi government in country’s vast and fragmented farm sector. So far protests by farmers have largely concentrated in north-western India, in Punjab and Haryana, but the legislations are likely to have far reaching impact over the next few years across states. The government hopes competitive markets and higher private investments in the food supply chain will improve farm-gate prices
Firstly, over the next few weeks, freshly harvested kharif crops will start arriving in the markets. The number to watch out for is by what extent arrivals in existing mandis drop. For instance, if arrivals drop significantly by say, over 25% compared to last October, this would mean trade is shifting out of APMC yards to take advantage of the zero taxes and fees provision of the new regime. But without regulatory oversight and monitoring of transactions outside APMC mandis it remains unclear how the welfare impact on farmers will be quantified. If arrivals show no change year on year, that would mean a status quo for now.
It could be concluded that reforms listed in the farm bills will weaken rules around sale, pricing and storage of farm produce – rules that have protected India’s farmers from the free market for decade will no longer be there to protect them and it would eventually destroy India’s vast agriculture sector that has been a back-bone of the country’s economy.
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