Agriculture experts say, “BJP’s fallacious fulsome farm bills flog for farmers, foray on farmers, caul of corporate and cauldrons of corporate chant.
By Bibhuti Pati
The controversial farm sector bills that the National Democratic Alliance government has passed in haste during the recently concluded Sept. 2020, Monsoon Session of Parliament are all set to provide big national and international companies a free run and would ultimately lead to the death of farmers particularly small and marginal.
The controversial bills that the government claimed are aimed at transforming agriculture and raising farmer’s incomes by pumping in private investment in this sector have created apprehensive and skepticism among farmers, would actually create private monopolies and drive out small and marginal farmers. With the capital investment pumping in without any regulation and in the absence of a rights-based safety net provided to farmers, the new legislation would allow the big companies to control India’s vast agriculture sector which is the backbone of the country’s economy as it accounts for more than 70 percent of the population.
The Shanta Kumar committee report that was set up by the previous NDA government says 94 percent of farmers in India are dependent on the markets. Only 6 percent of the farmers in the country are able to sell at the guaranteed Minimum Support Price (MSP). Studies have also shown that only some 36 percent of farm produce was sold in the mandi (APMC yards) and the remaining was sold outside to private trade. The question that crops up is, if the markets were so efficient, Indian agriculture shouldn’t have been in the grip of a severe agrarian crisis. In other words, markets failed to prop up farm incomes in India.
The center point of the current debate that has set in motion in the aftermath of the passage of contentious farm bills is the raging battle for retaining the MSP. Although the government has assured farmers that MSP and the regulated APMC mandi will stay, it has allowed purchase by private traders outside the mandi without paying any market fee. It means, for instance, that in Punjab, which has a vast network of APMC markets linked with village link roads, trading inside the mandi will invite 6 percent tax for traders (including rural development fee) but outside the mandi, anyone having a PAN card can buy from farmers directly without paying any tax. Farmers fear that such a system will make the APMC mandi redundant over the years, which in turn means that MSP, too, will go. The fear is not completely unfounded.
What required is to bring a fourth ordinance which makes MSP for all 23 crops a legal right for farmers, ensuring that no trading takes place below the MSP and makes MSP the price below which no contract farming can happen. Since agribusiness companies and the policymakers are claiming that farmers are being misled and they will, in reality, get higher prices, why not then make MSP a legal right and build confidence and trust among the farming community? Corporations and agro-processors can demand graded products for MSP. Otherwise, they may not buy at all or at reduced prices. Where will the small farmer go then?
An attempt made in Bihar in 2006 to throw agriculture to open the market failed to attract private investments and, in the process, failed to provide farmers with higher prices. Then there was excitement all around when Bihar repealed the APMC Act. Economists were upbeat, saying that Bihar will turn out to be the harbinger of a new market-driven revolution in agriculture. It has been 14 years, and we are still waiting for the miracle to happen. A 2019 study of the National Council of Applied Economic Research (NCAER) on ‘the experience of Bihar after the abolition of APMC Act in 2006’, warned: “It is easier to dismantle institutions than to build them. The consequences could be very serious for the farm sector and the farming community.”
The Government argues that farmers are not free to sell anywhere because of a “corrupt and middlemen-infested Agricultural Produce Market Committee (APMC).” Hence, break the APMC and free the farmers. Now corporations and any other person with a PAN card can directly procure products from farmers. Agri-business companies can enter into contracts with them. But what complicated matters were the lack of substance in the Bills, no mention of a guaranteed price for farm pick-ups in case of a bad year or excess yields, and the Government’s cavalier manner of handling the Rajya Sabha, negating debate and passing the Bills by voice vote. This naturally raised more doubts. Indian farmers have had centuries of slavery under the Company Raj. That is precisely the reason behind current countrywide agitation by farmers over the bills.
In the present situation, the farmer is weak, highly indebted, and trapped in the cycle of over-production and low income. His monthly household surplus is under Rs 1,500 per month. This has already been destroyed by COVID-19. The majority of farmers are marginal. This means they only grow enough to feed their families and sell a little surplus to the markets from the village field.
The major problem in procurement is grading. Big companies and agro-processors can demand graded products for MSP and if the gunny bag is ungraded, they may not buy at all, or at a reduced price. This is common practice, which results in huge losses for farmers and food security. There are also serious questions on post-harvest infrastructure and warehousing in rural India. Will the farmers, due to bad storage facilities, make distress sales? The new reforms favor the big farmers and agri-businesses but are detrimental for small and marginal farms that constitute 86.21 percent of our total landholdings.
Another big problem is no small and marginal farmer has access to the Sub-Divisional Magistrate and District Magistrate. How many of them will be able to go to the already over-burdened official to settle trade disputes? Even their journey for justice will become a nightmare given their literacy levels and manipulation by the bigger parties. The companies or traders will not be criminally liable; this is a regressive step favoring big agri-businesses.
It is unclear how the new system will play out in reality. For one, farmers can already sell to private players in many states but what these bills do is offer a national framework. But farmers are mainly concerned that this will eventually lead to the end of wholesale markets and assured prices, leaving 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.
Farmers will feel attracted to these private players, who will offer a better price for the produce. The government mandis will pack up meanwhile and after a few years, these players will start exploiting the farmers. The government has said the mandi system will continue, and they will not withdraw the Minimum Support Price (MSP) they currently offer. But farmers are suspicious. This is a death warrant for small and marginalized farmers. This is aimed at destroying them by handing over agriculture and market to the big corporate.
There is no opposition on giving freedom to the farmer to sell outside the mandi system, but what requires is put in place a mechanism under which the mandi system coexists with the private trading system. The government should bring in a law that they will not withdraw the MSP or the mandi system and also clear its stand on land use as it is a very crucial factor in the Indian context. India still has stringent laws around the sale and use of agricultural land, and high subsidies that protect farmers from market forces.
Since the farmers are the backbone of the country and its economy is by and large based on agriculture, there should have been a thorough discussion in the Parliament and bills relating to the farm sector should be passed through the proper parliamentary procedure and should have been sent to the parliamentary standing committee for a comprehensive discussion. Instead, the government hurriedly pushed the bills without taking all the stake holders in confidence and thereby flouting all parliamentary and democratic norms.
The APMCs set up in the 1960s were originally meant to protect farmers from distress selling by creating a system of notified markets that records all transactions and prices. The new laws, which brings a new contract-farming regime, doesn’t adequately protect the farmer because its section 19 states that “no civil court shall have jurisdiction to entertain any suit or proceedings in respect of any dispute which a Sub-Divisional Authority or the Appellate Authority is empowered by or under this Act to decide”. This bar of jurisdiction will certainly hurt the interests of farmers.
Why a new farm bill is described as a death warrant to the farmers because under new law it’s not mandatory for a company to make a written contract with the farmer for any contract farming. So, even if the company violates the terms of the contract, the farmer cannot prove it.
It does not have any provision to penalize companies that do not register their contracts. For example Last year, Potato farmers from Gujarat witnessed a big issue where PepsiCo attempted to penalize potato farmers for growing the same seed varieties. The farmer organizations finally had to knock on the doors of the court and agitate to get justice.
Bill does not prescribe or specify that the contract price of the crop should be at least equivalent or above the MSP. It means the contractor/companies can pay whatever price they want to the farmer. India’s experience of contract farming has been poor with farmers getting very low rates through contract farming as compared to selling it in government mandis on MSPs.