Agri Bill: A reform or Anti-Farmer?

Agri Bill/Farm Bill, 2020

Around 12,000 years ago, our ancestors must have seen and done something, which may have surprised them too. This was the Neolithic period when humans first saw the plant beings germinated from seed and since then it has been going on to date. We called it “Farming” or “Agriculture”. The understanding of seeds in one of the greatest understandings in human civilization, such as the understanding of fire and the discovery of the wheel.

Time changed, the country changed, farming also changed, but how much? The issue of the betterment of farmers is in every government’s manifesto. Every Prime Minister, Chief Minister wants the progress of all farmers, to make new policies for their development, but have the farmers really developed?

BJP’s oldest ally, the Shiromani Akali Dal, is fighting each other and that’s why Harshimrat Kaur Badal relinquished his ministerial post. Despite the continuous agitation by farmers in various states including Punjab and Haryana, the agricultural bill was passed in both houses of the Parliament. Now, The President also signed it and made it act.

The government implemented these acts through an ordinance on 5th June 2020.

What is an Ordinance?

On the recommendation of the Cabinet, the ordinance is a type of presidential order issued by the President which is similar to the law passed by Parliament, but only when the Parliament is not running. It is mandatory for Parliament to pass the ordinance within 6 weeks of the commencement of the Parliament session, which was done by the Narendra Modi government. The controversy started from here. A group of farmers have protested against the Act since 14 May, when the bill was passed by the Lok Sabha.

Farmers Protesting against Agri Bill 2020

What are these three new laws, what is the logic in its favor, and what is in its opposition?

These three new Acts are:

1. The Essential Commodities (Amendment) Act, 2020
2. Farmers’ agreement on Price Assurance and Farm Services Act, 2020 (Empowerment and Protection Act, 2020 i.e. Contract Farming Act)
3. Farmers’ Produce Trade and Commerce Act, 2020 (Promotion and Facilitation Act, 2020)

Essential Commodities

Essential Commodities are those items that are required by us on the day to day basis. Let’s understand with the latest example:

In COVID-19 Pandemic, we require two essential items to save ourselves from this fatal disease:

1. Face Mask
2. Hand Sanitizers

From 13 March 2020, in view of the outbreak of COVID-19 by the Government of India, these items were declared as essential commodities.

What is the Essential Commodities Act?

This is the Act of 1955. The government controls the production, sale, price, supply, distribution of all items that come under this Act. The government has the authority to fix the maximum retail price (MRP) of package items. There is a provision for punishment for selling things at a higher price than the MRP. The Act also said that no one can store more than a limited amount of essential items, there was also a provision of punishment for being caught. The purpose of bringing this Act was to provide essential things easily to the people at a reasonable price.

Source: Twitter

Essential Commodities Amendment Act, 2020

The Essential Commodities Amendment Bill was passed from the Lok Sabha on May 14, 2020.

The main points of this act are:

• According to this act, Essential commodities like cereals, pulses, edible oil, onions, and potatoes are removed from the list of essential commodities in India.
• Anyone can now store these above items as much as they want. Only in some situation, it is declared as illegal to store these items in:
• War
• Famine
• Extraordinary Price Rise
• Natural Calamity

Official Announcement of Essential Commodities Act 2020 approval on Twitter

Merits of this Act

These agricultural foods are not under the control of the government and farmers will be able to fix their own prices and sell them. However, the government will review it from time to time. Strict rules can be imposed if needed.

Demerits of this Act

Artificial fluctuations and low prices for farmers after harvest can be seen due to Unlimited stocking. 

Let’s understand Artificial Fluctuations with a real scenario. Suppose an institutional buyer bought a large quantity of grain, at a cheap price and stored it. When the farmer will go to that institutional buyer after harvesting the crops again in the next season then he may refuse to give the fair price to the farmer for his farm produce as he has an abundant amount of grain stored already.

Farmers’ agreement on Price Assurance and Farm Services Act, 2020 (Farmers’ Empowerment and Protection Agreement i.e. Contract Farming Act, 2020)

The main points of this act are:

• It provides a National framework for Contracts Farming through an agreement between a farmer and a buyer before the production. In short, it is “Price before Farming” or Price assurance to farmers even before sowing of crops.
• If open market rates fall drastically then this act covers the minimum guaranteed price. In short, it gives protection agreements on price to the farmers.
• Modern technology, better seeds, and other inputs can be accessed by farmers through this act.
• In the case of dispute, there will be a reconciliation process with the Conciliation Board to settle the dispute. There will be a three-level dispute settlement mechanisms-
• The Conciliation Board
• Sub - Divisional Magistrate
• Appellate Authority

Source: Twitter

Merits of this Act

• If a farmer has made a contract, he will get the contracted price of his crop, the fluctuations of the market prices will not affect the farmers.
• The produce will be picked up directly from the farm by the purchasing buyer after signing a contract. Farmers will not have to search for buyers/traders.

Demerits of this Act

• In case of dispute, Big companies may get an advantage over the group of small farmers.

What is the Agricultural Produce Market Committee (APMC)

APMCs came into existence through APMC Act in the 1950s in India. APMC is a type of open market where farmers go to sell their produce. This is also known as “Krishi mandis or Sarkari mandis” especially in north India. There are approx. 7000 APMCs all over India. After harvesting, farmers go to APMC mandis to sell their produce. Each APMC had licensed middlemen (men between the institutional buyer and the farmer, also known as Artiyas especially in Punjab, Haryana, and in North India) who would buy grain from farmers at prices that were set by the auction before selling to institutional buyers i.e. retailers and big traders. Sometimes these institutional buyers are referred to as “Bicholiyas” especially in Punjab, Haryana, and in North India. These Bicholiyas buy grain from the APMC market and sell it to many factories and big companies e.t.c. to make a profit.

An APMC Market or Mandi

Now, The government says that due to these middlemen (Artiyas and Bicholiyas), the farmers don’t get the fair and remunerative prices for their produce. The government is being repeatedly accused of shutting down the APMC market. The reason for saying that the government is promoting private markets (private mandis), if the entire sale and purchase are done from the private markets, then why would the government spend money on APMC markets to maintain it?

What is Minimum Support Price (MSP)

MSP is the minimum amount at which government agencies buy grain from farmers. The government fixes the minimum cost on 22 crops like wheat, rice, etc and government agencies buy grain from farmers at the same rate. The price is fixed so that farmers get protection at the cost of their crops. There should be no loss to the farmer due to fluctuations in market prices. In APMC markets, the farmer gets less price than the MSP, the MSP is given only to farmers in government procurement, and it has been done in every government till date, be it the UPA government or the NDA government. But the bitter truth is that on MSP, only 6% of the farmers in the entire country are able to sell their crop to the government, for the remaining 94% farmers it does not matter. The government purchases food grains and stores them in FCI godowns. Reports of grain rotting continuously came from FCI godowns, but the government collects it, to distribute it to the poor.

Food Corporation of India (FCI) godowns

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

The main points of this facilitation bill 2020 are:

• This allows the farmers to sell their produce to intra-state and inter-state beyond the APMC (Agricultural Produce Market Committee) markets and physical premises of another market.
• According to this act, the Electronic trade of scheduled farmers' produce is allowed in the farmers’ area.
• According to this act, Charging market fees, cess, or levy to trade outside the APMC markets are restricted for the state governments.
• Farmers have the option to bypass the middlemen (Artiyas & Bicholiyas) and sell their produce directly to institutional buyers at the prices to be agreed between them.

Source: Twitter

Merits of this Act

• On paper, this scheme is good as there is no one between the farmer and the buyer. So, all profit of the deal goes to the farmer.

Demerits of this Act

• The groups of farmers are worried because this act exposes them to corporates who have more bargaining power and resources than the small or marginal farmers.
• 85% of farmers own less than 2 hectares of land-difficult for them to negotiate directly with large-scale buyers.

We consume grains with great fervor, but no one knows the hard work of farmers behind this grain, according to a report of NABARD (National Bank For Agriculture And Rural Development), it has been said that the income of the farmer has increased by ₹2,505 per month only in the last 4 years. While a teacher's income is increased at a rate of 7% every year. It was the farmers who strengthened our economy by 3.4 percent even during this COVID-19 pandemic, otherwise this year our GDP would cross -28% (which is recorded -23.9% this year). To say, there are many schemes for the farmers, but those schemes do not seem to have a positive impact on the lives of the farmers.

Source: google.com, downtoearth.org.in

This bill act has some good things as well as a lot of flaws in it that need to be fixed. The government is trying to provide direct benefits to the farmers by removing the commission of the middleman (Artiyas and Bicholiyas) of the APMC market, it can be considered a good move, but if there is no work in APMC markets, it will be closed. After which the farmers will have to resort to private markets. The farmers fear that if the APMC markets are closed, then the arbitrariness of private markets will increase.

We can take the example of “Reliance Jio”. Initially, the company provided very good plans to increase the number of customers for either free or at a very low price for almost a year. During this period, many private telecom companies (Telenor, Aircel, Vodafone, Idea) and government company BSNL, either went bankrupt or reached the verge of bankruptcy. Today all the plans of Reliance Jio have become expensive and the customer has no other option left. Telecom can be an important part of our life, but the income of a farmer which he earns through his produce is his life. His livelihood depends on it. This is why many farmers take steps like suicide because they do not get as much income as they are in debt.

        Some Suggestions:

• The government should invest more than private companies in the agriculture sector.
• MSP should be made a legal authority. Farmers should at least have the right to sell their crops at MSP.
• APMC is not required to be removed but needs to be improved.

        Source and References:

• https://pib.gov.in/PressReleasePage.aspx?PRID=1657657
• https://pib.gov.in/PressReleasePage.aspx?PRID=1656929

What’s your prospect on this topic, please do mention in the comment box.

Thank You!