For several years the Government of India has been introducing different farm bills. All these bills have one motto behind them and that is to maintain the safety of farmer’s hard work and to increase their profit from it. In the recently launched Farm Bills 2020, the Indian Parliament passed three bills which aim to introduce reforms in the agriculture sector. But, these bills faced strenuous objection by the opposition in both Rajya Sabha and Lok Sabha. In September 2020, Union minister Harsimrat Kaur Badal resigned from her post to protest against the ruling government. According to her these farm bills are anti-farmer and will destroy the agriculture sector. To know about the latest issue, first, we have to understand the concept of farm bills and a few other terms.
What is a Farm Bill?
The farm bill is a set of laws passed once every five years in order to ensure and protect the farmer’s rights. These farm bills always have a tremendous impact on farming livelihoods. These laws also tell us what modifications can be made to increase food production. Amendments in these acts also define how food is grown, and what kinds of foods are grown.
The farm bills set the stage for our food and farm systems as they cover programs ranging from crop insurance to healthy food access for low-income families. Every farm bill aims to make sure that the bill which is going to pass has a long-term benefit for farmers, consumers, and the natural environment. After every five years, the farm bills get updated. The bill passed by the government goes through an extensive process where it is proposed, debated and then signed by the President.
What is the Minimum Support Price (MSP)?
Minimum Support Price (MSP) is the price at which the Government of India purchases some crops from Indian farmers. It is the minimum price, set to support the farmers against any sharp fall in market prices of commodities. MSP is a form of market intervention by the Indian government which protects the farmers from distress sales in case of massive production. If the market price of a commodity falls below the announced minimum price because of the bumper production then government agencies purchase the whole quantity at the announced MSP.
The central government fixes MSP for 23 commodities like:
-Cereals (Paddy, Wheat, Maize, Sorghum, Pearl millet, Barley, Ragi).
-Pulses (Gram, Tur, Moong, Urad, Lentil).
-Oilseed crops (Groundnut, Rapeseed-mustard, Soyabean, Sesamum, Sunflower, Safflower, Niger seed).
-Commercial crops (Copra, Sugarcane, Cotton, Raw jute).
What is Agricultural Produce Market Committee (APMC)?
To eliminate the chances of exploitation of farmers by intermediaries, the government established a marketing board called Agricultural Produce Market Committees (APMC). APMC is the system operating under the state government. The APMC has market places i.e. mandis at various places within the states. Traders who operate within the market require a license. Traders like the wholesalers, retailers, and mall owners do not have the permission to purchase the produce from the farmers directly.
APMC ensures worthy prices and timely payments to the farmers for their produce. The first sale of agricultural produce occurs only at the market yards (mandis) of APMC. But now the 2020 farm bill will allow farmers to sell outside APMC mandis in India.
The Farm Bills 2020:
The Farm Bills 2020 is a combination of three agricultural bills passed by the Indian Parliament in September 2020. In starting, the government passed the 2020 farm bills as a legislative notion. After the permission of the Indian President, this bills became an act in September 2020. Prime Minister referred these bills as a watershed moment that will empower crores of farmers. The laws ensure to bring farmers closer to the markets where they can enter into contracts. These bills are:
Farmers’ Produce Trade and Commerce (Promotion and Facilitation) or FPTC Bill, 2020:
This FPTC bill allows the farmers to sell their produce outside the notified APMC mandis without paying any state taxes or any charge. Earlier some states had stopped farmers from selling their produce anywhere other than these mandis. Middlemen cartels control the prices in APMC’s mandis. These middlemen decide the money in advance before farmers get the MSP. FPTC bill also allows private parties to set up a framework for the electronic trading of agricultural commodities. The bill also promotes a barrier-free inter and intra-state trade of farmers’ produce. It helps farmers to get a better price by reducing marketing/transportation costs.
This bill permits the entry of private corporate and thus will become a demerit for farmers. Some experts and farmers have doubt that due to this bill, farmers may not be able to bargain with the private corporate entities and leading to further exploitation of the farmers. India is still plagued by huge connectivity issues and the cost of transit might far exceed the price of APMCs. So, it cannot be assumed that farmers of northwestern states could sell their produce to the southern states of India. If farmers sell their produce outside registered APMC markets, states will also lose revenue as they won’t be able to collect ‘mandi fees’. If the entire farm trade moves out of mandis then commission agent will also suffer.
Out of three bills, FPTC bill is the main cause of farmers’ protest against the government. There are some doubts relating to this bill and its impacts in the future.
Farmers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020:
In this act buyers and farmers can make a contract in which the buyer assures the price for farmers produce. Farming would be carried out based on the agreement made between the buyers and the producers. The great benefit that farmers receive through this bill is the price assurance even before sowing of crops. Some companies want specified farm produce for their businesses like some five-star hotels grow spices or vegetables on their own to maintain the quality. So, through this act, any firm or company can directly deal with the farmers. They will tell them directly to produce their specialized product and eliminate the involvement of traders to ensure that produce is organic and fresh.
This act will reduce the risk of market unpredictability from farmers to buyers. Farmers can easily access modern technology and better tools. This will help in reducing the cost of marketing and boost the farmer’s income. The negative aspect of this act is that due to the lack of negotiation ability of farmers, big corporations might exploit the farmers through unbalanced contracts. More than 86% of farmers in India are marginal farmers and have very small land area to produce. The agribusiness firms, processors, wholesalers, exporters or large retailers would not like to deal with these marginal farmers. This hampers the productivity of small or marginal farmers.
Parliament of India established the Essential Commodities Act (ECA) in 1955. The act was introduced to restrain inflation. The state government imposed stock limits to restrict the movement of any commodity deemed essential. This act ensures the delivery of certain commodities or products and also helps to discourage hoarding or black marketing of items that would affect the normal life of the people. The ruling government has made amendments in this act in a way which ensures the interests of consumers.
In this bill, regulating stockholding of agricultural foodstuff in situations such as war, famine, extraordinary price rise, and natural calamity consumers can be safeguarded while removing stock limits on trade might be beneficial for farmers eventually. This act aims to remove the fears of private investors of excessive regulatory interference in their business operations. Big companies will have the freedom to stock commodities. Hence, they will have the power to dictate terms to farmers which may lead to fewer prices for the cultivators.
Who is protesting against the farm bills 2020 and why?
When these three farm bills were introduced as ordinances by the government in June, farmers soon started protesting in many parts of North India. Later when the president signed the bills the protests got erupted. Many opposition parties termed the bills ‘corporate-friendly’ and ‘anti-farmer’. The bills have faced strong protests from farmers in states like Punjab, Haryana, and Madhya Pradesh despite COVID-19 restrictions. They are protesting alleging that passing of this 2020 farm bills will hurt their earnings. The protestors imposed a statewide bandh. They blocked the highways and railroads in many places. Farmers carried out ‘Rail Roko’ protests in Amritsar. Over 250 farmer and farm-worker organizations gave the call for the ‘Bharat Band’.
One of the reasons why there is a lot of uproar in the country is that some people argue that government has imposed these laws in an unconstitutional way. These bills affect the state government’s revenues and commissions of the agents. The big loophole of this farm bill is that the government didn’t include the thoughts and voices of farmers while imposing the bills. The farm bill 2020 might bring reform by creating an assisted approach towards privatizing the sector. But, the way this bill was being implemented has created a huge communication gap and developed mistrust between the government and farmers.
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