Farmer’s market


On September 14, as Parliament reconvened for its monsoon session, farmers across Punjab, Uttar Pradesh and Telangana fiercely protested three agriculture-reform bills being tabled by the government. In Punjab, farmers demanded that the legislation (currently in force as ordinances) be immediately repealed. Farmers’ groups say the proposed new laws, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, the Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and the Essential Commodities (Amendment) Bill, will leave them vulnerable to manipulation by the private sector. They say a free (read: unregulated) market will lead to less income security for farmers, and safety nets, such as the MSP (minimum support price) mechanism and regular procurement through APMC (Agricultural Produce and Marketing Committee) mandis—will be compromised.

So fierce was the farmers’ agitation in Punjab that a core group of the Shiromani Akali Dal (SAD), a long-term BJP ally, prevailed on party chief Sukhbir Badal to publicly oppose the Centre on these bills on September 12, two days before the monsoon session was to begin, despite the fact that Harsimrat Badal, his wife, was a member of the Union cabinet. Pressure built up to a point where Harsimrat Badal found it necessary to resign her cabinet position, ‘in protest against anti-farmer ordinances and legislation [and] to stand with farmers as their daughter and sister,’ as she later tweeted. While the SAD stand has no real bearing on the passage of these bills, it has only two members each in the houses of Parliament, the optics of a major protest by an ally will trouble the BJP. The Badals now have to walk a tightrope, having already publicly supported the ordinances, with others like Dushyant Chautala in neighbouring Haryana facing similar problems.

Another complicating factor is that these bills have to be cleared in this session of Parliament, provisionally ending on October 1, or the ordinances will lapse. Though they passed the Lok Sabha on September 17, they face another test in the Rajya Sabha next week. Also, significantly, the marketing season for India’s kharif crop begins as soon as this session of Parliament ends. Opposition leaders like the Congress’s Jairam Ramesh have already made it clear that they oppose the bills. However, putting them on the back foot, on September 14, minister of state for consumer affairs, food and public distribution Raosaheb Danve said the decision to reform agricultural laws had come from the recommendations of a committee that included the chief ministers of Punjab, Haryana, Odisha, Maharashtra, Arunachal Pradesh and Uttar Pradesh. This put Punjab CM Amarinder Singh in a bit of a spot, on August 28, he had a resolution rejecting the ordinances passed in the Punjab assembly.

Why Farmers Worry

A most contentious issue is price security. Farmer groups say the bills allow corporate capital into the market without guarantees of returns on crops. Leaving farmers and buyers free to negotiate ‘open market’ prices, the subtext of the bill(s) is that these prices need not be linked to government-administered MSPs. There are two sides to this debate. The corporate argument is that quality will be rewarded. Sanjiv Puri, chairman and MD of ITC, one of the country’s largest food processing firms, says this is an opportunity for farmers and corporates to collaborate on productivity, better pay for better crop. Farmers say the problem is that corporates have too much power to set prices. Says Jang Bahadur Sangha, a leading farmer from Punjab and one of India’s largest growers of potato and maize: “It is almost impossible to get fair prices from corporates. Farmers don’t have the financial means to negotiate remunerative prices. It will take time to develop the skills needed to break up corporate cartels, to get the best prices for their products. The history of corporate entry into the farming sector is not a happy one for farmers.” So, farmers’ groups insist that ‘open market’ prices must be legally pegged to MSPs, to protect their interests vis-à-vis corporates.

Another major issue relates to the hearing and settlement of disputes. Under the proposed new laws, states are to constitute a ‘conciliation board’, with district collectors as the final appellate authority. “This means they can’t move court [in case of a dispute],” says Congress MP Pratap Singh Bajwa. This provision is even opposed by RSS affiliates like the Bharatiya Kisan Sangh (BKS). “There is a need to protect farmers. [They should not be] left alone to deal with corporate houses, without price guarantees and [with a] faulty dispute settlement mechanism,” says BKS general secretary Badri Narayan Chaudhary. In early August, top BJP leadership, including home minister Amit Shah, agriculture and farmers’ welfare minister Narendra Tomar and MSME minister Nitin Gadkari were to meet BKS and other RSS affiliates to discuss these issues, but that meeting was cancelled after home minister Shah tested Covid +ve and had to be hospitalised.

Farmer groups also fear that the new bills will lead to the ultimate abolition of the MSP mechanism as well as assured procurement via APMCs. At the very least, they fear these safeguard mechanisms will get so diluted in the proposed new dispensation as to become practically ineffective. The ties that bind farmers and APMC procurement agents are decades old, they are an informal information and support structure, besides being a source of credit to many farmers. Agriculture minister Tomar has laboured the point that the new farm markets will only add to the existing APMC network: “I have repeatedly said this will supplement the existing procurement system, not replace it.” Government agencies like the FCI (Food Corporation of India) will continue buying from APMCs, he says.

It is not only farmer groups that are worried; state governments, too, fear the loss of revenue and jurisdiction. At the heart of this matter is a technicality, the Centre says these bills regulate ‘trade’, not ‘marketing’ of agricultural commodities. Technically, trade is a concurrent list subject, while agriculture marketing is a state prerogative. Under the new law, states cannot levy any market fees, cesses or levies on farmers, traders or electronic trading platforms doing business under the new system. For states like Punjab, Haryana, Chhattisgarh, Uttar Pradesh and Madhya Pradesh, which tax APMC transactions, this jeopardises an estimated Rs 12,000 crore of revenue.

Face to face: A farmers’ protest in Haryana’s Hisar

The Road Ahead

The current protests notwithstanding, India’s agriculture sector, its policies and markets do need reforms. Just before the lockdown, the governments of Punjab and Haryana permitted private players to set up mandis; the governments of Uttar Pradesh, Gujarat and Madhya Pradesh followed suit. Maharashtra, Karnataka and Tamil Nadu already had similar provisions. Under the new law, anyone with a PAN card can purchase directly from farmers. This allows food processing companies and retailers direct access to farmers and their produce. The new law also allows corporates to enter long-term contracts with farmers, up to a period of five years. The Centre has also been pushing state governments to adopt the model Agriculture Produce and Livestock Marketing Act, 2017, the model Agriculture Produce and Livestock Contract Farming Act, 2018 and the model Agricultural Land Leasing Act, 2016. Contract farming has so far remained a pipe-dream in India, since a large chunk of the country’s 200 million farmers do not own the land they farm, and there are no clear laws for the leasing of land for big operations. “There is no going back on these reforms,” says noted agriculture economist Tajamul Haque. “But the issues farmer groups are raising do need to be addressed; pricing is a critical one. Leaving that to negotiations between farmers and corporates will be unfair to farmers.”

As of September 17, the three bills had been passed by the Lok Sabha, and were to be voted on again in the Rajya Sabha the following week. While the Government looks on course to win the legislative battle, getting stakeholders on board with the reforms will be a stern test of its marketing skills.



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