Farm bills are seen by farmers to deliver freedom to private capital Editorial 27th Sep’20 FinancialExpress

Farm bills passed by the Parliament:

  • Three bills with huge impact on Indian agriculture, including two farm bills and one concerning the stocking of agriculture produce, were passed by the Parliament.
  • These are:
    • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 (FPTC)
    • The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 (FAPAFS)
    • The Essential Commodities (Amendment) Bill, 2020 (ECA)

One of the primary aims of the Bills is to free farmers from APMCs:

  • Most farmers would agree that the functioning of the Agricultural Produce Marketing Committee (APMC) mandis is inefficient, opaque, politicised and often controlled by cartels.
  • The government says that the Bills will usher in historic reforms, and will free the farmers from the exploitative APMC mandis and from the middlemen who charge commission from trade in these mandis.

Government says the new reforms were necessary as all efforts to reform APMCs failed:

  • The union governments have been trying for many years to reform APMCs.
  • Three different model APMC acts have been proposed by previous governments (in 2003, 2007, and 2013) and in 2017 by the current government.
  • The proposals were acted upon in different forms by state governments.
  • Some states have enacted reforms allowing for establishment of private markets, while some have enabled direct purchase of agricultural produce from agriculturists by processor/bulk buyer/bulk retailer/exporter.
  • However, none of them resulted in any meaningful reforms of APMCs.

Protests happening against the Bills:

  • While there is praise from some circles to these bills, farmer protests were witnessed in the agrarian states like Punjab and Haryana which supply bulk of the government’s MSP procurement. 

Some farmers are in favour of mandis:

  • Those farmers who are protesting against the bills want the primacy of the mandis in agricultural trade restored primarily because they see APMC mandis as essential part of the agricultural trading ecosystem.
  • While they have some issues with the functioning and administration of mandis, they also share a symbiotic relationship with the middlemen and the mandis extending beyond matters of transaction in agricultural produce.
  • For instance, the middlemen are also a source of information, inputs, and sometimes credit without collateral.

Some are angered at how the bills have been pushed by the centre on states and farmers:

  • There is also anger against the bills over the manner in which the bills were thrust upon the farming community.
  • Protesters say that neither the farmers’ organisations, nor the state governments have been consulted. 
  • Critics say the current reforms completely bypass the state governments and weaken their ability to regulate agricultural markets even though it is a state subject.

Some critics say bypassing APMCs will create unregulated trade:

  • Unlike earlier measures where the focus was on reforming the APMC mandis while allowing for greater private market access and participation, the current FTPC bill bypasses the APMC altogether.
  • This creates a separate structure of trading. Critics say that the absence of regulation and exemption from mandi fees creates a dual market structure.
  • They say this is not only inefficient but will also encourage unregulated trade which could be detrimental to providing market access to farmers for better price discovery and assured prices.

Some fear the takeover of farming by private sector:

  • Some critics say that the FTPC Bill is not about delivering on the promise of freedom to farmers but freedom to private capital to purchase agricultural produce at cheaper prices and without any regulation or oversight by the government.
  • There are fears that this could eventually lead to shifting of trade from regulated APMC mandis to private markets without any commitment to investment in infrastructure and regulation from government.
  • With unequal and differentiated terms of engagement, the APMCs could first decline and soon disappear.
  • These fears are compounded by the contract farming bill and amendments in the essential commodities act.

There are fears in some states that MSP regime could end:

  • With declining public investment in agriculture (in real terms) and rising input costs and declining subsidy, farmers in some states with high government procurement fear the loss of state support in the form of the Minimum Support Price (MSP) regime.
    • Note: MSP based procurement did not benefit the majority of farmers and only a few states like Punjab and Haryana contributed to the procurement operations of the FCI. Even in those states, its effectiveness was only in two crops, wheat and paddy.
  • These states are calling for a commitment from the government on maintaining state support to the agricultural sector, especially regarding MSP.

Meanwhile, government policies towards international agri trade remain haphazard:

  • Even while enacting these reforms and promising greater freedom to farmers, the government has banned the export of onions and reduced, increased and again reduced import duty on masur in a matter of three months.
  • This shows that while the government promises to free agriculture trade in India, there is still a long way to go in having a predictable regime for international agriculture trade.

Conclusion:

  • The last three years have seen a collapse in prices of major agricultural products.
  • Amidst the economic slowdown, it remains to be seen whether the government’s promise of a bumper increase in agricultural prices through the free market regime being brought in through these bills succeeds.

Importance:

GS Paper III: Indian Economy

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s