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Farm Bills 2020: The unravelling of the present7 min read

October 17, 2020 5 min read


Farm Bills 2020: The unravelling of the present7 min read

Reading Time: 5 minutes

In the previous article, The Manipal Journal outlined the history of agricultural development and reform in independent India and the origins of the Minimum Support Price (MSP) and now widely debated Agricultural Produce Market Committees (APMCs).

The structure of the agricultural sector was said to be in need of reform and this view has been held very strongly by the Modi government. A unified agricultural market was even stated. In a letter to chief ministers in 2018, Prime Minister Narendra Modi said, “It is imperative to swiftly undertake market reforms of our decades old and restricted agriculture produce and marketing committee (APMC) architecture.” Many states ruled by the BJP including Madhya Pradesh and Gujarat had already enacted reforms on the APMC (as it still remains state-controlled). 

To make headway towards this, it took advantage of the COVID-19 crisis, and included the reforms within the stimulus package announced in May. In the recent monsoon session of the Parliament, the three Bills that would make these reforms law became the fulcrum of dramatic showdowns and protests inside and outside the Parliament. But what is in the essence of these Bills in the first place?

Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020:

Earlier, farmers could legally trade in state-organised APMC yards. With the passing of this Bill, they are also allowed to trade outside these areas, allowing them to sell to private buyers. State governments are also prohibited from imposing a fee on these “outside trades”.

Essential Commodities (Amendment) Bill, 2020:

This four-page Bill introduces an amendment in Section 3 of the Essential Commodities Act, 1955. With this amendment going into effect, it abolishes the central government’s “control production, supply, distribution, etc, of essential commodities” except in extraordinary circumstances such as inflation, war, famine or natural calamities. These “essential commodities include vital food crops such as cereals, pulses, oilseed and potatoes.

The Bill also elaborates that stock limits may be imposed only under the circumstance of price rise— if the price of horticultural produce increases by 100 percent or the price of non-perishable agricultural produce increases by 50 percent.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020

This Ordinance sets a framework for an agreement between a farmer and a private buyer before the start of production. The minimum period for this agreement must be one crop cycle and the maximum is set at five years unless the crop has a production cycle longer than five years. It also mandates that the agreement includes the method of price determination for the produce and the final price of the produce. For crops with varying prices, a minimum guaranteed price must be set and other additional amounts must be mentioned. 

The first Bill, commonly known as the APMC Bypass Bill makes no mention of the MSP, and this became the basis of concern for many protesting farmers. Agriculture Minister Narendra Singh Tomar argued that the MSP has nothing to do with the contents of the bill. In an interview with the Indian Express, he also pointed out that the MSP had never been and still is not part of the law. As mentioned by Tomar, despite the history of the MSP, it has always remained only a prerogative of government decision making. There is no law enforcing its implementation. Therefore, outside of the APMC mandis, traders are not obligated to sell or buy grains and crops at the MSP.

The main point of contention with the second Bill stated by the Opposition is that the amendment will only benefit hoarders and middlemen. With the removal of government control on essential supplies, middlemen will profit the most out of hoarding and monopolising supply of these commodities in the market.

It is feared that farmers lack the power to bargain with big companies, and with the advent of the third Bill, they may enter into contracts with and thus sign an agreement that puts them at a disadvantage.

The Bills garnered bitter opposition in the Parliament. Two of the three bills were then hurriedly passed in a dubious and still unclear vote on September 20. The Opposition claimed that the Deputy Chairman of the Rajya Sabha, Harivansh Narayan Singh, refused to conduct a division of a voice vote after they questioned its result.

The proceedings even took a turn for chaos on September 22 when eight Members of Parliament (MP) in the Rajya Sabha were suspended for “unruly behaviour” for protesting against the Chairman of the Rajya Sabha, Venkiah Naidu. The eight MPs refused to leave causing multiple adjournments. They staged a dharna outside the Parliament building and stayed through the night. Multiple MPs and leaders from opposition parties came to their protesting spot by the Mahatma Gandhi statue to show solidarity. 18 political parties also banded up and wrote to President Ram Nath Kovind, pleading that he refuse to give assent to these bills until they could have an audience with him and redress their concerns. Yet, despite the heavy opposition, the President signed these three Bills into law on September 27.

Various farmer organisations have also been protesting the bills across the country. These protests have been clamorous in Haryana and Punjab. Opposition leader Rahul Gandhi carried out a kisan bachao rally from Patiala in Punjab to Kurukshetra in Haryana, which was greeted with rebuttals from the Centre and a lukewarm response from the protesting farmers. There were also calls for bandhs across the nation which turned out to be futile except for one in Karnataka.

In Karnataka, which was one of the first states to enact APMC reforms after the Bills were made law, pro-farmer organisations protested in Bengaluru. The state government not only made amendments to their APMC law, but they also amended the Karnataka Law Reforms Act to end restrictions that allowed only farmers to purchase agricultural land. 

Deregulation is also a process that requires a lot of scrutiny to ensure private players don’t exploit farmers and monopolise the entire market. Some also argue that it is far-fetched to assume that deregulation will allow the small and marginal farmers to grow. The example taken over and over for this is the case of deregulation in Bihar in 2006. Corporates monopolised the trade of maize. But they chose to buy only from aggregators and large farmers and hence, the marginal farmers saw little change in their condition and continued to sell to illegal middlemen outside of the APMC. 

Speaking to The Wire, P Sainath, the founder-editor of the People’s Archive of Rural India (PARI) acknowledged that the APMC set-up is a highly flawed one. But when the reins are handed over to the corporate sector, he believes that the farmers are exploited and lose most of their income. He presented the example of milk farmers in Maharashtra, whose earnings were halved during the lockdown by corporates controlling the milk trade as there were no regulations. “There was no APMC holding the farmer prisoner, there was no APMC depressing this price. The APMCs are extremely flawed structures, that is an entirely different conversation. But, here is this transaction, done entirely in the private space, where the farmer has lost almost 50% income, from Rs 30 (to about Rs 17),” he said.

On October 14, the Centre invited 31 farmer organisations for talks in an attempt to reach a truce with the protesting farmers. However, the representatives reportedly walked out of the meeting citing the absence of the Agriculture Minister Narendra Singh Tomar and the unresponsiveness of the Agriculture Secretary.

There is also a reported perception and consistency gap with how the government is implementing the reforms. Immediately after these Bills were passed, there was a rise in the price of onions which led to a ban on onion exports. Experts believe instances like this lead to farmers not getting a sense of how the bills are meant to be farmer specific, and to counter this there needs to be an array of policies to protect farmer interests and consumer needs. The reforms to the existing APMC structure has been hailed by many academicians as a long-needed action against the uneven and partial reforms in various states of the country. But, some like Mekhala Krishnamurthy, (a Senior Fellow at the Centre for Policy Research and Associate Professor of Sociology and Anthropology at Ashoka University), have also argued that a uniform law has never been the answer to the “distinct and diverse agricultural realities on the ground”.

While the government’s viewpoint that farmers will have the chance to sell their grains at a better and higher price is well-intended, and reforms to the worn-out APMC system and the loopholes of the Essential Commodities Act is long incoming, Krishnamurthy believes the right implementation of the laws and location-specific improvements is expected to see further developments.


Read Part 1 of the explainer- Farm Bills 2020: The history behind agricultural reforms in India

Featured Image Courtesy: Adnan Abidi/Reuters

Edited by: Vibha B Madhava