Article

Farm Laws: Revolutionary Reforms or Corporate Sell out?

Author: AMAN AWASTHI

Keywords-  Agriculture, Farmer, Produce Market, Government, MANDI. 

The Government introduced Agriculture Produce Market Committees ACT. This act says that farmers can’t sell their products to the buyer nor anyone can directly purchase from all of them the sale is going to be done through the MANDI which was established through the Agriculture Produce Market Committees ACT and therefore the MANDI’S are going to be run by the state governments.

Introduction 

This government decided to go ahead with these farm-related bills dividing farmers now some call it anti farmers others call it the first step towards farmers’ financial freedom and liberalization. Some Critics say that like the D licensing of industry in 1991 because you are giving a better choice and opening up the markets where the processors and the farmers or exporters and the farmers or retailers and the farmers can join together so the intermediation cost is likely to come down. These two parts of this game one is the politics part because some states are upset that their MANDI fee and all those revenues are likely to decrease. It reminds me of Indian airlines times when there was only one airline and one of monopoly and could be high priced and lower quality and when you create competition and create five more airlines as a country then the consumer gains so the farmers should gain out of this and a few others things need to be fixed but first, the legal framework has to allow the competition and I think these ordinances in that direction. I am saying that the government just does De- licensing agriculture finally like the De-licensing industry in 1991. They are not going to lose monopoly or procurement as such because those funds you know you are not abolishing Agriculture Produce Market committees you are not abolishing the MANDI system and the procurement system so for those who want to sell to the government they will keep going to the Agriculture Produce Market Committees markets but I will give you an example you know Punjab is in the forefront of opposing deaths what is the reason wheat and rice which is their main crop it all goes for the central government literally they used to 14 and a half percent taxes fee on top of that before the GST reform came after the GST still it is eight and a half percent on and it is a center FCI that has to pay to the state and the commission the SAS and MANDI Fee and all that their arguments is we use that money for building infrastructure and everyone other thing, on the other hand, it increases the intermediation cost so no you recognize roller flour mills in Punjab want to bring wheat from Uttar Pradesh rather than buy it from Punjab because they say if we pay eight and a half percent very first day we are out of business so what will happen is if Punjab doesn’t want to go with these reforms then don’t expect aggro processing industry or competitiveness of wheat it will be only settled with central government already stocks are more than double of the buffer stock norms massive economic inefficiency in the management of food system in the country right now because of this at present so this is going to clean up some of it MANDI will continue procurement will continue you are only opening another option . you know the social-economic survey that was conducted only six percent of the farmers in the country have benefited from procurement system of the government procures only wheat and rice they may announce MSP 23 commodities even in the last season you know the maize prices are hovering at eleven hundred twelve hundred rupees a quintal when the MSP 1700 plus so you know where are where is the government to procure and government cannot be procuring each and everything you look at rice prices you look at pulses you know CHIKHALI prices they were all below MSP in most of the state and what happened to fruits and vegetables and other commodities government cannot be buying tomatoes and potatoes and onion do they need to defend the borders or start becoming a banana top so only six percent upper limit is ten percent of the farmers have gained from procurement business in the country now if they feel procurement system is not being dismantled at all it is right there it will remain intact for the next 10 years to 15 years even more so they are not going to lose.

Background  

After the Independence in 1947, Farmers directly want to sell their agricultural produce to the buyer but thanks to the ZAMINDARI system and lots of other situations maximum farmers of India were under debt, and therefore the money lenders want to charge high-interest rates for the debts taken by the farmer when farmer fails to pay their Interest then those money lenders use to shop for the products from the farmer at a cheap price and for subsequent production, farmers have got to take a loan again from the cash lender and this process became sort of a cycle from which farmers weren’t ready to begin and that they were exploited continuously for solving the matter of farmer exploitation, Government interfered in it and that they introduced Agriculture Produce Market Committees ACT. This act says that farmers can’t sell their products to the buyer nor anyone can directly purchase from all of them the sale is going to be done through the MANDI which was established through the Agriculture Produce Market Committees ACT and therefore the MANDI’S are going to be run by the state governments.

How does Agriculture Produce Market Committees ACT function in the present scenario? 

Each state’s government has its own Agriculture Produce Market Committees. States divide the MANDI’S consistent with their area and every area has its specific MANDI. If traders want to get anything from MANDI then he has got to acquire the license of that specific MANDI. Similarly, the farmers of that area are allowed to sell their production thereon specific MANDI. This technique of selling and buying things from the precise MANDI is Mandatory for the traders and farmers. So, If any trader wants to get the product from Agriculture Produce Market Committees then he has got to acquire a license from the Agriculture Produce Market Committees. 

How do the products get sold-through Agriculture Produce Market Committees? 

In Agriculture, the Produce Market Committee’s marketplace for selling the products begins auctioning. We divide the auction system into 2 parts First part is the MSP system, which means Minimum asking price and therefore the minimum asking price is set by the government of India. MSP isn’t for all the crops, there are 22 such crops that the Government of India decides minimum asking price. MSP means auction price can’t go down from that minimum price, MSP is going to be the starting level from where the auction will start the merchandise can’t be sold at a lesser price from that decided minimum price and therefore the second part is that the crops aside from that 22 crops are sold by the worth Discovery System means on the idea of demand and provide of that product within the market the worth is discovered of that crops the products get sold through the auction system, we will see that products get sold in APMC through a supply chain means when farmers produce something it reaches to the buyer eventually before that there are many middlemen within the process “The new system is trying to eliminate this middlemen process” 

What’s the availability Chain and the way it works? 

The farmer will take his product to Agriculture Produce Market Committees MANDI and there he will meet with the commission agent also referred to as ARTHIYAS. These commission agents will take forward the farmers produce to the traders for selling the merchandise and there they’re going to negotiate and can discover the worth and this process isn’t transparent then, that transaction agent involves the farmer and inform him at what price his product is sold now the transaction agent charges 3% market fees on the worth which farmer goes to urge, the farmer only pays it now finally the merchandise is up to trader from the trader it goes to the wholesaler from wholesalers to the retailers and there on to several vendors, in any case, this is finally involves the buyer the time when the consumer receives the merchandise, there’s 50% difference of the particular cost of the merchandise and a minimum of 25% of the entire produce gets wasted so if I’m getting this product at the worth of fifty or 80 farmers is getting only 7 rupees reciprocally all the remaining money is split within the middlemen and also as market fees So this existing APMC system.       

Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

Reforms 

1. Promotes barrier-free intra-state and inter-state trade of farmer’s produce 
2. Prohibits state government or APMC from levying fees, cess, or any other charge on farmer’s produce.
3. Any trader with a PAN Card allowed, No license needed.
4. Conciliation Board to decide Farmer- Trader Disputes

This reform has done it creating barrier-free intra-state and inter-state trade of farmers produced how now the farmer if the farmer wants to sell this farm, produce outside of the APMC MANDI as well no tax no fee can be imposed neither by the APMC MANDI nor by the state government so the farmer has liberty if you want to sell your product inside the APMC MANDI do that or if you want to sell your products outside of the APMC MANDI do that you have liberty. For example, I belong to APMC MANDI X. Before this law I could only sell my produce inside this APMC MANDI X but now I can sell it in APMC MANDI Y. So it’s a win-win situation for a farmer.                       

Fear 

1. Corporate incentivized, No Level playing field for APMCs
2. Existing Yards Under state APMCs not mentioned 
3. In the absence of Licence, Unscrupulous trader scan enter  
4. Farmers not allowed to approach a civil court 

  Farmer is saying that basically what the government is doing is corporatizing agriculture how if I am allowed to sell outside of this APMC MANDI as well directly to the corporate initially I will get the best price but slowly and steadily what the government is trying to do according to the farmers they want to kill the APMC MANDI. Initially these corporations will give me the best price so no farmer will sell in APMC MANDI that is why APMC MANDI got dissolved. Then we will be left at the mercy of these corporations and they will exploit us.      

Farmers (Empowerment and Protection)  Agreement of Price Assurance and Farm Services Act, 2020

Reforms 

(i) Can sell products anywhere in the country

(ii)Breaks state MANDI Cartels

(iii)Better Bargaining Strength 

(iv) Contract Farming with Privates Players

(v)Will get a share if prices surge after contract farming deal signed

(vi) Minimum Guaranteed price If markets rate Crash

(viii) Many items out of essential commodities act allowing trade 

The act seeks to provide farmers with a framework to engage in contract farming, where farmers can enter into a direct agreement with a buyer (before sowing season) to sell the product to them at predetermined prices. This reform creates a national framework for this contract farming and what is this contracting farming. For example, I am a farmer I have this piece of land there is a corporate entity there is an MNC there is a food processing industry they get in touch with me that you have this land we want onion for our chips so before you sow potatoes this is the price and we will guarantee you that this is the price that we will pay you a win-win situation for the farmer.   

Fear 

The farmer is saying what if tomorrow this corporate bind us to some illogical terms and condition which we are not in a position to understand if this is a win-win situation for us why is it that you are not writing in the law mentoring in the law that these multinational companies they pay us about the MSP they will not force us to enter into a contract and sell our farm produce below the MSP.   

Essential Commodities (Amendment) Act, 2020 

The act removes cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities. What will happen because of that, For example, these are onions the price of onions in the open market right now is 20 is rupees a kg big traders what they will do they will buy this onion produce in bulk they will start holding then they are creating artificial scarcity of onions in the market ultimately what will happen the demand will increase and price of onion will also increase and traders will get the best price. That is why there is an essential commodities act which means if tomorrow onions are declared as essential commodities you cannot hoard onions beyond a specific limit. If you do that if you hold onions beyond a specific limit you will have to sell them in the market.

Supreme Court Reviews

The supreme court stayed the implementation of these laws and appointed a four-member committee to mediate between the protesting farmers and the government of India why? The Supreme court was perhaps right supreme court said you have consulted the farmers after the law was passed and now there have multiple talks between the government and the farmer unions still there is no resolution of the deadlock and the deadlock persists that is why the supreme court believe that we stay the implementation of these laws and we will appoint a committee to negotiate between farmer and the government of India so that convivial atmosphere will be created and protesting farmer trust taken into account because 6+basically, these farm law creates huge trust deficit between the farmers and government of India. The Supreme Court is the one who can build the trust between farmer unions and the parliament. But people are criticizing the supreme court for setting up this committee in favor of the government of India because the four-member which is in the committee are supporters or praise these farm laws why they support us. The government created a large number of meetings between the farmer’s unions to talk or negotiate these farm laws. Then also deadlock persists. That is why the supreme court interferes and tries to see if there is a resolution of this dispute after all the supreme court is the guarantor of our fundamental rights. The supreme court petition was filed to evict these farmers from the highway but the supreme court said it is her fundamental right to protest and their right must be recognized. In the supreme court, there are three petitions filed first challenging the constitutional validity of these farm laws and second those who are supporting these farm laws and it’s unpredictable why this petition was filed if the law has been passed and you are supporting these laws. The third petition was filed by residents of Delhi to evict the farmers from the highway because it caused inconvenience. In the petition, they said in the SHAHEEN BAGH judgment supreme court said protest should be going on the designated place where inconvenience is not caused to the public at large. In all three petitions none of the petition asked the supreme court to mediate in these laws then why the supreme court wants to mediate either declare that these laws are constitutional or unconstitutional.  

Four Main Reasons For Farmer Protest	Government Responses
Legislation protecting Minimum Support Price	Written assurance that MSP will continue
APMC MANDI to not be closed	APMC MANDI will continue
No corporate takeovers of Farm Lands	No transfer of land by sale, lease, and mortgage
Farmers should be consulted before farm laws	The consultation was held for two decades

Conclusion

Three farm laws have been passed by the parliament some people say these farm laws are benefits of the farmers and they will herald a new dawn for the agricultural community and that is how the income of the farmer will increase rapidly. I think that there is a strong argument in the favour of these farm laws. I am not in the favour of the government or against the government. I am just looking at the argument in favor of these farm laws and what is the argument against these farms’ laws without taking any side. Farms laws are constitutional from looking one side of an angel because parliament resorted to entry 33 of the concurrent list to pass these farm laws. These laws are not unconstitutional but through another angle, these farm laws are unconstitutional because the procedure was violated on this ground. The Supreme Court should not mediate or stay implementation on these farm laws. My suggestion is that the court will pronounce that these farm laws are constitutional or unconstitutional. These protests will continue if the Supreme court does not find a way to resolve the dispute. 

Reference:-

1. byjus.com
2. https://learn.finology.in
3. https://www.indiatoday.in

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