Life After Farm Laws: The Road Ahead
Keywords: Farm Laws, farmers, market, produce, price, agriculture
Author: Ashi Dubey
Abstract
Farm Bill provides an alternative platform for farmers to sell their produce in the open market. Now the farmer is free to sell his products to anyone else as he wishes. Thus, they can earn profit by selling crop products at a higher price.
The three laws were the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, The Farmers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, and The Essential Commodities (Amendment) Act.
Introduction
Farm sector reforms is a continuous process and the political will to implement them must be garnered at the earliest. The Center introduced three Farm Bills in 2020 to align the industry with agriculture. The laws primarily aimed at deregulating the agricultural market whipped up widespread and prolonged protests forcing the government to roll back all three laws in November last year. The move confounded its critics and supporters alike.
For critics, it was a long-drawn-out battle against a regime that showed little sign of retreat. While for its supporters, it was a much-needed intervention to fix the country’s ailing farm sector. Despite the right intentions, the information asymmetry between the government and other stakeholders marred the implementation of three laws. The agri-sector is in dire need of reforms, and without opening up the agricultural markets and freeing up the productive capacity of farmers. It would be difficult to bring them out of an unending downward spiral.
State’s role in farm reforms
After enacting the model APMC Act 2003 by the Center, several States reformed their APMC laws to make way for private mandis. Bihar went a step further and abolished its APMC Act in 2006, thereby ending the age-old mandi system in the State.
Some States have enacted laws that go beyond the now-repealed agri-reforms. Karnataka allows non-farmers to get into land ownership and land leasing. Rajasthan, Gujarat, and Karnataka allow free trade outside mandis without charging any fees.
Analysing the reforms enacted by State
But a deeper analysis of the reforms enacted by States has revealed that this changeover did not benefit the farm sector to the extent it should have. In Bihar’s case, the changes in the APMC system didn’t improve the farm growth and instead resulted in greater price volatility, ultimately hurting farm growth. In the period between 2001-02 and 2016-17, agriculture growth in Bihar averaged 2.04 per cent, lower than the all-India average of 3.12 per cent in the same period.
The problem with Indian agriculture today is that the cost, risk, and return structure of farming is becoming unfavourable to farmers. The cost of production is increasing because of rising input costs. While the return from farming is on the decline as pricing and procurement situations are unfavourable. In such a scenario agricultural reforms are required not only to correct the inherent flaws in the system but also for keeping it functional.
As far as the three farm laws are concerned, it may have helped if the laws on contract farming as well as essential commodities were taken up separately from the more contentious third law on Agri marketing. The Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, (FPTC) was at the heart of the dispute. The FPTC Act, if implemented, would have allowed the sale and purchase of farm produce in areas outside APMC mandis.
The law prohibited collection of any market fee/ cess/ levy “under any State APMC Act or any other State law”. The argument against this Act was that the new rules would have disadvantaged small farmers. Farmers feared this could lead to inadequate demand in the local market, and they may not be able to sell their produce outside mandis given their lack of financial/economic resources. This doesn’t mean the existing State APMC laws are flawless.
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