The agriculture sector contributes nearly 15 per cent of the India’s $2.9 trillion economy
New Delhi:
On Sunday afternoon, amid scenes of chaos and uproar, the Rajya Sabha passed two of a set of three controversial bills related to India’s agriculture sector. The bills, which replace ordinances issued in June, were passed amid fierce protests by farmers’ groups across the country – particularly in the grain bowl states of Haryana and Punjab. The Narendra Modi government has said the farm bills, as they have come to be known, empower small and marginal farmers by allowing them access to markets and prices of their choosing. The opposition, which includes political parties and lakhs of farmers across the country, disagrees – they say the bills threaten to abolish MSPs (minimum support prices) and, consequently, leave the same small and marginal farmers at the mercy of corporates and large-scale institutional buyers. As for the farmers themselves, some of those who spoke to NDTV say they are confused and want the government to reach out and offer clarifications.
Here are the top 10 points in this story:
-
The three farm bills are – The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services; The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill; and The Essential Commodities (Amendment) Bill. The Upper House, yesterday, cleared the first two, paving the way for them to become laws (once President Ram Nath Kovind signs off) and triggering protests.
-
The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill allows barrier-free intra- and inter-state trade of farm produce. Previously, farm produce was sold at notified wholesale markets, or mandis, run by Agricultural Produce Marketing Committees (APMCs). Each APMC, of which there are around 7,000, had licensed middlemen who would buy the produce from farmers – at prices set by an auction – before selling it on to institutional buyers like retailers and big traders.
-
Under the proposed system, farmers can (eliminate middlemen and) sell directly to these institutional buyers at prices to be agreed between them. However, farmers’ groups are worried that this exposes them to corporates who have considerably more bargaining power (and resources) than small or marginal farmers. A Madhya Pradesh farmer who spoke to NDTV said: “I am worried… sometimes they ask for wheat at Rs 1,400 or Rs 1,500 per quintal. They will take (produce) as they wish”.
-
In India, nearly 85 per cent of poor farmers own less than two hectares of land. Farmers like these find it difficult to negotiate directly with large-scale buyers. In a report by news agency Reuters, leaders within the farming community said mandis play a crucial role in ensuring timely payments to them. Removing these markets, or allowing corporates direct access, without offering an alternative, such as regulated direct-purchase centres, does not make sense, they say.
-
Also, with APMCs, farmers were usually required to sell to markets near them rather than in open markets, which will now be allowed. The government has pointed to this to suggest that farmers’ incomes will, therefore, increase. In practice, however, small farmers may find it difficult to avail potentially better prices at markets further away because of constraints on travel and storage, as well as associated costs.
-
The second bill to clear the Rajya Sabha – The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services – is supposed to allow “contract farming”, or allow farmers to enter into agreements with agri-firms, exporters or large buyers to produce a crop for a pre-agreed price.
-
Farmers, however, are worried that this means the MSP (which is a price guaranteed by the government) will be removed. They point, once again, to small and marginal farmers who will likely by vulnerable to disadvantageous contracts unless the sale prices continue to be regulated. As Congress MP P Chidambaram pointed out, there needs to be a clause linking MSPs (which must remain) to the lowest agreeable price.
-
Although the new law has not explicitly removed MSPs (and Prime Minister Narendra Modi has insisted it will not), farmers are concerned because allowing prices to be settled outside regulated mandis makes it difficult for the government to monitor each transaction individually.
-
MSPs are also of concern to rice and wheat farmers, who sell directly to the government at these guaranteed prices. They fear that government purchase will give way to private buyers, who could arm-twist them to sell at lower rates. These guaranteed prices, which the government today raised, are often a source of credit in hard times like droughts and crop failure.
-
In addition to farmers’ concerns, state governments – particularly those in Punjab and Haryana – fear that if private buyers start purchasing directly from farmers, they will lose out on taxes that are charged at mandis. The potential scrapping of mandis, they also argue, endangers the jobs of millions who work there. Most farmers in Punjab and Haryana sell their rice and wheat to the FCI.
With input from Reuters
