This article is authored by Sanskriti Goel , a 1st year law student from Chanderprabhu Jain College of Higher Studies and School of law, GGSIPU. The article is an attempt to provide clarity and remove any conjectures about the reforms introduced by the farm laws 2020 especially in the context of the backlash. It also provides insight into the important provisions of these laws.
The three farm bills were given assent by the President of India, Ram Nath Kovind on 27th September, 2020 and ever since, the backlash against these laws has been massive. Agriculture in India provides livelihood to 58% of the country’s population. The three laws aim to change the way agricultural produce is procured, sold and stored across the country.
Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020
- Farming Agreement: The act provides for a national framework for contract farming under which an agreement will be made between a farmer and a buyer before the production or cultivation of any farm produces.
- Minimum Period of Farming Agreement: The minimum period of the farming agreement will be for one crop season or one production cycle of livestock.
- Maximum Period of Farming Agreement: The maximum period of the farming agreement shall be five years with the exception that if the production cycle of any farming produce is longer and goes beyond five years then the maximum period of farming agreement can be mutually decided by the farmer and the buyer provided that it shall be explicitly mentioned in the farming agreement.
- Pricing of Farming Produce: The pricing of farming produce and the process of price determination should be stipulated in the agreement. If the prices are subjected to variation, a clear reference for any additional amount above the guaranteed price must be mentioned in the agreement.
- Resolution of Dispute: The Act provides for a three-level dispute settlement mechanism at three levels in following ascending order:
- Conciliation Board,
- Sub-Divisional Magistrate ;and
- Appellate Authority
Farmer’s Produce Trade and Commernce (Promotion and Facilitation) Act, 2020
- Trade of Farmers’ Produce: The Act allows intra-state and inter-state trade of farmers’ produce . The farmers are now allowed to trade in outside trade area such as farm gates, factory premises, cold storages, etc. Earlier, it could only be done in the Agricultural Produce Market Committee (hereinafter ‘APMC’) markets or Mandis.
- Lucrative Prices: The farmers are likely to be offered lucrative prices via alternative trading channels to promote barrier-free intra-state and inter-state trade of agriculture produce.
- Electronic Trading: It will also facilitate direct and online buying and selling of the agricultural produce (regulated under any state APMC Act) via electronic devices and the internet.
- Market Fee Abolished: The act prohibits the State Governments from levying any market cess on farmers, traders and electronic trading platforms for trading farmers’ produce in an outside trade area.
Essential Commodities (Amendment) Act, 2020
The act aims to amend the Essential Commodities Act, 1955.
- Deregulation of Commodities: Certain commodities that have been deregulated are food items, including cereals, pulses, potato, onion, edible oilseeds, and oils.
- The farm laws 2020 intend to help the small and marginal farmers who constitute 86% of total farmers because it has been observed that such farmers usually do not have the means to either bargain for their produce to get a better price or invest in technology to improve the farm productivity.
- The farmers are likely to get access to internet and other modern technology which in turn will help in improving the production and trading process of agricultural produce.
- For several decades, the monopoly of APMC markets had led to centralization and reduction in competition. The new farm laws would create an environment favourable for competition via alternative trading channels.
- The new farm acts would improve the marketing process for agricultural produce , making it more efficient and effective.
- The farmers would have full autonomy to negotiate better prices for their produce.
- The deregulation of several food items under the Essential Commodities (Amendment) Act, 2020 will help attract private sector and foreign direct investment into the agriculture sector.
- Contract farming will help reduce the input cost for farmers.
- Contract farming will also encourage private sector participation in procurement of agriculture produce, ensuring regular supply of needed inputs for their production and would save them from unforeseen market price fluctuations.
- The farm laws are expected to pave the way for the creation of a ‘One India, One Agriculture Market’ by promoting barrier-free inter-state and intra-state trade along with provisions of electronic trading.
- Mandis are a source revenue for state governments. The diversion of agricultural trade towards private mandis could lead to the loss of states’ revenues.
- Middlemen and traders would be affected.
- There is no specific provision as to how the private mandis would be regulated.
- The major drawback of contractual farming is that the farmers who lack proper knowledge and are illiterate might not be able to negotiate best possible contractual terms and this would lead to their exploitation at the hands of private companies.
- It is feared that contractual farming would pave the way for slavery as farmers would become puppets of large corporations.
- If the produce is substandard, the companies would not pay the farmers for their produce.
Why the Backlash
Minimum Support Price
- Despite a written assurance of procurement at Minimum Support Price (hereinafter ‘MSP’) given by the government to the protesting farmers, the leader of Bharitya Kisan Union, Rakesh Tikait wants the new farm laws to be repealed and has demanded for a separate law on MSP.
- Here, it is worth noting that only 6% of farmers actually sell their crops at MSP rates, as per the 2015 Shanta Kumar Committee’s report.
- The small and marginal farmers fear that they will lose their landholdings to big corporations under contractual farming.
- However, the new law explicitly prohibits any sponsor firm from acquiring the farmers’ land and hence protecting the farmers’ land ownership.
- Moreover, the contractual farming is purely voluntary in nature and no farmer can be compelled to enter into farming agreement.
U-turn by Opposition Parties
- On 7th december, 2020, Rahul Gandhi’s tweet read: “The ‘Adani-Ambani farm laws’ have to be revoked. Nothing less is acceptable. ”
Ironically, the Congress’s 2019 Lok Sabha election manifesto, under the segment “agriculture”, promised repealing of the APMC Act and not merely bringing an additional procurement set-up as proposed by the new law under Modi government. Not only this, under the manifesto it was also promised to make trade in agricultural produce, including exports and inter-state trade, free from all restrictions.
- Apart from this, Arvind Kejriwal also tweeted on 7th december, 2020 in support of protest led by farmers’ unions saying: “In support of our farmers in their protests, we are here to serve them just like one should serve every other citizen.” Interestingly, in October 2016, in AAP’s manifesto for Punjab Assembly Election, it was proposed that amendments would be made to APMC act to allow farmers to sell their produce to buyers & markets of their choice in and outside the state.
- The chief economist of International Monetary Fund, Gita Gopinath has said that India’s recently enacted agricultural laws have the potential to increase farmers’ income, but there is a need to provide a social safety net to the vulnerable farmers. She also added that Indian agriculture is in need of reforms.
- Backing India’s new farm laws, the United States said: “It welcomes steps that would improve the efficiency of Indian markets and attract greater private sector investment.”
- Undoubtedly, the farm laws 2020 have the potential to increase rural incomes provided that the government ensures proper implementation of these laws after making the required changes.
- The government and the farmers’ unions should continue with their talks to reach an amicable solution.
- The government must work towards removing any ambiguity that might hinder the peaceful implementation of these farm laws.
- Any misconceptions that farmers might be harbouring should be cleared by the government immediately.
- The farmers also need to have a wider outlook on the new farm laws and should view these laws as a medium of much needed change in Indian agriculture.
- Also, the opposition parties need to keep farmers’ best interests at heart rather than viewing this as an opportunity to defame the ruling party and politicizing something that they supported earlier. The parties should refrain from indulging in dirty politics and must come to a consensus for implementing the newly enacted farm laws.
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