Contentious farm Laws 2020- Their effect on Farmers and Agriculture Marketing System

At the end of September 2020, Lok Sabha enacted new bills regarding agriculture and amended the essential commodities act 1955, with the notification of these bills there was widespread agitation particularly in three states Punjab, Haryana, and Uttar Pradesh. Several times the farmer unions requested central govt. to take back these bills because in their opinion these bills were against the prevailing farming system but the govt. ignored them by saying that this protest is led by their opposition parties. Then farmers unions decide to come to Delhi, Now farmer unions set at various borders entering Delhi yet a place was also provided by govt. for protest. The farmers are having some demands among which abolishing of all three laws from legislative structure yet the central Govt. is also trying to solve the issue and regular talks are on practice but there is no any fruitful result. Let's discuss the farm laws in brief and simple language and you can judge on your own.

Why the new farm laws?-

In 2018-19, The standing committee on Agriculture (2018-19) submitted its report and noted that APMC laws are not be followed and require reforms immediately as, i) Most APMC have a limited number of traders operating which leads to cartelization and reduce competition, ii) Undue deduction in the form of charges and market fees, traders, commission agents, and others organize themselves in association/Unions which do not allow new persons into market stiffing competition. Also noted that the availability of a transparent, easily accessible, and efficient marketing platform is a prerequisite to ensure remunerative price for farmers. Most farmers lack access to govt. procurement facilities and APMC market, on an average area, served by an APMC is 496 sq. km is much higher than 80 sq km recommended by the national commission on farmers in 2006 headed by MS Swaminathan.

In July 2019 a high power committee of seven chief ministers was created to discuss the following things i) Adaptation and time-bound implementation of model acts by states and ii) Change the essential commodities act 1955 for attracting private investment in agricultural marketing and infrastructure.

Why protest behind these laws?-

The farmers' unions have several reasons for protesting against the laws. More than 100 different farmers' unions protesting against the bills as they are claiming that:-

• These laws are intended to benefits big corporates and in long term, the farmers will be daily wages workers of the corporates on their own farmland
• A statement from Kisan unions is that the companies which will buy farmers' produce outside APMC (Mandis) will not purchase their produce on MSP, as nothing is mentioned about the MSP.

• The Farmer unions also clamming that the contractor may take the loan over farmer’s land and failing in repayment, banks can take control over farmer’s land,
• There is no provision of appeal to any civil court in case of any dispute between farmer and sponsor.

Discussion on the laws-

1) Farmers' produce, trade, and commerce (Promotion and Facilitation Bill, 2020):-Provisions-

• Inter-state and intra-state trade of farmers' produce outside Mandis at farm gate, storage, etc.
• The farmer can sell their produce through an Electronic trading platform created by the trader or company or any firm.
•  Abolishing of any type of market fees as trade will be operated outside Mandi premises.
• Same-day or Maximum 3-day payment of produce to the farmer.
• Penalties if breaches found- Trader- Penalty of 25 thousand maximum up to 5 lakh, if repeated again less than 5 thousand for each day. Electronic marketing firm- Penalty of 50 thousand maximum up to 10 lakh, if repeated again less than 10 thousand for each day.

Dispute settlement- A three-tier system for dispute settlement is created but there is no provision for any legal suit, but a farmer can reach to the SDM and SDM will give the order to create a conciliation board having a chairman and an equal number from both the parties. If the board fails to decide or any party is not ready with the decision of the conciliation body, they may approach SDM. SDM will take a decision within 30 days, and again if a party is not happy with the decision, at last, they may approach Appellate authority i.e. DC or ADC.

Issues-

• Not feasible for farmers to carry produce to long-distance or other states to sell.
• Uncertainty of price, as not mentioned about MSP or other price-fixing mechanisms in the bills.
• In absence of a middle man, the farmers cannot take any benefit from local middlemen (Ahartiya) for emergency credit help.
• Difficult for the farmer to sell less appropriate produce e.g. with high moisture or with weed seeds in absence of APMC and MSP.
• Revenue of states from Mandi boards will reduce or lost it will affect several developmental activities in rural areas.

Positive sides-

• No commission or middle man
• Can sell anywhere outside APMC at a good price
• Online trading can generate more revenue as no middle man is involved.
• Timely and quick payment to the farmer.

2) Price Guarantee and farm service Bill agreement for farmers' (Empowerment and Protection) 2020:-

Provisions-

• Agreement between farmer and buyer for contract farming will be for one season and maximum up to 5 years
• Same day payment to farmers in case of crop production.
• Produce will be taken from the trade area i.e. farm gate, storage, etc and transport charges of produce will be from the buyer
• No buyer can sell, mortgage, lease the farmers' land yet insurance and credit facilities can be taken by both or either of the party on the basis of the agreement only, not on the land of the farmer.
• The price of the produce can be predetermined at the time of agreement and farmer may ask for a bonus or premium on the behalf of benchmark price in case

Dispute settlement-Settlement of the dispute in this bill has three-tier systems. There is a provision of creation of a conciliation board at the time of agreement which is having representatives from both the parties in case of any dispute this conciliation board will act as the first step for dispute settlement. If any party does not agree with the decision or the body is unable to make a decision, then any party can approach SDM within 30 days. SDM will take the decision within 30 days and if any party found this decision inappropriate, that party may approach the appellate authority.

Issues:-

• Issues regarding quality, grade, etc. will create difficulty for farmers because of the uncertainty of these parameters and if it doesn’t meet the requirements then the company may refuse to purchase the product.
• Uncertainty of the guaranteed price as no set of rules regarding MSP is mentioned. In absence of MSP, there may chance of fraud with the farmers. 

Positive Side:-

• Timely money for produce to the farmer.
• Produce will be taken from the farm, farm gates will reduce transportation costs for farmers.
• No action can be taken against the agricultural land & farmer for recovery of any dues if the loan or credit is taken by the company on the agreement.
• If farm services to be provided by the company it will result in the improvement of quality and yield of the produce.
• Farmer’s land cannot be sold, mortgaged, and leased by the company having an agreement with the farmer.

3) The Essential Commodities (Amendment) Bill, 2020

• The central government has removed the stock limit over some agricultural produce like cereals, pulses, potatoes, onions, edible oilseeds, and oils and may regulate the storage of such items only under any extraordinary condition like war, famine, extraordinary price rise, and natural calamity.
• Regulation of stock limits will be based on price rise i.e. 100% increase in the retail price of onions & potatoes and 50% in case of non-perishable food items such as cereal, pulses, etc. The base price will be decided as price prevailing immediately proceeding twelve months or the average retail price of the last five years whichever less is.
• The stock limit will not be limiting for processors or value chain participants in case the stock is up-to maximum capacity of processing or export.

Issues:-

• It may lead to black marketing and hoarding of above-prescribed products. It may cause a price rise.
• The construction of large godowns will be made by corporate groups as farmers don’t have enough resources to build infrastructure.

Positive Side:-

• Due to the more storage facilities, produce will remain in the market year-round which will help in uniform price of product throughout the year.
• Reduction in post-harvest losses.
• Due to the amendment, competition among corporates to purchase the farmers' produce will increase the opportunities for the farmers.

New Proposals by the Central Government-

After a long time and several discussions on 10th December the central govt. became ready to amend some points in the laws, which were the reasons for the protest according to govt. but even after the amendments, the agitations are still going on and farmers are demanding complete removal of these bills. Govt. is ready to restore MSP in written form but denied to implement a law on MSP and in this case, the MSP will be granted as per the previous system before the laws. The govt. is also ready to include the provision of a court suit in dispute settlement of the above laws.

Conclusion:-

After a thorough study and by taking account of both farmers and Central govt. it may be concluded that these farm laws are more in favor of corporate as corporate can make more profits from farm business, in which they were having a little or no influence yet at present these also looks slightly in favor of farmers also if I talk about India as a whole and all farmers together, These laws definitely will help the farmers in the states where MSP is not followed seriously and APMCs are wide apart such as Bihar, Uttar Pradesh, Jharkhand, etc. the states having least per capita farmers income but in case of states like Punjab, Haryana, etc. where the about 85% of produce is sold on MSP and farmers having highest per capita income these laws will affect the farmers much, instead of the laws if govt. strengthen the MSP and APMC system in low farming income states, It will help them a lot and but govt. also have to be ready for the adverse effects and economical pressure of govt. machinery. The third law which is The Essential Commodities ( Amendment) bill, 2020 will not affect the farmers to more extant but it may help them in increasing their income by enhanced competition and less post-harvest losses but to some extent, it may affect the price of commodities and hence may have a more adverse effect on consumers. The biggest impact of these laws will be on the middle man (Ahartiya) as this APMC system is their major source of income and they rely much on the commission gained and non-institutional credit to farmers.

The proposed amendments are really welcomeable but the govt. should make certain rules by which farmers can protect themselves from deception by the corporates in a long run. Govt. should also encourage diversified agriculture, as only one produce will not be surpluses in a particular area and all the farmers may get a reasonable price for their different produces. The govt. should encourage Co-operative farming instead of Corporate farming, the biggest difference is that in Co-operative farming farmers will organize themselves in groups with shared resources and with unity among themselves and they may get a good price by selling to the corporate companies then.