New Indian Farm Laws – The Good, the Bad and the Ugly

 Farmers protest Delhi

by Seema Khan

Unlike manufacturing, banking industry, job market - agriculture was the one area not affected or suffered under the Modi government.

Overall GDP of the country has gone into minus but the agriculture was the only sector where it grew by about 3%. This sector had a bumper production for the last many years - the only reason that India did not suffer from food grain shortages.

The farming industry is the biggest industry in India, and about fifty percent of the population, directly or indirectly, depends on it for their livelihood.

Now the union government seems hell bent to damage this sector too. Instead of addressing the grievances of the farmers who have been committing suicide at the average of one farmer per hour, these new farm laws are more in the favor of the corporates rather than the farmers.

Passing of the bill, similar to elimination of the Article 370 of the constitution, seemed devious.

There was no consultation with the major stakeholders – mainly the farmers’ representatives – when the bill was drafted.

It was then pushed through the parliament without any discussion, and passed with voice vote. Microphones of the Lokshaba were muted.

There are claims that the bill was passed with insufficient votes. The opposition members of the parliament, who objected, were suspended from the parliament.

On the surface, this bill appears to be in favor of the farmers, but the farmers are skeptical about it.

Protesting against the bill, hundreds of thousands of farmers from various states have marched towards the capital Delhi, and now camping at its boundaries, unfazed with the cold of the peak winter season, demanding immediate withdrawal of this bill. About 60 of them have lost their lives so far.

So why are the farmers protesting when the so called ‘farmer’s bill’ is meant to help farmers? Or, is it the corporates owned by people like Adani or Ambani who will reap the benefits of this bill, at the cost of farmers’ livelihood?

 

The farmers produce Trade and (promotion and facilitation) Bill 2020.

In simple terms; this bill says farm trade is barrier-free and the produce can be sold in any state, or any part of the country, to anybody.

Normally, the farmers sell their produce to registered middlemen in APMCs (agricultural produce marketing committee), or Mandis. These middlemen then sell the produce to retailers or big business houses.

The new bill says that the farmers can get into an agreement with the business houses and the traders, and sell their produce to them directly on agreed prices.

Though the clause sounds farmer friendly, they are worried about the big corporate, with strong government backing, will have a lot more bargaining power, and may not give them the minimum support price.

85% of Indian farmers own less than 2 acres of land, and will not be in a position to bargain with big corporates, hence possibility of being coerced to accept their terms, and may end up selling their land.

The other issue is the possibility of big corporates signing one or two year contract with the farmers to grow certain crops, which will make the APMC slowly but certainly redundant.

Once the APMC is closed, these corporates will set their prices as they wish, and the farmers will not be in a position to bargain because APMC mandi doesn’t exist as an alternative sale point, leaving them with no choice but to sell in whatever price they are offered by those corporates.

To reveal their concern, farmers give examples of BSNL and Jio; like Reliance offering free data and services in initially to get people into the trap, then start charging the tariff.

APMC charges some tax amount which the private mandis will not be charging. To save this tax amount the farmers may start selling their produce to these private mandis, which will expedite the closure of existing mandi system, and the state governments will lose revenue that it earns from these taxes.

People employed in these mandies; like laborers who load the produce, the truck and trolley drivers, the accountants, the storekeepers, etc. will lose their jobs. It will create further unemployment in the rural areas of the country.

There was never any restriction on the farmer for selling his produce anywhere in the country. But practicality of selling his produce where he gets a better price was restricted that choice. The cost of transportation and storage added to the price he could get.

The middlemen or the dealer, also known as Arthies, buy the product from the farmer, and sell it in outside markets. These Arthies also function as ATMs for the farmers. If the farmer needs money, they go to these articles and borrow money - in return for the promise to sell their products after harvest. This informal borrowing process can’t happen with big corporates or multinational companies.

While the Union government is busy telling the people that it will eliminate the middlemen - it is not possible or easy because the corporates cannot directly locate the small and multitude of farmers, and will need a middleman anyway. Arthies, therefore, will shift from government mandies to private buyers.

 

The Farmers (Empowerment and protection) Agreement and price assurance and farm services Bill 2020.

This can also be called a contract bill. This bill allows the corporates to agree with the farmers to produce a certain crop at a pre-agreed price. What the farmers are worried about is that the minimum support price that the farmers get today will be removed as the government will not have any control over the private players and they will have to sell the produce at the price given by the corporates.

The farmers demand that they want the government to guarantee the minimum support price (MSP), which exists under the present system.The MSP to be the legal right of the farmers and this system should be strengthened.

 

The Essential Commodities (Amendment Bill, 2020)

This original law related to Essential Commodities, passed in 1955, prohibits the traders from hoarding the commodities, making it illegal and punishable. The new law allowed hoarding, which will enable the big corporate for mass scale hoarding, leading to a sharp rise in retail prices.

This new law will encourage them to buy cheap, hoard it to create an artificial scarcity, then sell it in significantly higher prices to consumers.

 

Demands of the Farmers

  • Repeal the farm laws immediately, even if requires a special session of the parliament.
  • Make minimum support price (MSP) and state procurement of crops a legal right.
  • An assurance from the government that conventional procurement system will remain in place.
  • A 59% cut in the diesel price for agricultural use.
  • Swaminathan committee report be implemented, and peg MSP at 50% more than the weighted average cost of production.
  • Repeal of Commission on Air Quality Management in NCR And Adjoining Ordinance 2020, and removal of punishment and fine on stubble burning.
  • Release of farmers arrested for burning paddy stubble in Punjab.
  • Abolishment of the electricity Ordinance 2020
  • The Central government not to interfere in state subjects, decentralization in practice.
  • Withdrawal of all cases against farmer leaders, human rights activists, poets and intellectuals, and writers, and release them from the prisons.

 

Why Punjab is at the forefront of the agitation.

Punjab is in the forefront of the agricultural sector in India. The mandies or APMCs get 8.5% percent tax, out of which a certain percentage goes to the states as tax. Punjab gets 6% of it, which is a substantial amount, and the farmers make good money due to the minimum support price or MSP.

 

How the present union government has been preparing the ground to help the private companies to overtake the Food Corporation of India (FCI)

The FCI role is to procure the produce from the farmers, store it, guarantee MSP for the farmers, and administer mandies.

The FCI was established in 1965 by Lal Bahadur Shastri to ensure a minimum support price for the farmers, manage the public distribution system, providing the Ration to the needy, keep enough food grain reserve in the country for emergency situations, and to maintain the price equilibrium of the grain market.

Since the BJP government came into power in 2014, it has been working systematically to destroy the FCI, and make it incapable of functioning by pushing it into heavy financial debt – basically to create a situation where its assets can be bought by the big corporate at a throw away prices, while introducing new farm laws to make agriculture industry attractive and profitable for big business houses.

An understanding of what is to come was established with these business houses two years ago, giving them adequate time to gear up and get ready to capture the industry. Some of those business houses have been procuring rural lands quietly, and building huge storage capacity for some time.

 

How the BJP government worked in the direction so that the farm laws could be implemented as soon as they are passed.

FCI needs money for its operations, transportation of grains, storage of the grains, supply it to ration shops, maintain the MSP. For all these functions a certain budget is needed and the central government had a provision in the budget for the functioning of the FCI under the food security act.

When the BJP came into power the FCI was in a loss of about Rs 91 thousand crores. Soon after taking power, the government started reducing the budget of the FCI, and not paying the allocated amount, thus pushing it into debt with each passing year.

FCI has been borrowing and increasing its debts to incur its expenses such as maintenance of the warehouses, payment of the electricity bill and rents, wages of the staff and workers, etc.

By the end of the financial year 2020, the debt of FCI rose to nearly Rs 3 lakhs and 15,000 crores.

What is expected to happen now is that the private parties will come into play and take over the functions of the FCI. This is how the ground was being prepared for the big business takeover.

Private warehouses were being established, the most prominent of which is AAll (Adani Agro Logistic Ltd) owned by Adani. It has purchased/leased hundreds of acres of land and built huge storage capacity. The construction gained speed after 2015, and more storage capacities are being built in various states.

The FCI had an initial deal of Rs 700 crores with this group for storing the grain and the farmer in many states was directed to send the produce to these warehouses. Further deals are expected in future.

For any disputes with produce buyer, farmers can approach the local Sub-Divisional Magistrate (SDM). But the question is whether a small farmer will be able to approach the SDM. Even if he could; will the officer make a decision in favour of the farmer, or will he be more obliged to favour the corporate? Corporates being a rich entity can bribe SDM, or apply political influence to have a decision in their favour.

New bill has no provision to involve the court in dispute resolution process. Even if there was a provision, will a small farmer be able to fight the big corporate in a court of law to redress his grievances?

One month has passed since the farmer's protests have started but the government is not ready to budge from its position and accept the demands of the Farmers. There has been no breakthrough in the talks between the governments and the farmers. This reflects the influence big business houses currently have on the union government.

 

*Opinions expressed in this article are the author's own and do not necessarily reflect the views of UMMnews.

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