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Friday, March 29 2024
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Op-Ed: Farm Bills: Agribusiness promotion or Farmer rejuvenation?

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The government last week, passed three bills relating to the farm sector without discussion in parliament and as things seem even without discussion among the rank and file of the ruling party; not that it would have made much difference. Policymaking these days in the ruling party is limited to its top echelons. Deference not difference is the name of the game in most political parties and more so in the ruling party at the center. There is hardly Mann ki Baat within the party it would appear.

The Govt. calls it a game-changer, the opposition wants to change the game. But the rules, the umpires, and the pitch are not in their favor. At least for the moment and maybe for a long time to come. 

The farmers are on the warpath, but it will hardly make a difference; it is more like tokenism that will wither away with time. But what if anything are they agitated about?

Let us simplify things for clarity’s sake: the three bills passed are the “The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020” – let us call it the APMC dilution Ordinance; “The Essential Commodities (Amendment) Ordinance, 2020” – let us call it the hoard it and forget it ordinance; and “The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020”; let us call it the Contract Farming Ordinance.

Essentially these three bills seek to do three things which the government says will unshackle the Farmers from regulation and usher them into a free agricultural market economy in which they can easily double their income.

Let’s be very clear about one thing; the intention is good, as are the objectives; to double farmers’ income by 2022 and allow them to get better remuneration with fewer logistics headaches than they have now.

Currently, farmer income stands around Rs 6500 per household – small, marginal, and medium farmers – and almost all of them are in debt – they borrow against future crops to keep their income flowing, and when the crops fail they are in deep trouble. But will they work toward that objective – let us check the reality and then we may understand why farmers and related organizations are protesting.

Essentially the bills (in the order in which they have been named above) seek to do three things

  1. Allow farmers to trade their produce outside of the APMC directly from their farm gates and anywhere in India electronically
    or otherwise. 
  2. Exempt most commodities from government control under the Essential Commodities Act 
  3. Institutionalize Corporate Farming – This is besides the fact that anyone can now buy farmland (in Karnataka and many other states (https://economictimes.indiatimes.com/news/politics-and-nation/karnataka-government-notifies-ordinance-on-opening-up-market-for-non-irrigated-farm-land/articleshow/76945721.cms) – you really don’t have to be a farmer.

All thee three bills including the last one were brought into force as ordinances and now made into law by ramming them through parliament without so much as a discussion let alone a referral to a select committee or the standing committee on agriculture.

What do they essentially do?

“The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020”

The agriculture sectors can and should be compared to the health and education sectors in India – where both the Private sector and the Government Sectors exist but not in equal measure in terms market reach, market attractiveness, and market share – primarily because of the inefficiency, deliberate or otherwise of the government entities in these sectors. In the case of the health and education sectors, the balance tips in favor of the private sector. Government schools and hospitals are the APMCs of these sectors. But‌ in the agricultural sector, the trend has been reversed.

The state Agricultural Produce Marketing Committees dominate the market and they have built-in defects and inefficiencies – which include corruption and dominance of the REGISTERED middlemen. The advantage is that there is provision for price discovery based on auctions and what is called Minimum Support Price at which the Government will mop up stocks in case of distress sales by farmers, though that hardly happens nowadays with the stocks actually going to waste in FCI godowns, with very little offtake by state governments who prefer to buy their APL stocks directly from the market. What the ordinance turned Act seeks to do, is to allow farmers to sell their produce directly at their farm gate at a price they determine to be fair or whichever is offered to them whichever is higher obviously without regard to the MSP, but based on market forces.

This presupposes fair dealings, and a fair price offering by Agri-Business / Retail chains – which really may not happen and the farmer lured by the home take off (no logistics costs involved) may be lured into selling his produce at a lower price than what can be obtained through price discovery in the semi-official mandis called APMCs. It is crucial to note that the idea is not to shut down APMCs but to expand a farmer’s choices. So, if a farmer believes a better deal is possible with some other private buyer then he can take that option instead of selling in the APMC mandi. The scheme sounds good, looks good on paper, but on the ground – we have to wait and see. If the Health and Education sector is anything to go by, then the small farmers with no bargaining power will be disenfranchised easily like patients and students are in these sectors.

The Essential Commodities (Amendment) Ordinance, 2020”

The ordinance / Act seeks to exempt most commodities from government controls under the erstwhile Essential Commodities Act – This Bill proposes to allow economic agents to stock food articles freely without the fear of being prosecuted for hoarding. The erstwhile Act essentially allowed the government to declare a commodity essential and control the production, supply, and distribution of that commodity, and impose a stock limit. Commodities such as cereals, pulses, oilseeds, edible oils, onion, and potatoes have been deregulated under the new ordinance/bill.

Earlier Consumer was king. Whenever prices hit the roof, the Govt. would invoke the act to protect consumer prices, but did not come to farmers’ aid when prices were down. That dichotomy has now reversed. But will the farmers benefit? unlikely. They are likely to fall victim again – Agribusiness will control the prices by manipulating stocks – While the farmer may benefit a wee bit, the consumer is likely to fall by the wayside in this game of capsicum thrones! The government can still regulate but only in times of force majeure – extraordinary price rise, war, famine, and natural calamity of a severe nature. Maybe they should have added ‘elections’ to the list!

“The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020” 

This Act seeks to institutionalize Corporate Farming. This is besides the fact that anyone can now buy farm land (in Karnataka and many other states). The fact is that this sort of Contract farming was already in place and the Act seeks to institutionalize it. The Ordinance provides for a farming agreement between a farmer and a buyer prior to the production or rearing of any farm produce. The minimum period of an agreement will be one crop season or one production cycle of livestock. The maximum period is five years unless the production cycle is more than five years. The price of farming produce should be mentioned in the agreement. For prices subjected to variation, a guaranteed price for the product, and a clear reference for any additional amount above the guaranteed price must be specified in the agreement. Further, the process of price determination must be mentioned in the agreement.

Dispute Settlement: A farming agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes. The Board should have a fair and balanced representation of parties to the agreement. At first, all disputes must be referred to the board for resolution. If the dispute remains unresolved by the Board after thirty days, parties may approach the Sub-divisional Magistrate for resolution. Parties will have a right to appeal to an Appellate Authority (presided by collector or additional collector) against decisions of the Magistrate. Both the Magistrate and Appellate Authority will be required to dispose of a dispute within thirty days from the receipt of the application. The Magistrate or the Appellate Authority may impose certain penalties on the party contravening the agreement. However, no action can be taken against the agricultural land of farmers for the recovery of any dues.

It does not say if the agreement is to be written or verbal. With a large number of farmers illiterate or barely literate, verbal agreements are likely to rule the roost. Secondly pursuing dispute settlement itself is a costly and time-consuming affair that will take the farmer away from his work in the field to the offices of babudom. Thirdly the contracting party determines the crop – mostly they will want cash crops or crops that suit their ultimate product – like tomatoes or potatoes – a crop they cannot sell in the market if the agreement falters during or post-harvest. And fourthly – it might affect staple food production as the farmers may shift to crops demanded by Agribusiness entities which would ask farms to produce what sells not what is needed.

Conclusion

Despite all of these uncertainties, the bills are a step forward in helping farmers overcome their impediments in income growth. Simultaneously, however, the government should have strengthened the APMC functioning, the formulation (as per the Swaminathan committee), and implementation of the MSP System in private transactions and created a tripartite agreement and escrow account system for contract farming. The worrying factor is the hoarding of food stocks by traders for-profit motives and this could be a major issue for consumers. Time will tell.

Ultimately, to have a fresh start, all farmers, especially the small ones should be debt-free. How that can be done is something that needs to be explored by all parties.

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Brian Fernandes

Brian is an alumnus of Roshni Nilaya’s Post Graduate School of Social Work, HR Department and has 30 years of local and international HR and General Management experience. Journalism, poetry, and feature writing is a passion which he is now able to pursue at will. Additionally, he loves compering and hosting talk shows. He loves learning and imparting it; so, when time permits, he provides leadership facilitation and soft skills training to Postgraduate students and Corporates in Mangaluru and Bengaluru. Besides, he is an accomplished Toastmaster under the aegis of Toastamasters.org and a designated Distinguished Toast Master.

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