The Witty Stride

  – Satyakam Ray

A lot of political humdrum has already occurred over the issue. Still, ordinary people are unaware of what is happening with the farm bills. Many don’t understand the backlash. This article tries to demystify the farm bills for everyone. Let’s tackle the issue with empathy and logic. 

The crux of the protest lies in the three farm bills passed in the parliament’s upper and lower houses. Then, the president of India signed them, making them law.

What are the three farm bills?

• The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
• The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
• The Essential Commodities (Amendment) Bill, 2020

Let’s examine the farm bills and laws, including their pros and cons. Whenever necessary, relevant examples will be provided to support the argument.

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

It helps create an ecosystem. Farmers and traders have the freedom to choose when to buy and sell produce. The salient features are given below.

• Any farmer, trader, or electronic trading and exchange platform can carry on inter-state trade. This is conditional on the provisions of this Act. They are also free to engage in intra-state trade and commerce in farmers’ produce within the area. (Chapter II, section 3)
• No market fee, cess, or levy shall be charged on any farmer. This applies under any State APMC Act or any other State law. The authorities will not impose any market fee. Farmers will be exempt from any cess or levy. The same applies to any trader. Electronic trading and transaction platforms for scheduled farmers’ produce in a trade area are also exempt. Here, trade gate refers to any area, location, or production site. It includes collection and aggregation points such as farm gates, factory premises, warehouses, silos, and cold storage facilities. It also encompasses any other structure or area. (chapter II, section 6)
• It provides a facilitative framework for electronic trading. 

In simplified terms, a parallel trading system will be available outside the APMC mandis. No tax will be levied on private entities, while government-run mandis will continue to charge farmers a tax. A free-market concept will emerge in India. Private players can engage with farmers. This will lead to increased competition and better pricing. It will ultimately result in higher incomes for farmers. A unified farming system will enable farmers to sell their produce across the diaspora. Government-run mandis will stay as an optional backup. The intermediaries in the mandi system will be removed. That would be a win-win situation for everyone, according to the government. Yes, on paper!

If everything is so good, then why are the farmers still protesting? Are they misguided, or are they smart enough to know the ploy? Here’s the analysis.

• Taxes will be levied in government mandis as usual. Part of the tax revenue is allocated to the maintenance of the mandis. The tax rate in Punjab is 8.5%, while it is 6.5% in Haryana. Nevertheless, there will be no taxes during transactions with private players. This implies that farmers will be more inclined to sell their produce outside mandis. There is a growing concern among the farming community. They worry that the mandi system will become obsolete over the next 2-3 years. This change may leave their future in the hands of large corporations. Some may argue that the fear is far-fetched. Yet, we must consider the cunning of private players in other sectors. These sectors include healthcare, telecom, and transportation. The fear is not entirely unfounded. But who has seen the future?
• The primary contention is that the bill omits the Medicare Secondary Payer (MSP) provision. The minimum support price (MSP) is the minimum price the government ensures farmers get for specific crops in the mandis. Yet, no law legalizes the Minimum Support Price (MSP). PM Modi has repeatedly stated that the MSP wouldn’t be affected. The farmers demand that the Minimum Support Price (MSP) be legalized in government mandis. Some are even requesting that MSP be made legal outside the Mandis. Nonetheless, as outlined in writing, the government’s stance on MSP must be clarified today. Who would listen to the oral promise if a dispute were to occur between the farmer and the private players?
• According to the farmers, the so-called intermediaries who exploit farmers are service providers. They perform various menial tasks for farmers, including loading and unloading produce at mandis, for a commission. They have personal relationships with farmers. In emergencies, they serve as an instant credit setup; if these people are removed from the scene, significant job losses will occur. Farmers will also lose a valuable support system. The ‘exploiting’ middleman narrative is way too nuanced to comprehend. It doesn’t mean the system is perfect. It’s flawed to some extent and needs reform to remove the problems, rather than being scrapped entirely.
• Price discovery is a sensitive topic for farmers. Typically, in mandis, this price discovery occurs when farmers interact directly with traders. Still, with private players, there is no precise mechanism for price discovery. Obviously, between a small-scale farmer and a representative of a corporation, the negotiation terms are common knowledge: corporations prioritize profits above all else. They do business, not charity. It’s like removing the traditional intermediaries and engaging in more severe exploitation.
• The entire concept of barrier-free intrastate and interstate crop sales is too impractical. The farmers’ suicides and their sorrowful financial state make it clear. It would be overly optimistic to expect a farmer from Odisha to sell his produce in Bangalore, Karnataka. Who will pay the transportation fee? In practice, intra-district crop sales are more burdensome for farmers in rural economies. Forget about doing business all around the country!

2. The Farmer (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

The salient features of the bill are given below.

• It will empower farmers to engage with processors, wholesalers, aggregators, large retailers, exporters, etc., on a level playing field. Price assurance will be provided to farmers even before sowing. If market prices rise, farmers will be entitled to this price, in addition to the minimum cost.
• It will reduce marketing costs and increase farmers’ income.
• It will transfer the risk of market unpredictability from the farmer to the sponsor. Due to prior price determination, farmers will be protected from market price fluctuations.

Everything about the bill agrees with the farmer’s agreement. The principal’s primary concern is the absence of a provision allowing farmers to seek recourse in civil court. This applies when there is a dispute between the farmer and the private player. The farmer cannot go to court if they disagree with the authority’s decision. At best, they can go to the SDM or the Additional Collector for grievance redressal. These officials have the power of a civil court. The law protects the bureaucracy. As a result, no action can be taken against them if any irregularity occurs. In a way, it strengthened contract farming and the bureaucratic system. 

Do specific, valid questions arise about the dispute mechanism?

• What if the bureaucrat is corrupt and favors the interests of the rich corporate lobby?
• Is the farmer educated enough to handle the nuisance of farm agreements? Can he decide on a suitable price? Is he capable of lobbying the SDM/AC for his rights in case of any dispute in the farm agreement?

3. The Essential Commodities (Amendment) Bill, 2020

The salient features of the bill are given below.

• The supply of foodstuffs, including cereals, pulses, potatoes, onions, edible oilseeds, and oils, may be regulated under extraordinary circumstances. The Central Government may specify these by notification in the Official Gazette. These circumstances may include war, famine, and a significant rise in severe environmental catastrophes.
• Increase the retail price of horticultural produce by fifty percent, and increase the retail price of non-perishable agricultural foodstuffs. An order regulating the stock limit for farm produce may be issued under this Act. This can occur only if there is a 100% increase. Any action imposing a stock limit shall be based on a price rise.

In simpler terms, the government will not limit the stocking of foodstuffs. It will regulate the price only during war, famine, or extraordinary price increases. 

The main contention of the protest is about large, wealthy corporate entities. They will purchase fruit and vegetables from farmers at low prices and store them indefinitely in their cold storage facilities. This will lead to hoarding and an artificial imbalance between demand and supply. If the big corporate players control prices, it will significantly hurt the pockets of ordinary middle-class individuals. One who has the stock controls the price. One who holds the price has a monopoly on the market.

The last bill is not dangerous for farmers; it harms middle-class folks like you and me. If these laws are implemented, food prices will increase.