What is Agriculture bill 2020? Why farmers are opposing it?

The government has undertaken landmark agricultural reforms, freeing farmers from restrictions on sale of their produce and ending the monopoly of traders. It has also opened the window for private capital by allowing farmers to enter into deals with large buyers such as exporters and retailers. This is expected to catalyse the sector, bring in much-needed private investment and boost rural incomes.

What is the matter ?😕

Three months ago when Parliament was not in session, the Government of India issued three ordinances. These three ordinances were about agriculture and farming. Now one of the ordinances has been passed in the Lok Sabha. The other two are on the way.

You would imagine that farmers would welcome any reform that gives them more freedom.
But this ‘granting of freedom’ has met with a big protests. Farmers in Punjab and Haryana have come to the streets. It has spilled on to highways. Opposition parties too are criticising the ordinance, but that is expected. The ruling party in Punjab is opposing the new law, but asking farmers to not blockade traffic. The most awkward thing for the ruling party in center was that the Union food processing industries minister (Harsimrat Kaur) resigned from the cabinet. She resigned in protest because she claimed that the new law is anti-farmer. But in the four-page resignation letter written to the prime minister she did not spell out how, exactly, the new reformist law was anti-farmer. She belongs to Alkali Dal, a coalition partner to BJP.

The present law dilutes the power of the middleman. The farmer is now free to sell his produce to whoever he wants to at whatever price he negotiates. It basically removes the middleman, the adhtiya, who operate in the mandi, i.e. the Agricultural Produce Marketing Committee(APMC). Of course, the option of selling in the APMC is still there. So the farmer has more options, and how can that be a bad thing?

It is because of what happens to the future of Minimum Support Price (MSP). Every year the government has a massive procurement programme to buy large quantities of wheat and rice and other crops at the MSP. This is done only through the mandi. This past rabi season, which ended in April, the government procured five million tonnes of wheat in just one state, Punjab. Farmers got assured price of 1840 rupees per quintal. That was reasonably good income. The state government too collected handsome mandi tax of 8.5 per cent of total value. In fact the state of Punjab crucially depends on mandi tax revenue, which is above and outside the GST. If the mandi and APMC system is diluted, or dismantled, then there is no guarantee that the farmer will get assured minimum price. Only when government procurement is done, that too through the mandi, does the farmer get full price.

The prime minister and his government has assured that the MSP system will continue, but it is not clear how this will work in practice. For instance in Bihar, not even 1 per cent of targeted procurement of wheat happened at MSP. In fact APMC was dismantled in Bihar in 2006, and it has not really benefited the farmers. For sale that happens directly between farmer and private buyer there is no way to ensure MSP.

The government procurement system acts as a safety cushion, and adds to the bargaining power of the farmer. If the mandi system collapses, the farmer cannot credibly tell the customer: Give me the MSP or else I am going to sell my produce in the mandi or APMC. As such only states like Punjab and Haryana Dominantly fulfil the targeted procurement. Other states farmers are more behind them.

In Maharashtra a couple of years ago, the state government told traders that they had to pay farmers MSP for toor dal. The trades simply boycotted, despite threats of imprisonment. So MSP can be enforced only through government intervention, which requires the mandi system to coexist along with private trade outside. Incidentally with fall in mandi sales traffic, states like Punjab will also lose mandi tax revenue. So they too are upset.

Now you see: Farmers are agitating because they fear that diluting the mandi and APMC system would mean eventual closing down of the MSP system. To add to this, while the government says we are allowing free market access, it has banned the exports of onions, which could have proved lucrative to farmers. So all this mixed messaging is why the farmers are nervous and agitating.

Brief of Major Points related to this Bill:

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

·         Farmers are free to sell their produce to anybody, anywhere

·         Removes all barriers for intra and inter-state trade in agricultural produce

·         It supports seamless electronic trade

How does it help?

·         Ends the monopoly of traders

·         Engenders competition among buyers

·         Yields better returns to farmers and raises incomes

·         Farm produce can move freely from surplus to deficit regions

·         Creates national market; high cost mandis will go

·         Consumer gets better and cheaper products

 Oppose because?

·         Middleman “adhitya” will loose their jobs.

The Essential Commodities (Amendment) Bill, 2020

·        Removes cereals, pulses, oilseed, edible oils, onion and potatoes from the list of essential commodities

·       Does away with imposition of stock limit except under exceptional conditions

How does it help?

·         Ends harassment of businessmen and traders

·         Likely to attract private investment in cold storage, warehouses, processing

·         Helps reduce tonnes of wastage in Govt Godowns and also storage facilities improve

 

Oppose beacause?

·         Minimum selling price “MSP” which farmers are getting (Dominantly from Punjab and Haryana) by govt on their produce will decrease as their will be no minimum storage conditions.

Farmers (Empowerment & Protection) Agreement of Price Assurance & Farm Services Bill

·         The bill relates to contract farming

·         Allows farmers to tie up with large buyers, exporters and retailers

How does it help?

·         Farmer will have assured price before sowing

·         Transfers market risk from farmer to sponsor

·         Gives farmers access to high quality seeds, fertilisers, pesticides

·         Will attract private investment in farming and link farms to global markets

Oppose Because?

·         Threat of Corporate Dominance & Politics in which farmer might not get their price.

Why is there opposition to these reforms?

·         The measures threaten the elaborate system mediating between farmers and consumers

·         Agri-produce selling involves commission agents, state mandis and bureaucracy

·         APMC mandis where farmers are forced to sell are heavily politicised

·         Commission agents get a 2-2.5% cut in sales and have a lot of political clout

·         If the reforms are implemented, this commission and patronage structure will disappear

·         Hardly 6% of total farmers in country get benefitted from MSP and Govt purchase and in that too Punjab & Haryana farmers get most benefit from this. So we can see that the protests are mainly centered over Punjab, Haryana & west UP.  

Why these reforms were needed

India has Great potential in agriculture, but archaic laws and regulations have held back investments and depressed productivity.

Reasons for decline

·         No major reform for decades

·         Draconian laws against businesses that need to keep food stocks

·         Severe restrictions on sale of farm produce

·         Middlemen grab a big chunk of profit, while farmers suffer

·         Poor access to high quality farm inputs

C

So from this whole article Conclusion comes that for the benefit of some farmers the Interest of other farmers shall not be criticized and on other hand there must be some regulations and laws to protect and give farmers their desired rates and not result in corporate politics in which farmers get stuck and suicide remains the only option.

As per some economist this model has failed in USA & Europe so we should not adopt a failed model. But this theory is not enough to give such statement as there are many factors which leads to failure of any model. As per my views this sector has a must need of a reform from decades. So we should welcome this bill as a change.

This are my personal views it can change from person to person