Decoding Farm Bills 2020

<p value="<amp-fit-text layout="fixed-height" min-font-size="6" max-font-size="72" height="80">Last week the Parliament passed three bills referred to as the farm bills. These were Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, and The Essential Commodities (Amendment) Bill. Farmers and opposition parties have relentlessly opposed these bills and the former even announced a ‘Bharat Band’ couple of days back. But, what was the reason behind this massive upheaval despite, the government saying it to be ‘historic’ for the farmers? It is a complicated topic so let’s break it down.Last week the Parliament passed three bills referred to as the farm bills. These were Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, and The Essential Commodities (Amendment) Bill. Farmers and opposition parties have relentlessly opposed these bills and the former even announced a ‘Bharat Band’ couple of days back. But, what was the reason behind this massive upheaval despite, the government saying it to be ‘historic’ for the farmers? It is a complicated topic so let’s break it down.

I will be explaining the Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 today as these are pretty similar topics and the Essential Commodities (Amendment) Bill (you can click on it if you want to read about it) would not fit in here.

The first question which arises is whether parliament had powers to make laws related to agriculture. In our constitution, there is a Union List which contains matter for which central government can make laws, then there is a State List for which state governments can make laws and then comes the concurrent list for which both central and state governments can make laws. The term ‘Agriculture’ comes four times in Union List but all those times it is made clear that Central Government can’t make laws on them. The same term comes eight times in State list and it is made clear that State Governments can make laws on them. Then the only legal reason why central government could have made such laws was that the ‘Trade and Commerce’ comes under Concurrent list. “Education is not considered a business but seen as an occupation”, Faizan Mustafa, a Law professor says, “the same way Agriculture should not be seen as a trade or commerce but something much greater than that.” ‘Food Stuffs’ is also an item in the concurrent list but if it is considered as agriculture then all the powers to make laws on it as I mentioned earlier in the State and Union list would then be of no use.

Now that we have covered the legality of these bills (which have now become acts), it is time for us to take a dive into it. Both these bills allow farmers to do inter as well as intra state trades beyond the premises of APMC markets (I will describe these later on in this piece) and without paying any taxes. It also allows farmers to sell their crops to cold storages, processing units or even directly to the consumers (you and I). It also promotes contract farming and all these reforms will ‘supposedly’ help to double the farmer’s income by 2022, as targeted by the government. This all seems to be a brilliant idea, but remember GST? No one could deny we needed ‘One Nation, One Tax’, yet a botched up implementation resulted into where we are today. Nevertheless, let’s not get into that and first understand what APMC markets are.

APMC Markets

Agricultural Produce Market Committee (or APMC) markets are the State run markets where the farmers take their crop and sell it to the licensed middlemen who in turn sell those to the processing units or the consumers. These markets are also responsible for ‘Price Discovery’. What this means is that a farmer gets to know the real rate for his crops according to the demand in the market. If a farmer is unable to sell his crop in the market, he can then sell it to the government at Minimum Support Price (or MSP) that is usually declared by the government before the harvesting season. It essentially works as a safety net for the farmers. At the same time, APMCs have not worked so perfectly. Many flaws have been identified in it over the years. Politicians and traders have dominated these markets, the provisions have not been implemented effectively, traders have passed on the taxes to the farmers, are some of the examples. So, is the bill helpful?

The Answer

These bills, to a large extent, provide freedom to the farmers. At the same time no regulation in the non- APMC trades can become a disaster. Since, there will be no ‘Price Discovery’ in these trades, it will become easy for the corporate (in case of contract farming) to arm twist the farmers and get the produce in whichever price they want. With this, a fear of declining APMC and abolishment of MSP have been set in the minds of farmers. Are these fears true?

Will the MSP End?

There has been a discriminate procurement of crops by the Food Corporation of India. According to the reports, about 70% of wheat grown in Punjab is procured through MSP, but only 11% wheat grown is procured in UP, the largest producer of wheat. This is same for other crops as well. Also, over the years FCI has been procuring more food than it needs and waste a lot of it at the end of the year, thus wasting money. Therefore, if not end, then the FCI will most probably limit its procurement process. This will bring down the price for food too as now more food is in the market. And clearly big farmers are not happy with this. Although the PM has assured that farmers will get MSP, but Nirmala Sitharaman, at the 6th World Congress on Rural and Agricultural Finance, organised by APRACA and NABARD, said “I want to place emphasis on eNAM. It is being pushed by the Centre and many States have agreed to join it. We are trying to get the States to scrap APMC.” I don’t know whether she had talked to states about it, but surely now an attractive, tax free, ‘Parallel’ system is being created that can be seen as a prominent proof of it.

Conclusion

A thing to note is that Agricultural Census of 2015-16 had pointed out that 86.2% of India’s operational landholdings are small and marginal (i.e. small than 2 acres). Therefore, most farmers simply don’t produce enough to gain profit in any of the markets. Unless, there is a good infrastructure of roads connecting the village, cold storages, better transports and many more, there is no way small farmers are going to benefit. Bihar did away with the APMC act in 2006, but there has been no impact in their income as there was no infrastructure. On the contrary, their income declined even more. Hence, no benefits will take place overnight, as shown by some media houses and politicians.

Also, even if we believe that these acts will bring some great changes in the agricultural sector, then why were they bulldozed through the parliament without a discussion with farm unions, trade unions and State governments? It has been four years since the eNAM platform was launched. It was to help the farmers facilitate their crops to sell it in the markets outside their local market and even state. Same promises were made at that time. Are these promises fulfilled? Or same incidents are taking place which happened at the time of GST, Demonetisation and eNAM? On that, your guess is as good as mine.

Sources:

1. ‘Why Farmers Are Protesting Against Laws Which Will      ‘Supposedly’ Help Them’ by Vivek Kaul
2. Prime Time with Ravish Kumar (Youtube)
3. Faizan Mustafa’s Legal awareness web series (Youtube)
4. ‘What are the Farm Bills and how will the affect farmers’ by Newslaundry (Youtube)