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Along with the three farm acts, government must address the miseries of farmers

Farm Acts 2020
Farm Acts 2020
(CAUTION: THE OPINIONS EXPRESSED IN THIS ARTICLE ARE THOSE OF THE AUTHOR’S OWN AND DO NOT REFLECT THE OPINIONS OR VIEWS OF THE RATIONAL DAILY IN ANY MANNER.)

Economic transformation of developing country like India depends on the performance of agriculture and its allied sector. Fragmentation of agricultural land, small and marginal size of land holdings and certain weaknesses such as dependence on weather, uncertainties in production and unpredictable market make Indian agriculture risky and inefficient in respect of both input and output management. For the majority of the farmers, farming is not entrepreneurship; it is a source of livelihood. As high as 70 percent of its rural households still depend primarily on agriculture for their livelihood, with 82 per cent of farmers being small and marginal.

The recent three Farm Acts, viz., (i) The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (ii) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and (iii) The Essential Commodities (Amendment) Ordinance, 2020 passed by the government in the parliament must be seen and studied in the context of farmers’ problems and size of land holding. Through these Acts government is trying to double the income of farmers and making them self-reliant and thereby achieving the objective of self-reliant India. The positive side of The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 is that farmer will be free to sell their produce inter-state and intra-state. This Act allows barrier free trade to farmers and traders of farm produce. This means that farmers and traders can now trade farm produce outside the physical premises of mandi or Agricultural Produce Market Committee (APMC) yard. Earlier agricultural product were sold only in the APMC Yard like warehouses, cold storage or mandis but this new Act has given freedom and choice to farmers to sell their farm produce outside the premises of APMC. We must remind here that situation of the most of the farmers in Bihar were deteriorated after abolition of APMC act in Bihar in 2006 as they had no option to store their produce. However, it did not impact much as about 97 per cent of the agricultural community of Bihar comprises small and marginal farmers who hardly left with surplus to sell. After 14 years of abolition of APMC act in Bihar, expert says, farmers have not had a favourable market for their produce. And perhaps this is the reason why farmers in Punjab and Haryana are protesting this Act. Further, state government will lose its revenue as under new Act they cannot impose any market fee or cess or levy on farmers’ produce. To get benefit of minimum support price (MSP), the farm

produce for which central government fixes MSP need to be compulsorily go through the APMC, through which state government controls mandis. When farm produce will be sold outside of the premises of APMC, there would be no APMC in the future, and consequently lost of MSP. Large-farmers may get benefit of freedom of selling farm produce inter-state and intra- state but under the new Act government cannot intervene to protect farmers when they would lose crops due to bad weather, war, famine, and natural calamity of grave nature. Their fear is genuine as most of the farmers are poor and not able to bear the loss. Besides most of the farmers are not able to bear the cost of transportation; and hence freedom of selling produce inter-state and intra-state for such farmers is useless. Another aspect of the Act is that governments want to get out of the agri-business. Consequently, farmers’ income will depend upon the free play of market forces. Price of farm produce will decrease when demand for farm produce falls down. Consequently, farmers will be squeezed between low prices of produce and high cost of production. In this situation, government will not intervene to protect farmers. We must know that corporate players are very smart as they purchase at low prices and sell at high prices.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 introduces a farming agreement between farmer and sponsor, wherein farmers are given guaranteed price of their produce and no sponsor can take over the ownership of land. Still farmers are protesting the Act just because of doubt that their ownership may be snatched and may not get price of their produce at the time of the delivery.

The government is trying to promote strong local linkages for domestic industries or to participate in the Global Value Chains (GVCs) wherein linkages are globally dispersed through The Essential Commodities (Amendment) Ordinance, 2020. Hence, government now would regulate only under extraordinary circumstances like war, famine, extraordinary price rise and natural calamity of grave nature. Under this stock limit is based on price rise and the government can take action only if there is: (i) hundred per cent increase in the retail price of horticultural produce; or (ii) fifty per cent increase in the retail price of non-perishable agricultural foodstuffs. Besides, processors and value chain participants of agricultural produce are exempted from such stock limit regulation provided stock limit of such persons do not exceed the overall ceiling of installed capacity of processing. The objective of the government is very clear as the government knows that income of farmers cannot be increased unless and until they move along with farming activity to a processor or global value chain. It is in our interest to promote local and global linkages for agriculture sector and allied activities through which farmers may be turned into processor and may be able to take the benefits of globalisation. Through these three Acts government is trying to achieve these objectives. However, farmers are protesting this act fearing that corporate investors may involve in hoarding of farm produce. Through hoarding of farm produce corporate investors in the next season would ask farmers to reduce the price of their farm produce as they would have had huge stock. Consequently, farmers would be in loss as there would be no buyers for their produce. Government, along with explaining the benefits of the three Acts must address the worries of farmers and answer why government is not intervening in the market through minimum support price on which Act seems to be silent.

Rajesh Pal

Written by Rajesh Pal

The author is a Professor at the Department of Economics in Mahatma Gandhi Kashi Vidyapith. He has a Ph.D. in economics and often writes on issues and concerns related to the economy.

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