Farm laws

ABSTRACT

India is an agriculture dominant country even today more than half of the population is engaged in this field, last year approximately 58% of the Indian population were engaged in the agriculture field. But even though a large proportion of the population is engaged in this field the problems faced by the farmers are no less.

Farmers face a lot of problems such as getting the right price for their produce, warehousing their produce, and small and fragmented landholding. When India first got independence there was a lack of an organised management system. Farmers had to sell their produce at low prices as they needed money to pay off the loan that they had taken to sow the same crops and then had to take another loan to sow them again. Farmers were trapped in this vicious cycle, never able to get the right prices because of the unions formed by the traders to take advantage of these desperate peasants, always lagging in debt...

The total national income produced by the agriculture sector in India has declined from 50% in 1950 to less than 18% in 2007-08. The problems of farmers are not becoming any less as the years pass by, even today farmers are dying of hunger, the very person who makes sure that your houses have food is dying of hunger. Farmers and others in the agricultural trade had the highest suicide rate of all occupations from 1992 to 2010. In 2020 alone, 5,098 of these agricultural workers died by suicide, an 18% rise from the 4,324 who died last year.

The inequality in landholdings is so much that only 0.4% of farmers have more than ten-hectare land while almost 70% of the farmers are marginal farmers who have land less than one hectare which is not even enough to grow food for a year for a household of 5 people.

MSP was introduced in 1965 in India, it has helped some farmers, but the Food Corporation of India stated that less than 6% of farmers used MSP. These are mostly Punjab or Haryana-based farmers. The problem here is that most farmers don’t know how this system works and are unaware of the benefits they could acquire from it.

APMCs (Agricultural Produce & Livestock Market Committee) were introduced by the government to help the farmer trade their goods safely but it has also created some problems for them. There are only 7000 APMC mandi throughout India and each farmer must sell their produce at a specific mandi assigned to their geographical area. For such a large country 7000 mandis are merely enough, so farmers had to go a long distance to sell their produce.

WHAT WERE THE THREE FARM LAWS?

The Indian Agriculture Act of 2020, often referred to as the 'Farm Bills', was a set of three acts introduced by India's Parliament in September 2020. The bills were adopted by the Lok Sabha on September 17, 2020, and the Rajya Sabha on September 20, 2020.

THE THREE BILLS WERE: -

1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act

This bill stated that the farmers and traders are free to sell and purchase farmers’ produce anywhere they want which facilitates remunerative prices through competitive alternative trading channels. Farmers are no longer obliged to sell their products at specified markets and traders no longer are required to only buy from these markets. These bills were proposed to promote efficient, transparent and barrier-free inter-State and intra-State trade and commerce of farmers’ produce outside the physical premises of markets. Any licence-holder trader can buy the produce from the farmers at a mutually agreed price. This trade of farm produce will be free of mandi tax imposed by the state governments.

2. The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act

This bill was implemented by the Union Cabinet on 5 June 2020. The bill stated that the farmers are allowed to do contract farming and can now market their products freely. It was an Act to provide for a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters, or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework fairly and transparently.

3. The Essential Commodities (Amendment) Act

This act was an amendment to an existing Essential Commodities Act. This bill allowed the central government to regulate the supply of certain food items only under extraordinary circumstances (such as war and famine). Stock limits may be imposed on agricultural produce only if steep price rises. This law freed items such as food grains, pulses, edible oils, and onion for trade except in extraordinary situations. It also deregulated these items' production, storage, movement, and sale.

WHY THESE LAWS WERE MADE (BENEFITS OF THE BILL)

The government had presented these laws as reforms akin to the 1991-opening of the Indian economy linking it with the globalized markets. The farm laws were introduced by the government for a set of reasons which would lead to the betterment of the farming society.

Following are the reasons why the government made these laws: -

1. New opportunities –

The laws open up new opportunities for farmers it provided them with an alternate platform to sell their produce in the open market. The government said the new laws will help strengthen basic farm sector infrastructure through greater private investments.

2. Financial betterment-

The government introduced these agriculture bills to bring structural reforms to the agriculture sector. This step was taken by the government to boost the agriculture sector and double the income of the farmers by 2022. The government thought that by freeing the agriculture sector from the burden of selling their produce at the specified mandi, farmers will get better prices for their agricultural products. Farmers selling their produce directly to corporates and exporters will also motivate the corporate sector and exporters to invest in the agro-ecosystem.

3. Alternatives-

The APMC mandi would still be functional so the farmers will have the option of selling their produce to government agencies.

4. No APMC Tax-

APMC use to charge 1% to 10% on various goods, but after the law, no state or central tax will be levied on trade outside the state markets.

5. Contract farming-

At present farmers are dependent on rates fixed by the government for an income. But this bill allows them to sell their products anywhere they want, they can even do contract farming which would relieve them from being dependent on the government and get low rates on sales. Through contract farming, they can connect with big traders and exporters and earn profits. In contract farming no private agencies will be allowed to do anything with farmers’ land nor will there be any construction on farmers’ land under the contract farming ordinance, in this way farmers’ land will be protected and no claim could be made on them.

6. New investments-

The new bill will encourage more investment in agriculture, as it will increase competition. Private investment will further strengthen farming infrastructure and create employment opportunities.

7. Easy entrance into the agriculture sector-

The new bill removed the law that only people with a license can purchase agricultural produce of farmers in the trade area outside the APMC mandi, now anyone with a PAN card or any other document acquainted with the Central government can join the trade. This would ease trade in agricultural products and will benefit the farmer.

8. Less risk for farmers-

It seeks to transfer the risk of market unpredictability from farmers to sponsors. Besides giving them access to modern tech and better inputs, it also seeks to boost farmer income by reducing the cost of marketing.

WHY THESE LAWS WERE OPPOSED

1. Hoarding of food –

Before the bill was released many essential items were on the Essential Commodities List and so the supply regulation was in hands of the government but now that most of the agriculture products have been removed from the list due to the law, it might lead to price volatility and hoarding of food to increase their price.

2. Unemployment-

If the entire farm trade moves out of mandis the commission agents in states will lose their business

3. Small farmers-

It will affect the small farmers as many sponsors may not like to deal with a multitude of small and marginal farmers. They would rather choose a smaller number of large farmers.

4. Illiteracy leading to scam-

Farmers who don’t know to read and write might get exploited by the sponsors.

5. MSP-

The main sticking point for farmers’ protest. When the laws were not established, the farmers depended on the Minimum Support Price (MSP) system for an assured stable income. The Farmers’ Produce Trade and Commerce Act allows farmers to deal outside the APMC mandi and the farmers are worried that this would lead to the government buying less from the mandi and MSP would be of no benefit to them. Before the bills were made MSP was used by only 6% of farmers but most of these farmers were from Punjab and Haryana and so they were the most vocal in these protests. They demanded that MSP should be applied both inside APMC mandis and outside.

6. State government-

When the laws were not made all the farmers sold their produce at the APMC mandi and they paid a fee that went to the state government of that particular state. Now that the law has allowed the farmers to deal outside the market, they would no longer have to pay the fees and so the state government would suffer a huge loss and so this law is highly opposed by the opposition parties and state governments.

Questionnaire

INSTRUCTIONS: -

Please fill the below questions according to your perspective and according to how you feel about the question asked

Name- Place- Age-

Q1 How much land do you have? (In hectare)

Q2 What type of farmer are you?

o Marginal Farmers (1 hectare and below)

o Small Farmers (1-2 hectares)

o Semi- Medium Farmers (2-4 hectares)

o Medium Farmers (4-10 hectares)

o Large Farmers (10 hectares and above)

Q3 Do you produce anything to sell in the market?

o Yes

o No

Q4 If yes, where do you sell your agricultural produce?

o APMC mandi

o Government

o Middleman

Q5 How many seasons do you produce crops? (Fill all the season you grow in)

o Rabi season

o Kharif season

o Zaid season

Q6 Do you support the government allowing farmers to sell their produce outside the APMC mandi?

o Yes

o No

Q7 Do you support contract farming?

o Yes

o No

Q8 Do you support MSP?

o Yes

o No

Q9 Do you agree that this bill is in the favor of the farmers?

o Yes

o No

o Maybe if we made some changes

Q10 What changes do you think the government should make in this bill

CONCLUSION

The conclusion here is being drawn from the responses to the above questionnaire received. The sample space on which the conclusion is drawn is 25 responses. The response has been answered by farmers from various places like Hardoi (UP), Khem Karan (Punjab), Jallalpur (UP) etc.

Out of 25, only 2 (8%) are not commercial farmers both being small farmers. The rest 23 people when asked about where they sell their produce answered in variety giving the highest percentage (19 responses) to Middlemen. With 12 out 25 people selling in more than one place it was concluded that most large farmers are the ones who sell their products in all the three places (APMC, Government, Middlemen) and the small or marginal mostly sell their products to only one of the three as they don’t have much to sell and try to earn as much as possible from their small produce.

When asked about in which season you grow your crops 100% of respondents opted for the Kharif season among other seasons. This is done because of the reason that the Kharif season commences with the start of the rainy season and in India, mostly water greedy crops are grown.

80% of the respondents support the government allowing farmers to sell their produce outside the APMC mandi, considering that there are 20 farmers having land of more than 2 hectares. From these answers to the questionnaire, we can interpret that farmers support selling out of the APMC mandi and even 52% of them support contract farming as contract farming creates an advantage for big farmers. Contract farming was introduced by the government in these laws as it would help bring updated technology and better equipment into the agriculture sector. This was disapproved by the Small and Marginal farmers because private firms mainly give their consignment to Large and Medium farmers and ignore the low landholding farmers.

100% of the farmers opted in support of the MSP (Minimum Support Price). It was the main point of protest by the farmers. Farmers believed that with these laws the MSP system was being removed, even though the government assured them that the MSP system was not being targeted in any way by the new laws. But even though it was not being removed, farmers knew that allowing the private sector into the agriculture sector would restrict the buying of government from the farmers on MSP price and so they will lose their assured minimum wage. Ironically, a census was conducted by the government in which it was shown that only 6% of farmers use MSP and that also from Punjab and Haryana but now even farmers from UP and various others are supporting the MSP. The government bared a lot of costs because of the MSP(Minimum Support Price) and PDS(Public Distribution System) and so removing them also benefited their budget before the laws were retreated by the government.

Only 16% of farmers feel that these laws are in the favour of the farmers. 40% say that these laws are not in favour of them and 44% of farmers feel that if some changes were made these laws could be accepted by them. When in the final question these respondents were asked about what they think the changes should be their answers varied from, “don’t remove MSP” “Let the farmers go to court against these laws” “Let the farmers sell their produce wherever they want”, to “no changes”. Interpretation from these replies can be drawn that some farmers feel that the MSP system is being attacked by these laws and that their assured income will not be so assured anymore. The thing here is that the government hasn’t removed the MSP system, but the farmers have misinterpreted the law and they feel like the government buying under MSP would fall.

Some of the farmers also responded saying that “middlemen are eating away price but the same would happen for final purchase as well in absence of MSP” which again points out that the farmers are interpreting that MSP is being removed. Most farmers have no understanding of what these laws are and are being misled by those who oppose them into believing that they are simply ways for the government to deceive and oppress them. The main problem with these laws was that before applying them, the government didn’t explain them to the people whom these laws were affecting, the farmers, and also that they did not consult enough farmers before constructing the laws.

Bibliography

https://economictimes.indiatimes.com/news/india/how-the-three-farm-laws-will-be-repealed/articleshow/87796136.cms?from=mdr

https://www.business-standard.com/article/current-affairs/benefits-drawbacks-of-the-3-farm-laws-at-the-heart-of-farmers-protests-120120600592_1.html

https://www.indiatoday.in/india/story/three-farm-laws-to-be-rolled-back-what-were-they-all-about-1878746-2021-11-19

https://www.downtoearth.org.in/news/agriculture/government-will-repeal-all-3-farm-laws-modi-80280