Farm law reforms leaves India’s lawmakers divided

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IAC Photo by Parivartan Sharma

The Indian parliament’s approval of two key farm bills that aim to reform agricultural markets has ignited a storm of protests with opinions divided over whether their legislation will benefit farmers, Biman Mukherji and Ritwik Sinha report.

The parliament’s upper house on Sunday approved the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020.

While the aim of these laws are to facilitate barrier-free trade of farm produce outside the markets notified under the various state Agriculture Produce Marketing Committees (APMC) laws, opposition leaders say they will result in dismantling of minimum support prices and trade manipulation by big business houses.

Farmers will have the right to sell their produce anywhere in the country, removing a regulation that compelled them to sell at nearby notified markets. Private wholesale markets can also be established now that compete with APMC markets.

Uneasy path to new laws
Prime Minister Narendra Modi said the approval of the two laws are a  “watershed moment” in the history of Indian agriculture as it will remove the “various constraints” on farmers who traditionally have to go through middlemen to sell their crop.

“These bills will add impetus to the efforts to double income of farmers and ensure greater prosperity for them,”  he said.

On the other hand, opposition Congress Party leader Rahul Gandhi said the laws amounted to “death orders against farmers” as private competitors to APMC markets are being allowed without providing any guarantee that MSPs will be paid to farmers.

“Nobody is opposed to agri-reforms. But the rigidity shown by the government in not paying heed to the MSP price assurance on major commodities is difficult to understand,” said Chaudhary Pushpendra Singh, President, Kisan Shakti Sangh, a farmers body in western Uttar Pradesh.

“It may further fuel agitation in other parts of the country as farmers in other states were hopeful that the government would not rush into it,” he said, adding that they were asking for MSP for only 23 commodities.

Singh said that without an assured MSP for these commodities big businesses may try to bargain down farmers while buying their produce and later sell at huge profits when the crops are not in season.     

BJP leaders say the concerns are unwarranted as Agriculture Minister Narendra Sinbgh Tomar had already assured that MSPs won’t be removed.

Uncompetitive Legacy

Farm economist Suresh Pal said the proposal to reform the state agricultural markets had been in the works for a long time and the new laws would improve farmers competitiveness.

“There seems to be some communication gap over MSPs, I don’t foresee any problems,”  he said.

If corporates try to manipulate prices of farm commodities, the government can always intervene through regulatory agencies to prevent misuse, he said.

Typically, middlemen end up cornering the most profits and both the farmers and end-consumers suffer because of malpractices, analysts said.

“In most cases the largest beneficiaries are middlemen and this has been a major issue for the government, said Sunil Sinha, principal economist at India Ratings.  

“The APMC structure was not allowing it to happen. If you are allowing alternate mandis (wholesale markets) which are corporatized, farmers have the option of not going to APMC,” he said. “All of that will change the game.”

Economists also did not see any major issues in the proposal to encourage corporate farming. Some have expressed apprehension that allowing more corporate farming can put farmers at a disadvantage since business houses have greater influence.

Madan Sabnavis, chief economist at CARE Ratings, said that past experience shows that farmers renege on their contracts more often than corporates. Rather a conducive environment needs to be established for establishing win-win relationships.

Even though India has one of the largest proportions of arable land under agriculture, crop productivity has been among the lowest in the world due to lack of scientific inputs and technology. Farm incomes also tend to be low and drive farmers into a vicious cycle of  debt and poverty.

Biman Mukherji is a columnist and consulting editor at Indoasiancommodities.com. He has worked for international news organisations such as Reuters, The Wall Street Journal as well as for newspapers like The Times of India. He can be reached at biman.mukherji@indoasiancommodities.in

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