Will the Farm Bills Benefit Our Farmers? Myth of Freeing the Farmer

Amandeep Sandhu
28 Sep 2020

It is a terrible irony that most of us, who know English and can read this article, who live in urban India, who left rural India back just a generation or two ago, are unable to understand the implications of the three Farmer Bills the government has managed to bulldoze through the Parliament and which now await the President’s nod to become Laws. These are Bills against which, despite the ongoing pandemic – officially over 58 lakh cases, close to 1 lakh deaths - thousands upon thousands of farmers and farm labour, at least ten Central Trade Unions, Opposition political parties, even Akali Dal, an ally of the ruling Bhartiya Janata Dal whose Cabinet Minister recently resigned, have called a Bharat Bandh on September 25th. 

A word on the process through which the Bills cleared Parliament: in Lok Sabha they passed because the incumbent government has huge numbers. However, in the Rajya Sabha, where the ruling party has only one-third seats, its allies were double-minded about the vote, the Deputy Chairman pushed the Bills through a contentious voice vote. The Deputy Chairman ignored the Opposition demand for a Select Committee to study the Bills and a division of vote. This inversion of process of the august House spells doom for democracy.

The role of rural, agrarian India in our nation’s economy: 42 per cent to 58 per cent of the nation is employed in the agriculture sector. Even after the neo-liberal thrust in the last three decades, agriculture contributes 15 percent of the GDP, while industry contributes 26 percent of the GDP. During the Coronavirus pandemic, in which every sector fell into a negative growth, it was only agriculture that contributed 3.4 per cent to the economy. Surely, there is some merit then in looking at the farm sector.

Leading agrarian thinker Devinder Sharma states: in 1971, in the earlier days of the Green Revolution, the MSP of wheat was Rs 76 per quintal and the paddy price was Rs 21 per quintal. In 2015, the MSP on wheat was Rs 1,450 per quintal—nineteen times the price in 1971. The MSP on paddy was Rs 1,400—sixty-seven times the price. If we were to create income parity between farming and any other trade, the wheat price should be Rs 7,600 per quintal and paddy should be Rs 5,100 per quintal. By way of contrast between the urban dweller and rural farmer, Sharma goes on to state: In the same period, 1971 to 2011, the basic salary plus dearness allowance of government employees had gone up 120-150 times, of college teachers 150-170 times, of school teachers 280-320 times, of corporate employees of the general manager rank 300 times, of a vice-president and above, 1,000 times. These numbers, more than anything else must tell us the vast gap in the growth graph of urban and rural societies. Another instance is above 3 lakh farmer and labour suicides in the last two decades or on an average 40 plus  farmers and labour per day.  

What ails the sector? The answer is layered and complex. When a few years had passed and the famer and labour suicides were not coming to an end, in 2004 the government set up the National Commission on Farmers under the leadership of Professor M.S. Swaminathan. The Commission submitted its final report on October 4, 2006. Since 2007, the nation’s farmers and traders have routinely protested for the implementation of the Swaminathan Report. Specifically, for one of the key recommendations of the Report:  Minimum Support Price the farmers earn must be more than fifty per cent of cost of production of farm produce. This recommendation led the BJP to include the promise of doubling MSP by 2022 in its 2014 election manifesto. It was a nice catchy phrase to gather attention. And it did.
However, the Report in five volumes talks not only about MSP but also about other aspects: land reforms by redistributing ceiling-surplus land, substantial investment in irrigation through canals, drainage and the Million Well scheme, soil testing laboratories, a cap on interest rates levied on farm loans, primary health centres and suicide prevention facilities, and a food guarantee programme through local self-help groups, and so on. 

However, instead of doing all that, really working to make the agrarian sector Atma Nirbhar, self-reliant, the Bills now propose a vast array of changes which will disproportionately affect the farmer but aid big traders and businesses which are now being allowed into the sector. Every new law seeks to address and amend some past wrong – either law or practice. At least, notionally. The new Farmer Bills also claim to do that. For this the two wrongs they have chosen are, a) Agriculture Produce Marketing Committees (APMC) and b) middle-men. 

APMCs are a key part of the farm produce procurement mechanism. In states where they are implemented, APMCs have two mandates: a) ensure that farmers are not exploited by intermediaries (or money lenders) who compel farmers to sell their produce at a low price; and b) all food produce should first be brought to a market yard and then sold through auction. In intention, this looks very nice but issues are with execution. In many ways, these issues are because of the second wrong factor – middle-men.

Middle-men are intermediaries - commission agent or money lender - who stand between the famers and the markets, even APMCs. The farmer is connected with middle-men because of the nature and uncertainty of his job. What the ATM is to the salaried urban person, the money-lender is to the farmer. In the absence of any other income, the farmer goes to the middle-man for all his needs: a sudden crop disease, urgent hospitalization, children’s school fees, death of cattle, need to build a new room, and such. No bank, even co-operatives, will advance the farmer loan for such expenses at such short notice.  

That is why, instead of APMCs, the farmers deal with middle-men. No doubt, the relationship between a famer and a middle-man is not always smooth. Often the farmer suicides are due to their inability to pay the loans they incur from middle-men, from co-operatives, from banks. Around 80 per cent of our farmers own less than two hectares of land and are neck-deep in loans. That is why, according to the BJP government appointed Shanta Kumar Committee, only 6 per cent of India’s farmers get MSP on their produce. This is not only because of middle-men buying produce at lesser rates but also market factors which in spite of the protection APMC assures continue to operate. Yet, until now, at least on paper, in case of an extreme price fall, the government was obliged to intervene. The Swaminathan Report also talks about the need for changes to APMC Acts which push them from only marketing, storage and processing of agriculture produce to promoting grading, branding, packaging and development of domestic and international markets.
Given this scenario, let us look at the three new Bills:

1. The Essential Commodities (Amendment) Bill, 2020, amends the existing act to remove all agricultural commodities from the list of essential commodities. This is a move which allows private players to stockpile as much farm produce, food grains as they wish and release it in markets in a way that they control the prices and maximise their profits. As of now, India has enough food stock in its godowns but that cannot be guaranteed for the future. What if we again have a food crisis? Like in the 1960s when we ushered in the Green Revolution in then Punjab, now Punjab and Haryana. With this Bill becoming Law, the government is absolved of all responsibility towards the nation. It will also affect the Public Distribution System.

2. The Farming Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, promotes barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets - APMC - notified under State Agricultural Produce Marketing legislations. This opens up markets beyond APMCs. The idea that farmer can take his grain anywhere is ridiculous because how will the farmer transport the yield? At an average Punjab grows 20 quintals paddy or wheat per acre. Would a farmer who has say contracted 10 acres then carry around 200 quintals around the country gawking at prices in various markets? The fact is with no limits of stockpiling, private players will enter to buy and stock the produce. Since the markets would be open, there would be no data with the government. Slowly, the APMC will become redundant and with APMCs crashing, the state's income through taxes will crash leading to shrinking of capacity to maintain rural infrastructure notably link roads, smaller mandis, grain markets and so on. 

3. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, provides for a national framework for agreements with the farmer by any third party. Though the Bill is titled positively, the fact is private players might initially give better than APMC rates but once entrenched they will drop prices. With no law, the farmers will not even be able to go to court. At most there will be a committee but we know how judgements bend towards bribes. The Bill also enables contract farming. With most farmers small and marginal, bigger players will contract their land and put the famers to work on the land. This compromises the farmer sovereignty and reverts the farmers back to serfdom.  

The Bills thus move the middle-men out of the middle but make them party with the big players who will gradually control the agrarian sector. While the Bills might lead to developing a quicker agricultural products processing industry, it does not address even the farm labour. The example of Bihar which removed APMCs in 2006 which led to extreme depression of prices of produce is in front of all of us. Though the Prime Minister has repeatedly assured that APMCs and MSP will stay, the Bills themselves do not guarantee these. The farmers of Punjab and Haryana – earliest to take up the cudgels against the Bills because that is where MSP is most realised – are demanding that if the PM is assuring that APMCs and MSP will stay, why does the government not bring in a fresh fourth Bill stating this guarantee. 

The reason these Bills contradict the Constitution is because agriculture is a state subject. The Centre cannot bring in ad hoc laws to amend the agrarian sector. It is on this basis that Kerala assembly has passed a resolution to take the matter to the Supreme Court. The Punjab government also passed a resolution against the Centre’s Bills. 
Now the ball is in the court of the President. As per precedent the President gives the nod to all Bills that come up to him but who knows, given the ground resistance, he might demur. If the Bills succeed, the government’s aim to use the excuse of benefitting the farmer to benefit the corporates will succeed. If the Bills fail at this stage or in the courts, the BJP will always have the excuse that they tried their best and will no longer even try to address the agrarian woes. 

The BJP says this is a move towards ‘One Nation, One Market’. We know that phrase was used last time when the unified Goods and Service Tax was ushered. Since the implementation of GST, the Centre found it hard to compensate the states. During the pandemic, the Finance Minister blamed its woes on ‘Act of God’ and advised the States to seek loan from the Reserve Bank of India. This loan for the money consumers had already paid as state taxes that the Centre had gobbled up. The Farmer bills are being hailed as a ‘1991 neo-liberal’ reforms to free the farmer. We know what happened when we opened the Education and Health services in the country. The situation worsened; the services plummeted. These Farmer Bills will do the same to the agrarian sector.   

(Amandeep Sandhu is a Bangalore based free lance journalist. His latest book is PANJAB: Journeys Through Fault Lines)
 

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