Updated: November 30, 2020 7:09:43 am
Farmers protest on the Singhu border during their ‘Delhi Chalo’ march against the Center’s agricultural reform laws, in New Delhi on Sunday, November 29, 2020. (PTI Photo: Atul Yadav)
Even when the farmer protests against the three new laws related to agriculture, gained momentum, one thing seems obvious: much of the opposition is actually just one of the three laws. Even in that one, the Law on Trade and Trade in Agricultural Products (Promotion and Facilitation), there are only some contentious provisions that, although key, can leave the doors open for negotiation.
The other two laws
Consider first the two laws that should not be a serious cause of distress for farmers.
The Essential Products (Amendment) Act seeks to eliminate the Center’s powers to impose storage limits on food products, except under “extraordinary conditions.” These could be wars, famines, other natural calamities of a serious nature and an annual increase in retail prices that exceeds 100% in horticultural products (basically onions and potatoes) and 50% in non-perishable products (cereals, legumes and edible oils ).
Since stock limits apply only to traders, the amendment exempts processors, exporters and other “value chain participants” as long as they do not hold quantities beyond their installed capacity / demand requirements, you should not be concerned. farmers at all. Farmers, if anything, would benefit from the removal of storage restrictions in trade, as it potentially translates into unlimited purchases and demand for their products.
The Farmers Agreement (Empowerment and Protection) on Price Guarantee and Agricultural Services Law is concerned with providing a regulatory framework for contract cultivation. This specifically refers to agreements entered into by farmers with agricultural companies (processors, large retailers or exporters) before any growing / growing season for the supply of products of predetermined quality at guaranteed minimum prices.
Again, there is little reason to object to a law that simply allows contract farming. These exclusive agreements between companies and farmers are already operational in crops of particular processing grades (the potatoes used by the beverage and snack giant PepsiCo for its Lay’s and Uncle Chipps wafers) or dedicated to export (pickles). Processors / exporters in these cases generally not only do the assured buyback at pre-agreed prices, but also provide farmers with seeds / planting material and extension support to ensure that only products of the desired standard are grown.
The point to keep in mind is that contract cultivation is voluntary in nature and largely for crops that cannot be marketed in regular APMC (agricultural products market committee) mandis. There is hardly any domestic market for pickles, just as the high-dry-matter, low-sugar potato PepsiCo needs for its chips is different from the table-top potato used in kitchens. The farmers also do not sell sugar cane and milk in mandis. The product obtained by sugar mills and dairy plants is practically contract farming. A law that formalizes contract farming through a “national framework” and explicitly prohibits any sponsoring company from acquiring land from farmers, whether through purchase, lease or mortgage, should be welcomed.
The contentious
That leaves the only law, the FPTC Act for short, which is a bone of contention. It allows the sale and purchase of agricultural products outside the APMC mandis facilities. Such exchanges (including on electronic platforms) will not generate market fees, assignments, or liens “under any APMC state law or any other state law.”
What is at stake here is the very right of the Center to enact agricultural marketing legislation. Article 246 of the Constitution places “agriculture” at entry 14 and “markets and fairs” at entry 28 of the State List. But entry 42 of the Union List empowers the Center to regulate “interstate commerce and commerce.” Although trade and commerce “within the State” are included in entry 26 of the State List, they are subject to the provisions of entry 33 of the concurrent List, according to which the Center can enact laws that would prevail over those promulgated by the states.
Entry 33 of the concurrent List covers trade and trade in “food products, including edible oils and oilseeds”, fodder, cotton and jute. In other words, the Center can pass any law that removes all impediments to interstate and intrastate trade in agricultural products, while repealing existing state APMC laws. The FPTC Act does just that.
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However, some experts distinguish between agricultural “commercialization” and “commerce”. Agriculture per se would take care of everything a farmer does, from preparing the fields and cultivating them to selling his own produce. The act of primary sale in a mandi by the farmer is both “agriculture” and production in the field. The “trade” begins only after the farmer “markets” the product.
Following this interpretation, the Center has the right to formulate laws that promote barrier-free trade in agricultural products (both between states and within states) and do not allow storage or export restrictions. But these can be only after the farmer has sold. Regulating the first sale of agricultural products is a “marketing” responsibility of the states, not the Center.
Farmers, for their part, would not want restrictions on the movement, storage and export of their produce. Maharashtra onion growers have vehemently opposed the Center’s appeal to ban exports and the imposition of stock limits when retail prices have tended to rise. But these restrictions are related to “trade.” When it comes to “marketing”, especially the dismantling of the APMC monopoly, farmers, especially in Punjab and Haryana, are not very convinced of the “freedom of choice to sell to anyone, anywhere” argument.
The reason for this is simple: much of the government procurement at minimum support prices (MSP) – for rice, wheat and, increasingly, legumes, cotton, peanuts and mustard – is done on APMC mandis. In a scenario in which more and more operations move outside the APMC, these regulated markets will lose revenue. “They may not be formally closed, but it would be like BSNL versus Jio. And if the government stops buying, we will only have the big corporations to sell to, ”said a farmer from Panipat (Haryana). 📣 Express Explained is now on Telegram
Farmers at the Burari protest site in New Delhi on Saturday. (Express photo: Praveen Khanna)
What can be negotiated
If protesting farmers’ union leaders came to the negotiating table, the government could possibly get them to agree to drop the demand to repeal the three laws. Their problem is essentially about the FPTC Law and its provisions that they consider weaken the APMC mandis. There are also concerns about the dispute resolution mechanism for off-mandis transactions. The law proposes that they be referred to the offices of the subdivisional magistrate and the district collector. “They are not independent courts and they cannot do us justice, not to mention guaranteeing timely payment,” claimed the same farmer.
These may be just fears, but they are not small. From the government’s point of view, the elephant in the room would be if farmers insist on an additional demand: to make the MSP a legal right. That would be impossible to enforce, even if the three agricultural laws were suspended.
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