The agricultural sector contributes almost 15% of the Indian economy, valued at 2.9 trillion dollars.
New Delhi:
On Sunday afternoon, amid scenes of chaos and uproar, Rajya Sabha passed two of a set of three controversial bills related to India’s agricultural sector. The bills, which replace ordinances issued in June, were passed amid fierce protests from farmer groups, particularly in Haryana and Punjab states, cereal bowls. The Narendra Modi government has said that farm laws, as they are known, empower small and marginal farmers by allowing them access to markets and prices of their choice. The opposition, which includes political parties and thousands of farmers, disagrees: they say the bills threaten to abolish minimum support prices (MSP) and consequently leave small and marginal farmers themselves at the mercy of large-scale corporate and institutional buyers. As for the farmers themselves, some of those who spoke to NDTV say they are confused and want the government to reach out and offer clarification.
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The agricultural invoices are: Price Guarantee Agreement and Agricultural Services for Farmers (Empowerment and Protection); Draft Law on Trade in Agricultural Products and Commerce (Promotion and Facilitation); and Essential Commodities Bill (Amendment). The Upper House yesterday cleared the first two, paving the way for them to become law (once President Ram Nath Kovind passes) and sparking protests.
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The Draft Law on Trade and Commerce of Agricultural Products (Promotion and Facilitation) allows intra- and interstate commerce of agricultural products without barriers. Previously, agricultural products were sold in notified wholesale markets, or mandis, directed by the Agricultural Products Marketing Committees (APMC). Each APMC, of which there are about 7,000, had licensed intermediaries who would buy from farmers, at prices set by auction, before selling to institutional buyers such as retailers and large traders.
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Under the proposed system, farmers can (cut out intermediaries and) sell directly to institutional buyers at mutually agreed prices. However, farmer groups are concerned that this will expose them to companies that have more bargaining power (and resources) than small or marginal farmers. A farmer from Madhya Pradesh who spoke to NDTV said: “I am worried … sometimes they ask for wheat at 1,400 rupees or 1,500 rupees per quintal. They will take it (produce) whatever they want.”
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In India, almost 85 percent of poor farmers own less than two hectares of land. Farmers like these find it difficult to negotiate directly with large-scale buyers. In a report by the Reuters news agency, leaders of the farming community said mandis They play a key role in ensuring timely payments. Eliminating these markets, or allowing direct access by companies, without offering an alternative, such as regulated direct purchase centers, is pointless, they say.
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Also, with CMPAs, farmers generally had to sell at nearby markets rather than outdoors, which will now be allowed. The government has signaled this to suggest that farmers’ incomes will increase. In practice, however, small farmers may find it difficult to take advantage of potentially better prices in more distant markets due to travel and storage limitations, as well as associated costs.
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The second bill to pass the Rajya Sabha, the Farmers’ Agricultural Price Assurance and Services Agreement (Empowerment and Protection), is supposed to allow “contract farming”, or allow farmers to enter into agreements with agricultural companies, exporters or large buyers to produce a crop for a previously agreed price.
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Farmers are concerned that this means that the MSP (a price guaranteed by the government) will be eliminated. They point out, once again, to small and marginal farmers that they are likely to be vulnerable to unfavorable contracts unless sales prices continue to be regulated. As stated by Congressman P Chidambaram, there needs to be a clause that binds MSPs to the lowest acceptable price.
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Although the new law has not explicitly eliminated MSPs (and Prime Minister Narendra Modi has insisted it will not), farmers are concerned about allowing prices to be set outside of regulated regulations. mandis It makes it difficult for the government to control each transaction individually.
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MSPs are also a concern for rice and wheat producers, who sell directly to the government at these guaranteed prices. They fear that the government purchase will give way to private buyers, who could pressure them to sell at lower rates. These guaranteed prices, which the government raised today, are often a source of credit in tough times like droughts and poor harvests.
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In addition to farmers’ concerns, state governments, particularly those of Punjab and Haryana, fear that if private buyers start buying directly from farmers, they will lose the taxes charged to them. mandis. The potential scrapping of mandisThey also argue, it endangers the jobs of millions of people who work there.
With input from Reuters
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