December 18, 2020 9:23:19 am
The Union Agriculture Minister Narendra Singh Tomar. (Archive)
Amid unprecedented agitation against the Center’s agricultural laws by farmers across the country and particularly in the country’s capital, 10 economists from various universities have written to the Union Minister of Agriculture, Narendra Singh Tomar, demanding that the laws be repealed.
“We believe that improvements and changes in the agricultural marketing system are required for the benefit of millions of small farmers, but the reforms introduced by these laws do not serve that purpose. They are based on erroneous assumptions and claims about why farmers cannot get remunerative prices, that farmers are not free to sell where they want under previously existing laws, and about regulated markets that are not of interest to farmers. We present five crucial reasons why these three laws, presented as a package by the government, are fundamentally harmful in their implications for small farmers in India, ”the letter read (a copy available from The Indian Express).
They pointed out various reasons for repealing the laws. First, they said that making a central law that nullifies and undermines the role of the state government in regulating agricultural markets is a flawed approach, both from the point of view of the center-state balance of power and from that of the interests of the farmers. farmers. The machinery of state government is much more accessible and accountable to farmers, down to the village level, and therefore state regulation of markets is more appropriate than including a large part of the sales and trade of commodities within the scope of the Central Government Law, establishing “commercial areas”.
According to the Ministry of Agriculture in July 2019, more than 20 states had already amended their APMC laws to allow private mandis, electronic commerce, electronic payments, e-NAM, etc., with all of them operating under state regulation. government. For such reforms or new mechanisms to be successful, there must be buy-in by all stakeholders in the market, including farmers, traders, commission agents, etc., and this process can be handled with more sensitivity and responsiveness to realities. local. by state government, rather than through drastic and comprehensive legislative change at the central level.
The second reason is that it will lead to two markets, two different sets of rules. A key problem with the laws is the creation of a virtually unregulated market in the “commercial area” along with a regulated market in APMC’s market yards, subject to two different laws, different market rate regimes and different sets of rules. This is already causing traders to move from regulated markets to an unregulated space. If collusion and market manipulation are concerns within APMC markets, the same collusion and market manipulation is likely to continue in the unregulated market space. Within regulated APMC markets, there are mechanisms to address and prevent such market manipulation, while in unregulated ‘commercial areas’, the central Law does not contemplate such mechanisms. Farmers’ means of operation include price issues and other issues such as weighing, sorting, moisture measurement, etc. mainly in remote areas that do not have access to structured markets, including tribal areas.
Third, there are fragmented markets, monopolies, and problems with price discovery. Even before these laws came, a large percentage of the sale of agricultural products took place outside of APMC’s regulated market shipyards. However, APMC’s yards still set reference prices through daily auctions and provided some reliable price signals to farmers. Without these price signals, fragmented markets could pave the way for local monopsonies. The experience in Bihar since the removal of its APMC Act in 2006 shows that farmers have fewer buyer options and less bargaining power, resulting in significantly lower prices compared to other states.
Fourth, there will be unequal actors in contract farming: small farmers and companies, which does not provide adequate protection for farmers’ interests. The current scenario is likely to continue, where most contract farming is done through unwritten agreements with no recourse to farmers, and most deals are done through aggregators or organizers to protect companies. of any responsibility. The law has no provision to address this.
Finally, the concern about the dominance of large agricultural companies: it is legitimate to understand that the three laws together represent the liberation of agricultural companies from regulation and licensing at the state level, limitations such as existing relationships between farmers, traders and market agents, and the limits of storage, processing and marketing. This rightly raises concerns about the consolidation of the market and value chains of agricultural products in the hands of a few large players, as has happened in other countries such as the United States and Europe. Inevitably it led to the “Raise or Exit” dynamic in those countries, driving out small farmers, small traders and local agricultural enterprises.
Instead, what Indian farmers need is a system that enables better bargaining power and greater participation in the value chain through the storage, processing and marketing infrastructure in the hands of farmers and MROs. That would be one way to improve farmers’ incomes, and some of the government’s earlier policy initiatives were expected to help in that direction.
© The Indian Express (P) Ltd
.
