Shiromani Akali Dal (SAD) leader Harsimrat Kaur Badal resigned from the Union Cabinet on Thursday in protest against legislation seeking to liberalize agricultural markets. The resignation came amid protests by farmers, whom SAD, the ruling Bharatiya Janata party’s oldest ally, counts as its main support base in Punjab, a key food bowl state, against reforms even as economists have hailed them. Here’s what the reforms in the agricultural sector imply and why they have angered farmers:
1. The legislation seeks to free agricultural trade from all restrictions.
2. It provides the opening of the agricultural sector to greater competition, the modernization of supply chains by allowing larger agribusinesses to engage with farmers more directly and creating seamless access to fragmented markets.
3. The Draft Law on Trade and Commerce of Agricultural Products (Promotion and Facilitation) seeks to allow interstate and intrastate commerce without barriers of primary agricultural products. Agricultural products have been sold for decades mainly in notified wholesale markets managed by the Agricultural Products Marketing Committees (APMC).
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4. The CMPA require that farmers only sell to authorized intermediaries in these notified markets, generally in the same area where the farmers reside, rather than in open markets, which, according to economists, reduces price discovery and hurts prices. agricultural profits.
5. The Draft Law on Trade and Trade in Agricultural Products (Promotion and Facilitation) seeks to allow farmers and buyers of their products to trade outside these markets duty-free and open the CMPA to competition. It will allow food traders to buy farmers’ products in any market, rather than linking them to the specific markets where they are licensed to operate.
6. The Farmers Agreement (Empowerment and Protection) on Price Guarantee and Agricultural Services establishes a new architecture for contract farming. It provides a national framework on agricultural agreements, which allows the farmer to interact with agro-industrial companies, processors, wholesalers, exporters or large retailers for the sale of future agricultural products at a previously agreed price.
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7. The legislation will allow the government to invoke the Essential Commodities Law only if retail prices rise 50% for non-perishable products and 100% for perishable products compared to average retail prices in the last 12 months or the last five years. .
8. Opponents of the legislation have accused the government of meddling in the jurisdiction of states and taking advantage of the Covid pandemic to introduce the bills.
9. They say that the legislation will lead to a replica of old structures outside of mandis and create two market spaces with completely different sets of rules.
10. Farmers fear that the legislation will lead to big monopolies and will be as bad as the current cartelization in mandi and that it will also affect the contracting system.
11. Farmers want profitable sales in the form of minimum support prices (MSP) to be a legal right. They fear that the reforms threaten the MSPs.
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