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Mainstream, VOL LIX No 1, New Delhi, December 19, 2020

Farm Laws: Privileging Private Players | Suranjita Ray

Saturday 19 December 2020, by Suranjita Ray



The recent Farm Laws have seen country-wide protests by the farmers. The three new laws - Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and Essential Commodities (Amendment) Act, 2020, are a watershed programme in agriculture, argues the government. It states that farmers will be free from the clutches of middlemen and expand their choices. They can sell their produce anywhere they want to at a remunerative price, outside Agricultural Produce Marketing Committee (APMC)/mandis, which are government-approved wholesale markets that procure farmer’s produce.

However, majority of the farmers are demanding withdrawal of these new farm laws as they see in them what is ‘anti-farmer’ and therefore contentious. Farmers believe the laws will lead to privatisation of agriculture and will eventually do away with the government led procurement at declared Minimum Support Price (MSP), APMC/mandi system and other safety measures. Since the law does not mention anything on MSP, it will not only be the government’s discretion to decide the quantum of procurement of wheat and paddy on the declared MSP, but the government will also progressively withdraw from being the principal procurer. This will legitimize the procurement of foodgrains by the private sectors at lower prices than the declared MSP.

Farmers apprehend that without any bargaining power, their vulnerability to processes of exploitation and injustice in the alternative/private market will increase. They contend that the laws which aim at promoting engagement with agri-business firms, processors, wholesalers and exporters alongside promoting contract farming are designed to help the big corporate houses at the cost of farmers, arhtiyas, small shopkeepers and landless labourers.

Concerns of the Farmers 

Since the big agribusiness and private/corporate buyers have monopoly in private markets, they decide the terms and conditions of purchase from the farmers. The small and marginal peasants who lack the power to bargain or negotiate and compete in private markets, fear that the new farm laws will lead to dismantling of MSP systems and end APMC /mandi system which will further lower the price of farm produce.
Farmers Unions have been protesting the provisions in the laws to exempt transactions done outside APMC/mandis from any market fee/cess/levy that were imposed by state governments on mandis, as this would lead to diversions of trade from the mandis. While in the mandi system, farmers could approach the APMC authorities in case they did not receive payment for their produce, and the former could either cancel the licences of such traders or could even encash the bank guarantees submitted by the traders, under the new law the traders will not need any license. Traders can buy or sell in the private markets with Permanent Account Number (PAN) or such other document as may be notified by the Central government. The laws mandate trade of the produce only when it is of mutually acceptable quality, grade and standard, which reinforces the privileges of the private buyers with bargaining power, to decide the terms and conditions of trade alongside price of the produce.

Similarly, farmers feared that disputes arising out of transactions in the private/alternative markets which cannot be entertained in regular civil courts and have to be compulsorily referred to conciliation boards and appellate authorities appointed by the local Sub-Divisional Magistrates (SDM) and District Collectors, will be biased towards the big corporate buyers. Since the removal of trade-barriers would neither protect an assured minimum price nor dispute settlement by the mandi system, the farmers who mostly depend on the APMC-MSP model fear the worst impact. Protests by farmers across the country for several days expressing lack of trust on the government, have compelled the Centre to invite the farmers unions for discussions.

Assurances by the Government 

Following several rounds of talks with the leaders of farmers unions, the Centre has agreed to amend the farm laws and has offered significant concessions on 9 December 2020. It has proposed to give a written assurance to continue with MSP-based procurement system and proposed to tax transactions outside the APMC/mandis. The state governments will be authorised to fix the rate of cess/fee to be collected from outside markets to ensure parity/level-playing field between the APMC mandis and private markets. To protect the farmers, states will also be authorised to register and verify the private traders who will make any purchase.

The proposed changes to the new law also assure that farmers can approach the civil courts in case of disputes. The farmer’s land can be secured by not mortgaging it in contract farming and the onus will lie with the contractor. The farmers have also been assured that the Ordinance on stubble burning which imposed fines and penalties on farmers found to be burning stubble will be withdrawn. Also the existing arrangement on subsidy on electricity usage by farmers will not be modified. A comprehensive 106-page document was issued by the Information and Broadcasting Ministry on 10 December, that explicates the rationale for the three farm laws that legitimises the government’s purpose to increase the farmers choice and income, and refutes the myths regarding the laws.

However, the farmers unions rejected the proposals and have decided to intensify their protests as they insist on a law that guarantees MSP and not mere assurances. Past experiences of farmers suggest that despite declared MSP, they are compelled to sell their produce at a much lower price in the absence of a law to penalise violation of MSP. Farmers demand for a statutory MSP and not to open up sales and marketing of agricultural produce beyond regulated APMC /mandis. Their demand to repeal the farm laws therefore continues.

Farmers Discontent 

The farmers plan to continue the nation-wide agitation and more farmers have joined the dharna sites as nothing substantial has been offered to them in the absence of law on MSP and with the continuance of opening up of the alternative/private markets as per the new farm laws. While the government maintained that ‘no law was completely bad’ and has appealed the farmers’ unions to reconsider its proposals, the farmers are willing to resume the dialogue only when the government offers a ‘concrete solution’. The protesting farmers groups stated that the same amendments were proposed by the government in the previous rounds of talks on 5 December which they had already rejected. The Bharatiya Kisan Union moved the Supreme Court on 11 December underlining the inconclusive talks with the Centre. Farmers argue that deregulating agricultural markets will further increase their insecurities as past experiences (privatisation of agricultural sector, in particular sugarcane industry in 1998, and removal of licensing barriers to agricultural markets), reveal that private buyers pay much lesser price and defend the same by making unfair demands on quality of the produce. Thus, privatisation of agricultural markets has failed in bringing any significant increase in the income of farmers.

The corporatisation of agriculture which invited the Multi-National Companies to privilege Bt. Cotton and Bt. Brinjal further deprived the farmers increasing their vulnerability to debt trap that led to the ‘dependency syndrome’. Farmers growing crops under the contract farming model, have not been able to secure/sustain their livelihood resources/ land rights. Farmers have been working as labourers in their own land as they have mortgaged their land for money. The cultivation costs have increased with small size holdings. The risk of losing out land rights increases under contract farming particularly in case of crop loss. Even, when land is not mortgaged, farmers have little option to recover their loss or repay the loans. The emphasis on land market serves the interest of the large farmers, non-agriculturists and corporate houses.

We had seen similar discontent and anger of thousands of small and marginal farmers, landless labourers in an unprecedented agrarian unrest across the country in 2017-18 that led to the alike movement - ‘Delhi Chalo’. Farmers who marched from the Ramlila Maidan to the Parliament Street on 29-30 November 2018, had demanded a special session in the Parliament to discuss the agrarian crisis and pass two private member bills drafted by All India Kisan Sangharsh Co-ordination Committee (AIKSCC) -The freedom from Indebtedness Bill and The Framers Right to Guaranteed Remunerative Minimum Support Prices for Agricultural Commodities Bill. They demanded the need to discuss the credit crisis which is much larger than just one loan waiver. It is significant to address the underlying causes of systemic deprivations that persist in an agrarian economy.

We are reminded of solidarity expressed by thousands of students, artists and professionals under the banner called ‘Nation for Farmers’ as a ‘historic moment in the country’s democracy’ as farmers moved to protests to assert their rights from their demoralized mind set to commit suicide during the last 20 years (P. Sainath). As farmers also constitute large sections of the voters, frequent protests by them have compelled the political parties across ideological divides to bring the farmers issue to the centre of their policy agenda. Several schemes such as Rythu Bandhu in Telangana, Krushak Assistance for Livelihood and Income Augmentation (KALIA) in Odisha, and several schemes on cash transfers in Jharkhand, Andhra Pradesh and West Bengal to help the farmers have been defended as better solutions of the agrarian crisis. Studies find that numerous initiatives taken by the government have either not benefited majority of the farmers or they remain unimplemented.

Contesting Pro-capitalist Market Model 

Ever since Liberalisation, Privatisation, Globalisation (LPG) became the major strategic mandates for economic policies in the mid 1980s and 90s, the neo-liberal ideology has campaigned in favour of a minimal state or rolling back of the state. Public policies privileged reduction in state controls, decline in the public sector, increasing de-licensing and deregulation by the state, greater private investments, privatisation and promotion of free and unrestricted trade, and creating more opportunities for full play of free market in the economy. The campaign for a national common agriculture market by removing restrictions and bottlenecks for free trade set the agenda for market reforms and privatisation in agriculture and food sector.

The New Rights School like the Public Choice School emerged as a dominant ideology in public policy which campaigned for a reduced role of the state in social and economic transactions vis-a vis the market. The utilitarian argument in favour of citizens as rational choice makers and utility maximisers became central to the liberal policies and privatisation was legitimised as inevitable for development. Thus, the pro-capitalist global market model of development facilitates the invisible mechanisms in the free competitive market to allocate resources independently of the regulation of the state.
In the context of globalising world, the debates on state versus market and that state can be replaced by the market or vice versa became less valid. An alliance between the two saw a market-friendly state which not only campaigns for liberalised economy, but has also been successful in manufacturing consent for the market model of development. Any deviation from the market model is seen as a genuine threat to the economic growth. The global media has also played a vital role in convincing the large mass that a growth centric capitalist development can contribute to protect the rights of the deprived and marginalised.

However, the ground reality suggests that a free competitive market economy as the precondition for development has resulted in large scale asymmetries as the oligopolistic nature of market economy has successfully established the monopoly of few powerful corporate sectors. The fundamental principle of market economy and its operation is not to equalize the small and marginal producers, sellers and buyers but to place them at the periphery/margins, to be left at the mercy of the big corporate sectors. Therefore, a ‘comprehensive, clean, equitable and farmer-centric model agreement’ to protect the farmers from arbitrary mechanisms that decide quality standards and prices of produce, was focused in the recommendations of M.S. Swaminathan Commission Report. It argued for the institutional support mechanisms to prevent small farmers from being exploited and prioritised land reforms, infrastructural facilities such as irrigation, credit and insurance for increasing production, ensuring food security, alleviating distress of farmers, preventing farmers’ suicides, in order to sustain the agricultural system.

The narratives of the farmers about their everyday experience of agony and struggle as sites of continuous oppression, conflict, and paradox, explains how agricultural policies that facilitates greater mechanization, commercialization of the agricultural, and entry of the big corporations through contract farming have also seen the dismantling of the traditional production systems that disintegrated the livelihood systems of the farming communities resulting in dispossession, deprivation, landlessness and distress migration.

While cost of production has increased year after year, incomes have failed to show a corresponding growth. Despite promises of doubling the farmer’s income by 2022, the Economic Survey 2018 acknowledges that the real income of the farmers has remained stagnant during the last few years. Lowering the cost of production needs to be prioritized. It is incongruous that the government has failed the need for reform in lowering the cost of production. On the other hand, it focuses on growth in both agricultural production and exports.

The recommendations of Swaminathan Commission on a farmer-centric single-nation marketing system and MSP for sustained income support to the farmers needs to be implemented. A long pending major demand of the farmers organisations has been to implement these recommendations in letter and spirit. The farm laws will not only have its impact on the farmers, small shop keepers, landless labourers but will also impact the Public Distribution System, the National Food Security Act, 2013, food sovereignty of the country and people’s basic right to food. While the government’s willingness to negotiate with the leaders of farmers union has revitalized social movements in a democracy, it is significant to find concrete solutions to many of the concerns of farmers.

(Suranjita Ray teaches Political Science in Daulat Ram College, University of Delhi and can be contacted at: suranjitaray_66[at]

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