Farmers in Punjab & Haryana have been protesting against three ordinances promulgated by the Parliament since the Union Government on September 14th (Monsoon Session) introduced the Farm Bills in the Lok Sabha to replace these three ordinances. The farmers have been protesting against the three bills as they fear getting prices for their crops below the Minimum Selling Price and eradication of the monopoly of the APMC market yards formed under the APMC Act.
Until 2020, these APMC market yards or mandis in a state are the first places where farmers sell their produce. An Agricultural Produce Market Committee (APMC) is a marketing board under APMC Act established by a state government in India to ensure farmers are protected from exploitation. However, after the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 came it allowed farmers to sell outside APMC mandis in India. (anywhere in any State)
Key Ordinances & Farmers Demands:
The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020; The Farmers (Empowerment and Protection) Agreement on Price Assurance & Farm Services Ordinance, 2020; and The Essential Commodities (Amendment) Ordinance, 2020. While farmers are protesting against all these three ordinances turned bills, the ordinance/ bill that is majorly under protest is the first bill. And while there is no uniform demand among the protesters or a unified leadership, it emerges that their concerns are mainly about sections relating to “trade area”, “trader”, “dispute resolution”, and “market fee” in the said first bill.
Basically, the farmer's demand includes a rollback of all the three bills, mandi system to remain intact, loans to be cleared. The Union Agriculture Minister Narendra Singh Tomar stated that the bill merely elucidates for "trade areas" outside the physical limits of APMC mandis. These areas would serve as an "additional marketing channel" for farmers, even as the APMCs "will continue to function” parallelly. The freedom of choice to sell outside the regulated mandis will help farmers realize better prices for their produce. In simple words, selling the produces outside the physical territory of the mandis will be an additional marketing channel for the farmers.
Why the Protest?
While the government mentioned that these ordinances will help the farmers move towards a freer and more flexible system, the farmers raised their arguments that in the garb of these ordinances the government is trying to take away the Minimum Support Price (MSP) regime and destroying the monopoly of the APMC mandis. The fear is that once the APMC regime collapses, the private operators, traders, commission agents will probably state prices below MSP. The farmers also believe that the bills will lead to the destruction of peasants.
1. First ordinance
The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 basically does not take away with the APMC (Agricultural Produce Market Committee) system, but limits it to “physical space of the market”, with transactions made outside of this area exempted from any taxes or fees related with the APMC as the APMC can levy fees or taxes on transactions done within its boundaries.
Previously, APMC laws were limited to market yards, and the ordinance will allow private parties to set up online trading platforms and a “dispute resolution mechanism for buyers and farmers to be operated by a sub-divisional magistrate”. According to the report of the Times of India, the mark-up is the “difference between the price that farmers pursue for their produce and what consumers pay” and stands at 65% for India.
2. Second Ordinance
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance deliberately mentions contract farming that permits farmers to sell their produce outside of the APMC through a “framework for farmers to enter into direct contracts with those who wish to buy farm produce”. (private players etc.)
The ordinance overrides all state APMC laws, the ordinance provides a way to a "farming agreement prior to the production or rearing of any farm produce” with a sponsor. It also enshrines that there should be a duration for the agreement between the farmer and the sponsor, consider for example "one crop season or one production cycle of livestock" with the maximum period being 5 years. In this agreement, the price for the purchase must be stated.
In the existing APMC system, it is mandatory for farmers to go through a trader (via Mandis) so as to sell their produce to consumers and companies and they receive Minimum Selling Prices for their produce. It is this very system that has influenced the rise to a cartel led by traders and uncompetitive markets due to which the farmers are paid MSP ( a very low price) for their produces.
3. Third Ordinance
An amendment to the Essential Commodities Act (ECA), 1955 originally empowered the Centre to control the supply, production, distribution, trade, and commerce in certain commodities”. The amendment constitutes a new sub-section (1), that overrides Section 3, by restricting the powers of both central & state governments in regulating and imposing stock limitations on commodities.
Regulations can now be imposed only in extraordinary situations that include “war, famine, extraordinary price rise and any other grave natural calamity”. The second change in the amendment mentions that a rise in price can dictate regulations with a 100% rise for vegetables and a 50% rise for lentils and cereals. Although, both of these decisions are left to the state governments’ discretion.
Conclusion
The demands of the farmers include revocation of all three ordinances, then the mandi system to remain intact and their loans be cleared, later in line with the 2006 Swaminathan report by ‘The National Commission on Farmers’ a law should be promulgated for MSP to be at least 50% more than the weighted average cost of production and if the MSP is not paid, it must be a penalized. Rajya Sabha passed two of the three ordinances in the Monsoon Session recently. The Lok Sabha passed the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 amidst the protests.