The newly passed farm bills will give farmers the freedom to trade across states and empower them to turn into traders of their own produce and be in control of the process. The intent behind these three bills is that the new regulation will create an ecosystem where the farmers and traders will enjoy the freedom of choice of sale and purchase of agri-produce and promote barrier-free inter and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce Marketing legislations.
The lacunae with the existing system are that the farmers had been facing several problems in the late 1800s. These problems included overproduction, low crop prices, high transportation costs, high-interest rates, and growing debt. Farmers worked to alleviate these problems. The other major issue with the existing MSP-based procurement system is the working dependence on middlemen, commission agents, and red-tapism of the APMC (Agriculture Produce Marketing Committee) officials. An average farmer finds it difficult to get access to these mandis and depends on the market to sell farm produce.
More than 90% of farmers have been out of the ambit of the MSP-based procurement system. Even MSP has stayed a highly emotive subject for farmer-based politics. The current estimates suggest that only 6% of farmers have access to the MSP-based procurement system. The MSP-based procurement system is that it is highly balanced.
Demand of the Farmers
- The demands of the farmers include revocation of all three ordinances turned bills:
The Bills have not been revoked and the Lok Sabha passed the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 & The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 amidst the protests.
- The mandi system remains intact and their loans be cleared.
The bills had been claimed by the farmers to dismantle the monopoly of the mandis but it is rather introducing an additional market channel running parallelly with the existing system to ensure free trade. This new legislation has nothing to do with the MSPs, it is merely providing freedom of choice to sell and buy the produces outside the mandis, as stated by Agriculture Minister Narendra Singh Tomar.
- Later in line with the 2006 Swaminathan report by ‘The National Commission on Farmers’ 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.
- A law should be put in place that will guarantee payments from the buyers through middlemen. Middlemen also make money by selling the product for more than its purchase price.
Pros & Cons of the new Farm Bills
Pros of the new Farm Bills
- The farmers had moved towards a freer and more flexible system.
- Selling produces outside the physical territory of the mandis will be an additional marketing channel for the farmers.
- The new bill has not brought any major drastic changes, only a parallel system working with the existing system. Prior to these bills, farmers can sell their produce to the whole world, but via the e- NAM system.
- The amendment to the Essential Commodities Act which is one of the three bills under protest removes the scare or fear of the farmers that traders who buy from farmers would be punished for holding stocks that are deemed excess and inflicting losses for the farmers.
- The bills ensure that the farmer or the producer is given the same attention as production is and the farmer gets the stipulated price for crops, so that farming survives.
- The prime minister Narendra Modi tweeted on September 20th, that the “system of MSP will remain” and “government procurement will continue”. The Agriculture Minister also stated that past governments actually never thought it mandatory to introduce a law for MSP.
- 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 was 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.
Cons of the Farm Bills
- The Farm Bills hampers with the monopoly of APMC (agricultural produce market committee) mandis, thereby allowing sale and purchase of crops outside these state government-regulated market yards or mandis.
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill does not give any statutory backing to MSP. The farmers have nothing to do with the legal system but everything to do with the MSP, a price at which they sell their produce, there is not even a mention of either “MSP” or “Procurement” in the said bill.
- The government declares MSPs for crops, but there has been no law mandating their implementation.
- The only crop where MSP payment has some statutory implementation is sugarcane for which FRP is determined. This is due to its pricing being governed by the Sugarcane (Control) Order, 1966 issued under the Essential Commodities Act.
- The new bills are placing farmers and traders at the mercy of civil servants, rather than of the courts.
The simplest solution against the protest of the farmers with respect to the farm bills can be including statutory backing to the minimum selling prices and procurement in the new bill to eradicate the fear of the farmers. Giving farmers the choice to sell without the help of middlemen will be of great use only if there are roads that link villages to markets, climate-controlled storage facilities, the electricity supply is made reliable and available to power those facilities, and food processing companies who compete to buy their produce.
The CACP who recommends MSP along with the Central ministries and State Governments itself is not any statutory body set up by the Parliament. It is only a government policy that is part of administrative decision-making. The government declares MSPs for crops, but there is no legal implication. The government can procure at the MSPs if it wants to thus the system of MSP will remain and government procurement will continue, this fear had to be clarified even further and farmers should be guided well in this regard.