The farmers' agitation in India against three controversial farming reforms has put the ruling National Democratic Alliance (NDA) government of Prime Minister Narendra Modi in the dock as it appears to be groping in the dark to find an amicable solution to defuse the crisis that could potentially have far-reaching implications as the country’s economy that is largely dependent on agriculture.

The farmers’ movement has painted the Narendra Modi government as pro-rich and anti-farmer. The agitation led mainly by the farmers from northern states like Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, and Rajasthan seems to be a long-drawn one with media reports stating that the farmers are carrying rations for six-months. Stationed at Delhi’s borders, the thousands of farmers took to the street in the biggest such protests in years last week and fought pitched battle with policemen, who used water cannons on them in the bitter cold, and batons to stop them from entering the national capital.

The reason for the massive farmers’ protests – with women and children being part of the protest in large numbers - is that the umbrella organization of the farmers’ union does not want a compromise – they simply want the complete withdrawal of the agriculture bills, which they claim will destroy farm sector and create a new superclass.

Controversial farm bills

The widely criticized agriculture bills that the Modi government hastily pushed through during the Monsoon session of parliament have replaced state laws relating to agriculture. The government’s claim that the bills are aimed at ushering the much-required reforms in the farm sector and have been taken for the welfare of the farmers are facing strong opposition from both the farmers as well as the artiyaas (commission agents) who are up in arm against the bills.

The opposition-ruled states are against the farm bills because they consider them as an encroachment on the powers of the state as agriculture is a state subject under the Constitution. They are also being construed as an attempt contrary to the spirit of cooperative federalism. The states contend that the laws would curtail the efficacy of state legislations on matters under the state list.

The centre is duty-bound to respect the autonomy of states in a federal set up because the farm bills have a direct impact on state laws and for that reason, such an attempt by the central government is being construed as violation of the federal structure. The first bill - Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 - the stakeholders have raised three interconnected issues i.e. end of minimum support price (MSP), end of existing agriculture price mechanism system and loss of revenue and livelihood.

Why farmers are up in arms

The biggest apprehension of farmers is the dismantling of MSP because in such a situation they fear exploitation by big private companies by means of hoarding and other wrongdoings.

The BJP-led government’s call for one nation; one market has also met with widespread opposition as the farmers' unions have replaced it with one nation, one MSP. The purpose of the government to enact such a law is to end the APMC (Agricultural Produce Market Committee) food grain market system and force the farmers to sell their produce to private players at a price of their choice because of the non-existence of MSP.

It is feared that in case one crop fails due to a bad monsoon or other natural calamities, the private companies would hoard food grains and sell them at higher prices.

The basis for market intervention by the government for procurement is price intelligence from the mandis (government-regulated markets) which initiates government intervention when prices start crashing. The new Bill has resulted in a lack of information on market transactions, quantities, and prices with the government, in a way facilitating the government to abdicate its responsibility of assuring MSP and PDS (pubic distribution system).

Furthermore, it is likely that the reforms do not do away with middlemen at all as it is claimed that the same and newer entities will now have the freedom to operate outside the mandis without any regulations. Additionally, giving due regard to the small landholdings of farmers in Punjab and Haryana, it does not seem as if the large private corporations would deal directly with them consequently resulting in the emergence of middlemen and contractors.

Private traders might also insist on purchasing produce immediately after harvest when prices are low. There is also a possibility that corporations will buy food grains from states with surplus grains, like Punjab, at lower prices and sell them at higher prices, resulting in market distortion and reduced income for farmers.

Although the Farming Agreement Bill aims at protecting farmers against price exploitation and increasing choice in the sale, it does not take into account that individual farmers, especially small or marginal farmers (who constitute 85 percent of rural farmers), might not be equipped to negotiate with private corporations to ensure themselves a fair price.

As a consequence of the adoption of contract farming policy, the power balance will shift from the farmer to private companies, and the farmers might end up being the weaker players in the negotiation process. A farmer might be pushed to become a land-owning tenant under the interest of corporate.

Another concern that arises relates to the three-tiered dispute settlement prescribed by the Bill, first, a conciliation board, second, the sub-divisional magistrate (SDM), and third, the Collector or Additional Collector as the appellate authority.

Farmer-buyer contracts will effectively be removed from the ambit of civil courts, as well as judicial review, by the creation of a bureaucrat-led dispute resolution mechanism. The usage of “shall” in the Bill points to the mandatory nature of these provisions. Additionally, the majority of farmers lack the resources required for fighting legal battles against large private corporations.

One of the foremost concerns that have arisen in relation to this Bill are regarding hoarding and black marketing. Since the Bill eases the restrictions imposed on stock limits relating to the prescribed food items, there is increasing fear of hoarding of food items by exporters, processors, and traders during harvest season when prices are lower until a later time when prices tend to increase.

The critical nature of remunerative prices for farmers must be realized and a statutory framework must be developed for guaranteeing the same. The Commission for Agricultural Costs and Prices in its report had highlighted the role of government intervention for ensuring remunerative prices to farmers and suggested to make MSP a legal right. Furthermore, the slow death of the APMC will consequently result in the failure of the eNAM as it is dependent on the physical APMC markets for electronic trade.  The National Agriculture Market (eNAM) is a pan-India electronic trading portal which networks the existing APMC mandis to create a unified national market for agricultural commodities.

Experts have said that wheat production is likely to fall by 23 percent by 2050 in the absence of proper intervention. Moreover, environmental concerns arising from agriculture like greenhouse gas emissions.

Agrarian distress

Agrarian distress has been persistent in India due to a number of factors, including low productivity, lack of storage and transport facilities, heavy indebtedness, and fragmented landholdings. Subjecting the fate of farmers to the vagaries of the market, forces cannot be the only way to uplift the agriculture sector.

Experience from other nations has revealed that corporatization of agriculture --  which contributes about 17 percent to the total GDP and provides employment to over 60 percent of the population – could further, instigate problems for the farmers. Replacement of one flawed model with another flawed model is not the solution.

The agriculture sector requires stability, whereas the new model will only introduce more price volatility by introducing market forces. Even in the existing system, as it will be in the new system, the farmer never gets to decide the price of his farm produce; it is decided by another person for him and is subject to extreme fluctuations. There is an urgent need to address the apprehension of the concerned stakeholders and to reassess the existing policies.

The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 provides a framework for farmers to engage in contract farming, i.e. farming as per an agreement with the buyer before sowing, under which the farmer promises to sell his produce to the buyer at a pre-determined price.

The Essential Commodities Amendment Bill 2020 makes provisions for the removal of items such as cereals and pulses from the list of essential commodities and attracts foreign direct investment in the sector. Some sections have raised the fear that this will compromise food security. The Bill is aimed at legitimizing what would otherwise be called hoarding, without the government even having the capability of knowing which stock of which grain exists with whom. Even the place and time of such stock would not be known.

In a nutshell, reforms listed in the farm bills will weaken rules around the sale, pricing and storage of farm produce. The rules that have protected India’s farmers from the free market for a decade will no longer be there to protect them and it would eventually destroy India’s vast agriculture sector which has been a backbone of the country’s economy (IFS)

(The writer is a veteran journalist. The views expressed are personal)