The month of September, 2020 is considered to be a historic step by the BJP led Government as it passes 3 Bills that can potentially make or break the backbone of the nation i.e. agriculture. The Farm Acts have been accepted whole heartedly by some parts of the nation, while some regions especially in Northern India (Punjab and Haryana) has criticized it.
Whether it is good or bad, let us break down all the points of the Acts and understand from both the perspectives.
What are these Farm Acts? Let’s break it down
It is not a single Act but there are 3 Acts that have been passed in the Upper and the Lower House-
- Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
- Farmers (Empowerment and Protection) Agreement on Price Assurance, 2020
- Essential Commodities Amendment Act, 2020
Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
Earlier farmers were only allowed to sell their crops through Agricultural Produce Market Committee (APMC) and other markets notified under the state APMC Acts, but through this Act, they have opened the doors for inter state and inter state trading and can directly sell the crops to the private sectors, cold storages, warehouses, silos, etc. Private Mandis could be formed and farmers will not be bound to sell the crops in the APMC only.
Farmers (Empowerment and Protection) Agreement on Price Assurance, 2020
This Act gives farmers the opportunity to directly come under the contract system and directly sell through the contract system with the private companies, wholesalers, processors, etc. The Act also provides a three-level dispute settlement mechanism by the Conciliation Board, Sub-divisional Magistrate and Appellate Authority.
Essential Commodities Amendment Act, 2020
Earlier hoarding of any crops by any party (either farmers or private players) was illegal after a certain number but this new amendment in the Essential Commodities Amendment Act, 2020 allows hoarding by any party.
Good Points about the Farm Act, 2020
- A good initiative for liberalizing the farmers.
- Farmers can have a variety of places where they can conduct business and sell the crops.
- Removal of the middleman (decrease in the number), helps in gaining more revenue from the farmers perspective and from the private companies point of view, the crops could be bought for less money.
- APMC and the middleman are not the only person to set the price, the monopoly is thus removed.
- Electronic trading of farmers’ produce in the specified trade area. It will facilitate direct and online buying and selling of such produce through electronic devices and internet.
- There will be not fee or extra charges made by the State Governments for inter state trading.
- Farmers too can hoard the crops for the right time and sell it to the private companies when the price matures.
- Under the contract system, better negotiations can be built and it whatever is mentioned shall be followed under the law.
Points for the Government to ponder upon
- Capitalism without governance is anyway bad, when people talk about setting private Mandis, who is fixing the price? Since a small scaled farmer can be manipulated.
- Hoarding can be done by private companies too, they can hoard the crops when it is abundance when price at the market is very low. This leads to the creation of unnatural demand thereby increasing the market price for the end consumers.
- On other way, they can save large amounts of crops from the farmers in one season and hoard them until farmers give in and take less money for their next crops. Suggestion is to have some cap on private players.
- Farmers under the contract system are bound to receive money once the crop is harvested, what if the crop fails?
- Removal of middleman means loss of jobs to some extent, what’s their alterative for work?
- Removal of middleman to a large extent means polarization of wealth again, doesn’t the rich again gets richer here?
Bone of Contention with Shiromani Akali Dal against BJP
Shiromani Akali Dal (SAD) has been an ally of BJP in the NDA and in the state of Punjab but they have shown their remorse towards the Farm Act, 2020 such that Harsimrat Kaur Badal, the only union minister from SAD in the Central Government has quit her ministry.
Their course of discontent was in the Assurance of MSP (Minimum Support Price). There are 23 crops on which the MSP is set by the government in the APMC.
These crops are – 7 cereals (paddy, wheat, maize, bajra, jowar, ragi and barley), 5 pulses (chana, arhar/tur, urad, moong and masur), 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower and nigerseed) and 4 commercial crops (cotton, sugarcane, copra and raw jute) — based on the CACP’s (Commission for Agricultural Costs & Prices) recommendations.
CACPs can recommend MSPs, but the decision on fixing (or even not fixing) and enforcement rests finally with the government.
The government only buys wheat and paddy from the APMC at the MSP price under the National Food Security Act (NFSA), 2013. And provides it to the ‘priority housing’ to receive 5 kg of food grains per month at a subsidized price not exceeding Rs 2/kg for wheat and Rs 3/kg for rice.
SAD pleaded with the government to insert constitutional and legislative guarantees in the bills as a commitment to the farmers about the continuance of official procurement (including food security) at the MSP but the government did not give anything written. And this led to the rift between the GOI and SAD.
But the Government isn’t wrong.
MSP was not part of any law before. Nor is it part of any law today. MSP, by contrast, is devoid of any legal backing. Access to it, unlike subsidized grains through the PDS (Public Distribution System for NFSA, 2013), isn’t an entitlement for farmers. They cannot demand it as a matter of right unless of course a separate law is made.
Although PM Modi said that APMC and MSP will continue to exist and these new bills are about the liberalization for farmers in India. There is still some conflict and confusion among the parties and farmers.