The Complexion of the Farmer Reforms 2020 across the Agro-scape of India

The Farmers' Ordinances' 2020 which proposed to create "One Nation, One Market" was first promulgated by the Union Cabinet on the 5th of June 2020. The bills approved by the Lok Sabha on the 17th of September 2020, were met with torrents of anger surging through the farmer community and masses of the country. However, many regarded these bills as “historic reforms” for the welfare of the Indian farmers. The Rajya Sabha on the 20th of September 2020 approved the bills and consequently, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 and The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 came to be passed. Before the enactment of the aforesaid Farmer Welfare Legislations 2020, the agro trade was regulated by the Agricultural Produce Market Committee (“APMC”) established by the respective State Governments. The statutory market committee facilitated the trade in certain agriculture and horticulture produce in regulated markets, popularly known as “Mandis”, particularly through auction sales via traders holding trading licenses. The highlight of India’s agricultural price policy and the APMC Mandis is the Minimum Support Price (“MSP”) as notified by the Government to protect farmers from distress sales and prevent their exploitation by creditors and intermediaries. Simply stated, the government can procure farm produce, in case market prices fall below the declared MSP and cushion the blow farmers would otherwise suffer. The apprehension that the recent legislation will dwindle the MSP system was the leading cause of indignation. The epicenter of the protest being the states of Punjab and Haryana were destined to lose a substantial amount of Mandi Tax of Rs. 2500 odd crores secured through Mandi transactions when surplus crops were procured by the Food Corporation of India for the National Buffer Stock if the legislation is enacted. Shockingly, the NSSO reported that only 6% of total farmers in the country could secure the sale of their crops at MSP. Over time, the APMC markets were infested by cartelization and “trader raj”, which ultimately decimated the elementary object of the APMC Act. The exploitative anti-farmer and anti-consumer tendencies of intermediaries, middlemen, traders and money lenders were getting out of hand and had to be curbed by new pro-farmer reforms. This atmosphere birthed a pressing need to introduce farmer welfare legislations. The concern today is whether these latest legislations answer their compelling needs? Is it the end of the Trader raj or is the crown simply being passed to elite agro-enterprises? It would be lamentable if these legislations are met with the same fate as the APMC Act, which was once a shield to protect farmers and in no time became a weapon for their exploitation. Undoubtedly, the agricultural reforms have brought about a significant shift in farmer – trader – consumer dynamics. The enigma today is, are these welfare legislations mere ropes of sand in the hands of our farmers? Whether it is illusory security or a firm commitment, is yet to be seen. In the meantime, we can attempt to comprehend the word of law. In essence, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 seeks to create a national framework for contract farming. Contract farming facilitates the future purchase of a specified quantum of farm produce at a mutually agreed price by a prior agreement between the farmers and agri-based enterprises, retailers, exporters, wholesalers and large buyers. The chief desired consequence of the act is to attract huge private sector investments from large scale and small scale businesses which will boost the agro sector economy and consequently benefit farmers. Since this deal is sans the middlemen, the obvious advantage is the disintermediation of the agricultural markets, which will bridge the farm to fork gap between farmers who earn very little and consumers who pay too much. Farmers will be able to assess the type, quantity and quality of their crops along with price and demand assurance before harvest. It creates a conducive environment to cultivate an assortment of crops within the country. Steady introduction to agro-technology seeks to facilitate farmer - market unification and provide global market linkage. The Act also provides for a three-tier dispute settlement mechanism through conciliation. The flip side of this Act is highlighted by several questions and concerns that remain to be effectively addressed. Corporatization of the agro sector in India is the elementary concern that remains presently unresolved but will be answered in time. The assurance of fair and transparent contracts is met with hesitation due to the obvious implication of one-sided contracts. Can our farmer friends be assured that this Act will assist them to navigate through the impeccably drafted one-sided contracts which are in favour of monopolistic sponsor companies? Will contract farming give better bargaining power to farmers or will they once again be the victim of unintended consequences? How will farmers deal with the risks of market failure and production issues? Will they drown in the surging wave of debts and liabilities that follow? Will those that never had the benefit of education take the assistance of the legal machinery or suffer in silence? Undeniably, the scale, capital, tools and power of these enterprises that have an army of data experts, price analysts and skilled lawyers at their disposal will remain unmatched to a great degree. The purpose of farmer reforms will be rendered otiose if the loopholes in the act allow the dominating buyers to mould the contract to their benefit. In no uncertain terms, The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 stipulates efficient, transparent and barrier-free inter-State and intra-State trade and commerce of farm commodities beyond the physical premises of notified APMC Mandis and seeks to create a facilitative framework for electronic trading for online buying and selling of agricultural produce. Farm produce will no longer be routed only through regulated markets. Since any "person" (as defined under Section 2(h) of the Act) having a Permanent Account Number is permitted to establish and operate an electronic trading and transaction platform for such free trade, as against the earlier prerequisite of licensed trading, it has the immediate effect of shattering trader monopoly. Moreover, no Mandi Tax for sale, market fees or cess can be levied by the State Government for the trading of farm produce beyond APMC Markets. It is an endeavour to foster trade liberalization and promote free markets with minimum governmental interference. The idea is principally based on the concept of neo-liberalism. However, inadequate marketing infrastructure can cause piecemeal erosion of the benefits of unrestricted trade facilities. Unregulated markets can pose challenges such as lack of information on base prices, limited to no exposure to a fair buyer spectrum and failure to secure the sincere benefit of competitive alternative trading channels. Where marginal and small farmers (more than 90% of the farmer community) have often fought for access to basic government procurement facilities and found it difficult to secure MSP, the benefits they are proposed to acquire through electronic trading remains contentious. Inter-state transportation also appears to be uneconomical for a huge percentage of farmers. Even so, if implemented correctly, this legislation is capable of engendering buyer competitiveness, expanding the buyer spectrum and creating a national market network which gradually allows the fluent streaming of agricultural commodities from surplus to deficit regions, thereby bringing about uniformity in crop prices, agro commodity distribution and farmer income. That being said, regardless of subjective perception of the Act, how the bills came to be passed in the Rajya Sabha is concerning. The haste with which the Bills were passed in the Rajya Sabha, amidst Covid-19 crisis and sans state consultations raises a fair degree of suspicion. Additionally, the credibility of the voice votes of the members of the Parliament is rendered questionable due to the utter disregard to the demands for physical voting made by the Opposition, which is a huge blow to the democracy of our country. In hindsight, it would have been advantageous to act upon the suggestion put forth by the Opposition, of placing the Bills before a Select Committee for scrutiny, to assess and conclusively determine the impact, implementation and lacunas of the proposed Bills before enacting the legislation. Although contemptuous, broken microphones and torn rule books weren’t enough to satisfy the demand of division voting put forth by the opposition, as it should have been per the protocol. Howbeit, the letter of law and practical operation thereof has never been an easy transition but a persistent and firm commitment by the government towards the development of pro-farmer and pro-consumer agricultural infrastructure across the country is imperative. “The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale and pays the freight both ways.”- John F. Kennedy As long as this statement stands true we will keep failing our farmers who continue to burn the candle at both ends. The fortune and fate of our farmers have to be rewritten and forged in the unbridled sentiment of welfare. Consistently identifying and filling the lacunas through timely amendment and improvement of the legislation is the only way forward. The legislation is a start to bringing about a profound shift in the agricultural infrastructure of India. Although imperfect, the reforms are all but monumental and necessary. We can hope that in time, the legislations will considerably bridge the staggeringly high percentage of farm to fork gap and free the farmers from the shackles of bureaucracy, monopolistic intermediaries and trader raj while successfully demolishing the patronage and commission structure.

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