Why farmers are protesting?

Farmer protest in India's national capital has created quite a flutter globally too. But very few know exactly what the farmers are protesting. Here's a primer or an explainer on the contentious Farm Bills.

Since 26th November 2020, the borders of Delhi have been witnessing a huge agitation being carried out by farmers, most of them from Punjab and Haryana.

The farmers are protesting against 2 Farm Bills that the Rajya Sabha recently passed: (1) the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, and (2) the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020.

The two bills had already cleared the lower house – the Lok Sabha. When they were introduced in the Rajya Sabha, there was ruckus and finally, the Bill was passed through a voice vote.

Here’s what the ordinances propose and why the farmers are protesting against it.

What are these bills do?

 

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

 

The first bill attempts to do is allow farmers to sell their produce at places other than the Agricultural Produce Market Committee (APMC)-regulated mandis. It is crucial to note that the idea is not to shut down APMCs but to expand a farmer’s choices. So, if a farmer believes a better deal is possible with some other private buyer then he can take that option instead of selling in the APMC mandi. It removes a barrier to inter-State trade and provides a framework for electronic trading of agricultural produce.

 

The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

 

This Bill relates to contract farming, providing a framework on trade agreements for the sale and purchase of farm produce. Under this ordinance, the farmer broadly signs a contract to sell the crops based on the parameters set by his crop standards. It is believed that this may reduce the risk of the farmer. This bill helps marginal and small farmers, with land less than five hectares to gain via aggregation and contract (marginal and small farmers account for 86% of total farmers in India).

 

The Essential Commodities (Amendment) Bill, 2020

 

Under the Essential Commodity Act, the central government can regulate the supply of certain food items only under extraordinary circumstances (such as war and famine). This provision will attract private sector and Foreign Direct Investment (FDI) into the farm sector as it will remove fears of private investors of excessive regulatory interference in business operations. This helps both the farmers and consumers by bringing in price stability.

 

The idea with all three Bills is to liberalize the farm markets in the hope that doing so will make the system more efficient and allow for better price realizations for all concerned, especially the farmers. The central concern, presumably, is to make Indian farming a more remunerative enterprise than it is right now.

 

Why farmers are protesting?

Farmer's Protest across railway tracks

Farmers across the country are opposing the ordinances introduced by the central government. The government, on its part, is projecting these ordinances as 'one nation, one market', a major step towards agricultural reform.

 

Farmers and traders have been alleging that the government wants to discontinue the minimum support price regime in the name of reforms. In effect, existing mandis established under APMC acts have been excluded from the definition of trade area under the new legislation. The protesters say this provision will confine APMC mandis to their physical boundaries and give a free hand to big corporate buyers.

 

Farmers, especially in Punjab and Haryana where MSPs are more prominently employed, are suspicious of what the markets will offer and how the “big companies” will treat them. The state governments of Punjab and Haryana will be affected most because of the loss ‘Mandi Tax’, a good source of revenue.

 

 

The government says the creation of an additional trade area outside of mandis will provide farmers the freedom of choice to conduct trade in their produce.

 

Interestingly, the farmers themselves want the old system to remain intact due to a variety of reasons. The biggest reason is that they avail finances from the commission agents to sow the crop and return it when the product reaches the market. Besides the farmers, the commission agents are also opposing these ordinances. They also fear that the new laws will bypass their business and they will be rendered jobless.

 

They say the ordinance does not allow farmers to approach a civil court.

 

Corporate dominance:

The farmers fear that the bills would bring about corporate dominance in agriculture. 

The farm unions have expressed the anxiety that by allowing the farming agreements, the big players and companies will capture the farming which will harm the small and marginal farmers.

 

The farmers fear that once the private grain markets are established, the traditional grain markets will become history. The farmers will have to depend on corporations and private firms.

 

Another underlying problem is the lack of information with farmers, which inhibits their ability to make the best decision for themselves. For instance, how will an average farmer figure out the right price for his or her produce?

 

Similarly, in the absence of adequate infrastructure to store their produce, farmers may not have the capacity to bargain effectively even if they knew the right price.

 

What is the government’s voice?

 

While the opposition has echoed farmers in alleging that the new legislation will benefit only big farmers and hoarders, the government said the provisions will be beneficial to all: farmers, consumers, and traders.

 

The government has said these reforms will accelerate growth in the sector through private sector investment in building infrastructure and supply chains for farm produce in national and global markets.

 

They are intended to help small farmers who don’t have the means to either bargain for their produce to get a better price or invest in technology to improve the productivity of farms.

 

The bill on the agriculture market seeks to allow farmers to sell their produce outside APMC 'mandis' to whomever they want. Farmers will get better prices through competition and cost-cutting on transportation.

 

These bills will help small and marginal farms by allowing them to sell produce outside mandis; allow them to sign agreements with agri-business firms, and do away with stock-holding limits on key commodities.

The Indian government’s failure to build political consensus, and the haste with which the three laws were enacted, make farmers suspicious about the true motives behind this reform.