2 FARM LAWS: A LOST OPPORTUNITY OR A GOOD RIDDANCE?

FARM LAWS: A LOST OPPORTUNITY OR A GOOD RIDDANCE?

By: Aishwarya Saxena (Lucknow University)

Parliament passed the Farm Laws on September 27, 2021. They created a stir across the nation and led to a massive upsurge of farmers. On April 5, 2021, the Supreme Court suspended the laws temporarily. Recently, the laws were repealed.

What were the three farm laws?

1) Farmer's Produce Trade and Commerce (Promotion and Facilitation) Act, 2020: This act sought to promote barrier-free trade and commerce of agricultural produce outside the premises of markets specified under State Agricultural Produce Marketing legislations. The farmers and traders could enjoy the freedom to purchase and sell agricultural produce. In addition,

 The farmers would not be charged any levy for the sale of their products and would not have to bear transport costs.  The bill proposes introducing an electronic trading and transaction platform to foster smooth trade electronically.  Besides mandis, farmers would have the freedom to do trading at farm gate, cold storage, warehouse, processing units.  By engaging in direct marketing, farmers could eliminate the intervention of intermediaries, thereby securing the total price.

Apprehensions: Upon enforcing this law, the farmers feared that Agricultural Produce Market Committees (APMC) could turn redundant, which would imply that the government would no longer procure excess supply at the minimum support prices (MSP).

Clarification Procurement at Minimum Support Price will continue  Mandis will not stop functioning, and trading will continue as before. Farmers would now have the option to sell their produce at places other than mandis.  The e-nam trading system (an online platform for the trade of agricultural produce) will continue in mandis.

2) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

This act sought to empower farmers to engage with the wholesalers, large retailers, and exporters at a level playing field through a contract farming agreement between the buyer and seller of agricultural produce before the inception of any farming activities. Contract Farming would secure price assurance for farmers.

 The market risk would get transferred from the farmer to the sponsor.  It would foster the farmers to access better technology and inputs like seeds.  It would help increase the farmer's income besides reducing the marketing costs.

 It sought to establish an effective dispute resolution mechanism between the farmer and the trader.  It encouraged to research and applying new technology in the agricultural sector. Apprehensions: Though the bill sought to protect the farmers against price exploitation, it failed to specify any price fixation mechanism. This loophole could have allowed private corporate houses to exploit the farmers. Also, formal contractual obligations seemed unreasonable in a sector as unorganized as agriculture. Farmers also lacked resources to wage a legal battle against private entities in case of exploitation. Clarifications:  After signing the contract, the purchasers of the product would directly pick up the product from the farm. Farmers would not have to look for traders.  A local dispute redressal mechanism would help solve disagreements. The farmers would not have to pay visits to the court again and again.

3) The Essential Commodities (Amendment) Act 2020: Deemed to be the most businessfriendly act out of all the three, it allowed the government to regulate the supply of agricultural food products only under exceptional circumstances like war, famine, natural calamity, and extraordinary price rise. It provided to remove cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities. Features:  It provided to liberalize the stocking of agricultural produce.  It sought to address the fears of the private investors regarding excessive intervention in their business operations for "regulation."  It sought to attract foreign direct and private investments to the agricultural sector by imparting the freedom to hold, move, distribute and supply. As a result, investment in the

modernization of the food supply chain and cold storage would surge.

WHY WERE THE FARMERS PROTESTING?

 The protesting farmers primarily belonged to Punjab, Haryana, and Western Uttar Pradesh, the first states to witness the Green Revolution in India. To encourage the farmers to adopt HYV seeds, they had been offered procurement of excess supply at MSP as an incentive. The already well-established system has only evolved ever since. Farmers were afraid that accepting these reforms would eventually lead to the government abandoning the procurement policy at MSP.  MSP incentivizes the farmers to produce wheat and rice in excess, often at the cost of other crops. If the government reduced its procurement, and with the establishment of private markets, the prices of rice and wheat would fall drastically, hurting the interest of the big farmers and the marginalized farmers.  Arhatiyas or commission agents facilitate the transaction between farmers and the buyers by providing a platform for farmers to unload, clean, auction, weigh and bag their agricultural produce before moving out. For this, they earn a 2.5% commission. They also finance the farmers. If the trading were to move towards markets other than mandis, they could get drastically hit.  Contract farming is not a new trend in the agricultural world. Delayed payments, highly onesided contracts, and outright cheating have often marred it. Moreover, the new laws did not prescribe any price fixation mechanism, which made the farmers prone to exploitation at the hands of corporate houses. Farmers feared that the private sector would take over the agricultural sector just like it has taken over numerous other industries.

 The recent rise in the agricultural cost of production owes itself to the increase in input costs such as machinery, seeds, and human labor fuel. The farmers attributed it to the increasing corporization of the agricultural input sector, further intensifying farmers' resentment towards the private sector.

HOW COULD THE FARM LAWS CHANGE THE LANDSCAPE OF THE AGRICULTURAL SECTOR?

Crucial problems like low yields and inefficient smallholdings have plagued the agricultural sector. Experts believe that the new farm laws can change the face of the Indian agricultural industry. With the inclusion of contract farming in the formal system, it could be easier to sell the crops, which would help stabilize the farmer's income. Improvement in production would prompt an increase in export and the resultant increase in agricultural revenue.

Agriculture is essentially an investment-starved sector that has resulted in inadequate infrastructure and technology. The farm laws aim to attract private and foreign direct investments to the agricultural industry. A surge in investments would facilitate the sector's modernization, improvement in infrastructure, technology, and farming techniques. More warehouses would be established, thus storing perishable agricultural produce to foster yearlong supply, stabilizing market prices, and reducing post-harvest losses, which amounted to Rs. 44000 crore in 2009 at wholesale prices. Also existed a strong possibility that the firms would provide inputs to farmers as a part of the contract, thus reducing the cost of production for the farmers. Ending APMC's monopoly to sell outside mandis would provide greater market access and an array of new opportunities to farmers so that they could seek commercial outcomes and profitable avenues than to sell their produce. Farmers presently sell their produce to the registered licensees of the state government. The poor infrastructure of APMC, inefficiencies of the system, and the exorbitant taxes levied by APMC would cause the farmers heavy losses. The new system sought to do away with intermediaries for farmers to decide the price they would like to sell. They would also secure the payment within three days. In addition, there would have been no need for a license to purchase agricultural commodities, and those with necessary documents like PAN cards could join the trading. The digital transformation could expand the sector by $30 -$35 billion by 2025. Quashing the stockpiling restrictions would drive supply chain efficiencies through stock access and fostering price stability. These reforms could help lift the farmers out of poverty and help transform the Indian agricultural sector into a "food export powerhouse."

CONCLUSION

It is a common opinion that the bill witnessed a hasty implementation, and the leading cause of its repealing is the lack of consensus and debate before its enforcement. Critics accused the government of violating democratic rights. The opposition makes it almost impossible to get bills passed in the parliament as the interest extends more than the welfare of the people to political friction. It is about time we put the nation's development before the vested interests. Moreover, on April 5, 2021, the Supreme Court suspended the laws. Had debate been the solution, this temporary suspension provided enough time for discussion, but no efforts were taken from either side to resolve the deadlock.

At the same time, we currently lack the resources to bridge the gap between what we are and what we seek to be. Doing away with go-betweens is beneficial for well-informed farmers and infrastructure, which was not the case here. The government should have taken active steps to address the fears and apprehensions of the farmers to counter their insecurities and provide the much-needed impetus for the vision of transformation. The government to assure the farmers should have statutorily backed MSP. The lack of inclusion of stakeholders in decision-making had sown the seed of mistrust. Open discussion between the farmers and the government is the only viable option to solve this deadlock.

India's agriculture lacks adequate infrastructure despite the government's support. Private investment is the only feasible solution to bring about the necessary technological advancements. Repealing the law sends negative signals to the corporate world.

With proper implementation and support, the much-needed reforms possessed the potential to change the face of Indian agriculture and bring about the much necessary infrastructural changes. However, resistance to change and apprehensions seems to have seized the opportunity to improve forever.