Gokul Patnaik
The whole country has been in turmoil for the last few weeks because the farmers are agitated. Lakhs of farmers are on the streets and Delhi, the national capital, is under siege. The bone of contention has been three farm laws which the government has promulgated recently, almost surreptitiously. On June 5, in the midst of a raging pandemic when people were worried about the economy, the Government of India notified three ordinances having far-reaching consequences on agriculture in the country. They were introduced in Parliament in September and rushed through quickly and received President’s assent to become laws.
Each of the three laws deals with one aspect of agricultural marketing. Collectively, they are designed to eliminate or reduce the influence of traditional APMC-based middlemen and to create a unified national market. They are based on the premise that they will enable private players to invest in agrifood supply chains more easily, lead to gains in efficiency downstream along the supply chain and that these gains will be passed on to farmers to enhance their income. These laws have been variously hailed as ‘revolutionary’ and ‘1991 moment for Indian agriculture’ while others have criticised them as the ‘death knell for farmers’.
The first, and perhaps the most controversial of this troika, is called the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020. This Act attempts to bypass the state-level APMC Acts and has therefore been called by some as the ‘APMC Bypass Act’. This Act permits private entities to buy and sell agricultural goods anywhere and set up private markets referred to as the “trade area”. The jurisdiction of APMC is confined to the designated “market yard”. The private markets are exempt from any registration charge, market fee or levy by the state governments. This will make the transactions in APMC markets more costly as they are burdened not only with fees and levies but also commission charges of ‘Arhtias’ or middlemen operating there. As the APMC markets become uncompetitive, traders will bypass them and they will wither away. However, there is no guarantee that the commission agents will not operate or that there will be no cartelisation of buyers in the private markets which will operate in the shadow of regulations.
The second Act, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 is more easily referred to as the ‘Contract Farming Act’ and provides a template for written agreements between farmers and sponsors. It supersedes the “Model Contract Farming Act” which was circulated to the states not too long ago in 2018. It allows corporates and major buyers to have written agreements with the farmers for purchase of their produce subject to pre-agreed quality parameters. This is voluntary and a farmer can opt for a written contract or not. However, if he opts to do so, the terms are binding, and any deviation is punishable. Disputes are to be resolved in summary proceedings by designated revenue officers like the District Collector. The jurisdiction of courts is banned. Contract farming is not a new phenomenon. It is being practiced in products like milk, poultry and sugarcane since long. Many corporates also buy fruits and vegetables from contract farmers to meet their processing needs. Under the Indian Contracts Act, even a verbal contract is legally binding if it is acted upon – so why was there a need to have a separate law for it? As the disputes are to be arbitrated by government officers and the jurisdiction of courts is banned, farmers fear that the decisions may be influenced by the government of the day or influential businesses.
The third Act, the Essential Commodities (Amendment) Act, 2020 is perhaps the least controversial as it removes the power of the government to impose restrictions on stocking limits except in “exceptional circumstances” subject to certain triggers such as abnormal increase in retail prices. However, before the ink on the proposed bill was dry, the central government banned export of onions and imposed stock limits without a trigger. This aggravated the persistent trust deficit between the government and the farmers and gave rise to many larger issues which lie at the core of the present agitation. — To be continued
The writer is a retired IAS officer and former Chairman, Agricultural & Processed Food Products Export Development Authority.
