Conflict Alerts # 200, 10 December 2020
Alok Gupta In the news
On 9 December, in a bid to meet the demands by the farmers protesting in New Delhi, the Indian government said the minimum support price (MSP) for crops would stay as it draws up a written proposal.
Since 26 November, farmers mainly from Haryana and Punjab have been protesting against three farm acts - the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, the Farmers' (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act and the Essential Commodities (Amendment) Act. Later, farmers from Rajasthan and Uttar Pradesh also joined them.
On 8 December, the protesting farmers have met with the Union Home Minister Amit Shah with no resolution to the deadlock as both sides remained resolute on their demands. The farmers' said, "they would settle for nothing less than the scrapping of the legislations."
Issues at large
First, the farm laws and indebtedness. The bills were brought to address farmer's entitlements in light of the Swaminathan report that identified freedom from indebtedness which has been the main cause for increasing farmer's suicide in the country. Also, the report highlighted guaranteed remunerative prices that often leads to mounting debts as farmers are forced to sell even at half the MSP (Minimum Support Price) declared by Governments for 24 crops.
Second, the protests are mainly against the first two acts. The FPTC Act allows farmers to sell their produce outside the erstwhile Agricultural Produce Market Committee (APMC), the government-controlled regulated marketing arrangement called mandis. This provides a wider choice to farmers for selling their produce anywhere to anyone. APMC became infamous for monopoly-cartel fixing low prices for the produce, forcing distress sales on farmers, as well as for market fees and levy by state governments. Farmers are apprehensive of the government's plot to eliminate MSP safety net. Farmers are not convinced about the provision of the Act as it leaves them at the mercy of big corporates increasing their vulnerabilities further. Adhatiyas (commission agents) would lose substantial commissions. State government stands to lose revenue as a sale through APMC would shrink substantially.
The second Act provides a regulatory framework towards striking a deal between a farmer and an ordained buyer before producing a crop, ensuring predetermined quality at minimum guaranteed prices. Contract farming has been operational in different crops. Potatoes used by beverages and snacks company PepsiCo for Lay's and Uncle Chipps (wafers) for exports. It has assured farmers buyback at pre-agreed prices alongside companies providing seeds/planting material, and another extension supports to farmers to maintain product's standard. Hence, the Act formalizes voluntary contract cultivation for crops not traded in APMC. Sugarcane and milk are also not sold in mandis but through contract. The Act prohibits sponsor firm from acquiring land of farmers through purchase, lease, or mortgage protects them. Act again considered having potentials to kill government procurement process, which procures nearly 85 per cent of paddy and wheat grown in Haryana and Punjab. Farmers also have a trust deficit with corporates.
The third Act will not affect the farmers rather would serve their interests. It mitigates Centre's powers to impose stock holding limits on foodstuffs, except under 'extraordinary conditions' like war, famine and other natural calamities and annual retail price rise exceeding 100 per cent in horticulture products like onions and potatoes and 50 per cent for non-perishables like cereals, pulses and edible oils. Hoarding has been beneficial to traders and not to farmers. Earlier, despite being a criminal offence, the practice was there. The government argues this would attract private investment and FDI in agriculture, cold storage, warehouses and would facilitate farmers when bumper crops are there.
Finally, the threat to food security. The opposition parties have castigated all three Acts as anti-democratic as it threatens food security and would destroy farmers through mortgaging agriculture and markets to the caprices of multi-national agri-business corporates and domestic corporates. Hence, they are standing by farmer's demands.
In perspective
Amid deadlocked negotiations between the government and farmers, the latter firmly demand repeal of all three acts. Negotiation is, however, limited. First, the problem of the farmers confines mainly to the FPTP Act as it weakens APMC mandis. The government could make MSP a legal right. The act proposes disputes to be referred to the offices of SDM (sub-divisional Magistrates) and District Collector, which are not an independent court, hence justice would be a casualty. Proper Dispute Resolution Mechanism for a transaction outside APMC could be negotiated for timely payment and all transactions. State and adhatiyas too are required to be assured of their revenue. Nearly 86 per cent of farmland are smallholder farmers owning less than five acres (two hectares) of land each. Hence, farmers would continue to be vulnerable before the corporate giants, for lack of bargaining power to get fair prices. Both need to listen and understand each other, and neither should hijack the nation's interests.