On June 5, the central government rolled out three farm ordinances which have invited a major backlash from several farmer outfits across parts of Punjab, Haryana and UP. The most recent developments include the resignation of SAD MP and Food Processing Minister, Harsimrat Badal and passing of the new Farm Bills in Rajya Sabha. But why are the farmers against these new laws?
The Farm Reform
The ongoing protests are against the following three ordinances passed by the central government after the monsoon session of Parliament -
- Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance 2020
- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance 2020
- Essential Commodities Ordinance 2020
In practice, the three ordinances:
- Give farmers access to trade areas and traders beyond the notified APMC markets* without any license or paying any commission
- Support the marketing freedom by formalising and regulating contractual farming and dispute settlement mechanisms
- Regularize essential items and frees traders from arbitrary stocking limits
*Agricultural Produce Market Committee (APMC) market is a state-run market to ensure fair prices and a regulated marketplace for farmers’ produce.
Government officials argue that these new laws would help make agriculture trading more integrative for farmers, traders and consumers. Farmers would get the choice to buy, sell and move their crops in alternative trade areas. They would also get the choice to engage with private buyers, attract competitive crop prices, and not have to pay unnecessary transaction costs. These benefits would trickle down to reach the end consumers.
One Nation-One Market
The government also believes this would help Indian agriculture to transition from mere subsistence towards market-orientation. It would open up private investment opportunities in agriculture and create an additional private marketplace for farmers, next to the traditional ‘mandi system’, wherein the two would eventually combine to form one holistic marketplace, ready to face global competition.
Why are the Farmers Unhappy?
Farmers see these laws as favouring the “big babus” of the corporate world. They fear that private intervention would not guarantee them an MSP for their crops. They also feel it would lead to instability in the existing trade areas (mandis), affecting thousands of farmers, traders and commission agents.
They’ve garnered immense support from Akali Dal, who want to protect their large farmer vote-bank.
Bigger Issue for Small Farmers
The biggest fear amongst farmers is that these laws will hit the small and marginalised farmers (cultivating less than 2.0 hectares of land) the worst.
The small farmers constitute more than 70% of all farmers in India and are often landless. Without MSP, these farmers would be exposed to aggressive pricing of an open market, leading to compromised sales, losses, debt and landlessness. Although the ordinances talks about a support price for farmers, the issue around MSP lacks clarity.
The Arhtiyas Angle
These new laws seek to remove market fees from the transaction costs of grain procurement, thereby threatening the livelihood of thousands of commission agents or Arhtiyas in the APMC markets. Concentrated largely in parts of Punjab and Haryana, the issues of the Arhtiyas has contributed to making Punjab the hotspot of the issue.
The reforms were welcomed by many western states where the commission agents are low in number. Does it mean these protests are largely an act of resistance to change?
It is clear that these ordinances are passed in the right spirit. The mindset to remove restrictive regulatory laws from agricultural framework is needed to uplift the farmers and to open the market. What we also need are improved logistics, farmer-friendly infrastructure, easy access to formal capital, assured sustainable pricing, investment in state-of-the-art technologies and assistance in diversifying crop produce to support the farmer community from ground-up.