Agriculture

Why are farm bills of Modi govt. opposed by farmers, opposition parties?

Photo: Rajya Sabha TV grab of the Opposition parties’ protests

By Deepak Sharma

New Delhi: Indian parliament’s upper house (Rajya Sabha) on Sep 20 passed two of the three contentious farm bills amidst an uproar by opposition parties’ members and protests by farmers at several places.

The two bills – Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, and the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 – were already passed by Lok Sabha on Sep. 17.

Many farmer organisations, particularly in agriculture-dominated Haryana, Punjab and western Uttar Pradesh, have held street protests while India’s main opposition Indian National Congress and its several allies have criticised the Narendra Modi government.

The Bill

In June, three agriculture-related ordinances were issued – the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, and The Essential Commodities (Amendment) Ordinance 2020.

To simplify one can say “The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill 2020” as the law to end ‘Agriculture Produce Market Committee‘ (APMCs) or ‘mandis‘ monopoly. Similarly, “The Essential Commodities (Amendment) Bill 2020” as the freedom of food stocking by agribusinesses firms and “The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020” as the contract farming bill.

It is crucial to note that the Bill is not to shut down APMCs but only expands the choices for farmers. So, after the passage of Bill, a farmer has option to sell its produce to some other private buyer instead of selling it through a commission agent or ‘Arhatia’ in the APMC/mandis.

An Agricultural Produce Market Committee or mandis  were introduced in 1950s to protect farmers’ interest, particularly from money lenders, who were forcing farmers to sell their produce at much lower prices in lieu of the money borrowed by them.

But many of the money lenders later become commission agents and the exploitation of farmers continued as these agents collaborated with others to create of chain of middlemen.

These middlemen pocketed huge amount of money by exploiting weakness in the system while both the farmers and the consumers stood to lose. The government had earlier too tried to bring similar legislation but failed to implement it.

Similarly, ‘The Essential Commodities (Amendment) Bill 2020’ is aimed at allowing private sector to create storage facilities. Essential Commodities Act was also introduced in 1955 to prevent illegal hoarding by some to push the prices up, as there was shortage of food-grains and other essential items in the country. After the green revolution, things have change and India become a net exporter of food grains and now struggles to store them.

‘The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020’ is aimed at providing a legal frame work to private companies to directly engage farmers so that they could ensure increase in income by diversifying to other crops.

Many agriculture experts hailed the move as a great leap forward for Indian agriculture but some others cautioned, saying it would eventually lead to a situation where large private retailers such as Walmart could monopolise the whole system.

“The reforms could be a harbinger of major change in agri-marketing, a 1991 moment of economic reforms for agriculture. But, before one celebrates it, let us wait for the fine print to come out,” said Ashok Gulati, an agriculture economist.

According to him the government has surely shown a willingness to walk the right path and deserves compliments.

Why protests against the bill

Some farmers’ union are protesting the Bill fearing that it will encourage entry of large retailers and other private companies to directly deal with farmers, which eventually result in government doing away from providing subsidy to agriculture sector and also stop giving Minimum Support Price (MSP) to farmers.

The government, however, clarified that there is no plan to move away from the system of procurement by state agencies on MSP.

While congratulating the government on passage of the bills, Prime Minister Modi reiterated his assurance regarding the system of minimum support price and the government procurement, saying that these systems will continue unhindered and the passage of the Bills do not affect these systems in any manner.

He said the Bills are intended to transform the agriculture sector and empower farmers to lead a better life.

Realty of protest

So far the protests by farmers are confined to three states – Punjab, Haryana and some districts in western Uttar Pradesh only.  Almost there is nil protests in eastern and central part of the country, and in the southern states, only few small scale protests in Tamil Nadu has been organised by Congress Party’s ally Dravida Munnetra Kazhagam (DMK).

As per information available, Congress Party and other regional parties in these three states have strong support among commission agents, who feared losing their decades-long hold on farm trade, are fuelling the protests.

A large number of Members of Legislative Assemblies, Members of Parliament and other political leaders in these three states are either themselves or their immediate family members are actively involved in farm trade through these mandis.

Family members of Bhajan Lal, Bansi Lal, Bhupinder Singh Hooda, Randeep Singh Surjewala, all from Haryana, the Badal clan and the Maan family, both from Punjab, and Chaudhary Ajit Singh from western Uttar Pradesh, and numerous other leaders in these three states have been practising  the profession of commission agents or Arhatiyas  for decades.

They also have significant resources available to them through clan membership and through business association, which they are utilising to add more fire to the protests.

In Punjab alone, there are 28,000 registered Arhityas operating through 152 big mandis and around 1,850 government designated purchase centres. Similar numbers of commission agents are also there Haryana and western Uttar Pradesh also.

According to a commission agent based in Hisar, Haryana, over the years, big farmers, with deep political connection, have been venturing into the business of trading in agricultural commodities in grain markets along with farming. Earlier people from the Aggarwal community only were involved in grain markets.

“But today, two-third of commission agents in any grain market of Haryana are from farming background and are politically active.  Now they dictate terms where collective decisions are to be taken,” he said.

“Big corporate have the reputation of capturing the entire business by finishing competitors. They will initially offer good rates, which will lead to complete demolition of the present marketing set-up. Once they monopolise trade, they will buy farmers’ produce at the price of their choice.”

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