Amidst strong protests by Opposition parties and farmers’ organisations, the Central government got the three farm bills passed in Parliament. With the assent of the President of India, these bills have now become Acts or the laws of the land! The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act 2020 implies that private traders can now bypass Agricultural Produce Market Committee (APMC) mandis and purchase agricultural produce to sell it anywhere in India. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act 2020 means freedom for contract farming and price negotiations and the Essential Commodities (Amendment) Act 2020 provides freedom to agribusiness and trades to stock any agricultural produce in as much quantity as they would like to. In effect, it means that the corporate sector has been given free hand to enter in agriculture, contract farming on ‘mutually agreed terms and conditions’, purchase, storage, processing and other market operations, with little legal protection to the farmers. Even the constitutional validity of Central acts in a federal state of India, where agriculture is a state subject in the constitutional scheme, is being questioned.
The Central government has claimed that this move has liberalised agricultural markets and will facilitate improvement in market’s efficiency, attract private investment in agriculture and would ensure better prices to farmers for their produce with high transparency. This would mean farmers will get out of the clutches of the monopoly of APMC mandis and evade the rent-seeking behaviour of the traditional intermediaries (arhtiyas). The polar opposite viewpoint of the protesters is that this move, towards greater play of free markets, is a ploy by the government to get away from its traditional role of being the guarantor of Minimum Support Prices (MSPs). For this, farmers argue that the government should have provided for statutory guaranteed MSP for their marketed surplus.
Farmers, especially in Punjab and Haryana where MSP for their two major crops is almost assured, are suspicious of what the markets will offer and how the “big companies” will treat them, where they may be minor players and incapable of bargaining effectively. There are many structural problems like lack of information with farmers which inhibits their ability to make informed decisions. Even if they have market information, their capacity to bargain or hold their crop is very limited, forcing small and marginal farmers for distress sale and getting further into debt trap and pushed out of their agricultural occupation and be landless labour.
It is nobody’s case that agriculture market reforms were not required. There have been many problems with APMC mandis. They were getting inefficient, opaque, politicised and often controlled by cartels. Need of the hour was to clean the system than to make it defunct. Two parallel systems of marketing, one operated by private corporates where there will be no government charges and the other APMC mandis, where mandi boards and ‘ahrtiyas’ charge a fee, a dual price structure will encourage unregulated trade detrimental to providing access to farmers for better price recovery and assured prices. Soon APMC mandis will become defunct and it will pave the space for withdrawal of MSP rendering farmers more vulnerable to unregulated market operations. Corporatisation does not reduce the role of middle-men, they will now have a new role as market integrators between corporates and farmers without any government regulation, rendering farmers more vulnerable to exploitation of the middlemen and corporates. Provisions of Agricultural Marketing Acts are highly skewed in favour of private capital, with no limit on stock holding and with restrictions on the government interventions, there is limited recourse to any independent grievance redressal mechanism as SDMs/DCs are prone to pressures from the state and corporates, without judicial review.
Very little attention has been paid to the implications of amendment to the Essential Commodities Act. Even recently, when onion prices shot up, the government was forced to ban its export to protect the interests of the domestic market. With amendment to the Essential Commodities Act, policy space for government intervention will get reduced, rendering domestic consumers to be more vulnerable to the operations of the market mechanism. These agricultural market reforms are consistent with neo-liberal macroeconomic policy regime being adopted by the Government of India since 1991 in general and 2014 in particular. But the moot question is how they will impact small and marginal farmers, rural employment, distribution of income, food security and consumer protection?
Experience, of the advanced capitalist countries of Europe and the US, shows that unregulated markets always lead to pushing the small farmers out of agriculture. In India, about 80% farmers have a holding of less than 5 acres, they will have no option but to become wage labourers. Crisis will deepen further when there is no alternative strategy to generate employment to absorb farmers’ rendered surplus from agriculture. During 2011- 19, India had a jobless growth. Post Covid-19, Indian economy is in a very bad shape which reveals falling GDP and worse employment situation. Crores of semi-skilled labourers have got unemployed. It is reported that 2.1 crore salaried jobs have been lost and people are in great stress. This has been no time to tinkle with a relatively smooth-running machine of APMC mandis, further aggravating the worsening state of the economy. These agricultural market reforms, in the name of safeguarding the interests of farmers, are out and out structural changes to give free play to the corporate sector with little protection to the farmers.