Why farmers need assured price in new farm law


*Dr. Pranay Mishra

The recently passed controversial Farm bill is expected to bring revolutionary changes to agrarian context and help farmers  in doubling their income.  

This new act is aimed to reduce the involvement of middlemen in the selling process of farm products. It has lifted the control of APMC (Agriculture Product Market committees)or state-owned Mandis from the trading of agricultural products.

It can be counted similar to the introduction of  LPG (Liberalization, Privatization & Globalization) policies by government in early 90s to open up the economy for global trading through uplifting state’s control from different industries, easing industrial licensing policies and inviting private players to take over public sector owned businesses. Likewise, as per the provisions of new Farm Act, farmers are not bound to sell their products only to the government approved or license holder intermediaries in Mandis. They have open market for trading of their productsbeyond the geographical boundaries under ‘One Nation- One Market’ concept. They can’t only sell their products to anyone as per their volitionbut also make contract with the buyers for selling products before sowing the seeds.

There are three laws passed in a line by the Indian Parliament aimed to reform the agricultural sector of the country: First, Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 which allows farmers to sell their products anywhere within the country. Earlier, farmers can only sell products to government-approved Mandi or Agriculture Product Market committees (APMC). These APMCs are state-operated markets, allow farmers to sell their produce to the middlemen. Further, these middlemen sell their produce to consumers throughout the country.Second, Farmer’s (Empowerment and Protection) Agreement of Price Assurance and Farm Services act, 2020 that ensures farmers tomake contracts with buyers. Farming can be carried out on the basis of the agreement between the buyers and the producers. There are huge scopes of contract farming as MNCs regularly get into contracts with farmers in order to ensure receiving of specified types of produce. They require specified produce and would prefer to be directly in touch with farmers rather than traders to get organic and fresh products. For example Mc Donalds uses only a specified kind of potatoes for their Fries and gets them grown accordingly. Third is Essential Commodities (Amendment) Act, 2020 which was long overdue out of all the 3 Acts that have been passed. A current amendment in ECA reduces the power of government and uplifts the restrictions on the storage of essential commodities like pulses, oilseeds, onions, etc.

These new laws are claimed to bring farmers closer to the market by changing the policies related with the place where they can sell, by strengthening their ability to store produce and enter into contracts.

These laws allow farmers to sell their produce outside APMC or state-owned Mandi. Anyone can buy their produce even at their farm gates. This may cause revenue losses for government in terms of their Commissions and Mandi fees, also the new reformations are likely to impact the income of Commission Agents of the Mandias well.

This law ensures better prices of the productsto the farmers due tothe competition, alsoexpected toincreasefarmer’s income by cost-cutting on transportation. Since government would not have any control over price mechanism and Agricultural Produce Market Committee (APMC) or Mandi, has worried the farmers as it ended the Minimum Support Price (MSP) regime as well.

Farmers are also expecting risk of losing out land rights under contract farming rule and reduction in price of their produce as the market would be dominated by big agri-businesses.The farmers who are strongly opposing the bill believe that this bill is "anti-farmers", are designed to help big corporate houses at the cost of farmers.

It is based on the fact that India has more than 86% marginal farmers who own very little land. There are high possibilities  of exploitation of these marginal farmers by big corporations through unbalanced contracts. Farmers have fear that big contractors may take undue advantage of them under contract farming provisions. They also have dangers of turning them into slaves through these contracts.




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