Hyderabad: The Indian farm reforms 2020 passed by the Parliament has turned out to be a subject of controversy. Amid the COVID-19 crisis, the Center passed three laws – Farmers' Produce Trade and Commerce Act, Farmers Agreement on Price Assurance Act and Essential Commodities (Amendment) Act without consulting the farmers or opposition parties, leading to a slew of protests.
Industrial and service sectors are floundering in the aftermath of the pandemic. Only agriculture has been steadily clocking growth rate even as the Center decided to hand it over to the capitalists and private players. The fact that few state governments have made laws against these reforms questions the concept of federalism in the country.
The government’s decision to forsake the livelihoods of small and medium scale farmers for the vested interests of corporates has drawn flak from all sections of the society. The Bill was passed without any public referendum or discussion with the state governments. There are no adequate processing, storage and marketing facilities for farmers in the country. Agricultural marketing is a complex process.
The farmer cannot decide a maximum retail price (MRP) for his product. The minimum support price (MSP) fixed by the government does not completely ensure profits for the farmers. At this juncture, the government must improve marketing facilities and increase the MSP instead of doing away with crucial clauses that provided a safety net for the ailing farming community.
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The Farmers’ Produce Trade and Commerce Act will reduce the states’ control over agricultural produce market committees (APMC) and reduce their revenues. Consequently, there could be a fund crunch for the development of APMC. In the new system, traders and multinational companies are likely to influence the market due to the lack of government control.
Outside APMC, there is no guarantee of MSP for the farming community. According to the Farmers Agreement on Price Assurance and Farm Services Act, farmers can sign an agreement with the buyer before the production or rearing of any farm produce. The catch here is that small and marginal farmers account for 85 percent of the agricultural sector in India. They lack the power or capacity to strike the right deal with powerful companies.
As per the principles of the free market, two equal competitors will benefit the economy. In the event of disparity, the stronger competitor wins thereby oppressing the opposite party and the market.
Through amendments to the Essential Commodities Act, the government removed pulses, cereals, potato, onions, edible oilseeds and oils from the list of essential commodities, removing stockholding limits on such items.
There is no clarity on the method of calculating the pricing. Private traders and corporates will seize this loophole to stockpile the produce and influence the market.
A closer look into the three laws reveals the true intentions of the central government. It intends to weaken the state-level APMC and forces the farmers to sign an agreement with traders. Companies are given the freedom to procure the produce from anywhere.
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Corporates sensed an opportunity in the form of agribusiness and food processing industries, the golden geese. In the guise of reforms, the Center axed MSP; a move that benefits big private players. State governments can have a take on the implementation of these new laws. Hence, the Center must address the fears and concerns surrounding the new farming bill.
Necessary amendments should be made to ensure the safety of the agricultural community in the proposed system. The central government should hold talks with protesting farmers. As per the Swaminathan Committee report, the government must give 50 percent more MSP than the production cost of the crop to farmers. The contract price of crops should not be lower than the MSP announced by the government.
The Center must act as a third party in these agreements and ensure effective implementation of the farmers’ demands. For agricultural development, the Center must set up National Agricultural Council with the state governments.
A regulatory committee for agricultural produce marketing, stock monitoring and control should be established to prevent private traders and corporate players from assuming the absolute monopoly of the market.
The government should ensure transparency and keep a check on the agriculture produce stocked by the corporates. Food stocks must be in accordance with the buffer stock scheme. There should be clarity in the method of calculating the rise in prices of essential commodities. The government must improve agricultural marketing facilities and safeguard the interests of farmers to put the nation’s agriculture scene back on track to progress.
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