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FARM ACTS- EXPLAINED

Updated: Nov 11, 2020

By M. Vanmathi, III year B.A.,LL.B.


Introduction

In this context, we have to discuss the most debatable issue that brings the lakhs of farmers protesting on the streets. The farmers in India have been protesting since three controversial bills were passed in the parliament in the name of agriculture reforms. We all know agriculture is the backbone of Indian economy and farmers were compared to god at earlier times. But now what is the position of those innocent farmers? They are exploited by middlemen, private companies. Farm goods are used to buy at a very low price. So that most of the farmers lived in debt and they didn't get what they invested in fields. Therefore they take a loan again. Most of the farmers in India are living in debt and die in debt. This is one of the most serious issues in India, but we just ignore it and listen to another issue. One thing should be kept in mind when there is no farmers and agriculture field, and then India will be a graveyard. To change the position of farmers, the government introduced three acts in September 2020 which replaced the ordinance issued in June 2020. The government promised that these bills will bring a boost in the agriculture sector and bring a change in the aspects of agriculture economy such as price and trade of agricultural products, bring a contract between the farmer and private companies and stock limits for essential commodities. This act raises the farmer's income and also promises to double the income by 2022. After all these promises still, the farmers are protesting against these acts. Most of the farmers said that these acts are 'death warrant' to us. But our Prime Minister Narendra Modi said these acts are farmers friendly and don't be misled. Meanwhile, farmers in India blocked the roads and railway tracks in a protest against these acts. They say it could pave a way for the government not to buy grain at guaranteed prices and leave them at the mercy of private buyers. On the other hand, Maharashtra and Kanpur farmers have accepted these acts. There is a total confusion among the farmers and the public regarding the acts. Hence we analyse the advantages and disadvantages of three acts.

What are the three acts and their objectives?

1. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Act 2020 - contract farming empowers farmers to engage with wholesalers, private companies, exporters etc. So they can get price assurance before sowing the crop.

2. The Farming Produce Trade and Commerce (promotion and facilitation) Act 2020 - 'one nation-one market' concept was introduced, it gives the freedom to farmers to sell their goods anywhere in the country.

3. The Essential Commodities (Amendment) Act 2020 - It removes potato, onion, cereals, oilseeds etc. from essential commodities list and only added under certain conditions. Thereby the restriction on storage of these items is removed.

Aim of the farm Act 2020

These acts aim to allow the farmers to sell their agriculture products to new zones without the intervention of middlemen and without paying the levies such as mandi fees. This will encourage inter-state trade and reduce transportation cost. These acts encourage private companies to invest in grading and other infrastructures. It will help in the creation of a farmer production organisation and it focuses on small and marginal farmers as well. The result of these acts could eliminate the monopoly of government-run APMCs.

Is it evilest act to destabilize the foundation of democracy?

These acts were passed in the Rajya Sabha with a lot of struggles. Many violence and aggressive actions have happened in parliament. But the present government urgently passed the bill. Many politicians shouted and showed their distrust towards the acts. There is mistrust in farmers on the government for passing these farm acts without debate. Implementing the law in these circumstances will be immoral. The process of passing the acts is not democratic. Anyhow the government passed these acts by voice voting. The main opposition party called this act as a 'black law' and 'pro-corporate'. Its top leader accused the current Prime Minister of 'making farmers the slaves of capitalism'. The way farm acts passed in Rajya Sabha clearly shows 'the decline in the culture of legislative scrutiny' and many politicians said 'this is the bad day for democracy'. Under the law, the Supreme Court cannot interfere in parliament proceedings. So that judicial maintains its silence regarding the violence in parliament.

Pros and cons of farm Acts 2020 -A Overview

First, we discuss the pros and cons of farm Acts 2020 entirely and then we discuss each bill separately. Now we discuss the advantages of these acts. Farmers will have a choice to sell to anyone and anywhere without the intervention of APMC (Agriculture Produce Market Committee). The monopoly of APMC will be destroyed and payment to the farmers within three days. The changes will take out middlemen who run the APMC. In some states, there is a surplus of some vegetables and fruits, whereas in other states there is a demand for those products. Through this one nation, one market corporate companies can bridge this gap for the benefit of consumers. It attracts private investment in the agriculture industry. Contract farming is helpful for farmers because they will get price assurance beforehand. Some companies provide seeds, fertilizer and other requirements, which will reduce the burden of farmers. The essential commodities act can bring price stabilization. Then we discuss the disadvantages of these acts. This will bring farmers at mercy of big companies during dealings. APMC is helpful for small farmers. There is no guarantee that farmers' income will be increased. For small farmers, transporting the product requires more expenditure than selling them at the nearest APMC. Removing the restriction on storage of some food grain may lead to more imports at cheaper prices, it affects domestic farmers. Moreover, big companies can store food grain to increase its price artificially. Unless prices are regulated by the government, the market will go into the hands of a big company, which leads to both the farmers and consumers at risk of exploitation. The contract farming may turn the farmers into slaves.

1) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act 2020

This act starts with the name of empowerment and production. This act has something to do with the protection of farmers through the legal agreement. Now the question is protecting the farmers from what? Again we look into the title, price assurance and farm services. It means the farmer and business owner get into a legal agreement. It is beneficial for farmers and their interest. By this farmers would not be cheated. If the buyer asks for one ton of rice and later he tells them that half of the rice is not of good quality. Hence the change in pricing now, to prevent the change of thoughts or any other forms of exploitation, this act provides a dispute settlement mechanism. Price assurance is whatever farmer and buyer decide whole in agreement that is what should be paid to the farmer. The farm services describe that if the buyer can specifically tell the farmer what quality or grade is required and when to deliver those products and many more such demands. This is called contract farming. Farmers agree to supply the goods based on quality struggles, deliver requirements of the purchaser. In return the buyer, which usually a company agrees to buy a product often it the price that is established in advance. Wherein a farmer will produce a crop as per the legal contract with the corporate investor for a mutually agreed remuneration. The government says that this act will transform Indian agriculture and attract private investment. Exactly it does attract private investment. Companies agree to support farmers through supplying imports, assisting land preparation, providing production advice etc. But we look at the farmers' side; the powerful corporate investor would legally dominate farmers. Everything today comes with conditions applied; most of the farmers are illiterate. They are chances that a private company can exploit farmers very easily with legal clauses.

2) The Farming Produce Trade and Commerce (promotion and facilitation) Act 2020

This act allows trading of farm goods outside the physical premises of mandi and APMC yard. Earlier agriculture trade was conducted only in APMC yard (warehouse, cold storage, mandis). But the new act gives the farmers to sell their goods anywhere in the state or outside any state. Many states like Punjab and Haryana could lose the big source of state revenue. Mandi spread across the nation. Earlier, farmers sell their agriculture produce in these mandis and mandis are controlled by the state government through APMC. There are restrictions for farmers if they sell agriculture goods outside the mandis. Because the products that have a minimum support price need to compulsorily go through APMC. Otherwise, the small farmer can sell directly to the consumer and they are even doing now. In large scale farming, if he wants his production is protected by the government, then he has to notify APMC or trade with only APMC licensed traders. Anyhow the bill allowed free trade of agriculture outside the notified APMC mandis. After passing of this bill, the state government will not impose taxes on sale and purchase of farm-produced outside the mandis. The farmer will give freedom to sell the produced at a good price. But this bill is beneficial for only large farmers, they have more choices and they are even selling it to the private companies. This act is a great disadvantage to small farmers; due to transportation small farmers don't have incentives to go the longer distance to sell their goods. In addition to this farmers business also depends upon the ups and downs of the market. When the demand for such a product is low, the price will fall. But the cost of cultivation is high. Now the farmer was a squeeze in between the rising cost of cultivation and low prices due to low demand. In that situation, the government cannot give any subsidy or any help. Now the private companies play smart in the market that they buy at less, stock it and then sell at a high price to earn profits.

3) The Essential Commodities (Amendment) Act 2020

This is not a new act. This is an amendment in the existing act. The essential commodities are those if it is illegally stored for creating an artificial demand or black marketing of such commodities will affect the normal life of people (essential food, medicine, fuel, petroleum etc). This act removes such commodities from the list and the Central Government can include those commodities as in when the need arises. It also takes them out of the list once the situation goes. This amendment is regarding removing certain commodities (food items such as cereals, pulses, potato, onion, edible oilseeds &oil) from the essential list and the government will only regulate supply and prices only in cases of war, famine, high price rate or natural calamities. On removing these from the essential list, it is a good step to boosting farmer's income. When the government is not going to regulate the supply of such food items, then there is a high chance of hoarding. The amendment also says the government will regulate the stocks of this item based on prices and it also puts a few conditions on it. We could see cereals, pulses, oil, edible oilseeds are non-perishable items, and they are even stored for years at room temperature. The government only intervenes and adds these to the essential commodities list, when there is a 50% increase in their retail price and perishable items such as potato and onion will be brought back to essential commodities list when its price rises to100%. There is a high chance of hoarding and black marketing. In some cases, the private retailer goes deep into the village to buy the agricultural product directly from the farmer and give his best price. Then come back to the city and earn the profit anywhere between 50% to 100% depending on whether it is a perishable or non-perishable item. No one questions the private retailer about his profit. But he never blindly sells it at an extreme price because he will lose the customer. Still, the private companies sell it out at a higher price and make a profit. The opposition party said that this bill was highly centralised and the central government interfering in state subjects. The central government is interfering a little but not completely. It is just setting a limit within which price has to fracture.

Conclusion

This is a good step by the Central Government but the small farmers are getting affected. Many states could lose state revenue. The positive sides of these acts are allowed to modernize the Indian agricultural sector. To ensure the betterment of farmers is strengthening the government market spaces and eradicate the loopholes in them. It is the responsibility of the government to take the opinions of states and farmers before passing such acts.