Guest Post By Arjun Singh Gosal
The Indian Agriculture Bill 2020 is a set of three bills, proposing sweeping reforms in the agricultural sector. They were passed by the Indian Parliament and signed into law by the President of India on September 27th, 2020. These three bills include the Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill 2020; the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020; and the Essential Commodities (Amendment) Bill 2020.
What is this Agricultural Bill 2020 and why are farmers opposing it?
- The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill 2020:
- This bill expands the scope of the agricultural produce market from mandis to “any place of production, collection and aggregation.”
- It allows electronic and e-commerce trading of produce.
- It prohibits state governments from levying any fees or taxes on farmers, traders, and electronic trade platforms for trading produce in an “outside trade area”.
This first Agricultural Bill 2020 is being touted as one that will benefit farmers by increasing market competition, allowing farmers to sell produce to private buyers instead of being limited to government mandis, letting the market dictate produce prices, and getting rid of the corrupt mandi system in which the mandi karamcharis profit by skimming a certain percentage of the levied taxes.
In reality, however, the Bill is simply replacing the old corrupt mandi system with a new corrupt corporate system. Currently, each state controls the mandis with its own taxation system, making it difficult for any corporation to monopolize agricultural production. Now, the Bill eliminates state control in regulating the mandis, by allowing corporations to purchase produce from any state without paying taxes to the state they purchase from.
Essentially under this Bill, the state mandis will continue to be taxed, whereas the corporate buyers will be tax exempt. This is blatant government promotion of corporatization and monopolization, in the name of increasing market competition. Over 20 states already have laws in place allowing farmers to sell to, and enter contract farming with private buyers. What then is the intention of the central government in making private purchasing tax free on a national scale? Who benefits most from the revenue that should go towards the state and central treasury – the farmer, the government, or the corporations?
This strongly points to the fact that this Agricultural Bill is meant to benefit corporations and not farmers or consumers.
- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill:
- The bill proposes to introduce a framework for contract farming.
- It makes provisions for dispute redressal.
Contract farming is when farmers sign a direct agreement with a buyer (before sowing season) to sell the produce to them at pre-determined prices. Perhaps in theory, contract farming is aimed at enabling a higher income and better standard of living for the farmer. However, in reality, this practice worsens the conditions of the farmers, as evident in countries where contract farming is prevalent. Many factors are responsible for this – the most important one being corporate greed and focus on share prices, without any thought for the dignity and wellbeing of the farmers, the environment or the end consumers.
The disadvantages of contract farming include:
- Inability to sell to alternative buyers when prices increase.
- Possible delays in payments and late delivery of inputs.
- Chances of increased indebtedness to loans provided by the buyer.
- Environmental risks from growing only one or two types of crops.
- Unequal bargaining power between the farmers and buyers.
- Facing the buyer’s rejection of produce based on very stringent and unrealistic quality standards.
One of the most harmful aspects of contract farming is a heavy bias in favour of corporations when disputes arise between the farmer and the buyer. Political powers pass laws aimed at preserving corporate interests. This Agricultural Bill of 2020 has no provision for farmers to settle a dispute above the District Magistrate level, whereas the buyer/corporation may move higher courts against the farmers. In case of a dispute the loss of income carries much bigger consequences for the farmer than it does for a corporation.
- Essential Commodities (Amendment) Bill:
- This Bill removes cereals, pulses, potatoes, onions, edible oilseeds, and oils from the list of essential commodities, removing any stockholding limits on such items.
- It requires a rise in prices to impose stock limits on agricultural produce.
This Agricultural Bill of 2020 essentially allows corporations to store “essential” cereals and grains without imposing any restrictions on the amount that is being stored. The principle behind setting storage limits is to prevent the manipulation of commodity prices. However, this Bill removes that provision, legally allowing corporations to manipulate the price of these commodities as per their preferences.
Additionally, in times of famine, war or other national emergencies, the government distributes the produce purchased and stored by the Food Corporation of India (FCI) – a body that maintains food prices at a reasonable rate for the consumer, while safeguarding the interests of the farmers, and maintaining buffer stocks of food grains for national food security. Now the government will be forced to purchase these commodities from corporations at inflated prices in times of need – leading to further enrichment of corporations at the cost of the common man.
Collective Effects of the Agricultural Bills 2020:
These three Agricultural Bills 2020 allow for monopolisation of the agricultural industry, by letting corporate entities control the production, storage and distribution of agricultural produce. This in turn will lead to high cost and low-quality food produced for the consumer, an overall low quality of life, and high indebtedness for the farmer. Agriculture in India will become less about the dignity, wellbeing and empowerment of the farmer, or the quality of food that is consumed in India, and instead become about the share prices of corporations and profits earned by their shareholders.
India is a country where 65% of the population derives its livelihood from farming. Would it not be better to increase the spending power of this segment of the population and boost the economy?
Further, these Agricultural Bills of 2020 do not mention the minimum support price (MSP). The MSP is an income assurance for the farmer and it is not a concept that is unique to India. MSP is offered to farmers all over the world by their respective governments in various forms, e.g. crop insurance in the US and Canada. Bihar led a statewide drive to eliminate MSP and the mandi system in 2006. After over a decade of a system without the mandi and the MSP, the value of output per hectare in Bihar is Rs 35,825, which is less than half that of states where MSPs are prevalent. In Punjab, the value of output per hectare is Rs 78,652. (Source: https://www.financialexpress.com/opinion/per-hectare-farm-income-does-bihar-really-outshine-punjab/2135752/)
Long-Term Repercussions of the Agricultural Bills 2020:
The government has not thought of the long-term repercussions for millions of small farmers and agricultural labour. Many farmers will be forced to sell their land to “big” farmers under the control of corporations and look for employment in urban areas. This will lead to a mass migration of uneducated labour to the cities which are not equipped with the infrastructure to shelter and feed this massive influx of people. No plan has been proposed for the employment of this population. Perhaps, the goal of the government is to provide cheap labour in cities and for industries, but at what cost? It is very likely that with the increased cost of living and dearth of employment opportunity, this uneducated labour will turn to crime to feed themselves and their families, cities will be overcrowded and millions of people will be left sleeping on the pavements.
From a consumer’s perspective, corporatization will lead to reduction in the variety of crops grown, which in turn will lead to reduction in variety of foods consumed. This will have long-term negative impact on the health of the nation. As is the case in the USA where corn and soyabean account for nearly 50% of the overall agricultural produce, so to create a market of the produce, corn syrup is used in every product – from toothpaste to ketchup and even fuel. This has led to a multitude of health issues for its population. (Source: https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/farming-and-farm-income/)
The consumer must really think about whether they want to eat fresh produce cooked at home, or eat pre-prepared and packaged food which is heated in a microwave before consumption?
Most importantly, one must assess the reason why farmers are protesting these Agricultural Bills 2020 so vehemently? It’s because the government did not consult them before implementing laws meant to benefit them, causing distrust of the government’s intentions behind passing these Agricultural Bills in such a hurried manner. Are you aware that since 2017 the Adani group has launched over 200 agricultural companies and purchased over 9,000 acres of land, spread across the country? They have set up warehouses for produce storage, and the government has built railroads connecting these private warehouses to the national railroad system. (Source: https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/farming-and-farm-income/)
Is it just a coincidence that the government has passed these laws after a few corporations had time to prepare and take advantage of the situation?
If these Agricultural Bills 2020 were meant to benefit the farmers and improve agricultural practices and food for the consumers, they would have instead focused on:
- the environmental impact of growing rice in states where it is not a traditional crop; the environmental impact of crop burning.
- the loopholes in the Agricultural Produce Market Committees (APMC) which allow middlemen to exploit farmers.
- creating and incentivising a market for organic produce.
- incentivising farming of crops based on geographical areas and environmental conditions.
- incentivising and creating an environment for the modernisation and innovation of agricultural techniques.
- introducing labour laws specific to agriculture.
- improving funding to agricultural universities.
- providing access to agricultural education for farmers.
Unfortunately, these Agricultural Bills 2020 do not address any of these issues and leave many concerns in their wake. The benefits to the farmers and supposed improvements to their life are questionable. Most importantly, why should the government not be open to consulting and accepting the questions and concerns raised by farmers?
There is no doubt that agricultural practices in India need to be updated, but corporatization is not the answer, and neither is it an eventuality for a capitalist democracy.
The writer, Arjun Singh Gosal, is a Mechanical Engineer who worked in the construction and artificial intelligence industries in USA. He moved back to India two years ago, to experience and be part of the agricultural practice at his family’s farm in Uttar Pradesh. He is now an active member of the farming community of UP and Uttarakhand.
Views expressed are personal.
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