The Modi government is facing one of the strongest oppositions since it came to power. And it is not from its biggest rival Congress. Rather it is from the people that Modi government promised to make the life easy for- the farmers of India.

The seeds of this massive protest were laid on 27th September 2020 when the president gave assent to the three contentious agriculture bills that were earlier passed by the parliament. The three bills include the Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and Essential Commodities (Amendment) Bill.  The three bills share a common theme making it easy for private players to deal directly with farmers and bypassing the ‘Mandi’ system existing at present.

The government believes that the three bills would make it easy for farmers to sell their products outside ‘Mandis’ making the market competitive and thus yielding better price for the farmers’ produce. Also, the bills are claimed to improve farmer’s accessibility to modern technology and reduce transportation cost resulting in multifold benefits to the farmer.

However, the farmers are apprehensive of the motive behind the bills. The contention is that the bill significantly jeopardizes the position of small and marginal farmers leaving them open to the vagaries of the market driven prices. A major setback could be the farmers not getting the minimum support price with the concentration of power in the hands of few big private players. The competitive price offered by private players can drive the APMC mandis out of business putting the farmers at the mercy of the private players and contract farming.

The discrepancy in the Indian farming sector is widely known. According to agriculture census 2015-16, small and marginal farmers account for 86.2% of all farmers is India but they own just 47.3% of the crop area. This leaves a considerable proportion of Indian farmers with little negotiation power in front of a large buyer if left in the open market which may further widen the inequalities in the sector. Further the bill completely removes any regulatory oversight which might be similar to the worrisome experience of dairy deregulation in 1991 leading to a number of firms coming with adulterate milk. Even the APMC deregulation in Bihar in 2006 failed to bring significant changes with farmers in the state who were rather further hamstrung by lack of right information about the prices.

What has been even more worrisome is the response of the government towards the protest. The attempts to stifle the protest have made the situation worse with agitation gaining widespread support and intensifying the protests to the extent that farmers are looking for nothing less than complete repeal of the law. “Phase 1 response of the government was that of suppression. Seeing that it didn’t work out, phase 2 is about superficial negotiation. We have to see what phase 3 holds”- Kirankumar Vissa (Farmer rights activist)

It is pretty clear that there are glaring loopholes in the bill that government needs to fix before it can come to the negotiation table. There is mention of price information in the bill but only as something government may do. In case the farmers lose access to the indicative prices of the mandis, government needs to ensure the farmers of alternate mechanism. Crop diversification hailed as one of the ways for improving the farmer’s condition would further be discouraged under the contract farming scheme. In the past contract farming has led to issues like buyers rejecting the crop citing quality concerns and not paying the full amount. In the absence of regulatory framework, government needs to chart out a proper mechanism for speedy resolution of the cases related to contract farming.

There is now more than assurance needed from the government’s side. To start with, the government has to engage in conversations with the stakeholders and give assurance that the bill will be put on hold till the issues are resolved. More transparency on the bill and other kinds of support are needed to win the trust of the farmers.  Investments in infrastructure like cold storage needs to be ensured to avoid any repercussion of the dwindling mandi system. Capital inflows into the value chain and encouraging crop diversification into high value crops should be adopted. Further, the government can take cues from China’s successful market liberalization in 1978 by taking small steps such as brining in price and market reforms, setting up rural cooperatives and transferring land rights to farmers. The proliferation of agri-tech startups can make the life a bit easier and government should encourage the same for the benefit of the farmers.

It is very clear that suppression and rhetoric has not worked in pacifying the protestors. The way ahead is to win the trust of the farmers and do that with meaningful reforms. The farmers are longing to return to their fields from the street. Now, it all depends on the government’s next response how fast and peacefully that happens.

Ananta Chhajer, MBA – IIM Ahmedabad (2nd year student)


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