The Agricultural Trade and Commerce Act, Farmers Price Assurance Act and Essential Commodities (Amendment) Act were enacted by the Union Government in October 2020. These laws have triggered nationwide protests, which include huge participation of women farmers. They believe that these laws will make them vulnerable to exploitation by corporations, erode their bargaining power, and weaken government’s MSP system, putting farmers and their families at the mercy of agri-businesses. Therefore farmers demand repeal of the three new laws.
Government insists that the laws actually help the farmers, and that their misapprehensions and agitations are because they are being misled by hostile political forces. It appears to assume that farmers (in their millions) are misled because they are simple folk, but farmers have not taken kindly to this condescension.
As a urban-living citizen who understands that all the food which he consumes comes from the efforts of farmers, this writer attempts to examine the controversy.
The rural-agri community
The rural-agri community of farmers, farm labour and workers in agri-operations and agri-related industry, constitute our country’s majority population. Of farmers, 82% are typically small and marginal farmers holding less than 1-hectare land. They are chronically stressed financially and economically, and disadvantaged because of rising cost of agri inputs (seed, fertilizer, water, labour, fuel, power) and control by superior economic forces on the price which they get for produce. They are poor, always living on the edge of one or other crisis.
The typical small farmer
A typical farmer’s resources are his strengths, namely: # Land, # Hands-on experience-and-expertise, and # Labour, not excluding his wife and even children who are part of the agri workforce.
His weaknesses are due to his dependencies: # A lender (bank or more often a moneylender who supplies farm inputs) who dictates interest-rate and terms/conditions, to provide him credit to purchase inputs at the commencement of every farming season, # The market to sell his produce and recover the cost of inputs and hope for a bit more for growing family needs, # Rainfall appropriate in time and quantum for successive farming operations, from year to year, even from crop to crop, and # Little or no price negotiating power due to his inferior socio-economic position.
The problems/challenges/threats he faces are: # Crop failure for any reason, # Non-availability of credit because of default (crop failure or serious-illness expenses) on previous borrowing, or usurious rate of interest, and other terms of credit, # Transporting produce to market (distance and means involved), # Increase in the cost of agri inputs, # Limited ability to store his produce, # Failure to get a remunerative price for produce, # Little or no safety net, and # Management of agri/farm and non-farm expenses.
Significantly there is little or no incentive or opportunity available to the farmer. He begins every sowing season at a disadvantage, with the disadvantage getting compounded by earlier disabling events. If adverse conditions worsen, and he is unable to meet his liabilities, he may commit suicide. Women and children of “suicide farmers” carry forward his liabilities and eventually lose the land and become destitutes.
The APMC system including declaration of MSP provides opportunity for fair remuneration, but this depends upon government assuring procurement, and timing the opening and closing of mandis to benefit the farmer rather than the trader-buyer upon whom he is dependent. Most farmers do not have access to mandis (there are too few) and depend upon local traders in whose grip they already are.
In real-life, the small farmer, especially one who is distant from market and cannot store his produce, is constrained to sell his produce at his “farm-gate” to a buyer who, being his creditor, dictates the price. Very few small farmers have tractors – those who do, cooperate to transport their produce to mandis, where however, they remain subject to the middleman’s rule in the absence of fair/adequate government control and regulation.
No system can be perfect, and the APMC system is no exception. The complex system of wholesale and retail purchase-store-transport-sale for farm produce to appear as food for the consumer involves intermediary business agencies. Reality is that these agencies are a businessman-politician nexus. They circumvent laws and regulations, manipulate procurement, prices and stocks, and maximise their profit to the detriment of both the producer (farmer) and the consumer (every human), who are at the starting and ending points of the farm-to-market-to-table system. This nexus is pejoratively called “middlemen”.
However, intermediary agencies are an inescapable necessity, and businessmen are entitled to fair profit, because they too have families to feed. It is therefore governments’ responsibility to operate APMCs responsibly, so that at the very least, the farmer is not disadvantaged more than he already is. It is governments’ responsibility to control the middleman nexus to strengthen the foundation (the farmer) of the socio-economic structure of farm-to-market-to-plate. But when businessmen influence government, it is the farmer who suffers, as has been happening for decades.
The new farm laws
The three new farm laws are being objected to by farmers for several reasons. There are also suspicions concerning the timing of passing the laws (during the Pandemic), and the unseemly haste and questionable methods used to pass the Bills through both houses of Parliament without discussion and obtain Presidential assent.
Agriculture is in the State List of the Constitution, but the new laws override state powers, and fail to recognize that the conditions of farming and agricultural economy are entirely different from Tamil Nadu to Punjab and Gujarat to Manipur. Even more strikingly, the reason for enacting the laws, the identity of those who piloted the Bills, why the Bills were not given for public comments, and why the primary stakeholders (farmers) were not kept in the loop, remain unclear.
Briefly, the new laws are supposed to provide the farmer with certain freedoms, choices and facilities [Gurucharan Das; “Don’t kill 2nd green revolution: Rolling back farm reforms would privilege a small but vociferous group over the silent majority”; <https://timesofindia.indiatimes.com/blogs/men-and-ideas/dont-kill-2nd-green-revolution-rolling-back-farm-reforms-would-privilege-a-small-but-vociferous-group-over-the-silent-majority/>; Times of India; December 3, 2020], and some of the claims of government are:
#1. The APMC which was meant to protect farmer, did not, because a cartel fixed low prices, and forced farmers to go for distress sale. Under the new laws, he can sell anywhere to anyone, and free himself from the cartel at the APMC mandi.
#2. He has freedom to store inventory, which was hitherto denied due to stocking limits imposed by Essential Commodities Act.
#3. He can sell directly to cold storages, which will have incentive to buy his produce.
#4. He has freedom to make forward contracts, transferring his risk to businessmen, leading hopefully to a freedom to lease unviable lands for a job and a share in profits.
Examining the claims
Government claims that he can “sell anywhere to anyone”. If he is to find a place where he can get a better price, he needs a reliable internet connection (internet penetration in rural areas is extremely low), the money to pay for broadband, a smart phone, and the skill to search for and choose a sale-point, the buyer and the sale price. But even if this is assumed to be possible, he needs transport to take his produce to the buyer with no guarantee that the transaction will go through as agreed on phone, because of the buyer rightly or wrongly raising objections regarding type/variety, quality or condition of the farm produce presented. This is because the farmer is at a negotiating disadvantage with the buyer. Legal remedies available to the farmer are again merely theoretical, being out of reach both in terms of money and time. A re-look at his weaknesses makes it clear that this freedom is chimerical.
Consider his “freedom to store inventory”. This “freedom” is without meaning because he doesn’t have the financial or infrastructural capacity to stock his produce like traders do until he finds the right market (place and price).
Next, whether he “can sell directly to cold storages”. Of course he can, but his price negotiating power is a serious weakness – typically he pleads with the buyer to accept the produce at a price to cover his investment. [The sugarcane farmer in Karnataka delivers his produce at the factory, and is paid after several months, usually after raising protests!]
Finally, the amazing claim that he “has freedom to make forward contracts, and transfer his risk to businessmen”. This claim, like the other “freedoms”, fails to recognize that the small/marginal farmer is usually a supplicant in front of the buyer, and cannot understand the language or complexities of a forward contract document. But the assumption that a businessman will accept risk without extracting a price indicates how far removed from reality the framers and promoters of the law are.
New laws do not help farmers
Rather than help farmers, the new laws, by offering them “freedoms”, appear to mock at the miserable situation in which small farmers have been and still remain. On the other hand, the laws facilitate agribusiness to freely trade farm produce without restrictions, permit private traders to stockpile unlimited quantities of essential commodities for future sales, control the buying price and the selling price, engage lawfully in forward trading, and lay down new rules for admitting corporates into the farming sector. Whatever little support the APMCs provided to the farmer is lost, and the earlier middle-level middleman nexus is replaced by an obscenely wealthy middleman nexus.
The tilt of the new laws towards the corporates is obvious, and this cannot but be at the cost of the small farmer, who is already fundamentally disadvantaged. It will inevitably widen the economic gap in a society in which already “the economic top 10% people own 77% of national wealth, 1% of the richest own four times as much as the 70% at the bottom, and India boasts of having 117 dollar billionaires. The constitutional Directive Principles, particularly Article 39 concerning livelihood, resources and economic conditions, are almost as if they had never been written”.
Remembering that 82% of all farmers are small farmers, governments should ensure that farming is made profitable to the small farmer. Bringing corporate interests into conflict with farmers’ interests can only further disadvantage the farmer. The matter of landless agriculture labourers who constitute a significant proportion of the rural-agri community losing livelihoods when the farmer loses out, is another ticking social “bomb”, which government should not lose sight of.
An interesting aside is that a not insignificant proportion of the farmers who are peacefully yet forcefully agitating on Delhi’s borders for repeal of the new farm laws, are Armed Forces Veterans who were compulsorily retired from military service at age 38-42 years, and returned to their rural roots. Apparently this has inspired a terse tweet with unsaid things, which goes thus: “China Border, Jai Jawan! Singhu Border, Jai Kisan!”
The new laws benefit the corporates at the expense of the farmer. To resolve the on-going stand-off, the leadership needs to understand ground realities and unwaveringly adhere to the constitutional Directive Principles of State Policy, even if it has to repeal the new farm laws. The good sense and courage it will take to repeal the laws will certainly be laudable.
S.G.Vombatkere is a cross-discipline, systems-thinking sceptic. Email: [email protected]