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Farm Bills, 2020: Agrarian Liberalisation or Insurrection?

Last week, the National Democratic Alliance (NDA) led by the majoritarian Bharatiya Janata Party (BJP) government’ passed three farming bills during the monsoon session of the Parliament. It was heralded as a “watershed” moment in the history of agriculture sector reforms by the Prime Minister Narendra Modi. The three bills are the repealed versions of the ordinances of the same that were brought in June 2020. The passage of the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act (FPAFSA), 2020, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act (FPTCA), 2020 and the Essential Commodities (Amendment) Act (ECA), 2020  led to the protests in the country by the farmers associations and organisations. Politically, the bills disturbed the relationship of BJP with their coalition partners and opposition parties. The passage of these bills needs to be seen as an extension of the BJP’s reform agenda in the domains of land, labor, capital and technology.
Broadly, the two viewpoints are emerging in the ongoing discourse; one of the liberals arguing in favour of the bills on the premise that it liberates the farmers from the monopoly of Agricultural Produce Market Committee (APMC) and other middlemen in selling their farm produces; it provides an enabling ecosystem by promoting the barrier free trade between states and within the state and empower the farmers through farming agreement by linking the farming to the insurance or credit. On the other side, the main contention is what the bills have not attended or mentioned in bringing the above changes to liberalise the agricultural market. They are, diluting the role of state regulated APMCs, silence on the fixation of minimum support price (MSP) and the way in which the bills were passed without adequate debate and discussion in the Parliament.
It is necessary to examine these viewpoints to ascertain the role of these legislations in facilitating the agrarian liberalisation especially market and trade.  It is true that know the farmer can have the liberty to sell her/his produce outside the APMCs. No doubt this provision gives the freedom to the farmers and it expands the market choices. The fact, especially in the context of rural India most of the selling of farm produces occur outside the APMC. This is clearly visible in the case of marginal and small farmers whose operational land holding constitutes 85 percent in the country as per the Agriculture Census of 2010-11. The high rate of indebtedness among the small and marginal farmers decreases the bargaining power to negotiate the price of the farm produces with the sponsors.
Another factor is the transportation and transaction cost involved in selling the produces from APMCs to the chosen buyer. Given the low average agricultural income, i.e., Rs.6, 426 per household as estimated by National Statistical Organization during 2012-13, it is highly impractical for the small and marginal farmers to burden with these costs in the pretext of providing alternative market system.  The FPAFSA fails to take account of these considerations which are critical in what the bill claims, i.e., price assurance and empowerment. The FPTCA has made provisions for the Price Information and Market Intelligence System, both FPAFSA and FPTCA does not ensure the price assurance to the farmers. The legislation is silent on giving onus to the farmers in determining or fixing the price for the farming produces.
The  method for determining the guaranteed price lacks precision and accuracy in the bill. The FPAFSA have not touched upon the operationality and feasibility of the rules, especially in creating the alternative orgnisational units for selling the farming produces other than the APMCs. With the implementation of FPTCA, the state governments lose the revenue arising from the levy or fees that is coming under the APMC or any State law. This clearly violates the spirit of cooperative federalism. A critical yet unattended in these bills has been the role of farming organisations or associations in settling the disputes.
By making the Sub-Divisional Magistrate or Collector as the authority to decide and settling the disputes arising out of the farming agreement, the bill has cleverly sidelined the collective bargaining power of the farmers associations in preserving and protecting the farmers’ interests. The same bill makes farmer producer organisation (FPO) as a party to the agreement, but not in the case of dispute settlement. A closer look at the bill provisions indicate that the word “may” was used more frequently than the “shall” which is necessary to have a binding effect of the law on the parties.
Address structural issues
The good intentions are not sufficient for the robust legislations. The good intentions need to be supported by the necessary political will by creating the required institutional arrangements and infrastructure facilities for the proposed alternative market mechanism for the selling of farming produces. Passing these legislations are only a first step in liberalising the farmers. It is also necessary to bring in the complimentary and required changes in the land related laws, ceiling limits, amendments to the APMCs, structural issues such as inadequacies of credit/loan system, problems of irrigation, fragmentation of land, technology adoption by the farmers and most importantly instituting a robust pricing mechanism with the recommendations of National Commission of Farmers.
The agrarian crisis has deepened since from the adoption of neo-liberal model of governance and development. The recent incidents of farmers’ protests which were sometimes turned into violent manifestations signify the acute rural distress that has seen an unprecedented farmers’ suicides. This reflects the continued neglect of agriculture by the successive governments of all the mainstream political parties in the post Independent period, specifically in the post economic reform period. The benefits of these agrarian bills will not be accrued to the farmers in the absence of course correction steps to address the above mentioned structural issues of agriculture. The government must tread the path cautiously in implementing these bills or else it sow the seeds for the agrarian insurrection in the countryside as witnessed in Tebhaga, Telangana and Naxalbari regions.