Understanding the impact of controversial farm bills

Fatima Hasan

It is interesting to note that the most controversial State in one aspect can turn out to be a trail blazer in other aspects. Yeah, you read it right; we are talking about the recent “Best of the Best States in India” Survey by INDIA TODAY magazine which ranks Madhya Pradesh (MP) as the best improving State in the agriculture sector. In November this year, MP was in news for its proposed legislation against the so-called ‘love jihad’ and again it is in the news but for a good cause. 

No State in the country has progressed so much in the agriculture sector as Madhya Pradesh. MP became the first State in India to score 258.6 out of 320 in the category of “Most Improved” State in the evaluation conducted by India Today. At the same time, Punjab bagged the first position in the country with 271.6 marks in “best performing” State category. Basmati paddy cultivation during Kharif in Bhopal, Sehore, Hoshangabad, Harda and Raisen districts of MP has increased the income of farmers.

In the wake of the present impasse surrounding the three farm bills and the huge protests in Delhi predominately by Haryana and Punjab farmers, let us analyze how the new bills will affect the States and if so, up to what extent?  The enactment of Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, and the Essential Commodities (Amendment) Act has kicked up a big controversy. 

The Government has said these reforms will accelerate growth in the sector through investment in building infrastructure and supply chains for farm produce in national and global markets. These are intended to help small farmers who don’t have means to either bargain for their produce to get a better price or invest in technology to improve the productivity of farms.

The bill on Agri market seeks to allow farmers to sell their produce outside APMC (agricultural produce market committees) ‘mandis’ to whoever they want. Farmers will get better prices through competition and cost-cutting on transportation. However, this Bill could mean States will lose ‘commissions’ and ‘mandi fees.’

The legislation on contract farming will allow farmers to enter into a contract with agri-business firms or large retailers on pre-agreed prices of their produce. The Essential Commodities (Amendment) Bill, 2020, seeks to remove commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities.  This will end the imposition of stock-holding limits, except under extraordinary circumstances.

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How will it affect Madhya Pradesh?

In MP, nearly 75 per cent of farmers are small and marginal. MP would have a lot more at stake since a larger number of them benefit from the MSP (Minimum Support Price)-based government procurement of wheat and paddy. The ongoing paddy procurement season in MP also provides an insight into why farmers regard the government procurement as important.

Registrations for paddy procurement have increased to 718,000 in 2020 from around 500,000 the previous year. The increase is being attributed to the fickle nature of paddy prices every year, especially in the basmati growing areas, where paddy was sold at Rs 1,800 per quintal in 2019, thereby not leaving too much of a price difference between basmati paddy (premium) and regular paddy.

“There was no need for the government to push through these legislations without consulting farmers. Agricultural produce, in any case, is not getting remunerative prices. These laws will further weaken the sector,” says Anil Yadav, State president of Bharatiya Kisan Union (BKU). The MSP is important for farmers in MP. The farmers from MP are not protesting in huge numbers at Delhi because the travelling cost is more and so they are reluctant to spend the amount and the other thing is that the farm laws just do not pertain to the State and rather it is Delhi chalo.  

What will be the performance of the State next time in agriculture?

There is still uncertainty about ongoing protests and the fate of the new legislations. So predicting anything at this time would be difficult. If the Central government provides for an alternative to the States, MP stands fair chances of making itself top in the next list also. 

What is Modi government’s bigger agenda behind the farm bills? To profit capitalist friends? 

As correctly remarked by the protestors, “these bills will help no one, except big corporates and destroy farmers’ livelihood.” These three bills may liberate farmers from the clutches of middlemen, also known as arhatiyas. Lakhs of commission agents in mandis of Punjab and Haryana, both the leading farm producer States, will stand to lose their control over farmers and in turn huge revenue. 

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These two State governments will lose mandi tax, also a huge source of revenue for them, which is why they seem to be opposing the bills. Even if the bills are implemented, then the Central government has to provide the State governments with an alternative or compensatory mandi tax. 

These laws also don’t do away with the old ones and only give farmers options to seek better prices for their produce. The farmers’ bodies are of the view that new laws will slowly end the MSP regime and will lead to huge loss of revenue to APMCs, which come under State governments. They also believe that farmers could lose rights to their own land at the hands of companies if these laws are implemented. This blatantly exposes the agenda of Modi government for paving the way for scrapping the MSP regime in the long run and giving free hand to private players to enter the market and sway the farmers’ income.

Should the farm laws continue?

At this point of time when there is chaos caused by the Corona pandemic,  there is a need for the heroes of the farm to actually work on the fields and produce more to meet the demands of the people.  And if the private players come into play, then where will the farmers go? With no incentives, no middlemen, the farmers may be exploited at first till they learn to actually forego the middlemen.

As the country heavily relies on the agriculture sector, so implementing these farm laws will also impact the GDP of the country. So it is not the right time for the farm reforms nor there is any proper plan for alternatives to the livelihood of farmers and the revenues of the State governments. 

The Central government should instead focus on settling the issue of the rate differential of MSP across the country. There should be one national standard rate of MSP so that there are no protests for MSP in different States. The Central government can actually take a cue from Telangana State and provide free irrigation facilities, power supply, seeds and other farm inputs and improve the infrastructure on the farm. The loan waiver is also another crucial issue for the States and hence the Central government can work for settling that issue too.

Fatima Hasan is a Hyderabad based journalist

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