There is a continuous debate going on at the international level (WTO and FAO) to improve the situation of farmers especially in low-income nations by providing them access to better farming techniques and the correct cost of their yield. In some least developed countries(Malawi, Burundi, Chad, Central African Republic ), about 80-90% population are engaged in agriculture. In India, 45 %-50% workforce is involved in agriculture, but the contribution of agriculture to the GDP is meagre 16%.
New Agriculture Laws Objectives.
This above data suggests that the improvement of economic conditions of the developing states (where a large part of the populace employed in agriculture) depends on the financial upliftment of the farmers. The same is the objective of The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020, now a law, passed by the Indian parliament during its Monsoon session.
These Agriculture laws passed by the Indian parliament made a lot of buzz in the Indian media and the International media covering Indian politics closely. The opposition parties are opposing it due to some valid concerns and also out of political compulsion.
The newly made law has given the freedom to the farmers (Small and Large equally) to sell their yield to anyone across the country. It would break the barriers of Agriculture Produce Market Committees (APMCs) and open up the market for the sale and purchase of agriculture product. At the same time, it changes the relationship, existed for years between the APMCs and farmers.
The Indian government bought these bills in the parliament with good intent, but it left some questions unanswered while making them law. Below are some direct benefits of these laws.
- These Laws would make whole India one market.
- It would empower Indian farmers to sell their yield at a price he considers correct.
- These laws would allow corporates to reach farmers of the particular area directly, without government officials or system in between.
- It would eliminate a large number (not all) of mediators/blocks between the farmers and the corporates.
- It would also give farmers access to new farming technique with the help of corporates.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Law, 2020 would improve the coordination as well as the relationship between the market and the farmers. Farmers which currently sell their produce through APMCs know very little about the demand of their yield in the market across the country. They rely on the local stocker or the agents to assess their crop quality and feedback. With the opening up of the market, farmers now would attract business to negotiate for procurement, which would enhance their earning.
These laws are intended to lessen the Farmers dependence on APMCs, decrease the impact of agents on the fixing of crop prices and inclusion of market forces in deciding the crop prices. APMCs was established by the respective state governments to provide a platform for the sale of the farmers produces conveniently at a price not less than the MSP. Over the period, commission agents licensed by the state governments in APMCs made a norm of not purchasing yield above the MSP, even if the market price of the particular crop is high. APMCs are a good source of revenues for the State Governments, therefore, it does not try to regulate it too much. The commissions, cess and taxes levied on the crop increased its selling price but without any benefit to farmers. Although procurement by the government through FCI and other agencies assured the MSP to farmers, payment generally got delayed by the commission agents. Due to the restriction of selling crop only in APMCs farmer got devoid from profit, in case of higher market price than MSP.
The new agriculture laws have left many questions unanswered, which raised doubts in the mind of farmers. In India, most of the farmers are marginal farmers (having less than 2.5 acres of land for cultivation). These farmers do not have the means to reach the corporates and private traders to sell their produce. The removal of intermediaries implies that the cost of maintaining and storing yield have to bear by the producer. Most of the farmers do not have such facilities. Though the government has assured that MSP would remain but would a private player would abide the MSP is unclear. There is no mention (from the government) for the development of any technological platform which would help farmers to contact potential buyers and negotiate with transparency. The selling of produce to private players help farmers when the price is high but at the time of low prices how the farmers would be protect is unmentioned.
The new agriculture laws are positive steps, but without addressing the concern for a fair price from private players to the farmers, it is not likely to help much. The government should guarantee MSP (for at least Five years) from corporates/private persons until the farmers gain sufficient experience in negotiating with corporates/private players. A technological platform for transparent negotiation seller and buyer is a must.