The agricultural sector contributes nearly 15% of India’s $ 2.9 trillion economy
New Delhi:
On Sunday afternoon, amid scenes of chaos and uproar, the Rajya Sabha passed two of three controversial bills related to India’s agricultural sector. The bills, which replace ordinances released in June, were passed amid fierce protests from farmer groups across the country – especially in the grain-producing states of Haryana and Punjab. The Narendra Modi government has said that farm bills, as they are called, empower small and marginal farmers by allowing them to access markets and prices of their choice. The opposition, which includes political parties and farmer lakhs across the country, disagrees – they say the bills threaten to abolish PSM (minimum support prices) and, by therefore, leave the same small and marginal farmers at the mercy of corporations and large corporations. institutional buyers. As for the farmers themselves, some of those who spoke to GalacticGaming say they are confused and want the government to reach out and provide clarification.
Here are the 10 main points of this story:
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The agricultural invoices are: – Agreement of the farmers (empowerment and protection) on price insurance and agricultural services; Agricultural Trade and Trade (Promotion and Facilitation) Bill; and the Essential Products (Amendment) Bill. The Upper House yesterday cleared the first two, paving the way for their passage (once President Ram Nath Kovind signed off) and triggering protests.
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The Agricultural Trade and Trade (Promotion and Facilitation) Bill allows intra and interstate trade in agricultural products without barriers. Previously, agricultural products were sold in notified wholesale markets, or mandis, managed by the agricultural product marketing committees (APMC). Each APMC, of which there are about 7,000, had licensed intermediaries who would buy from farmers – at prices set by auction – before selling to institutional buyers like retailers and large traders.
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Under the proposed scheme, farmers can (cut out middlemen and) sell directly to institutional buyers at mutually agreed prices. However, farmer groups fear that this exposes them to businesses that have more bargaining power (and resources) than small or marginal farmers. A farmer from Madhya Pradesh who spoke to GalacticGaming said: “I am worried … sometimes they ask for wheat at Rs 1,400 or Rs 1,500 per quintal. They will take (produce) as they wish.”
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In India, nearly 85% of poor farmers own less than two hectares of land. Farmers like these find it difficult to negotiate directly with large-scale buyers. In a report by Reuters news agency, leaders of the farming community said mandis play a crucial role in ensuring them timely payments. Removing these markets, or allowing direct access to businesses, without offering an alternative, such as regulated direct shopping centers, does not make sense, they say.
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In addition, with APMCs, farmers were generally required to sell in markets close to them rather than open markets, which will now be allowed. The government has highlighted this to suggest that farmers’ incomes will increase as a result. In practice, however, smallholder farmers may find it difficult to benefit from potentially better prices in more distant markets due to travel and storage constraints, as well as the associated costs.
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The second bill to wipe out the Rajya Sabha – the Farmers (Empowerment and Protection) Agreement on Price Insurance and Agricultural Services – is supposed to allow “contract farming”, or allow farmers to enter into contracts. agreements with agricultural companies, exporters or large buyers to produce a crop at a previously agreed price.
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Farmers fear, however, that this will mean that the MSP (which is a government guaranteed price) will be removed. They point to, once again, the small and marginal farmers who are likely to be vulnerable to disadvantageous contracts unless selling prices continue to be regulated. As Congressman P Chidambaram pointed out, there must be a clause binding PSMs (who must remain) to the lowest acceptable price.
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Although the new law has not explicitly removed PSM (and Prime Minister Narendra Modi insisted it will not), farmers are worried that allowing price regulation mandis makes it difficult for the government to monitor each transaction individually.
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MSPs are also of concern to rice farmers and wheat producers, who sell directly to the government at these guaranteed prices. They fear that public purchases will give way to private buyers, who could force them to sell at lower rates. These guaranteed prices, which the government has raised today, are often a source of credit in difficult times such as droughts and poor harvests.
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In addition to the concerns of farmers, state governments – especially those in Punjab and Haryana – fear that if private buyers start buying directly from farmers, they will lose the taxes that are charged to them. mandis. The potential disposal of mandis, they also claim, endangers the jobs of millions of people who work there. Most of the farmers in Punjab and Haryana sell their rice and wheat to the FCI.
With the contribution of Reuters
