Reforms for New India farmers
Agriculture market reforms brought about by the Narendra Modi government in September 2020 through the three Presidential Ordinances leading to enactment of laws are culmination of a clutch of measures taken by centre in last six years to double farmers’ income.
Larger objective behind the policy intervention made by the centre was to bring about transformational change in lives of farmers and take the famed India growth story to farming community that have been denied their due for too long post-independence.
The three bills, Farmers Produce Trade & Commerce (Promotion and facilitation) Bill 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance, Farmers Services Bill 2020 and The Essential Commodities (Amendment) Bill, 2020 were brought in as a reform package to unsettle the moribund structure of agricultural markets and allow farmers realize the best price he or she could command for his grains, vegetables, fruits, flowers and other products.
These reforms were well thought out and brought in to hasten the pace of doubling the farmers’ income in sync with the Union Government’s decision after 2014 mandate secured by Prime Minister Narendra Modi and BJP-led National Democratic Alliance in the Lok Sabha elections.
Eliminating Middlemen
Eliminating middlemen that pocketed most of the farmers’ productive incomes and ending the monopoly of buyers’ cartels that fleeced farmers’ income in the mandis was the key objective of Farmers Produce Trade and Commerce (Promotion & Facilitation) Bill of 2020.
In essence, the farmers have been given the freedom to sell their produce wherever they could demand a better price. They could even sell their produce at the farm gate, factory premises, warehouses, silos or cold storages where their grains and other produce was stored.
The consequent Presidential Ordinance ratified by the Parliament and enacted as a law allows farmers to trade their produce online. It also facilitates setting up of electronic trading platforms by farmers’ organizations and private companies.
The move is in continuation of The Electronic National Market for Agriculture (eNAM) set up in 2016 by the Modi government to promote electronic trading of agricultural produce. With over 1000 mandis already on board, this platform has evolved as a national market on the parallel.
Free to sell anywhere
The latest act allows farmers to sell their produce even outside the state in case better prices were to be realized. As a direct fallout of this act, the farmers were now not required to pay the exorbitant market fees, cess or levies applicable on sales in the designated mandis or markets by the state governments.
Freeing farmers from restrictions and rigours of selling their produce in the local mandis has rattled the big commission agents and their handlers seeking to retain their stranglehold on the gullible poor farmers, suppressing their income and rural communities.
Farmers hitherto forced to undertake distress sale owing to unholy nexus between middlemen, buyers and marketing committees can now go for alternative competitive avenues to sell their agricultural products.
Farmers that hitherto forked out mandi commissions and taxes as high as 16.5 per cent of his products value would benefit big time as he or she need not fork out these levies when the agriculture produce was sold outside the mandis.
Most importantly, nowhere in this bill has the government stated or undertaken to close down the Mandis or end Minimum Support Price (MSP) announced for various grains and farm products from time to time. In several states, the practice of procuring agricultural produce normally at rates higher than MSP has also not been disturbed by the latest act.
The myth being propagated by some organizations and groups with ulterior motive needs to be exposed given the unrest being spread across the farmers’ community especially in a couple of northern states including Punjab where ‘arthiyas’ or middlemen have a field day.
Radical Shift
Second big reform measure was brought in through the Farmers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill 2020.
As per the legislation that hitherto became an act allows farmers to freely enter into agreements with buyers even before commencement of production or rearing of farm produce. In these agreements, the prices at which farmers would sell their produce to buyers is also clearly mentioned so that nothing goes awry for the rural people. Also, in case there were disputes between farmers and buyers, a clear cut dispute resolution mechanism headed by the district magistrate has also been put in place with rights of both farmers and buyers clearly specified. Even payments to farmers against sales will have to be made within the stipulated time frame.
Third big reform measure that has upped the political heat these days is The Essential Commodities (Amendment) Bill 2020 that allows the central government to impose restrictions on stock limits in extraordinary situations like war, famine, extraordinary price rise and natural calamities like floods or cyclones etc.
The stock limits related restrictions become operative in the event of 100 percent increase in the retail price of a horticultural product or 50 percent of the non-perishable product.
Given that agriculture was under the state list and bringing it under concurrent list would need constitutional amendment followed by ratification by state legislative assemblies, the centre went ahead with the Presidential Ordinances. Consequently, these Ordinances were debated and adopted in both houses of Parliament following the due process.
The reforms were intended at bringing about a radical shift and far reaching changes in the way agriculture sector functioned and farmers earned without intervention from the government agencies.
Myths & Facts
Some myths about these reforms need to be busted upfront without mincing words.
First big myth spread was that Prime Minister Modi has ended the system of minimum support price (MSP) and would close down all the mandis leaving the markets and farmers to the mercy of private businessmen.
But, the facts are otherwise. For instance, the MSP for paddy, wheat, pulses, oil seeds and copra has been substantially increased over last five years. In sync with the recommendations of the National Commission of Farmers headed by M.S.Swaminathan, the MSP for several agricultural products was enhanced by 1.5 times of the production cost incurred by farmers that includes family labour.
On paddy alone, the government hiked MSP by 2.4 times in last five years. Actual payments made to farmers on paddy was a whopping Rs 4.95 lakh crore as against Rs 2.06 lakh crore in the previous five-year period.
On pulses, the increase in minimum support price was the maximum at 75 times leading to a payment of Rs 49,000 crore in last five years as against a meagre Rs 645 crore made in 2009-14.
On wheat, MSP payment to farmers increased by 1.77 times during last five years at Rs 2.97 lakh crore as against Rs 1.68 lakh crore in 2009-14. In the case of oil seeds and copra, the minimum support price witnessed an increase of ten times in five years. On both these products, actual MSP pay out was Rs 25,000 crore as against Rs 2460 crore given in 2009-14.
Even the government procurement based on MSP has not stopped or slowed down in anyway. Government agencies have made total procurement of food grains worth 382 lakh tonnes during Rabi season of 2020 which is an all-time record in itself.
Another big myth that needs to demolished was relating to farmers getting trapped in contracts with private companies. Well, the fact is that farmers can withdraw from these contracts at any time without any penalties if they have not availed an advance amount from the contracting parties. In fact, the farmers will be able to take advantage the other way round as he would be able to choose from large number of buyers.
Yet another myth being spread is that the new system will allow private companies to usurp the farmers land as part of the farm produce sales contracts. But, the fact is diametrically opposite, given that private players have been prohibited from involving sale, lease or mortgage of farmers’ land. And, the farming contract was limited to specific products and confined to particular timeframe.
In fact, the agriculture reforms would bring in new investments, modern equipment, better seeds, more crops, improve yields, better logistics and ensure free access to markets for both consumers and farmers.
Busting myths on Farm Bills
| S.No. | Myths | Facts |
| Advantage to big corporates, loss to farmers | In many states, farmers successfully produced crops like sugarcane, cotton, tea, coffee along with large corporates. Now small farmers to benefit from technology and equipment with guaranteed profits | |
| 02. | Big companies will exploit farmers in the name of contract | The contract agreement will guarantee the farmers to get the fixed price. Farmer can withdraw from the contract at any point without any penalty |
| 03. | Farmers’ land will be in the hands of capitalists | The Bill clearly prohibits sale, lease or mortgage of farmers’ land. Agreement will be for crops and not for land. |
| 04. | Now the mandis will end | Market system will continue as before |
| 05. | The bills are anti-farmer without any protection to them | These bills will give more options to farmers. Farmers can now sell their crops to anyone, anywhere and can earn more profits by joining with big companies |
| 06. | Farm bills are a conspiracy to phase out the safety net of Minimum Support Price (MSP) to farmers | Farm bills are not going to affect MSP at all. The MSP system will continue |
| 07. | The Central Government is nullifying the APMC law enacted by the various State Governments | The Farm Bills do not encroach upon in any way the APMC Act, which is an Act of the States The trade happening outside agriculture markets will be covered under the new law Bills facilitate better price discovery through alternative trading channels than APMCs |
So, the big question was why there was so much opposition to farmers being given a good deal through firm price commitments, selling the produce at farm gate without having to undergo hassles of movement, storage, bear standing cost of his crop?
Its rather ironic and many reform measures announced by government months ahead through Presidential Ordinances were committed to by these opposition parties in their electoral manifestos of 2014 and then in 2019.
Congress manifesto of 2019 had called for repeal or winding up of agricultural produce marketing committees, remove restrictions on export and inter-state movement of farm products. As per Congress manifesto of 2014, states ruled by the party had de-notified vegetables and fruits from APMC act. The opposition party ruled states Karnataka, Assam, Himachal Pradesh, Meghalaya and Haryana had taken vegetables and fruits out of APMC ambit.
Game Changer
Farm reforms announced by the Modi government are different and game-changing vis-a-vis uneasy and tentative steps taken by the state governments led by opposition parties that lost steam on core reforms during ten years of Manmohan Singh’s rule.
Some opposition parties’ crass opportunism seeking political dividends by opposing reforms is ‘anti-farmer’. Farmers that have been core to Modi’s electoral successes would see through and reject these opportunistic riff raff elements that seek to derail reforms, disrupt economic restructuring and spread of prosperity to rural India.
Safety valves have already been built into the agreements that farmers conclude with processors, aggregators, wholesalers, large retailers and exporters. Getting fair deal for farmers is the main-stray of agriculture reforms as prices, quantity, deliverables and payment commitments with timelines are pre-determined with local administrations playing a key role.
Technology can be harnessed for farm deals to be fair and square, plug any possible loopholes and even map all the contracts.
Measures Galore
On December 25, 2014 Prime Minister Narendra Modi rededicated his government to provide good governance, transparent and accountable administration with ‘citizen first’ as the policy. This was part of paying tribute to the greatest visionary and most respected Atal Bihari Vajpayee who was committed to ‘antyodaya’, reaching out to the last man in the line.
While being accountable to people is bedrock of this government’s policy formulation, reforms is the weapon that’s been deployed to bring about change that Prime Minister Modi seeks to usher in.
Agriculture sector reforms unveiled by the government in the midst of fighting lethal pandemic in June this year as part of the Atma Nirbhar Bharat campaign are no different.
Can anyone even imagine Modi government going against farmers’ interest after having committed itself to doubling farmers’ income by 2022, reforms or no reforms? It’s this very government that dusted out the M.S.Swaminathan committee report and implement 200 of its recommendations including 50 percent increase in minimum support price (MSP) over average production cost incurred by farmers. And, now it’s being accused of dismantling MSP.
Prime Minister Kisan Samman Nidhi Yojana launched to supplement the farmers’ income with Rs 6000 each year despite resources constraint cannot be forgotten hurriedly. Around Rs 75,000 crore is what government invests annually in putting liquid cash into hands of farmers to tide over their money needs before sowing happens each Kharif & Rabi seasons.
Dedicated Agriculture infrastructure development fund of Rs 100,000 crore created to develop and expand rural support systems for farmers definitely can’t be anti-farmer. Kisan Sichayi Yojana and neem coated urea to protect health of farmers’ land cannot be anti-farmer either!
Policy measures taken by Modi government in last six years has provided a ray of hope to hitherto distressed farming community that went through political trickery and vote bank politics over last six decades. Modi regime’s reform measures have begun to show results with farm sector posting a healthy 3.4 per cent in the first quarter, April – June 2020, at the height of a Covid 19 related strict lockdown. This growth momentum continued into second quarter during July – September 2020 with equivalent farm growth.
If government’s vision, commitment & conviction towards farmers, farm sector and rural economy are crystal clear then why are farm sector reforms being opposed? Why play politics with lives of farmers that too during a crisis unheard ever before in human history?
