By Gauthaman V
Farming is a major occupation in India, close to two-thirds of India’s population depends on agriculture for their livelihood. Most farmers in the country are marginal, referring to those cultivating as an owner or a tenant or a share cropper on a land up to 1 hectare, and small farmers, referring to those cultivating on a land more than 1 hectare but less than 2 hectares. The last official data on farmer’s income published by the National Sample Survey Office NSSO in 2016 shows that an average agricultural household of five members earns roughly $85 per month.
Indian farmers have been protesting for several months now, demanding that the three Farm Acts passed by the government in September 2020 be repealed. As many as 300,000 farmers, mostly from North India, have marched to the national capital with the slogan of #DelhiChalo (meaning “Delhi let’s go”) and have occupied the roads.
Let’s take a look at the three Farm Acts:
1. The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Act, 2020 allows the farmers to sell their produce to the private-sector outside the government-controlled Agricultural Produce Market Committee (APMCs). It provides for a payment period, an executive-led dispute resolution mechanism and prohibits any state levies on the trades, but it will render APMCs void, which has created a sense of insecurity and tension among the Indian farmers. APMCs are marketplaces where the registered buyers and farmers meet to auction off their produce. They are run and managed by state governments and were introduced to keep the retail price in control and to safeguard the farmers from being exploited by large retailers. Moreover, APMCs also helped in price discovery. Supermarkets and other stores also set the prices of food products, roughly based on the prices that were used for procuring the food crops, in the APMCs, thereby maintaining an equitable price range. However, the government argues that invalidating APMCs will lead to a higher price discovery thereby benefiting the farmers.
2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 allows industrial companies to enter into a contract with a farmer to sell a certain quantity of farm produce at a predetermined price. It provides for a payment period, an executive-led dispute resolution mechanism, prohibits any state levies on the trade and bars civil court jurisdiction. The government promises that doing so will result in the rise of farmers’ income by placing them in the global corporate food chain. However, contracting with farmers – particularly considering the fact that a majority of them are small farmers – would mean that farmers would be left hanging at the mercy of the prices that are set by private firms. They would have no leverage or bargaining power to negotiate what they need. Contract farming has shown to have some short-term positives in India, but the monopsonist behaviour of firms is a real threat to the farmers, as pointed out by some researchers.
3. An ordinance amending the Essential Commodities Act allows the government to delist certain commodities (including cereals, pulses, potatoes, onion, edible oilseeds, and oils) as essential, and to regulate their supply and prices only in cases of war, famine, extraordinary price rises, or other natural calamities. Further, this Act takes care of the government’s authority to impose restrictions on the stockpiling of crops. This was not allowed till now, as big players can easily hoard up crops and manipulate their prices. This will inevitably crush common farmers with no bargaining power.
Another crucial concern of the farmers is regarding the inevitable irrelevance of Minimum Support Price MSP. This is the minimum price for which the government will buy off farmers’ produce. This was introduced as a safeguard against price fluctuations in the market, and it is supposed to ensure that farmers do not have to sell off their goods at an unfair price. With an increased number of private players foraying into the agro-sector, there are concerns whether the MSP will be undertaken at all. This is a big problem for the farmers because MSP serve as a major incentive for them. In fact, normally they would not have to worry about market conditions, confident that, thanks to MSP, they would be guaranteed a decent price for their crops regardless of them.
However, the Prime Minister and his fellow party members have stressed several times that farmers are being misled by the opposition and that the MSP are here to stay. The PM also claims that these combined regulations will ‘liberate’the farmers. Farmers’ unions have consistently argued that the main beneficiaries of these laws would be multinational agribusiness firms, as these laws for the first time would allow unbridled capitalism to encroach into the agricultural sector.
At the protest sites, the police have used tear gas and water cannons on several occasions to disperse the people. They have cut water and power supply and temporarily blocked internet services in the area. But the farmers still stay put, as the cause continues to gain momentum.
Eleven rounds of talks have been concluded so far between the central government and farm unions with no resolution as of now. Even though these acts potentially would strengthen infrastructure, improve tools and modernise the sector, farmers need stability in prices as well as an assured price. These Acts will cause insecurity, fluctuation and volatility and a much-weakened bargaining position for the farmers in the market.
Gauthaman V is a 2nd-year law student studying at Institute Of Law, Nirma University. He has a keen interest in public policy, constitutional law and human rights.