In Punjab, Haryana and western Uttar Pradesh farmers are protesting for weeks now, against new ordinances bought about by our government. The government has introduced three Bills to replace these ordinances. Lok Sabha passed these bills last week. In this blog let’s understand why farmers are protesting, what are these ordinances, and a short note on Agriculture Produce Market Committee (APMC) also known as Mandis and the solution to the same.
Agriculture is one of the most critical sectors of the Indian economy. Growth and development of agriculture and allied sector directly affect well-being of people at large, rural prosperity and employment; and it forms an important resource base for a number of agriculture based industries and services Prior to independence, the major concern of the Government policy related to agricultural marketing was to keep the prices of food for the consumers and raw materials for the industry in check. However, after independence, the need to protect the interest of farmers and to provide them incentive prices to augment the production of agricultural commodities was also felt. After Independence of India Agriculture sector was mostly captured by money lenders and traders. Farmers did not had any way to trade their production easily and were highly dependent on these money lenders and traders. As a result of which farmers were in perpetual debt.
Government, with a view to establish a mechanism to monitor the market conduct, introduced from time to time several mandatory regulations. In 1960s and 70s states of India began implementing the regulations from the recommendation of Royal Commission from colonial rule and the model bill.
Agricultural markets are established and regulated mostly under the various State APMC Acts. Most of the state governments and Union Territories have since enacted legislations (Agriculture Produce Marketing Committee Act) to provide for development of agricultural produce markets and to achieve an efficient system of buying and selling of agricultural commodities.
The whole geographical area in the State is divided and each one is declared as a market area which is managed by the Market Committee (APMC) constituted by the State Government. States also constitute a Market Board which supervises these market committees. APMCs generally consist of representatives of farmers, traders, warehousing entities, registrar of cooperative societies etc.
Once a particular area is declared as a market area and falls under the jurisdiction of a Market Committee, no person or agency is allowed to freely carry on wholesale marketing activities. APMC Acts provide that first sale in the notified agricultural commodities produced in the region such as cereals, pulses, edible oilseed, fruits and vegetables and even chicken, goat, sheep, sugar, fish etc., can be conducted only under the aegis of the APMC, through its licensed commission agents, and subject to payment of various taxes and fee. The producers of agricultural products are thus forced to do their first sale in these markets. over the years many flaws came out of the act as Market Committee got more than required power for licensing which started the license raj and the agents who bought from farmers started making their cartels for stocking productions and profit.
Ordinances that led the Protest
The two bills one on Agriculture market reforms and the other on contract farming provisions while the third bill amending Essentials commodities act were passed giving the moto of one nation on market for freedom of choice to sell anywhere, led the farmers protesting in Punjab, Haryana and several other states.
The First Ordinance The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 with transactions made outside of mandis exempted from any taxes or fees associated with the APMC.
The Second Ordinance The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services which talks about contract farming that allows farmers to sell their produce outside of the APMC via a “framework for farmers to enter into direct contracts with those who wish to buy farm produce”.
The Third Ordinance The amendment to the Essential Commodities Act (ECA), 1955 which empowers the “central government to control the production, supply, distribution, trade, and commerce in certain commodities” and aims to protect the farmers income as well as the consumer’s interest.
Farmers contend that if there would be no tax outside mandis trade outside the mandi will be more attractive and gradually people will move out of mandis and it will start becoming redundant and over the years the value of Minimum Support Price (MSP) given farmers will be reduced.
Corporatization of Agriculture will a danger to farmers where big companies would establish there monopoly over agricultural sector and farmers will be exploited to a greater extent. For an example where Pepsico in 2019 sued some farmers in Gujrat for allegedly growing a variety of the tuber for which the company claims Plant Variety Protection (PVP) rights.
Neo Globalization is an ideology that believes in free market, mostly seen in America. Free Market is an Economic System in which prices are determined by unrestricted competition between privately owned business. It looks good at first instance but if market is open eventually not good for society if business will operate without regulation they will just profit oriented.
Those who oppose Neo Globalization contend that there should be a strong regulation like the MSP for farmers, and reserved sectors for environment .
Demands of Farmers
- Roll back the Ordinances,
- Protect Mandi Market,
- To make a National Law for regulation of MSP which sets at least 50% more than weighted average cost of production.
In my personnel opinion why farmers are protesting is the issue of Free Market versus The Regulated Market. Many developed Countries like England, America and Europe from which this model is derived they too had a fall in their agriculture sector.
Solution to this would be assuring MSP both outside and inside mandis.
The more of GDP should be invested in agriculture sector, as in RBI report of 2011-2012 and 2012-20108 stated that only 0.4% of the total GDP is invested in agricultural sector.
And the flaws in AMPC should be revised.
The farmers are protesting out of fear that once the private grain markets are established, the traditional grain markets will become history. The farmers will have to depend on corporations and private firms. While Our Prime Minister Said “These Bills unshackle our farmers from many restrictions. These reforms will provide more options and opportunities to our farmers to sell their produce. These reforms will remove the middlemen who exist between farmers and consumers and claim a huge chunk of farmers’ earnings.”