WHY THE FARMERS ARE ASKING FOR A REPEAL OF THE 3 FARM ACTS
(Note: This is a note that collects the various key issues being raised by farmer organizations about the Farm Acts, and attempts to put them together cogently and comprehensively)
Farmers’ organisations of the country have been demanding a full repeal of the three recent agriculture related acts: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, Essential Commodities (Amendment) Act, 2020, and Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020. [Hereafter referred to as ‘APMC Bypass Act’, ‘ECA Amendment’ and ‘Contract Farming Act’ respectively].
- 1. FALSE ASSUMPTIONS:
The rationale being given by the Government to claim that these Acts will benefit the farmers is based on incorrect or problematic assumptions that are not true on the ground. These false assumptions are:
(i) That farmers were not free to sell anywhere they like in the existing state APMC Acts. In most states, such freedom already exists (In various state APMC Acts, farmers were exempted or excluded from the purview of regulation (Maharashtra (sec.6), Karnataka (sec.8(1)(b)(i)), Andhra Pradesh (sec.7(1)), Gujarat (Sec.6(3), Uttar Pradesh (sec.9(1), Odisha (Sec.4(3), for example). The fact is that 63% of the farm produce is getting traded outside the mandi regime as per NSSO data, but was subject to regulation and oversight.
(ii) That farmers enjoy an equal bargaining status with the buyers and their problem is lack of more choice: It ignores the reality that a majority of farmers are caught in a nexus of input dealers, informal credit and output dealers. Farmers do not have holding capacity in terms of storage or finance and hence forced to sell immediately after harvest. Hence their bargaining capacity in the market is very limited, and they face a huge inequality in the market place with agri-business companies and traders on the other side. And it cannot be forgotten that big capital was never bigger in the past in terms of market consolidation of big players.
(iii) That de-regulation of traders and companies without any oversight and information is useful to farmers. Every evidence suggests that farmers need the regulatory protection from the government in their interfaces with markets when new Trade Areas are created and trade happens outside mandis. This is the reason why APMC Acts exist in the first place, to ensure fair market practices for farmers who are mostly small and marginal farmers, who face a huge inequality in the marketplace.
(iv) That removing restrictions on traders and agri-business will necessarily mean better price for farmers. The laws assume that many fair-playing, non-cartelising buyers would line up in front of farmers and buy from them directly without any intermediaries and aggregators and the freed-up margins from middlemen will accrue to farmers. This textbook picture of competition does not hold true, and deregulation would result in monopsonies and domination of a few big players, now outside the mandis.
- 2. WHY REPEAL?
(A) Farmers are demanding the repeal of these Acts because they understand that these three Acts seek to alter the legal architecture of Indian agriculture to the detriment of the farmers and that they also work in tandem with each other (the government also knows that these three Acts work together and therefore, brought them in together as a package). These amount to retreat of the government from its responsibility to protect the interests of the farmers. The core message of these three acts as a whole is that the Government of India does not care for, or respect the federal polity of the country, welfare provisions enshrined in the Constitution and is happy to let the small and marginal farmers as well as poor consumers fend for themselves. These would result in unregulated freedom to corporates and agri-businesses at the expense of crores of small and marginal farmers of India. Farmers demand nothing short of repeal of these legislations because they wish to save the future of farming and farmers in the country.
(B) Farmers demand repeal of these Acts also because they were never asked for by the farmers or their organisations, because they did not involve any pre- or post- legislative consultation with the principal stake-holders with no draft Bills circulated for public comments and so on which is an important part of any good law-making process, because these were rushed through the Parliament in violation of parliamentary procedure, and because these were illegitimate right from the beginning in terms of the processes adopted to ram them down the throats of farmers. In fact, it is important to note that for several years now, farmers in the country have been fighting for a legal entitlement for guaranteed realisation of a remunerative MSP for all farmers and all agricultural produce – the government chose to ignore this demand despite lakhs of farmers coming into Delhi in 2017 and 2018. On the other hand, it chose to bring in legislations which go in the exactly opposite direction!
(C) Farmers demand repeal of these Acts because ‘Agriculture’ and ‘Markets’ are State subjects under the Constitution, and through these Acts, the Centre is blatantly encroaching into the domain of the State governments. The Centre is using the item “Trade and Commerce” under the Union List to justify these Central Acts, but farmers contend that it is ‘Markets’ that are being directly and drastically affected by the laws. These are the first points of interface between farmers and markets. Further, for farmers, the state government and its agencies are not only more accessible, but they are also more accountable. When regulation is with the state government, the entire administration from the village agriculture and revenue officials to taluka, division and district level officials have the duty to intervene on behalf of the farmers when required, and the farmers have an opportunity to use the administration as well as local elected representatives to address their issues. These avenues become ineffective for farmers when the agriculture markets and contracts are brought under a Central legislation.
(D) Farmers demand repeal of these Acts because they know that the problem does not lie merely with a few select provisions or the wording of these laws. They object to the core provisions of these laws and question their intent – it is about the very objective of the laws. Hence, amending these laws is not sufficient. These laws must be repealed in toto, so that it becomes a lesson for future governments: farmers must be taken into confidence before a government seeks to alter the conditions of their life and livelihood.
(E) Farmers are also falling back on a well-set procedure in law-making where even a government which introduces a Bill in the Parliament, when it encounters a lot of recommendations for amendments from a Standing Committee, goes back to the drawing board completely and brings in a new Bill rather than move many amendments. In the case of these laws too, given that the objective itself is wrong, many provisions need to be changed and it is not worth doing so. A full repeal is the requirement in such a situation.
(F) Farmers are also apprehensive of some amendments now which will continue to keep the Acts alive, allowing the government to pass executive orders that might once again weaken the position/protection of farmers’ interests. A repeal would be an answer to this fear.
Farmers are also pointing out that the government has delayed engaging with the farmers for too long, and ignored the continuous protests that were unfolding all over the country for many months now. Now, the trust deficit of protesting farmers on the government has only widened, and they will not have anything short of a complete repeal.
It is also reported that during the multiple rounds of talks with the Government of India team so far, farmers’ representatives had pointedly asked the government why it would not repeal the laws, and found that it is essentially political compulsions that the government representatives are pointing to, which cannot be the reason why a government will not repeal the laws in this case.
2. SOME GENERAL ISSUES THAT CUT ACROSS THE THREE ACTS
2.1. Fragmented markets and weakening of farmers’ collective bargaining power: The APMC Bypass Act paves way for the creation of fragmented markets, with unequal rules and unequal regulatory regimes governing the mandis and the new trade areas. This is not about reforms, but about weakening and eventual death of mandis. These mandis are the physical spaces for farmers’ collective bargaining power but with the weakening and withering away of mandis, farmers will have no place and space in which to struggle and secure their entitlements related to just returns for their hard toil. It has to be remembered that the difference is not just about taxes/fees and registration by state governments, but about a difference in the regulatory and institutional approach itself.
2.2. Deregulation of traders and agribusiness companies harmful to farmers: Regulation of traders and agribusiness companies is essential to protect the interests of the farmers. Regulation does not necessarily mean competition being stifled. All competitors have to be play in an equal or standardised regulatory regime. Small and marginal farmers, each operating individually, are liable to get exploited in many ways – related to fair price, timely payments, weighing, grading, moisture measurement, trader collusion, etc. Farmers, given their disadvantaged socio-economic background when they interface with markets, require a system which ensures fairness in all aspects, and when they face exploitative situation, they should be able to easily and collectively approach local officials and market committees and get the issues resolved on the spot. These laws have a disconnect from the ground and do not recognise this exploitation of farmers.
2.3. Excuse for the government not to take up market intervention: The APMC Bypass Act and ECA pave way for the government to use the excuse of lack of price/stock intelligence to not intervene in the market when prices are crashing for farmers. It is the mandi prices which act as a signal or trigger for the government to intervene whenever required.
2.4. Wiping out competition: The combination of APMC Bypass Act and Essential Commodities Amendment Act will be used by very big players to wipe out competition from the market after initially presenting some options to farmers, and later on depressing their prices.
2.5. Food security of consumers jeopardised: The ECA Amendment clearly legalizes hoarding for speculative purposes. The deeper the pockets of an agri-business, the greater their ability to profiteer in this setup. Further, Sec.7 of the Contract Farming Act states that the ‘obligation related to stock limit shall not be applicable to such quantities of farming produce as are purchased under a farming agreement entered into in accordance with the provisions of this Act’. This jeopardizes consumer food security.
2.6. Irrelevance of price triggers amidst giving up of other regulatory tools: The price trigger for imposing stock holding limits in the ECA Act is irrelevant. In the best-case scenario, it will not serve the very purpose that the government claims it will serve, and in the worst-case scenario it will severely affect both consumers and farmers. The latter is the most likely scenario given that the government has willingly given up various regulatory tools that the ECA 1955 gave the government.
2.7. Ineffective and inaccessible dispute resolution & inadequate understanding of farmers’ exploitation: The dispute resolution mechanisms in the APMC Bypass Act and the Contract Farming Act will be ineffective and inaccessible to farmers. They would become new channels of corruption/rent-seeking behaviour. Preventing the access of parties to justice through regular courts of law is deeply problematic.
2.8. Hoarding of food legalised: Hoarding of essential commodities has been legalized in India, to the detriment of the interests of poor consumers including farmers. There is no additional freedom given to farmers in this new amendment. On the other hand, it reduces the bargaining capacity of farmers including their FPOs, vis-à-vis agribusinesses.
2.9. Invisibilising of stocks for inaction even in extra-ordinary circumstances: The invisibilising of stocks held in various unregulated storage spaces of various private players is a big cause for concern, even if the government manages to impose stock limits in extra-ordinary circumstances. Regulation even at those times has now become ineffective since the government will have no information on food stocks, where they exist, whether they exist, in what quantities etc.
2.10. Undermining the role of state governments: Agriculture and Agricultural Marketing are State subjects as per the Constitution, and through these Acts, the Centre is severely undermining the role of State government in regulating and governing on these subjects. From the farmers’ point of view, state government machinery is accessible right from the village level to taluq and district level, and it is also more politically accountable.
3. SPECIFIC OBJECTIONS TO APMC BYPASS ACT [FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) ACT, 2020]
3.1. Overriding the powers of State governments: “Agriculture”, “markets and fairs” and “trade and commerce within the state” are all state subjects in the Constitution (Entry 14, 26, 28, List II, Seventh Schedule). This Act severely undermines the ability of the State government to regulate agriculture markets and trade and commerce in agricultural produce, by making a Central Act that overrides the State’s powers.
3.2. Undermining the APMC Market yard system leading to collapse of market yards: The Act severely undermines the APMC market yard system by creating Trade Area (Section 2(m)) which consists of the entire area outside the market yards which are notified under State APMC Acts. The Act creates unequal playing field between two market systems in every area of the country operating under very different rules. The transactions in the Trade Area are not subject to the market fees (Section 6) and are not regulated under the state government’s APMC Act on price, payments, grading processes, and dispute resolution, whereas the transactions within the APMC market yard are subject to market cess and are regulated by the state government’s APMC Act. This makes the trade area hugely advantageous to traders and companies, and offers very little protection for the farmers’ interests. This will lead to traders and companies increasingly making their purchases exclusively outside the APMC market yards leading to the collapse of the market yards. It needs to be noted here that the difference between APMC market yards and central Act’s trade area is more than that of fees or simple registration of traders by state governments if they choose to. It is about unequal regulation, and this distinction becomes important to note in the light of government’s so-called ‘concrete proposals’ to farmers’ representatives.
3.3. Absence of APMC markets leads to lower prices for farmers: It is well-known that farmers who have an accessible, functioning APMC market obtain a better price, compared to farmers who are located in remote areas without access to functioning APMC markets. In Bihar, after the repeal of APMC Act in 2006, farmers have suffered from low prices – the prices of paddy and maize, for example, are at least 25% below MSP in Bihar in the past few years, and the farmers clearly know that they are getting lower prices because of lack of access to market yards. There is also evidence on volatility of prices. And even this price information in published literature seems to have come from an erstwhile market system that had already collapsed.
3.4. Impact on state government’s resources for market infrastructure: The traders and companies purchasing outside the APMC markets are being exempt from market fees, which has a significant impact on state government’s revenues. This undermines the state governments’ ability to potentially build and expand market infrastructure, even as it might be true that state governments were not always using this collection for infrastructure development. Further, it is a false assumption that the traders’ savings from the removal of market fees will be passed on to the farmer.
3.5. Absence of Regulation and Oversight in trade areas: Under the new Act, there is a complete absence of regulation and regulatory oversight for both the new trade areas and for the new electronic platforms that might emerge. The failure of a clear mechanism to record, collect and collate data renders all transactions in the new trade areas invisible and the entire marketing system opaque. There is no obligation for anyone in the trade area to record or report details of the transaction.
3.6. Private Mandis can charge market fees too: While the government is touting the fact that there is an exemption from APMC market fees in trade areas, Section 5 (2) of the FPTC Act provides that “the person establishing and operating an electronic trading and transaction platform shall prepare and implement the guidelines for fair trade practices such as mode of trading, fees, technical parameters …”. So, these private mandis will be levying their own fees, but will be free from government taxes.
3.7. Problems with deregulation of e-trading platforms: Exempting e-trading platforms from regulation would work to the advantage of corporates at the expense of small farmers. Association of Planters of Kerala has come out against the Rubber Board proposal to set up an e-auction platform for trading natural rubber, saying that the existing system provides fair prices for the commodity and maximum benefit to growers.
3.8. Receipt as sole proof of transaction for the farmer: For a farmer who makes a sale in the trade area, the sole proof of transaction itself lies in a receipt that farmers are supposed to get upon delivery, which is left entirely to the buyer and the ability of the farmers to demand and insist on one (even on electronic platforms). When the transactions happen in a dispersed with no oversight and enforcement, the farmers’ ability to get a receipt and take up any dispute resolution based on that is limited.
3.9. Weak Dispute Resolution mechanism and No Recourse to Civil Courts: The dispute resolution mechanism is very weak, putting the onus entirely on the farmers. If there is any dispute, the farmers are required to go to the Sub-divisional Magistrate, instead of settling them through the Market Committee and state agricultural officials as it happens in the APMC market yard system. The farmers do not have recourse to a civil court, which further undermines their ability to get justice in cases of exploitation. Furthermore, the dispute resolution is only meant for particular transactions and not for any faulty mechanisms which are exploiting the farmers.
3.10. No protection to farmers on issues other than payments: The Act doesn’t provide protection for the farmers on any matters other than payments, such as faulty mechanisms of grading, moisture measurement, weighing, etc. These are often sources of big losses to the farmers when they are transacting outside the APMC market yards, whereas in the APMC market yards, there are ready mechanisms for reporting and addressing these issues. Where thriving well-regulated APMC market yards are present, farmers always have the option of selling there, which limits the exploitation by private players outside the market. If regulated APMC market yards are not present, then the bargaining capacity and ability to resist exploitation in private trade transactions outside the market yards also gets severely undermined. This is something that the central Act does not take cognisance of, and the government’s proposals do not address these either.
3.11. No Provision to guarantee MSP as the floor price: Farmers have been demanding that the floor price of auctions in the market yards everywhere should be set at a remunerative Minimum Support Price so that this MSP (at C2+50%) is realized by the farmers as the minimum price. However, the Act does not have any provision for this. Instead, it reduces the ability by the governments to make effective market intervention by de-regulating and invisibilizing the transactions. The Commission of Agricultural Costs and Prices (CACP) has also recommended in its reports, including 2017-18, that MSP should be backed by a legal guarantee. This is a key demand of the farmers.
3.12. No space for collective bargaining by farmers: The daily auction of agricultural produce in the APMC market yards provides a collective bargaining space for farmers to obtain a remunerative price, even with the limitations of the market yards. It provides a space for collective intervention by farmers and farmer organizations to expose and counter exploitative practices and collusion by traders, commission agents and companies. A further strengthening of the regulations in the market yards is required to ensure fair practices. However, this Act, by leading towards a collapse of regulated market yards, gives it a free-for-all to all companies and traders to exploit farmers.
3.13 Lack of benchmark price through auction: As of now, the auction price at the APMC market yards provides the reference benchmark price for transactions outside the market yard, just as the MSP sends a price signal to the APMCs. In the absence of a functioning and thriving market at the APMC market yards, there is no signal for fair price and the small and marginalized farmers are at a big disadvantage in decentralized and invisibilised transactions with big companies or traders.
3.14 Enables reorganization of cartels outside APMC markets and local monopsonies leading to lower prices: Instead of effectively addressing the issue of possible cartelization within the mandi, this Act enables the cartels of traders and companies to efficiently reorganize outside the mandi to escape regulation and detection. The unregulated dispersed markets created by this Act would lead to monopolies and monopsonies developing in the trade areas rather than enabling better prices.
3.15 Invisibilization of stock holdings: Since registration and reporting are not mandated, the Act makes stock holdings invisible, unlike those registered warehouses under the Warehouse Development and Regulatory Authority. The lack of information at all levels makes the trade areas essentially unregulatable.
3.16 Individual Consumer being equated to a trader: In this Act, a consumer has been equated with a trader. Sec.2 (n) says, “trader” means a person who buys farmers’ produce by way of inter-State trade or intra-State trade or a combination thereof, either for self or on behalf of one or more persons for the purpose of wholesale trade, retail, end-use, value addition, processing, manufacturing, export, consumption or for such other purpose. This means that any individual consumer buying farmers’ produce without a PAN card or other document notified by Central Government (as per Sec.4 (2)) will be committing an offence (Sec.11 (1))!
3.17 Over-regulation of Farmer Producer Organizations: In this Act, the government is over-regulating Farmer Producer Organizations which are supposed to be autonomous farmers’ institutions by laying down the rules for payments, whereas that decision-making is supposed to be an internal process within the FPO. This in effect is a violation of the concept of farmers’ collectives.
A large section of farmers sell most of their produce outside the regulated markets. Women farmers, Adivasi farmers, tenant farmers and other such invisible and vulnerable farmers are in any case mostly outside the regulated markets’ purview. They however get some protection through the price signals that go out from the MSP regime and the mandi prices even when they don’t engage in trade transactions within the APMC regime. Further, the procurement regime, whenever it is brought down to the farmgate level, including by women’s SHGs opening procurement centres in south India, have benefited such marginalised farmers also. This is why the APMC mandi regime, the MSP regime and the procurement regime become important for farm livelihoods, even as improvements are to be made in these regimes.
4. SPECIFIC OBJECTIONS TO ESSENTIAL COMMODITIES (AMENDMENT) ACT, 2020
4.1. Misleading statement of objectives: The Preamble to the Act says that the purpose is “enhancing income of farmers” but the EC Act was never about Farmers or their incomes. There was no restriction under ECA on Farmers or Farmer Producer Organisations (FPOs) from stocking produce and selling it. The restriction was on Agri-business companies and traders. Now, those restrictions are being removed for all food commodities, so it gives businesses/traders freedom to purchase and store any quantities, and hence indulge in speculative hoarding and black marketing.
4.2. Market Domination by Companies: Big traders will now have freedom to stock any amount of food commodities. Section 3(1A) of the amended ECA that the supply of foodstuffs, including cereals, pules, potato, onions, edible seeds and oils. They will build huge storage and processing facilities, and build complete market domination. This means that they will dictate terms to farmers – which is likely to lead to less prices to farmers, not more income.
4.3. Disadvantage both for farmers and the consumers: It has been established that when there is price rise in retail market, the benefit is not passed on to the farmers, but when there is a price fall, the loss is borne by the farmers.
4.4. Government has surrendered its power to regulate: There used to be several regulatory tools with the government in the earlier ECA: licensing, price control, compulsory licensing, stocking, information collection and produce for inspection records, entry/search/examination of premises and seizure etc. The amendment does away with all these regulatory tools to help protect the consumer interest.
4.5. Power to regulate only under extra-ordinary circumstances: The extraordinary circumstances are specified in Section 3(1A)(a) which may include war, famine, extraordinary price rise and grave natural calamity. The price trigger for extraordinary price raise is very high – 50% hike in price in case of non-perishables and 100% hike in case of perishables, as per Section 3(1A)k so that it would get triggered very rarely.
4.6. Exemption for export houses: Even under extra-ordinary circumstances like war and famine, stock limits cannot be imposed on entities within their installed capacity of processing, or demand for export. This essentially exempts all the big companies like Reliance and Adani from this Act even under extraordinary circumstances. If the situation is so extra-ordinary, how is this non-applicability clause to large hoarders justified?
4.7. Invisiblising of stocks: There are different regulatory regimes applicable between registered warehouses and private players now. Private players don’t need to record or disclose their stocks. This would lead to invisibilisation of stocks. The implications for trade and food support policies are apparent, when the government does not have information on food stocks and where they exist, whether they exist, in what quantities etc. It is not clear how implementation of the meagre regulatory powers kept with the government will take place in such a situation.
4.8. Favours big retailers: The definition of the expression “value chain participant” includes ‘distribution’ that includes retailing. The big retailers are integrating everything from production (through contract farming), processing, packaging, storage and transportation. This integration is always against the interest of the small producers. Corporate retailers have processing, storage and transportation facilities.
5. SPECIFIC OBJECTIONS TO CONTRACT FARMING ACT [FARMERS (EMPOWERMENT AND PROTECTION) AGREEMENT ON PRICE ASSURANCE AND FARM SERVICES ACT, 2020]
5.1. Does not address serious shortcomings with existing contract farming regulation: The existing APMC Acts in states already allow contract farming based on the Model APMC Act of 2003, whose provisions were adopted by most states. However, these Acts have not provided effective regulation in practice. In reality, most contract farming arrangements simply did not comply with these Acts. Very few contracts were written and registered with the Marketing departments. There were no provisions to compel the companies to make written agreements, hence all contract farming remained unregulated, with no protection to farmers from exploitation.
5.2. Overrides the constitutional powers of State government: “Agriculture”, “markets and fairs” and “trade and commerce within the state” are all state subjects in the Constitution (Entry 14, 26, 28, List II, Seventh Schedule). However, Section 7(1) of the Act provides that “Where a farming agreement has been entered into in respect of any farming produce under this Act, such produce shall be exempt from the application of any State Act, by whatever name called, established for the purpose of regulation of sale and purchase of such farming produce.” Thus, the Act overrides the power of the state government to regulate the contract farming arrangements in its own state. This is a clear violation of the constitutional powers of the state. Further, it is advantageous to the farmer if the state government has regulatory role rather than the Centre. Both in terms of administrative accountability and political accountability, the farmer would find it easier to get justice from the state government. Further, there is no justification for why a Central Act is required for this, when many state governments had already included contract farming provisions in their state Acts.
5.3. Only written agreements recognized as farming agreements: As per Section 2(g), a farming agreement is a written agreement. As per Section 3(1), “a farmer may enter into a farming agreement in respect of any farmer produce.” However, almost all contract farming arrangements in India are informal and unwritten, therefore the farmers in those arrangements are not provided any protection under this Act.
5.4. No provisions that compel companies into making their agreements written: There are no provisions in the Act that would compel companies into making their agreements written and hence under regulation, nor are there penal provisions for not being so. Therefore, unregulated contract farming will continue as it is.
5.5. False claim of removal of intermediaries: The role for multiple intermediaries, commercial agents, arhatiyas and village touts who will act as intermediaries now. The contract agreements are mostly with “Aggregators” who act as classic middlemen between companies and the farmers. This means that the company doesn’t even enter into the picture if there is any liability to the farmer. There are also references to Third Parties in the Act, belying the government claim around removal of middlepersons etc.
5.6. Defective mechanism for dispute resolution: Under Chapter III (Dispute Settlement), Section 13 specifies that all farming agreements shall provide for conciliation process and disputes will be settled through conciliation board. This process is alien to the farmers, and the companies with their lawyers have an opportunity to dominate the dispute settlement, especially with the farmers having no recourse to civil courts.
5.7. Bar of jurisdiction of civil courts: In the Contract Farming Act, where everything else has been kept voluntary, the statute now puts a bar of jurisdiction of civil courts on disputes arising out of contract farming arrangements (Sec.19). Strangely, a law that makes the arrangement itself voluntary makes bar of jurisdiction mandatory!
5.8. Contract farming as proxy for Corporate Farming: While Section 8 prohibits the sponsor from acquiring ownership rights (or any other transfer including for lease and mortgage), or making permanent modification on farmers’ land or premises the Act has a concept of ‘production agreement’ where “the sponsor agrees to provide farm services, either fully or partially and to bear the risk of output, but agrees to make payment to the farmer for the services rendered by such farmer”. This appears to be a proxy for corporate farming. This also opens up the possibility of indirect corporate control of land.
5.9. No Provision to guarantee MSP as the floor price: Farmers have been demanding that the floor price for any purchase of agricultural commodity should be set at remunerative Minimum Support Price (C2+50% at least). However, the Act does not have any provision for this. Instead of referencing the price to be assured price to be pegged at remunerative MSP, the price reference was fixed to the mandi price which is in any case engineered to collapse due to the APMC Bypass Act.
5.10. Crop losses not compensated: There are no mandatory provisions for crop loss compensation for farmers in the Contract Farming Act, although these agreements are likely to take place in unsustainable and riskier production conditions (monocropping, exotic crops, intensive farming paradigm etc.).
5.11. FPOs being wrongly equated with Farmer: Definition of Farmer includes Farmer Producer Organisation in both APMC Bypass Act and Contract Farming Act – they cannot be equated and clubbed in the same definition. As per Sec.2(f), Farmer Producer Organization is a group of farmers. An FPO does not get into production directly.
5.12. On the assertion that the farmer will not lose her/his land: In case the contract suffers a financial loss, there will be recovery as is stated in Section 14, subsection 7 as “The amount payable under any order passed by the Sub-Divisional Authority or the Appellant Authority, as the case may be, may be recovered as arrears of land revenue”. So, it is clear that Section 8 is an empty statement, meant to fool the farmer. Yet Sec.15 states that “Notwithstanding anything contained in section 14, no action for recovery of any amount due in pursuance of an order passed under that section, shall be initiated against the agricultural land of the farmer.” How is all this reconcilable is unclear.
5.13. Sec. 8(b) of the Act prohibits the raising of any permanent structure on the land or premises of the farmer unless the sponsor agrees to remove such structure or to restore the land to its original condition at his cost under any farming agreement. It is also stated that if the structure is not removed, ownership of such structure shall vest with the farmer. However, the law does not state about any loans by the sponsor for the setting up of the structure and how the farmer might end up bearing the liability of the same.
6. OBJECTIONS TO DRAFT ELECTRICITY ACT (AMENDMENT) BILL, 2020
6.1. Farmers oppose the draft Electricity Act (Amendment) Bill, 2020 which seeks to force the farmers to pay high tariffs on electricity, with the Centre forcing the states to remove their cross-subsidies to farmers and other poor consumers, and to convert any subsidy schemes into direct benefit schemes. While electricity as a form of energy is a national resource, the Bill sacrifices the interests of the citizens of the country including farmers and poor consumers and is geared towards increasing and securing the profits of private power companies.
6.2. Electricity is a very important input for agriculture for a large number of farmers in the country. While the nation has made lakhs of crores of public investment into large irrigation projects which have provided irrigation in some areas, in other areas, especially the rainfed and dryland areas, farmers themselves have had to make lakhs of crores of private investment into groundwater irrigation. This groundwater irrigation which depends on electric pump-sets is playing a crucial role in sustaining agricultural production and farmers’ livelihoods. The move to take away the subsidy for agricultural connections in the interests of private corporations is a massive injustice against crores of farmers in the country.
6.3. Farmers and Consumers to be charged full tariff without subsidies: Electricity connection to all farmers shall be metered and they will be forced to pay the full electricity tariffs, as per Section 62, subsection (1). The subsidies may later be reimbursed by government through direct benefit transfer, but there is no assurance or protection for the farmers to ensure the receipt of the DBT support in a timely manner. Farmers will end up paying large bills or face disconnection by the DISCOMS. The state governments at this time have huge arrears of subsidies to be paid to DISCOMS. In the new regime, they will similarly delay and run arrears of paying subsidies to the farmers. This will be a death knell to farmers who are dependent on electricity motors for irrigation.
6.4. Mandating Reduction in cross subsidies: As per Section 42, sub-section 2, “such surcharge and cross subsidies shall be progressively reduced by the State Commission in the manner as may be provided in the Tariff Policy:” Therefore, the State governments are being forced to reduce and end cross-subsidies to farmers and poor consumers, thus benefiting the corporate consumers with reduced bills, while increasing the bills of poorer consumers who now benefit from a slab system.
7. AIR POLLUTION AND REGULATION/CRIMINALISATION OF FARMERS: Farmers are also asking for an exclusion from the regulatory and penal provisions of the Ordinance passed by the Government of India that seeks to set up a Commission for air quality in Delhi and adjoining areas. They are pointing out that straw-burning in agriculture is not just a matter of air pollution in Delhi, but also a serious resource degradation that affects farm livelihoods themselves. However, the approach of the government should not be to criminalise farmers and penalise them, but to support and incentivise farmers to move to sustainable practices and cropping.
8. LEGALLY GUARANTEED REMUNERATIVE MSP FOR ALL PRODUCE: An important and key demand of farmers is around a legal regime for guaranteeing realisation of a remunerative MSP (at C2+50% formula) for all farmers and all produce, through a basket of measures. They are asking the government to enact a new law that will create this entitlement for all Indian farmers. It is to be understood that this is vastly different from the government offering to give it in writing that the current MSP and procurement regime will continue. The current regime has several deficiencies including benefiting only a few farmers (of rice and wheat mainly, in some states mainly, and of some landholding classes mainly, whereas the most marginal farmers including rainfed women, adivasi and tenant farmers are out of the ambit of this regime) and not having a legal framework in which the regime is embedded in. The current proposal from the government does not provide any entitlements to farmers, whereas that is what farmers are seeking. The statutory framework that farmers are demanding will ensure economic viability, social equity as well as environmental sustainability when all agricultural commodities are assured of a remunerative MSP when any farmer interfaces with the market for their sale.
Farmers cannot rely on any oral or written assurance being given by the government that the MSP and procurement regime will continue, nor does that address what they are asking for. What farmers require is a repeal of these Acts, and a new Act that confers a legal entitlement to a remunerative MSP (at atleast C2+50%) in all commodities upon all farmers, and makes it an obligation on the government to deliver on the same through a basket of measures including expanded procurement, effective and timely market intervention, through investments on storage/processing/value addition by farmers and importantly, by making MSP as the floor price guaranteed in all transactions of sale by farmers.
Given all the above, farmers are rightly asking for a complete repeal of these 3 Acts and withdrawal of the draft Electricity (Amendment) Bill. They are also asking for a legislation that guarantees realisation of a remunerative MSP to all farmers for all their produce, whatever might be the marketing channel.
The issues being raised by farmers are valid and legitimate and their demands cannot be construed as “maximalist” or “my-way-or-highway”. It is not very difficult for a government to repeal an Act, politically or procedurally, provided that it does not become a matter of prestige and face-saving. This is India’s largest section of workers and population putting forward their reasonable demands, and accepting their demands is indeed the truly democratic thing for the government to do.