While opening new channels, the existing ones under the Agricultural Produce Market Committee (APMC) must not be compromised, cautioned Professor Sukhpal Singh, the former chairperson of the Center for Management in Agriculture, Indian Institute of Ahmedabad (IIM-A), speaking to News18.com on the three agrarian laws that have led to a nationwide stir by farmers.
Excerpts from the interview:
Can you place the interest of farmers in the three laws – Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, and the Essential Commodities (Amendment) Act?
Out of the three, only two acts are new and the ECA has only been amended to relax stock limits on various farm products and made more specific in terms of when it can be invoked. The purpose of all the three acts is to open up farm produce markets for buyers and farmers, in terms of choice of channels of purchase and sale, which was being attempted earlier. This was done at the state level with amendments to state APMC Acts (2003), as advised by the Union government.
Since all states had not carried out all the suggested reforms, they were directly carried out by the Union government through these acts by legislating on a domain, which was a state one under the Constitution. It has been done using the concurrent list of the Constitution. Here, the union government can make a law in public interest for any industry under entry 33 of the concurrent list.
Though the channel of contract farming was already being promoted under the APMC Act along with direct purchase from farmers, and provision of a private wholesale market besides the APMC market, all that was to be permitted by the APMCs or state marketing board/department and all the levies and cesses could still be charged from the buyer as in APMC mandi.
With these acts, the new trade area outside the APMC market yards/sub-yards has been created over which APMC has no control and it can’t impose any taxes or regulation there. Farmers are worried about the unequal playing field between an APMC mandi and the new trade area due to tax differences or buying costs for a buyer, which makes them fear that gradually all buyers may move out of APMC mandi as buyer costs in the new trade area would be nil or minimal compared to those in the APMC mandi.
They fear that besides the revenue of the APMCs plummeting due to diversion of trade to the new trade area, the procurement by the government may also move out of the APMC to lower buying costs and that would affect commission agents who would not get commission and even procurement at MSP may come down over time. Due to this unequal playing field, overtime APMC mandis may decline or perish altogether. On the other hand, the Contract Farming Act has some deficiencies on the farmer interest protection, which creates fears about land and other aspects of the arrangement though much of the concerns about land being taken away are misplaced as shown by practice of contract farming so far.
How does the Contract Farming Act make farmers vulnerable in case of disputes and production agreements?
There are various aspects of the Act, which are not good for farmers if we see the way they (provisions) have been defined in it. That is causing some concern. The process of dispute resolution is more complex now compared with the APMC level system under the APMC Acts. In addition, there are many provisions of farmers’ interest that are missing from the new laws, like no mention of contract cancellation clause or provision for the delay in taking delivery of produce.
There is much noise that these are ‘big reforms’, but the farmers are concerned. Shouldn’t have the government listened to these concerns?
There is no doubt that the process of consultations with various stakeholders especially farmers was not adequate. The timing was also not the most appropriate for such reforms given that we are impacted by a pandemic. Most institutions were not working adequately to deal with such legislations. Since these are very large and unique reforms in many ways, it would have helped if farmers’ concerns were taken into account to begin with or even when moving from ordinances to acts.
The government has promised MSP, but the farmers are not convinced. “If the MSP is so ensured why not write it in the law,” asked farmers. How do you think this ambiguity is going to pan out in the long run?
This has been an administrative decision of the government, so far. Its announcement and procurement at MSP are vastly different as very few crops in a few states are bought at it. So, the promise has been always met only partially and the spread of MSP benefit is very unequal across states, crops and farmers. It is a promise made by the state to the farmers as part of the social contract between the two, and other buyers should not be brought under it because they are not part of this promise and go by the demand supply dynamics to discover their prices.
A ‘sarkari’ price (MSP) can’t and should not be imposed on private buyers. This was tried in Maharashtra under the APMC Act some time back and it had to be undone due to traders’ protests within a week. This kind of legal provision may drive out private buyers from mandis altogether and may hurt the farmers’ interest as choice of channels would come to only government procurement once again, which may not be able to afford and handle all the produce. Remember, MSP is announced for 23 crops and there is a demand to make it applicable on all crops.
How are the concerns of farmers of Haryana and Punjab different from those in UP and other states? The protests also attracted farmers from other states. What do you have to say with regards to the farmers’ response to the central laws in different states?
Punjab and Haryana farmers are at the forefront of protests as they have been the biggest beneficiary of the MSP regime and they mostly rely on paddy and wheat, which is more effectively procured at MSP across these states. Farmers in other states generally don’t benefit from MSP and therefore it hardly matters for them if MSP goes away. Rather, some of these states’ farmers think that new acts may bring some new buyers for their produce with new channels being encouraged by these acts. But, the larger concerns about opening up the agricultural markets to corporations along with opening of land (lease) markets in some states are making farmers in other states also become concerned about the new laws.
How will a pro-farmer regional regime be a deterrent to these central laws in this case?
As we have seen, states with predominance of agricultural sector like Punjab, Rajasthan and Chhattisgarh, the state government (of course all Congress-ruled) have opposed these central Acts and have made amendments at their levels to counter the union acts though not likely to be approved.
Some states like Punjab are concerned that a state domain has been legislated upon by the Union government and that a robust agricultural marketing infrastructure (APMC mandi) has not been given due consideration. However, it is also a fact that most of them have been carrying out these reforms under the APMC Act at their level for many years now.
There are around 36% of produce and almost 11.5% farmers interfacing with the APMC mandi system. An NGO presented the data in a discussion and voiced concerns regarding far less than the required number of mandis (quoted NSSO 70th Round data). What should the government be doing with APMCs since major anxiety is emerging from bypassing them?
That is true. That also shows that all farm produce was not going through APMC mandis and therefore they are not monopsonies (market situation in which there is only one buyer), as they were projected to be for many years for making a case for reforms. A vast majority of farmers end up selling in non-APMC markets. Therefore, the state governments and the union government need to invest in APMC mandis and improve their governance as they are by law democratically elected bodies of stakeholders, including farmers, besides being the last resort channel for most small and marginal farmers in most major agricultural states.
While opening up new channels, existing channels of APMC should not be compromised, but be given a fair competition.
The government is saying these reforms will remove middlemen but on the other hand give power to corporates. This does not show any relief for the farmers.
It is beyond doubt that intermediaries have been hurting the farmers while they are supposed to help them in selling their produce. This is due to the fact that there is interlocking of produce and credit markets practiced by these entities in many states, which leads to underpricing of output and overpricing of inputs besides high interest rates on loans.
Madhya Pradesh removed ‘arthiya’ (commission agent) from its APMC markets in 1980s itself and every buyer now buys directly in APMC markets there. Now, we have many alternatives like PACS, FPOs and JLGs which can play the facilitator role, if needed.
For the marginalised farmers, these reforms do not mean anything. What challenges do you see ahead of them?
That is a million dollar question. Many policies and regulatory steps are taken in the name of small and marginal farmers, but they are the last ones to get it, if at all. These farmers have been excluded from new marketing channels like direct purchase or contract farming mostly as they are not attractive to new buyers of farm produce due to the high transaction cost of dealing with them. Therefore, it is important to keep the APMC option for them and also bring them into the FPO fold to make them deal better with markets- input and output – for better buying and selling as FPOs give better bargaining power and lower transaction costs to farmers and buyers of their produce respectively.
The FPO provision in the new Acts just sees these agencies as farmers and not buyers, which is unfortunate. We need to retain people in agriculture for some more time and there is potential for that, but not exploited.
How do you define an Indian farmer?
An Indian farmer has marginal land ownership (2.5 acres) on average with half of this land being dry. She/he borrows land to produce a crop, then sells under an interlocked system of credit and output and mostly suffers in markets as buyers and sellers because 25% of chemical pesticides, plus a large proportion of seeds are spurious. With costly credit and extension missing, he/she does not get a decent price for produce, if not sold under MSP arrangement for major crops.
This protest has shown that a farmer may be small or marginal but now has collective platforms from which voice can be raised. This protest is also an indicator of a larger crisis in the farm sector, which has been in the making for long for various reasons ranging from global to local.
How do you think the farm laws affect women farmers?
Women are the real champions of the farm sector as labour is mostly feminised but they are treated poorly in terms of lower wage for same work and unfair conditions of work for them. As owner farmers, only about 10% of them have land titles but they don’t have control over this land and they almost have no role in farm produce markets. Therefore, these acts don’t directly affect them. But as a part of the farming (owner/worker) household, they would be affected equally as a male farmer or even more given gender inequalities in household food provisioning and health and education access.
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