IAS Gyan

Daily News Analysis

Put the farm laws on hold, uphold farmers’ rights

23rd December, 2020 Editorial

Context: The Supreme Court’s recent suggestion to form a joint panel to look into the demands of the agitating farmers, has given a breather to the government, although such an offer, made officially at the outset, was rejected by farmer groups as a “dilly-dallying tactic”.

  • Farmers’ representatives see a moral victory in the Supreme Court’s observations, in that the top court did not outright reject their demands or the right to protest.
  • Agriculture producers are demanding a total repeal of the new reforms-oriented laws that provide for setting up private markets outside of designated mandis, allow contract farming without government regulation and also lift stockholding limits for farm produce.
  • Although the Court did not go into the merits of the demands, its intervention paved the way for farmers to challenge the constitutional validity of the central government enacting laws on agriculture, which is a State subject.
  • A group has been formed on how to approach the matter legally.
  • Be that as it may, the starting point of farmers’ demands in relation to the new farm laws was for mandatory payment of the Minimum Support Price (MSP) for notified farm produce in private markets to be set up.
  • Among other objections is the amendment to the Essential Commodities Act that provides for lifting of stock-holding limits on essential commodities.
  • Under the new Act, any trader, company or agri-business, etc. will be able to store unlimited quantities of say, wheat, rice, sugar, onion and potato, for any period of time.
  • Hoarding is normally related to speculation for profit that hits farmers and consumers alike.
  • The government did not concede these demands in its proposals to the agitating farmers, which escalated the problem.
  • Together, the new farm laws enable a private entity to control and monopolise the market.
  • They can hold sway over not only the rate a farmer will get for his/her produce but also influence the market price at which the end-product will reach retail consumers.

It’s about corporatisation

  • But more importantly, the mechanisation and corporatisation of agriculture, that is at the centre of the reforms-oriented laws, is the threat to the survival of 56.7% of the total workforce and 86.08% of small and marginal operational landholding farmers (as per the Tenth Agriculture Census, 2015-16) engaged in farming activity in the country.
  • Without adequately skilling, training and empowering the small and marginal farmers to become competitive on their land holding of less than two hectares, the government brought the new laws through the ordinance route, and that too when the country has been preoccupied and grappling with the COVID-19 pandemic.

Reforms and governments

  • Reforms in the agriculture sector have been an on and off process with successive governments since the economic liberalisation in 1991 and more so, under the subsequent World Trade Organization (WTO) norms.
  • And, even though the WTO seems to be collapsing under its own weight from an unequal set of rules that favour developed countries, India and the other developing countries fought for a ‘peace clause’ to pursue country-specific food security policies in keeping with their socio-economic responsibility.

Will that last man benefit from these reforms?

  • Farmers are now faced with new amendments to the Electricity Act, which propose to fully privatise distribution of power, a crucial input in farm irrigation.
  • At present, payment of MSP for notified commodities even inside designated mandis is not mandatory.
  • As a result, a majority of farmers are short changed. Without the backing of the law, there is no guarantee against this in the new markets that are being conceived — and what is agitating farmers.
  • Fragmented landholdings have become a problem for big ticket farming seeking economies of scale in a competitive market.
  • The government is banking on its reforms-oriented formation of producer companies as a panacea for all ills in the small and marginal farm sector.
  • It has fixed an ambitious target of setting up 10,000 Farmer-Producer Organisations (FPOs) by 2023-24 which must be registered as a company or a cooperative to run farming as a business.
  • The promoter can belong to private companies or a non-governmental organisation arm of mega companies or agri businesses which claim know-how on availing government grants, tax rebates and can leverage official schemes. Thus, an agri business can have its foot in the door even before a FPO is registered. Government guidelines facilitate this.
  • Even though the idea was floated almost two decades ago when company law was amended to enable this, only 881 FPOs have been registered so far.

Need for consensus

  • For now, it will be appropriate for the government to put on hold the implementation of contentious pieces of legislation and initiate widespread, transparent and participative consultations with all stakeholders including gram panchayats to arrive at informed decisions by consensus.