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Thursday, June 8, 2023

Is the battle really about farmers?

The Farm Bill 2020, consisting of three bills namely, The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 and Essential Commodities (Amendment) Bill were passed in the parliament on September 20, 2020. The economy witnessed a watershed moment in the history of Bharat’s agriculture. 

These reforms were being demanded, from time to time, actively and passively. These were delivered at the time when our country needed a new ray of hope, a cure to the crisis from the ill effects of the pandemic. The Bills attracted not only some encouraging voices but few critical eyes as well.

Though the benefits will be manifest in the long term, the Bills, as we speak of, clearly intend to improve the current economic state of farmers and the Agriculture Sector as a whole. 

Some comments are listed down below:

  • “These laws provide greater choice and freedom to farmers to sell their produce and to buyers to buy and store, thereby creating competition in agricultural marketing. This competition is expected to help build more efficient value chains in agriculture by reducing marketing costs, enabling better price discovery, improving price realisation for farmers and, at the same time, reducing the price paid by consumers. It will also encourage private investment in storage, thus reducing wastage and help contain seasonal price volatility.” – Ashok Gulati, Agriculture Economist (Source: The Print)
  • “The opposition’s claims that farmers won’t get minimum support price (MSP) is “plain falsehood”, – Swaminathan Iyer, India Economist, Journalist and Columnist at Economic Times (Source: The Print)
  • “New farm bills & realize they are flawed & will be detrimental to farmers. Our agriculture regulation needs change but the new laws will end up serving corporate interests more than farmers”- Kaushik Basu, C. Marks Professor of International Studies and Professor of Economics at Cornell University (Source: Business Today)
  • “The farm laws are not in the best interests of the small and marginal farmers of the country, and about which a broad section of farmer organisations have raised very critical objections. We do believe that improvements and changes are required in the agricultural marketing system for the benefit of millions of small farmers, but the reforms brought by these Acts do not serve that purpose. They are based on wrong assumptions and claims about why farmers are unable to get remunerative prices, about farmers not having freedom to sell wherever they like under the previously existing laws, and about regulated markets not being in the farmers’ interests.” – University Professors of Economics. (Source: Indian Express)
  • “Intent behind the farm laws is ‘right’ but reforms can’t be treated as ‘fire and forget’ and have to be constantly worked upon to address concerns. Yet India is at a juncture where further reforms are urgently required to achieve greater efficiency and productivity in agriculture for sustaining growth. There is a need to have stable and consistent policies where markets play a deserving role and private investment in infrastructure is stepped up. An efficient supply chain that firmly establishes the linkage between retail demand and the farmer will be important.” – Raghuram Rajan, Indian Economist, Professor of Finance at the University of Chicago Booth School of Business (Source: The Print)
  • “The Centre’s initiative in freeing up agri-trade will have a huge impact on the rural economy. This is not merely the “1991 moment” of ending an inefficient relic of the socialist era, but the unwinding of 700 years of systematic policy bias against farmers and farm produce traders. The FM’s announcement promises to remove a deep-rooted bias against farmers and the food supply chain (not to mention a source of multilevel rent-seeking). A central law will be introduced to allow farmers to sell their produce as they wish. Barrier-free interstate trade is to be encouraged. State-level APMC laws are already being changed one-by-one to complement this change.”- Sanjeev Sanyal, Indian Economist, Principal Economic Advisor to Ministry of Finance (Source: sanjeevsanyal.com)
  • “We heartily welcome the measures adopted by the Union Govt in order to enhance the production and income of farmers.” – Soumya Kanti Ghosh, Chief Economist State Bank of India (Source: uniindia.com)
  • “While each of the reforms announced is individually significant, it is the collective impact of all of them put together which brings about exciting possibilities. Indian farmers operate in a managed agriculture market, which provided almost no selling flexibility to them. The intermediaries led by the Agriculture Marketing Produce Committees (APMC) would retain a large part of the value and the consumer surplus almost never went to the farmers. Consequently, Indian agriculture has had an inverted pyramid pricing structure — we have consumer food inflation and farmer distress together. Additionally, since “agriculture market” is basically the local mandi bound by licences, the effect of these anomalous pricing structures have been even more pronounced. The measures announced by Finance Minister Nirmala Sitharaman on 15 May are set to change the sector fundamentally.” – Aashish Chandorkar, Author on Public Policy, Politics and Current affairs (Source: swarajyamag.com)
  • “For the private sector to make the kind of investments that are warranted in India’s agricultural sector, we have to give them the confidence of reduced intervention by government and its machinery. These three Acts will achieve precisely the same. Consequently, we are looking at a bold attempt to rewrite the policy handbook that has governed Indian agriculture thus far. The benefits of this attempt would be visible over the coming months and it will prove that the experts have been right all along — the only thing needed was a reformer by conviction (rather than compulsion) at the helm of affairs.” – Karan Bhasin, Economist, Columnist in leading newspapers on Indian Economics (Source: swarajyamag.com)
  • “Both Punjab and Rajasthan are considering legal measures to expand the bounds of their APMC mandi yards to ensure that they can continue collecting taxes on all agricultural trade within their State’s borders. States such as Chhattisgarh and Odisha have only seen procurement increase over the last five years, after the implementation of decentralised procurement. Paddy farming has received a major boost with procurement at MSPs and farmers fear their newly assured incomes are at stake.” – Unknown (Source: The Hindu)
  • “Ongoing protests by farmer organisations against the three farm laws passed by the Central government have little to do with their content and more to do with lack of trust.”-  Abhijeet Banerjee, Nobel Laureate and Economist (Source: Mint)

We have seen that the farm bills have a mixed bag of reviews from around the panel. Apart from the core of agriculture bills viz. production, trade and prices, we also need to consider them from environmental aspect. We know that paddy has been in the limelight considering the MSPs, and the most remunerative crop for the farmers.

We are well aware of paddy straw burning, famously known as stubble burning, which happens in Punjab, Haryana and Uttar Pradesh. It usually takes place to clear the fields during September to November in order to sow Rabi crops such as wheat. It has been a long -standing issue since it emits large amounts of toxic pollutants namely methane, carbon monoxide etc.

Considering these factors, the farm bill also gives the opportunity for a more purposeful agricultural research and consequently investments in such areas. 

Ergo, we need to take a holistic view of the farm bills and just not live in illusions and delusions relating to monopolistic farm trade practices, skewed price discovery or loss of revenue to APMCs. We need to bear in mind that these are just fears arising out of the script of the law and not the reality.

Big reforms often bring along with them a range of speculations but it is on our will, what we wish to propagate. Certain states like Punjab and Haryana have emphasized this fear.

The standoff between the states and the centre on account of the protests by Punjab and Haryana has turned into a stalemate even after conducting several rounds of talks. Even though the government has put forward constructive negotiations, the states are in total denial about the righteousness of the bill.

It seems like the issue is about trust more than the bill itself, as rightly pointed out by our Nobel laureate. This standoff is perhaps leading to another perspective- the battle between the centre and the states.

I believe this bill will stand the true test of our democracy’s federalism. Solving this conundrum between complete repulsion of agriculture laws and keeping the centre’s stand for its natural ally is going to be crucial, not only for Bharat’s Economy but also for Bharat at a global level. Sometimes it is imperative to look at the bigger picture, isn’t it?

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Samiksha Punamiya
Samiksha Punamiya
An ardent researcher, deeply inclined toward understanding economics and policy making. Rich in experience of writing on economic research on various platforms. I am a CA by qualification having about five years of experience in financial services space.


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