Farm laws stir: Govt, farmers to resume talks on Wednesday

Agriculture secretary Sanjay Agrawal sent out a letter to farm leaders on Monday, proposing the sixth round of negotiations on Wednesday, in response to an e-mail by the unions on December 26 in which they had agreed to restart negotiations and suggested a resumption of talks on Tuesday.
Farmers during an ongoing protest against the new farm laws, at the Singhu border in New Delhi.(ANI)
Farmers during an ongoing protest against the new farm laws, at the Singhu border in New Delhi.(ANI)
Updated on Dec 29, 2020 12:30 AM IST
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Hindustan Times, New delhi | ByHT Correspondent

After a three-week hiatus, the Centre will resume talks with farmers’ unions on Wednesday in an attempt to end a politically challenging protest by farmers who have camped on the borders of the Capital since November 26 to demand the repeal of three contentious laws they fear will weaken their bargaining power and leave them at the mercy of large agribusinesses.

Agriculture secretary Sanjay Agrawal sent out a letter to farm leaders on Monday, proposing the sixth round of negotiations on Wednesday, in response to an e-mail by the unions on December 26 in which they had agreed to restart negotiations and suggested a resumption of talks on Tuesday.

Talks will now resume on December 30 at 2pm in the Capital’s Vigyan Bhavan conference venue.

In his letter, the farm secretary invited 40 leaders who represent the Samyukt Kisan Morcha, a platform of over 400 farm organisations involved in the month-long agitation, over a set of reforms they say will hurt their livelihoods.

“In the meeting, the government will discuss issues delineated by you and issues related to farmers in the three laws along with the system of MSP (minimum support price) as well as Commission for the Air Quality Management in National Capital Region and Adjoining Areas Ordinance, 2020 and Electricity Amendment Bill 2020,” the government invitation to the farmers said.

The agriculture ministry’s invitation, a copy of which HT has seen, said the talks will be led by Union ministers. Three Union ministers — Narendra Singh Tomar, Piyush Goyal and Som Parkash — are likely to represent the government, an official said.

Also Read | Farmers’ protest: Several Delhi borders remain closed, police suggest alternative routes

The farm ministry letter said officials will discuss issues related to farmers in the three laws, signalling the government’s broad strategy to find a solution by addressing points in the legislation that farmers may have concerns about.

Reacting to the letter, Avik Saha, the secretary of the All India Kisan Sangharsh Coordination Committee, a platform of farm unions, said: “The letter of the government indicates that it is being clever with words and not willing to discuss the agenda proposed by farmers’ organisations and this exposes its double-speak.”

The farmers’ platform, however, said it looked forward to Wednesday’s talks and hoped the government would come to the negotiating table with an “open mind”. The farmers walked away from the negotiations on December 8 after meeting home minister Amit Shah.

Farm unions have launched one of the largest strikes in decades to demand that the Centre revoke the three contentious laws approved by Parliament in September. The laws essentially change the way India’s farmers do business by creating free markets, as opposed to a network of decades-old, government marketplaces, allowing traders to stockpile essential commodities for future sales and laying down a national framework for contract farming.

These laws are the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 and the Essential Commodities (Amendment) Act 2020. Together, the laws will allow big corporations and global supermarket chains to buy directly from farmers, bypassing decades-old regulations.

Farmers say the reforms will make them vulnerable to exploitation by big corporations, erode their bargaining power and weaken the government’s procurement system, whereby the government buys staples, such as wheat and rice, at guaranteed rates, known as MSPs.

In their December 26 email to the farm ministry, the farmers, however, stuck to their demand that talks must be geared towards repeal of the laws. The farmers spelt out issues on which they want discussions. They said the first issue they wanted discussions on were the “modalities (that are) to be adopted for the repeal of the three Central Farm Acts”.

Second, the unions want “mechanisms to be adopted to make remunerative MSP recommended by the National Farmers’ Commission into a legally guaranteed entitlement for all farmers and all agricultural commodities.”

These top two demands are the trickiest and are likely to be a test of the fate of negotiations.

Although, the government has made desperate attempts to restart negotiations with the unions, the government is not prepared to scrap its reforms agenda.

Instead, the government has proposed a set of concessions and amendments. These include greater oversight of proposed free markets and a written assurance on continuing the mechanism of MSP.

The farmers also want amendments in an ordinance to completely exclude farmers from any penalties for crop-residue burning, a major cause of pollution, they stated in their letter.

The farmers’ email lastly stated that farmers want “changes to be made in the draft Electricity Amendment Bill 2020 to protect the interests of farmers.” The bill proposes to provide cash instead of subsidised power for agricultural use. Farmers say the switch from subsidy to cash could increase the cost of power.

These two demands are easier to accede to because the government has already hinted that it is prepared to make the sort of changes farmers want.

However, a repeal of the laws, which is unlikely, and a legal guarantee on MSP as sought by farmers are fraught with complicated economic costs, analysts say.

“The government is and will be always be ready to discuss every issue. That is the government’s position which the letter to the farmers restates,” an official said on Tuesday.

The government has said it would come out with a written assurance on continuing the system of guaranteed prices, or MSPs.

Farm leaders have spelt out why the assurance on minimum prices was not enough.

The government sets minimum prices for 23 commodities but mainly buys wheat and rice at these floor prices.

The MSP is calculated using a measure of cultivation cost known as A2+FL, which is a narrower measure of costs of cultivation that takes into account all expenses of raising a particular crop plus the value of family labour.

Farm unions want the government to adopt a comprehensive measure of cultivation costs that include the imputed cost of capital and the rent on the land, called C2 in economic parlance.

Farm unions also made it clear that they want the government to buy all 23 commodities, which would bloat its food subsidy bill hugely.

Some analysts say such a law makes little economic sense.

If MSP is made compulsory, it will upend the natural market mechanisms of demand supply, which usually determine prices. And if MSP is made compulsory and traders find it unprofitable to buy at MSPs, especially during production gluts, they will simply avoid buying rather than face legal action, according to Ashok Gulati, a noted farm economist.

Moreover, the government cannot afford to be a monopoly buyer of all farm produce.

“There is no question that farmers need support. But they need to be supported in less market-distorting ways,” said Pravesh Sharma, a fellow at think tank Indian Council for Research on International Economic Relations, or ICRIER.

To be sure, Indian farmers get lower-than-global prices on most items not procured by the government and often have to dump produce below cost of production because of oversupply and the government’s obsession with keeping food inflation low.

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Wednesday, July 06, 2022