Why farm sector reform bills are angering farmers: All you need to know
While economists have hailed the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill and the Essential Commodities (Amendment) Bill, farmers are up in arms against themUpdated: Sep 18, 2020, 11:56 IST
Shiromani Akali Dal (SAD) leader Harsimrat Kaur Badal resigned from the Union Cabinet on Thursday in protest against legislation that seeks to liberalise agricultural markets. The resignation came amid protests by farmers, whom SAD, ruling Bharatiya Janata Party’s oldest ally, counts as its core support base in Punjab, a key food bowl state, against the reforms even as economists have hailed them. Here are what the reforms in the farm sector entail and why have they angered farmers:
1. The legislation seeks to free up agricultural trade from all restrictions.
2. It provides for opening up the farm sector to more competition, modernisation of supply chains by enabling bigger agribusinesses to engage with farmers more directly and creating seamless access to fragmented markets.
3. The Farming Produce Trade and Commerce (Promotion and Facilitation) Bill seeks to allow barrier-free inter-state and intra-state trade of primary agricultural commodities. Farm produce has been for decades sold mainly in notified wholesale markets run by Agricultural Produce Marketing Committees (APMCs).
4. The APMCs require farmers to only sell to licensed middlemen in these notified markets, usually in the same area where the farmers reside, rather than in open markets, which economists say scuttles price discovery, and hurt farm profits.
5. The Farming Produce Trade and Commerce (Promotion and Facilitation) Bill seeks to enable farmers and buyers of their produce to trade outside these tax-free markets and open up APMCs to competition. It will enable food traders to buy farmers’ produce from any market, rather than bind them to the specific markets where they are licensed to operate.
6. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill lays down a new architecture for contract farming. It provides for a national framework on farming agreements, enabling a farmer to engage with agribusiness firms, processors, wholesalers, exporters, or large retailers for the sale of future farming produce at a mutually pre-agreed price.
7. The legislation will allow the government to invoke the Essential Commodities Act only if retail prices rise 50% in case of non-perishables and 100% in the case of perishable items from the average retail prices in the preceding 12 months or last five years.
8. Opponents of the legislation have accused the government of intruding into states’ jurisdiction and taking advantage of the Covid pandemic to introduce the bills.
9. They say the legislation is going to lead to a replication of old structures outside mandis and create two market spaces with completely different sets of rules.
10. Farmers fear the legislation would lead to big monopolies and be as bad as the current cartelisation in mandis and also affect the procurement system.
11. The farmers want profitable sales in the form of minimum support prices (MSPs) to be a legal right. They fear the reforms threaten MSPs.