AlignIndia
Government Policy

The Concertina of the Three Corporate Documents, the Two Pin-cushions and the Missing Safety Net

By Sarabjeet Dhody Natesan

Let’s cut the clutter and go to the crux of the matter. The Three farm laws plus two. Spaced repetition, they say is good for all kind of learning. And specially when detractors keep asking you why you are opposing these ‘reforms’, its good to have some pointers at your fingertips.

1.Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

(APMC’s- local agricultural mandis set up by state governments to safeguard local farmers’ agricultural interests and also to make sure that the farm to retail prices doesn’t reach excessively high levels. The mandis also allow for setting and administering the MSP.)

  • No price guarantee. If in APMC’s, the gateway to setting and enforcing the price floor, the MSP is not guaranteed, the private players and private mandis are at no obligation to provide or support price, assuming that the government continues to list one for every harvest season.
  • No quantity lifting guarantee – No enforcement of a minimum buying quantity. And since there is no limit on the maximum, we are creating conditions, as they say for a perfect storm. (Don’t lift any food grains at the beginning of the season, let a glut develop and prices fall, and then buy huge stocks at low prices)
  • No alternative place provided to farmers, willing to hold out in the private markets looking for better prices and also for storage, clearing, checking, and holding transactions.
  • No responsibility on the buyer to find a collective sales market, the responsibility on the seller to find the buyer, willing to pay a higher price than what they can get in their respective areas.  Also, the time taken to scout for high prices (online data is not accessible to all) cuts into agricultural activities time.
  • Farmers can indeed take their produce anywhere within INDIA and sell it to the highest bidder. However, expenses like the cost of transportation, finding buyers, transactions costs rest with the farmers. 
  • No guarantee of higher selling prices anywhere in the country, it is a risk that the farmer has to take.
  • However, information is freely available and the buyer who is aware of the low prices that the farmers are trying to escape, will also hold on to buying at higher prices. They can also commission agents in local areas to buy at low prices.
  • State Governments lose 8.5% tax, with no compensation for their lost revenues. This money was otherwise used for the development of villages etc. 
  • Severe loss of employment to the thousands of labour engaged in roughly four lakh APMC’s in Punjab.

Middlemen or Arhtiyas will be replaced by other middlemen. The Arhtiyas provide financial support to the farmers, which is the only recourse to credit that the farmers have. The new middlemen will be only buying agents, and thus a lifeline to the farmers will be lost. 

The game will move to large corporate houses that have invested in infrastructure to enter the agricultural markets. They will take over the space that the government wants to vacate. The corporates have deep pockets to initially buy high, corner the market, drive competition away (like they did in Telecom) and then ruthlessly move in to cut buying prices (as in Horticulture)

  • The dismantling of the APMC’s will take away the cushion of the guaranteed price from the farmers. For those who think that the farmers are spoilt because they don’t have to worry about the sale of their goods, please remember the negative terms of trade they operate under. And large markets with unlimited produce arrivals, unless regulated often see prices crashing. 

2. Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020.

(Corporates can enter into contracts with farmers, binding over but non-contestable by the farmers in any court of law.  New methods of production, variety of food, etc.)

  • Farmers will be beholden to the contracts. 
  • The responsibility of providing the resources required for farming rest with the sponsors and fulfilling the contracts rest with the farmers. 
  • The disputes have to be settled through the contract and the final dispute redressal authority is the SDM (Sub-Divisional Magistrate). 
  • The bill denies the farmers access to the judicial system, which in any case, they don’t even understand.
  • This law leaves the farmers vulnerable to the machinations of the bigger, profit-seeking corporate. The crops once sown belong to the sponsor. The farmers tilling the land cannot even take a handful of grains for the next cropping season or self-consumption. 
  • The bill will harm the bio-diversity of Indian agriculture.
  • The bill will place the undereducated farmers against the sharpest legal minds corporates can hire. The results seem obvious.
  • If the Contract laws of the Britishers could not make the farmers rich then, how will they enable it now?

3. Essential Commodities (Amendment) Bill 2020.

(An amendment to the existing Essential Commodities Act against hoarding of essential commodities)

  • This law now frees items such as food grains, pulses, edible oils, and onion for trade except in extraordinary (read crisis) situations from stock limits.
  • Only in case of a crisis, when the prices of certain commodities increase by 50%, will the government intervene. 
  • For critical commodities, only a price increase by a 100% increase will demand governmental intervention.
  • However, the farmers cannot stockpile the grains they have grown as they neither have the resources nor spaces to store excess stocks.
  • Corporates and other players (wholesalers to retailers can stockpile food without any limit)
  • In the long run, will allow the corporates with big investment capacities to take control of food grains and agricultural commodities markets. 

A) Rural Electrification Bill-2020 

B) Farm Stubble Burning Act 2020 

These two are placed in this list of farm bills, to provide bargaining width to the government. These were the first bills that the government offered to take back. 

The Electricity bill aims to cut down on agricultural subsidy and the Stubble bill aims to pass the responsibility of environmental stress created due to burning field stubble onto the farmers. 

Those who decry electricity subsidy to the farming sector, I have a small example to illustrate how we take our urban privilege for granted and don’t see any issues with the subsidy we get. We don’t complain we get House Rent Allowance, we don’t complain when we get Leave Travel Concession, we don’t complain when we get DA payments tied to cost of living index, because we feel our education entitles us to that and more. Look up the cost of diesel required to run tractors and you will realize that this electricity bill relief is not subsidy, it is defraying some negative terms of trade of the farming sector. Not all, for the terms of trade are stacked heavily against agriculture, just a part of it. 

The Green Revolution, brought in to fight American food imperialism created an unsustainable land environment in Punjab. High yielding variety seeds, a hallmark of the Green Revolution, requires heavy use of fertilizers and an excess amount of water. As long as the water was not an issue, Punjab sustained the cultivation of wheat and also added rice (paddy) to its menu of crops. However, overuse of water and fertilizers and the creation of Sutlej Yamuna Link have reduced the groundwater levels of Punjab. Growing rice in Punjab (a state dependent on groundwater and the monsoons for irrigation) and exporting it is akin to exporting water from India. With the reduction of time between each sowing season (three now from the earlier two), farmers don’t have the wherewithal to employ labour to clear the farms of rice stubble, it is cheaper to just burn it. State support is needed for this, rather than putting yet another burden on the farmers.

The Missing MSP

(The safety net of the farm sector. Missing in words yet assumed present by the state.)

  • With the dismantling of APMC’s, and the setting up of private markets, not bound by geographical limits and proximity to villages, the guarantee of MSP will be irrelevant. 
  • With prices not indicated by the government, there is no way a minimum price floor can be maintained.
  • The corporate players who are waiting to enter the agricultural sector and take control of the supply chain will wait out the initial buying period and then buy the excess stocks at low prices.
  • Provision of an MSP in the context of dismantled APMCs and introduction of Contracts, means nothing. It will be a criminal waste of paper to even write this in the bill as it is unenforceable.
  • Missing also is the provision of agricultural credit and low-interest financing required for this sector. The government has instead offered to issue credit cards to the farmers. The usurious nature of credit cards is known to all. 

Outcomes

With the implementation of the three laws, the first casualty will be the Fair Price Shops and their stocking and the irrelevance of the ration cards of 82 crore people who depend upon subsidized wheat and rice for survival.

The second will be the huge unemployment created by the agricultural labour disposed from the rural mandis. Their moving to the urban sector will further depress the urban wage vector. It will help the corporates reduce their wage bills. Along with the Labour Laws, this will create severe wage and employment issues.

It will also lead to the creation of landbanks under corporate ownership (contracts), what they choose to do with the land so acquired is up to them- convert it into residential units, industrial units, or mechanized farms, it will come under their long-term strategy.

The third will be the imminent increase of food grains and produce prices. Finally hitting us where it will hurt. Inflationary trends will firm up in the economy.

Why suspension will not work.

The state through its actions has created a tremendous trust deficit. It would be more sagacious to repeal the bills, necessitating the farmers to call off the agitation and return to their villages. The Center can then call on the state government for consultations to reframe the farm bills keeping in mind the reforms that are needed in this sector. As of now, the bills are not farm reform bills but corporate agribusiness roadmap documents.

Disclaimer: The opinions expressed within this article are the personal opinions of the author. AlignIndia does not take any responsibility for the content of the article.

(Sarabjeet Dhody Natesan is a student of Economics and Policy and teaches at a Liberal Arts University in the South of India. She lives near her favourite seashore, in Chennai, with her family)

Related posts

Skill Development Programs: Study

Varughese Cherian

Who Watches Over Us?

Santhosh Dsouza

Facebook India Relationship Status: IT’S COMPLICATED

Alok Jagdhari