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Democracy and legislative Intent: A legal analysis on farm bills, 2020


INTRODUCTION


Indian agriculture has not been a profitable rather been an economically vulnerable sector. Lakhs of farmers have committed suicide because of failure of crops, debt burden etc. The government has been promising various schemes and incentives to help the farmers and the agricultural sector in large to overcome their misery. Recently, the Indian government drafted farm laws claiming that these laws will solve all the problems of the farmers and will help them to sell their crops at a reasonable price but this claim of the government has been repudiated by the farmers and have accused the government of being “insincere”. Instead, the farmers have started agitation and protest demanding the farm bills to be repealed.


Amidst the opposition by the opposition and several farmer unions, the government passed these Controversial Bills. The contentious Farm Bills consists of three separate legislation i.e. The Essential Commodities (Amendment) Bill, 2020, The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020. The changes that were done in all these bills is basically based on the entry of the private companies to the agricultural sector. The government believes that these private companies can help in the revival of the Indian agriculture. On the contrary, the farmers have contested that these bills are more likely to exploit the farmers rather than to help them.


BRIEF HISTORY AND PROVISIONS OF NEW ACTS

India has been an agrarian economy but the farmers have never been able to take advantage of the same due to the existing system. Before the green revolution, farmers were highly dependent on the Zamindars to sell their produce and money lenders to borrow money. Zamindars used to buy the whole farm produce at a very low price and the money lenders used to charge high rate of interest on the money they borrowed. This kept the farmers in permanent debt. This process was very exploitative so to help the farmers and end this system government of India introduced APMC (Agriculture Produce Market Committee) Act. It was introduced in 1960’s at the very same time when green revolution started in India many experts believe that in the major of green revolution APMC Act played a major role. APMCs set up Mandis or Markets across India where farmer’s produce was sold. There are around 7000 APMCs in India at present. The APMCs changed the process of selling the produce, Now the produce was brought to the APMC and was sold through auctioning to the Middlemen who are actually licensed by the government. This is done to ensure that the farmer’s produce is sold at the right time at a right price. The produce which remains and is not bought by the middlemen are bought by the government at a MSP (Minimum Support Price). After all this, still the sector is suffering and is rather highly unprofitable. According to National Crime Bureau report 2018, 1,34,560 suicides were reported in India out of which 10,350 were farmers remember this was total number of reported cases. This system was good seeing 1960’s but with time we need to evolve similarly, not much was done to APMCs and some problems popped up. Middlemen started exploiting farmers they formed cartels or an understanding among themselves and started buying the produce at MSP only and sold to traders at a high rate.


The government in response to these issues brought these three Acts in 2020 collectively called as the Farm Bills. These Acts envisages to bring change into the key aspects of the farm economy such as trade in agricultural commodities, price assurance, farm services including contracts, and stock limits for essential commodities. However, on the contrary the farmers have termed these Laws as ‘devastating’ in nature and have demanded the government for a rollback. The borders of the capital have been witnessing a huge agitation being organized by farmers, with the majority belonging from Punjab and Haryana.


Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

The government has allowed the farmers to sell their produce anywhere and not just in the APMC approved mandis or market place. This means they can sell it inside the state, outside the state, and can even sell online. This is helpful in many ways such as the farmers can sell their produce at a higher and profitable price through alternative channels of trading outside the APMCs. Moreover, digital and online trading will lead to abolishment of Market fee charged by the state government. But, the same advantages has some disadvantages as well which was the government was clearly not able to foresee. The biggest issue is there is no mention as to where the farmers will sell their produce if they don’t get any buyer for their produce. In the absence of any storage facility, again the produce will rot in the field. Moreover, the concept of Minimum Support Price will come to an end and farmers could be exploited in the same way the Zamindars used to exploit them by buying the produce at a minimal rate.


Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

This Bill has introduced the concept of contract farming in the country. In other words, companies can now have contracts with farmers for buying with farmers for buying their produce. They can set the price for the produce, the standards and qualities and other legalities can be mentioned beforehand. The government’s motive here as well, could be ascertained, was the welfare of farmers by empowering them to sell their produce to anyone a whole seller, a retail giant or an exporter but they again failed to identify various issues the farmers could face because of the entry of such big private players into the agricultural industry. These private companies will have an edge over marginal and small farmers while drafting contract because of absence of legal acumen in an illiterate and poor farmer who can neither himself understand the terms and conditions of contract nor can hire a legal professional to do the same. In case of crop failure, the private companies may not provide any renumeration and even refuse to buy the produce.

Essential Commodities (Amendment) Act, 2020

Essential Commodities Act was first brought in decades back in 1955. The Act basically controls the production, supply and the distribution of certain commodities that are known to be essential. So all the items covered under this Act for instance a food item or an important drug cannot be hoarded or the prices cannot be increased artificially by the companies and supermarkets. The list of essential commodities as per the original act includes: Drugs (medicines); Fertilizers (inorganic, organic, mixed); Foodstuff (including edible oilseeds and oils); hank yarn made wholly from cotton; Petroleum and petroleum products; Raw jute and jute textiles; Seeds (food crops, fruits and vegetables, cattle fodder and jute seeds). The Essential Commodities (Amendment) Act, 20202 has removed some food items such as Potato, Cereals, Pulses, edible oilseeds and oils, from the list of essential commodities which means unless there is a dire circumstances like a war or famine or an extraordinary price rise these commodities will not be considered under the essential commodities list.


Further, the government cannot impose a stock limit i.e. it cannot stop a supermarket chain or a retailer from hoarding unless there is a 100% (percent) increase in price of perishable goods or 50% (percent) increase in price of non-perishable goods. All items removed from essential commodities act are: Rice, Wheat, Potatoes, Onions, and Oil. This decision of the government itself kills the motive of the Act to stop hoarding and black marketing of essential commodities and the commodities which were removed are a part of daily food intake of any Indian and in case of any shortage, any private company with huge balance can misusing the provisions of this Act buy these commodities, store it and then sell it at huge prices in times of emergency.


CONTROVERSIES

The country has been witnessing an intense protest by the farmers who have camped themselves in cold winter outside the National capital protesting and demanding the government to repeal these farm laws. Amid all these concerns of the farmers, no one has talked or accused the government of destroying cooperative federalism since the State governments are likey to be greatly affected by the introduction of the provisions allowing farmers to sell their produce outside APMC which will lead to revenue loss for states since no taxes will be charged on transaction in private markets and to save taxes, farmers and companies would move to these private markets. Even though the government has not abolished APMC but depriving the state government of funds from sale of farm produce will ultimately lead to slow death of the State run APMCs.


The Middlemen will also lose their job and there would be no role of these middlemen in private sector since the companies would be more interested in profit maximisation and cutting cost will include removing middlemen. The concept of ‘One nation One market’ may sound fascinating but in reality would be difficult to execute since 86% of the farmers in the country are marginalized who will not have the medium and money to contact the private retail giants and transport goods from one place to another.


Contract farming has been introduced by the government as a remedy which will solve all the problems of the farmers but the government has shunned the basic fact of competency between a small and illiterate farmer and a MNC. A small and marginal farmer would never be able to negotiate with big private companies. The Act does not specify about any MSP which could at least secure the investment of the farmer. Moreover, Written contract is not mandatory which means farmer will never be able to prove violation of terms of contract. Farmers have a valid point because they have seen privatization in markets of seeds and fertilizers where government believed prices will go down because of competition but results are opposite, and farmers fear the same in this case also.


Limits of hoarding have been removed because the situation of ‘Extraordinary price rise’ is way to high to reach which simply means big private players can any time cause artificial price fluctuation. Not only farmers will be affected by it, consumers will also be affected because the main goal or focus of a private company will be to raise its profits.


CONCLUSION

Considering that there were serious flaws in the agricultural sector and the decades old APMC Act, the need was to plug the loopholes instead of introducing a new system altogether. A similar system has already been introduced in America and some European countries where it has failed miserably, we can only hope this does not happen in India and government will not repeat those mistakes.

Luckily, the Supreme Court of India has stayed these amended acts and has initiated attempts to carefully introspect these controversial bills. It is hoped that the downsides inherent in these acts would be adequately and properly addressed. From the attitude of government, the stand of government is very clear that it is not going to change anything because already it has been termed as Masterstroke. Right now, it is just an Act both are results are possible; farmers income becomes double as said by the government, or their conditions worsen as feared by farmers. History is the best judge. While the intent of Government is laudable, we will be able to see the results of these new Acts after few years only. Right now, everything is just a speculation.


Written by

HARSHVARDHAN

2nd Year BALLB student at Christ(Deemed to be University), Bangalore.


References:

  1. https://www.timesnownews.com/india/article/what-is-the-farm-bill-and-why-are-farmers-protesting-against-it/689215

  2. https://www.jagranjosh.com/general-knowledge/farm-bills-indian-farm-reforms-2020-1606901455-1

  3. https://timesofindia.indiatimes.com/india/what-is-farm-bill-2020-pros-cons-of-three-farm-bills-centre-introduced/articleshow/78180231.cms

  4. https://www.thehindu.com/news/national/president-ram-nath-kovind-gives-assent-to-three-farm-bills/article32708467.ece

  5. https://www.hindustantimes.com/india-news/the-farm-bills-passed-in-parliament-will-not-only-bring-radical-changes-in-agriculture-sector-but-will-also-empower-farmers-tweets-pm-modi/story-Wsi1df81nxjXQFeAHXPVtI.html

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