Harvest of Distrust

Source: By Himanshu: The Indian Express

On 25 September 2020, farmers’ organisations across the country gave a call for a bandh to protest the three bills passed by Parliament. These bills, namely the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 (FPTC), the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 (FAPAFS), and the Essential Commodities (Amendment) Bill, 2020 were passed amid protests by the Opposition parties.

Projected as historic reforms, the government promises freedom to the farmers from the “villainous and exploitativeAgricultural Produce Marketing Committee (APMC) mandis and from the middlemen who charge commission from trade in these mandis. Most farmers would agree that the functioning of the mandis is inefficient, opaque, politicised and often controlled by cartels. The attempt to reform the functioning of the mandis is not new and has been in process for the last two decades, starting from 2001 when the expert committee on agricultural marketing submitted its report. Since then, three different model APMC acts have been proposed by previous governments (in 2003, 2007, and 2013) and in 2017 by the current government, none of which led to the kind of protests that have been witnessed over the last two weeks.

Rather than welcoming the freedom from mandis, this time farmers are on the streets fighting for restoring the primacy of the mandis in agricultural trade primarily because APMC mandis are an essential part of the agricultural trading ecosystem. While they may have a confrontationist attitude to the functioning and administration of mandis, they also share a symbiotic relationship with the middlemen and the mandis extending beyond matters of transaction in agricultural produce. The middlemen are a source of information, inputs, and sometimes credit without collateral.

The anger against the bills is not just about restoring the primacy of the APMC mandis but also over the manner in which the bills were thrust upon the farming community. Not only the farmers’ organisations, but even state governments and allies have not been consulted. Secondly, all the earlier attempts at reforming agricultural marketing respected the constitutional separation of powers. While the Centre proposed the model acts, these were implemented by state governments. And most of these proposals were actually acted upon by state governments with waves of reforms in the functioning of the APMC in most states.

Out of 36 states and union territories, 18 states have already enacted reforms allowing for establishment of private market yards/private markets, 19 states have enacted reforms allowing for direct purchase of agricultural produce from agriculturists by processor/bulk buyer/bulk retailer/exporter, 20 states have enacted contract farming acts. Kerala and Bihar do not have APMC mandis and Tamil Nadu has a different system. Most states have exempted levy of taxes and fees on sale of fruits and vegetables. Most of these reforms were enacted by the state governments and rules were framed with farmers welcoming these changes, even though the changes were suggested by the Centre.

On the other hand, the current reforms completely bypass the state governments and weaken their ability to regulate agricultural markets even though it is a state subject. Further, unlike earlier reforms where the focus was on strengthening the functioning of APMC mandis while allowing for greater private market access and participation, the current FTPC bill bypasses the APMC altogether, creating a separate structure of trading. In any case, mandi trade accounts for less than one-fourth of the total agricultural trade with the rest accounted for by private markets/traders. The absence of regulation and exemption from mandi fees creates a dual market structure which is not only inefficient but will also encourage unregulated trade detrimental to the primary purpose of providing market access to farmers for better price discovery and assured prices.

Most farmers realise that the FTPC Bill is not about delivering on the promise of freedom to farmers but freedom to private capital to purchase agricultural produce at cheaper prices and without any regulation or oversight by the government. Farmers also realise that this will eventually lead to shifting of trade from regulated APMC mandis to private markets without any commitment to investment in infrastructure and regulation from government. With unequal and differentiated terms of engagement, the decline and disappearance of the APMC is only a matter of time.

The fight to retain the APMC despite its shortcomings is also a fight to extract a commitment from the government on maintaining state support to the agricultural sector. With government investment in agriculture declining in real terms and rising input costs and declining subsidy, farmers fear the withering away of the last remaining instrument of state support in the form of the Minimum Support Price (MSP) regime. While MSP based procurement did not benefit the majority of farmers and only a few states contributed to the procurement operations of the Food Corporation of India (FCI), it did work as a lifeline for the farmers in those states. Its effectiveness was only in two crops, wheat and paddy, among more than 1,000 crops grown, but it did provide the assurance that the state was willing to step in when required. It also contributed to revenue to the agricultural marketing boards which was partially utilised in improving infrastructure in the mandis.

These fears are compounded by the contract farming bill and amendments in the essential commodities act. Apart from the fact that the provisions of these bills are highly skewed in favour of private capital, with no limits on stockholding and restrictions of government interventions, there is limited recourse to any independent grievance redressal mechanism.

What has also angered the farmers is the deep divide between the rhetoric of the government and its actions on the ground. Even while enacting these reforms and promising greater freedom to farmers, the government has moved swiftly to ban the export of onions and reduced, increased and again reduced import duty on masur in a matter of three months. Agricultural terms of trade have moved against agriculture with rising input prices (with the government increasing diesel prices despite the collapse in international prices) and declining farm gate prices.

The last three years have seen a collapse in prices of major agricultural products. At a time of general demand deflation and the economic slowdown, promising the farmers a bumper increase in agricultural prices through a free market is as good as the promise of “achhe din” by the party that came to power in 2014.