By Nageshwar Patnaik in Bhubaneswar, September 26, 2020: Three decades after the P V Narasimha Rao government initiated epoch making economic reforms, the present Narendra Modi government is making an attempt to carry forward the structural transformation in the vital agri-business sector through the three pieces of legislation: Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, Farmer (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 and the Essential Commodities (Amendment) Bill, 2020.

However, opposing the farm bills, a nationwide protest “Bharat Bandh” by over two dozen farmer organisations has been held on Friday, Opposition parties, including the Congress, TMC, the Left, AAP and Samajwadi Party, have also extended support to the farmers in their protests demanding withdrawal of these steps.

The farmers and the opposition parties see the farm Bills as a move to throw farmers to market forces which had been a contentious issue under the World Trade Organization (WTO) norms. Way back in 1995, India became part of the WTO and all its policies related to Trade in Agriculture and other sectors are governed by the policies, term and conditions of the WTO.

With the Farm Sector, which never had level playing field since independence, was virtually left to compete at the global level with its back to the wall. Barely six years after the LPG era (liberalization, privatization and globalization) began, the country was literally flooded with a litany of cases of farmers suicides, largely attributed to adverse impact of the economic reforms.

India was no match to the developed nations where all the farmers were big while 80 percent of the farmers in the country are small farmers. The farmers in the western countries were substantially subsidized by their governments whereas for decades agriculture sector in our country was rather negatively subsidised.

On top of it these countries have highly developed agro-infrastructure, mechanised farming with modern technologies. In contrast, farm mechanization, access to modern technology and the much sought after agro-infrastructure still remain a far cry for our farmers, who virtually survive with subsistence level of farming.

India still remains a laggard in terms of development of irrigation potential or agro-infrastructure. At the time of independence, about 10 crore people comprising 70 percent of the country’s was employed in the agriculture and allied sector, which then accounted for around 54% of India’s national income.

Though agriculture’s contribution to national output declined sharply with less than 17 per cent in gross value added terms in 2019-20, 55 per cent of people are still engaged in agriculture. What is worse is the fact that the proportion of landless labourers went up from 28% in 1951 to 55% in 2011.

This has resulted in sharp reduction of the average size of landholdings. About 86 percent of all landholdings in India are small i.e. between 1 and 2 hectares and marginal i.e less than 1 hectare. The average size among marginal holdings is just 0.37 ha, which cannot provide enough income to stay above the poverty line. Consequently, most farmers in India are heavily indebted with Rs 31,000 on an average.

Undoubtedly, the agriculture sector needs massive investment along with extension and marketing and handholding support from the government. The Modi government’s three legislations make an attempt to address these pertinent issues by attracting private investments in Agriculture.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 entails freedom of choice to the farmer or trader to conduct trade and commerce while any trader having a permanent account number (PAN) is allowed to buy directly from farmers.

Similarly, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 allows farmers to get a share of post-contract price surge after they sign agreements of contract farming with private players. Also, they will have the cover of the minimum guaranteed price if open market/mandi rates fall drastically.

The third Bill, Essential Commodities (Amendment) Bill lifts stockholding restrictions on pulses, cereals, edible oil and some perishables.

The agriculture produce market regulation scheme has had a long history. The first Regulated Market “Karanja Cotton Market” was established under the Hyderabad Residency Order in 1886 in the present Odisha state. It all started in the British period with the Berar Cotton and Grain Market Act of 1887 in the Hyderabad Residency. This law marked the beginning of the agriculture marketing scene in the country.

After independence, most of the states during the sixties and seventies enacted the agriculture produce marketing laws. But they suffered from several limitations such as lack of sufficient markets and inadequate marketing infrastructure, high incidence of market fee/charges and lack of competition etc.

In a bid to convince the states and union territories on the need for reforms in agricultural marketing, the UPA Government had set up an empowered committee of state ministers in-charge of agricultural marketing on 2 March 2010. The committee in its final report in January 2013 recommended sweeping reforms in agriculture marketing to ensure barrier-free marketing of the produce by farmers and participation of private players and promotion of contract farming.

Modi government’s three farm bills are along the lines recommended by this committee. And yet the UPA partners are now opposing the Bill for their vested political interests.

No one can dispute the fact that the farmers should have complete freedom to sell their produce to anyone who offers them the highest price and they should not be compelled to sell their produce only in the designated mandi.

However, farmers apprehend the possible withdrawal of the Minimum Support Price (MSP) scheme aimed to prevent distress sale of farm produce as the prices of agricultural products crash during the harvest season. But Modi already has made it clear that the MSP scheme will continue.