By Prof. Raj Kishore Panda in Bhubaneswar, October 11, 2020: Recently three new farm bills have been passed by the Parliament and are made laws by the Government of India apparently to facilitate the farmers earning higher income. Nevertheless, the enactment of these new laws has created uproar among the opposition legislators and farmers as well in the country.

Of the three laws while one – Farmers’ Produce Trade and Commerce ( Promotion and Facilitation) Act, envisages freedom to the farmers to sell their farm produce as per their choices liberating them from the earlier arrangement of selling in the mandis managed by APMCs.

The second – the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm services Act, makes provision for contract farming on the agreement reached between the farmers and corporate business houses in getting different farm services and selling the farm produce at the assured prices.

The third -the Amendment to the Essential Commodities Act intends to remove the stockholding limit on food stuffs to be kept by the traders, thus deregulating essential agricultural commodities from government control.

Claiming the new laws as watershed reforms in the history of agricultural development, the protagonists of the laws argue that the implementation of the new laws will benefit both farmers as well as consumers in the country. The doing away with the middlemen in selling the agro-produce to the corporate retailers/exporters will not only raise the income of the farmers but also make available agricultural commodities to the consumers at a fairly lower prices.

So also the implementation of contract farming law will usher in increased flow of private investment and technology into agriculture raising scope towards commercialization of agriculture. The liberalization of stock holding limit on essential agricultural commodities, it is assumed will push increased investment in different agri-business infrastructures like cold storage, ware-housing , supply chains etc in the country. All these will help in boosting agricultural production and raising farmers’ income in the process to achieve doubling of farm income.

In contrast, the enactment of these new laws has created furore among the opposition legislators and farmers as well in the country. In the agriculturally developed states such as Punjab and Haryana the farmers have resorted to agitations against the laws through dharna and road blocks. These people argue that because of the new enactments not only farmers’ income security will be at a greater risk due to marginalization of the role of APMCs but also farmers will be severely exploited by the corporate agencies through various binding provisions. More particularly, the small and marginal farmers having meager marketable surplus will be severely hit by the implementation of these laws as these farmers may not be able to get a fair deal from the corporate agencies.

Leaving aside the war of words between those justifying the new laws and those opposing them, available data reveals the reality of the prevailing agricultural marketing system , and the working of APMCs in the country. Of the total farm households operating in the country more than 86 percent belong to small and marginal farmers having less than two hectares of operational holdings.

These households have very little surplus grains to sell in the market. Whatever quantity of farm produce these farmers sell it is mostly sold outside APMCs – to the local traders at a price below the MSP. These farmers largely sell immediately after harvest to meet their various obligations including repayment of the loans to their creditors. Literature in this respect provide ample testimony to show how the small farmers are exploited by the village sahukars/ money-lenders and traders.

On the working of APMCs , it is often alleged that over the years since their inception in 1950s these institutions have been carrying out their activities contrary to the objectives for which they were created. There were primarily three objectives behind the creation of APMCs viz:(1) ensuring food security, (2) remunerative prices to the farmers and (3)fair prices to the consumers. However, as the studies reveal the APMCs have largely failed on all the stated objectives.

More so, it is stated that the farmers are often harassed by APMCs on various pretexts. There is often inordinate delay in lifting paddy from farmers. Besides, the farmers are also often coerced to take back their harvest ( paddy)on the plea of higher moisture content in the grain and the grains are not properly cleaned.

Added to this, the APMCs also charge a hefty amount in the form of levies, mandi tax, VAT etc on the farmers who bring their produce to the Mandis. All these make agriculture a high-cost proposition. More so, being harassed by the APMCs in so many ways the farmers are very often forced to sell to private traders/ millers at a very subsistence price. Studies provide ample evidences of distress sale paddy in different parts of the country.

The very objective for which the APMC s are created -to protect the farmers from the exploitation of the intermediaries and creditors has been found defeated. In 2003 the Government of India introduced a Model APMC Act to provide freedom to farmers in selling their produce but the act did not go far enough to create national level market for agricultural commodities due to apathy of many states to implement the model act. At present the country has 2477 principal regulated markets with 4843 sub-markets regulated by the APMCs. But these markets stand fragmented in the country with monopolistic practices prevailing in the procurement of farm produce under the APMCs.

In the context of the deregulation of essential commodities, it is to be pointed out that the earlier act prohibiting stock holding was mainly intended to protect the interest of the consumers in view of the regular food shortage the country witnessed during the late 1960s. Today India is self-sufficient in food grains. More over the country is exporting some amount of food grains to outside countries.

But to make agricultural products competitive in the world market, we have to develop post-harvest technology in processing, storage, supply chains etc, for which increased private investment is needed. At present nearly 40 percent of food grains are getting wasted due to non-availability of go-downs, cold storages. As such the recent liberalization on the stock holding limit of essential agricultural commodities will go a long way in pushing development of post-harvest infrastructures like cold storage, warehousing supply chains in the country under private sector initiative.

To conclude, we may say that the new farm laws are certainly a better way of dealing with providing superior choice to the farmers for earning higher income. However, its implementation is of crucial importance. We see there is always difference between the announcement and implementation. Since agriculture comes under state list, the co-operation of the state governments in making necessary legislations for implementing the new farm laws is very much needed. Let us hope that both the central and state governments will work together in the interest of the farmers.