The government has initiated landmark agriculture reforms to end the monopoly of traders and free farmers from restrictions on sale of their agriculture produce. The new legislation is expected to bring much needed private investment and increase rural incomes. The three agriculture reform Bills have received the President’s nod and have also been notified in the official gazette.

The Shiromani Akali Dal, the oldest ally of the BJP, has pulled out of the NDA in protest against the new legislation. All three Bills — (i) The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act 2020, (ii) The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act 2020, and (iii) The Essential Commodities (Amendment) Act 2020 — have become Acts now.

The opposition

Earlier, the Congress-led Opposition parties urged the President to return the Bills to Parliament. Their main concern was that in the new law there was no assurance of minimum support price for farmers. The way the Bills were passed in the Upper House through a dubious voice vote also raised their hackles. Even their demand for voting by members was not considered. The Opposition parties have accused the government of drafting a policy that favours corporates.

They are of the opinion that the new law will enslave farmers. They say that the government should have consulted all parties and farmer leaders before drafting the new legislation. It has been claimed that agricultural reform is anti-farmer.

The three Bills were opposed by the Opposition parties in both Houses of Parliament. In India, reform measures usually evoke protests by the Opposition parties, a trend seen since 1991.

Farmers protest

Farmer groups from across the country, especially Punjab and Haryana, are also opposing the new legislation. There was a nation-wide bandh on September 25 called by farmers. They blocked roads and railway tracks to protest the new legislation. They fear that deregulation will limit their negotiating position and leave them vulnerable to giant corporates. It is a fact that they do not have enough mandis. So they are afraid that their livelihood will be hit.

The BJP-led NDA is saying that the farmers are being misled by the Opposition parties. The new legislation will be a game changer for the agriculture sector, says the NDA.

Earlier, there was restriction on traders and buyers operating outside the mandis. Farmers had a space inside of the mandi for collective bargaining on price and non-price issues. However, 65 per cent of the produce was sold illegally outside the mandi. The new legislation allows corporates to buy farm-produce directly from farmers.

Only licensed traders are allowed to operate inside mandis. In the new system, these traders along with commission agents will move out of the mandi and operate outside, which will definitely lead to a collapse of the mandis.

Farmers short-changed

We have a number of examples where farmers do not get the real price for their farm-produce. Due to logistics problems, they are not able to sell their products in the urban market. Sometimes a glut in the market too leads to a fall in the revenue of farmers.

The ruling party says that earlier farmers were prevented from selling their farm-produce at a price that they wanted and also from selling their produce outside their respective States.

However, social activist Yogendra Yadav in a TV debate said there is no law that stops farmers from selling their produce anywhere in the country.

Reforms’ potential

The new law is a next step towards agri-reforms. It seeks to promote barrier-free inter-State and intra-State trade in farm-products. The government says it is committed to double the income of farmers by 2022. It says that under the new legislation — farmers, women, workers and people from other marginalised sections — will benefit.

In a recent event PM Narendra Modi said that governments in the past had promised to improve the farmers’ economic condition which remain unfulfilled.

So in this context will the new laws benefit the farmers? Only time will tell.

Price stabilisation of farm-products is a crucial issue. Even to ensure MSP is a big challenge for the local administration. If the new legislation keeps farm-production continuously linked with the urban market then the problem would be reduced to some extent. The government must ensure that the farmers do not face any logistics problems.

In Q1 of FY21, the agriculture sector posted 3.4 per cent growth, when the overall economy shrank by 23.9 per cent.

The government must work towards the welfare of farmers as they are our annadata . It is the farmers right to get at least a minimum support price, which should be calculated as per the C2 formula of the Swaminathan Commission.

The government should enact a law which makes purchase of farm-produce below the MSP a punishable offence. Punjab has already passed three Bills to counter the new agriculture legislation. Now, forcing farmers to sell below MSP is punishable in the State.

Congress is looking to make the same provisions in other States ruled by it – Rajasthan and Chhattisgarh. The new legislation is a milestone in the history of agriculture reforms.

The writer teaches Finance at I.T.S Ghaziabad.