The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 and The Essential Commodities (Amendment) Bill, 2020 were supposed to usher in a structural transformation in Indian agriculture.
This was the argument put forward in Parliament when these Bills were introduced and passed by the Lok Sabha on September 17, 2020 followed by the Rajya Sabha in three days’ time despite the cautionary notes and worries expressed by the various bodies, farmers organisations and the Opposition parties at that time. They received the assent of the President of India on September 27, 2020.
What preceded and followed the introduction and passage of the Bills was an unprecedented agitation where a farmers protest stretched for more than a year. The repeal of the Bills in totality announced by the Prime Minister on Friday signals the acknowledgement of the existing political realities on ground and to that end it is a welcome step. This perhaps is also a moment to look for a way ahead as indicated by the farmers organisations themselves and initiate a more meaningful debate on the issue.
Bills’ objectives
So, what were the Bills aiming at? The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill was to reform the Agricultural Produce Market Committees, (APMCs). The Bill sought to open up the sale of farm produce outside of APMCs as well and also aimed at creating an e-highway for trading for agriculture produce. The aim perhaps was to create a larger market leading to better pricing amongst other things for the farmers.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill paved way for contract farming. This Bill sought to provide a framework with regard to agribusiness, processing, and the entire range of services.
The Essential Commodities (Amendment) took out cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities and deregulated them, freeing up their free trade.
Reforms are not new to the agrarian sector. Almost 18 out of 36 States and Union territories had already carried out reforms across many years and permitted private markets to operate for agriculture products outside of APMCs. Contract farming has existed in one form or the other in more than 20 States and 19 States allow and enable direct purchase of agricultural produce from the primary producer.
We need to understand the nature of agrarian crisis in India to analyse the logic of the protest and the way ahead. The average operational farm size in India today stands at 1.13 hectares. What is more worrying is the fact that small and marginal holdings constitute almost 90 per cent of our total agricultural land holdings. It is also more illustrative to note that the top 10 per cent of the households are today cultivating almost 50 per cent of India’s total cultivable lands whereas the bottom 50 per cent are cultivating less than 0.5 per cent of India’s cultivable lands.
Given these facts on ground and the reality that almost two thirds of Indian agriculture is rainfed, the income levels of farmers on an average have come down to roughly ₹9,000 per month per various government reports. This translates into an income of around ₹1 lakh which in today’s day and age a paltry sum if we have to take into account the expenditure incurred by the farming households.
It is against this background that we need to now move ahead and seek a road map of a structural transformation of India’s agriculture. At the heart of this structural transformation should be a realisation of the fact that food and the water security of the country and the interests of the farmers and their dependents cannot be compromised.
Towards that end though the steps to reform the APMCs as well as freeing up the agriculture practices at both ends(production through contract farming and sell in the private markets) as proposed in the farm laws need to be considered there has to be certain iron clad guarantees first, that will protect the interests of the farmers.
MSP demand
There has been a long-standing demand of the farming communities (endorsed by the Swaminathan Commission) on the Minimum Support Price. The calculation of the MSP should be based on the formula that calculates the comprehensive cost borne by the farmer — the C2, and not the one proposed by the government, viz, cash transactions and the payments made by the farmer on seeds, labour, pesticides and fertilisers (A 2).
The costing should also take into account the rent on the owned land as well as the interest on the owned capital as well as the family labour while calculating this cost.
On the other hand, the contract farming Bill needs to allow the farmers a proper judicial process that is as per the law of the land, something that was not properly articulated in the farm laws. One does think that if these two elements are given due consideration and enshrined in the laws then a way forward can be found.
However, to address the larger structural question one will have to also take into account the fact that the umbrella of MSP be extended to all crops and the issue of water be addressed at its fundamental level. As has been pointed out by Mihir Shah Committee, India is on the verge of exhausting its ground water due to over exploitation of aquifers and unless we fundamentally rethink our policy of managing surface and ground water, we are now looking at point of no return.
The Mihir Shah committee report has argued for a demand side management of water for all sectors and as rightly and strongly advocated for eco zone-based farming and a wider, diversified procurement process that gives a due consideration to millets, and other crops, a move away from water intense crop regime. The farmers, as long as they are assured of good returns from such a crop regime will certainly consider it as these favour them in the long run as it reduces the input costs and saves the soils from the excess of chemicals and fertilisers.
What the agrarian structure needs is a New Deal, an assurance that the farmers’ interests would not be hitched to immediate compulsions of interest groups, be it political or corporate. The Prime Minister’s announcements perhaps is an acknowledgement of this reality. The country cannot afford to see a situation where the farmers are pushed into such a situation again.
The writer is Chairperson, Centre for Public Affairs and Critical Theory, Shiv Nadar University