Harvest of Distrust

CONTEXT: Recently passage of 3 agriculture reform bills,  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, has led to mass farmer protest all over the country.

Background on Agriculture Reform:

• Model Act: Reform in Agriculture Produce Marketing Committees (APMCs) were being proposed through Model Acts by the Centre and implemented by States since agriculture is a state subject. 
• Model Act of 2003, 2007, 2013 and 2017 was introduced since the recommendation of the expert panel were laid down in 2001.
• The report highlighted that APMC are inefficient, opaque, politicised, and cartel operated and was agreed by many farmers. 
• Contract Farming and Direct Procurement: Out of 36 states and UT, 18 have allowed for direct purchase by a large private buyer, 20 have allowed for contract farming, and most states have exempted levy of taxes and fees on fruits and vegetables.
• Inclusive Policy Making: Farmer were included in rules formulation, and APMC was strengthened to allow for more private linkages.

• APMC mandi is an essential part of agriculture trading ecosystem since they act as the first point of sale and as a market regulator.
• Symbiotic Relations with Middlemen: Middlemen and Mandi are a source of market information, inputs and credit.
• FCI provided MSP which acted as a lifeline for farmers and revenue earned was utilised for improving mandi infrastructure.

Issues with the recent Agricultural Reform Bills:

• Absence of Consultation: Passage of this bill was a bone of contention since consultation with farmer organisation, states, political allies and deliberation in parliament was absent.

• Bypassing and Weakening of APMC: State as a regulator of APMC are being bypassed. While FPTC bypasses APMC altogether by creating separate trading structure. 

• Already weak position of APMC as they only control one-fourth of total agriculture trade.
• Absence of mandi fee and regulation will create a dual structure which is inefficient and will defeat the primary purpose of providing market access for price discovery and price assurance.
• Reforms provide freedom to private capital to procure produce at low prices, no limit on stockholdings and unregulated markets, 

• No commitment by either private or government to improve infrastructure. 

• Limited grievance redressal mechanism only worsens the case for farmers.

• Apprehension regarding reducing Government Support: With increasing farm input costs and declining subsidies, farmers are afraid that MSP as the last form of government support would also be withdrawn in the near future.

• Government recent steps, such as the ban on onion export, increased taxes on diesel and changing subsidies rates for Masur in three years, are in contradiction with the proposed reforms.

Conclusion: With, collapsing agriculture prices for major crops for the last three years and recent demand reduction along with economic slowdown, requires a re-look at the reforms with a consultation with all the stakeholders.