His trader’s voice

Context:  While the traders have been the Kanhaiyalals of agricultural yore, encouraging inefficient marketing, it is astonishing that farmers are speaking up to protect traders’ interests.

Evolution of Agricultural Produce Marketing Committee (APMC): Outcomes of The APMC Act of the 1950s -

• Positives: Freed farmers from the monopoly of traders leading to less exploitation.
• Negatives: Created Oligopolies: A symbiotic relationship between particular traders and farmers within these oligopolies was created:
  • The traders provide credit, the farmer then sells his produce only through that trader, to have the credit/advance against such sales adjusted.
  • The mandi trader is also a conduit for the sale of foodgrain at MSP, reducing the net received by the farmer to below MSP.

Arguments in favour of the farm laws

• The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 gives farmers the freedom to sell outside the mandi; and to the buyer to buy at “farm gate”, without a license.
  • This has been falsely linked with the removal of Minimum Support Prices (MSP in future).
• The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020: provides for contract farming.
  • This helps the farmer to transit to commercial crops, such as vegetables and fruits, which give higher returns than foodgrain sold at MSP.
  • It assures her the “contracted” price even if there is excess production, and fall in prices.
  • Even if market prices are higher, the law does provide a means of sharing this windfall.
• Enables farmers to store their produce: Essential Commodities(EC) (Amendment) Act, 2020 provides that storage, etc. of cereals, pulses, oilseeds, edible oils, onions and potatoes.
  • It can be regulated only in extraordinary circumstances such as war, famine, natural calamity, or extraordinary price rise. 
  • Before the amendment, EC served the interest of consumers and also discouraged investments in cold chains, warehouses, etc.

Conclusion: The farmers are agitating against the new reforms not really because that they have been “misled” as part of a “political conspiracy”, but it is due to the way the MSP scheme works in certain states, and the way “big” farmer-trader relationships have worked out in such states.