The three farm laws were never a solution

Context: The recent announcement by the Prime Minister that the Union Government would seek to repeal the three Farm Laws in the winter session of Parliament has prompted diverse reactions.

Troubling aspects of three farm laws

• Non democratic creation of law: Little is known to the public even today on who authored these laws or who was consulted before their introduction as ordinances.
• Buldozing passage of law in parliament: These were passed in Parliament in haste by voice vote, in what is viewed by experts as a violation of established procedures.
  • Passage of Acts with serious ramifications for States without deeper discussions even within Parliament, let alone with specific inputs from stakeholders and experts, is bewildering.
  • Opaque processes followed during passage of law increase the likelihood of poorly framed laws.
• Negatively affect Centre-State agri-relations: Via APMC Bypass Act, the Centre essentially wrested control of market areas outside ‘market yards’  yards of respective APMCs, now called ‘trade areas’, from the States.
• Deregulation of agricultural market environment to regulations of a whimsical Centre: APMC Bypass Act particularly hurt States that had the most deregulated systems.
  • Eg. A State that had no APMC Act, suddenly found that all deregulated areas within the State would now come under the Centre’s regulatory ambit and control, subjecting private players operating freely in that areas.
  • Past efforts of central government like One Million Ponds, 10,000 FPOs and One District One Product are often disconnected from local needs for robust and sustainable solutions for agriculture.
  • By absolving private players from adhering to any State law in agricultural marketing, it effectively nullified the power of States to shape the nature and functioning of agricultural markets.
• Centralisation of authority to influence the functioning of trade areas: But, systematic evidence suggest that the Centre was not  informed and  equipped to regulate agricultural markets.
• Eg. Barely weeks after the ECA was amended, the Centre imposed restrictions on stocking, in October 2020 for onions and July 2021 for a range of pulses, apparently undermining the purported spirit of the reformed ECA .
• Analysis of COVID-19 lockdown management in the agricultural sector  found that the Centre was always a step behind, implementing relief measures for agricultural marketing reactively rather than proactively.
• Acts facilitate consolidation of big business: As underlying premise of these three Acts was that freedom to operate in agricultural markets would attract capital-rich private players to a sector in sore need of rejuvenating investments.
• But concerns from various sections is that Acts load the dice in favour of corporates with deep pockets who would now use this freedom, to sidestep competition to gain control over supply chains at the expense of the farmers.
• Fears of consolidation have been further stoked by recent MoU that the GoI has signed for building data stacks with various companies to grant them  limited access to “data from the federated Farmers’ database” for specific areas.
• A “trade” area under full control of the central government would potentially offer big business a digital data consolidation route to controlling supply chains.
• Acts failed to address the central national challenge that different States have different regulations and a different pace of reform in part due to the political stakes involved in tackling trader collusion in these markets.

Way forward: True agricultural reform rests with local governments, and States need to go back to the basics and expert suggestions

• Incorporate local concerns for robust and sustainable solutions: While the Centre has the capacity to make landmark changes, true reform and action rests with local governments. 
  • States are better placed to assimilate and respond to the diversity of institutional and socio-economic contexts and agroclimatic regions. 
• Implement suggestions of  many expert committees like  delinking the regulatory and operational roles of the APMCs.
• Centre’s focus should be on offering a stable and predictable policy environment vis-à-vis imports and exports, the functioning of national commodity exchanges and futures market.
  • Providing inclusive platforms for discussions on State-level market reform, public procurement and price support.
  • Designing safeguards against consolidation of corporate interests and framing data policies.

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