The Lok Sabha on Thursday passed two farm bills that bring far-reaching, liberalising reforms to the agriculture sector, one to free up agricultural trade from all restrictions and the other to provide a new framework for contract farming.
The bills seek to open up the farm sector to more competition, modernise supply chains by enabling bigger agribusinesses to engage with farmers more directly and create seamless access to markets, which are currently fragmented.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, which replace similar ordinances, were passed by a majority in the lower house through a voice vote.
The ordinances that will be replaced by the bills bring the full force of liberalisation to the farm economy. They were first announced by finance minister Nirmala Sitharaman on May 15 in the second of her series of briefings on proposed reforms, following up on the May 12 announcement of Prime Minister Narendra Modi of a package worth Rs 20 lakh crore to spur growth.
Major parties that opposed the bills were the main opposition Congress, Bahujan Samaj Party, Siromani Akali Dal, Samajwadi Party, the Trinamool Congress, the Aam Aadmi Party, the Left parties, Nationalist Congress Party, the Indian Union Muslim League and the Dravida Munnetra Kazhagam.
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The Biju Janata Dal demanded the bills be sent to select committees. Shiv Sena supported the bills, but recommended changes. Parties that supported the bills included the All India Anna Dravida Munnetra Kazhagam, Telugu Desam Party, the Janata Dal (United) and YSR Congress Party.
The main provisions of the Farming Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 allow barrier-free inter-state and intra-state trade of primary agricultural commodities.
Farm produce, under a decades-old system, are sold mainly in notified wholesale markets run by so-called agricultural produce marketing committees, or APMCs, under state laws.
The APMCs require farmers to only sell to licensed middlemen in these notified markets, usually in the same area where the farmers reside, rather than in open markets, which economists say scuttles price discovery, hurting farm profits. The bill enables farmers and buyers of their produce to trade outside these tax-free markets and will therefore open up APMCs to competition.
The bill will enable food traders to buy farmers’ produce from any market, rather than bind them to the specific markets where they are licensed to operate.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 lays down a new architecture for contract farming. It provides for a national framework on farming agreements, enabling a farmer to engage with agribusiness firms, processors, wholesalers, exporters or large retailers for sale of future farming produce at a mutually pre-agreed price.
“I am happy that everybody expressed their views on the bills. Some have opposed it, some supported. I want to say this with great responsibility; till Narendra Modi is Prime Minister, our farmers’ interests will be kept supreme,” farm minister Narendra Tomar said, replying to the debate. “Please take off your politician’s lens and view the bills through the lens of a farmer.”
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He slammed the Congress, asking why it’s government never acted on the Swaminathan commission’s recommendations to give farmers 1.5 times over costs in the form of support prices.
In his right to reply, the Congress’s Adhir Ranjan Chowdhury said: “Show me one farmer who is happy over this bills. Haryana and Punjab are on fire.”
“I appreciate the sentiments of Harsimrat Kaur (the minister who resigned from Modi Cabinet) who had the gumption to oppose the bills. These bills are no silver bullet.”
Parties opposing the bill accused the government of intruding into states’ jurisdiction and taking advantage of the Covid pandemic to introduce “anti-farmer legislations”.
“Had there been no corona, farmers’ anger would have been visible in the streets , who does the BJP stand with, foreign investors, Adani-Ambani, dhanna seth (moneyed traders) or farmers?” asked Ritesh Pandey of the Bahujan Samaj Party, registering the opposition of party chief Kumari Mayawati.
Despite the political bickering, reforms in “agricultural marketing” or the buying and selling of farm produce have been a long time in the making. Various government panels and economists have often argued for changing existing structures of agricultural trade that are highly fragmented.
“Ultimately these so-called reforms are going to lead to replication of old structures outside mandis. Creating two market spaces with two completely different sets of rules is a recipe for disaster,” said Kavitha Kuruganti of the Alliance for Sustainable & Holistic Agriculture
“Government will not come to know anything about transactions in these new markets. Not knowing will give the excuse not to act. Farmers fear this, rightly so,” she said.
Economists said some concerns of farmers were valid and the solution was to bring appropriate regulation and oversight. “Ultimately, when we open up the market, we need to open it up in a substantive way. What we need is a market-clearing mechanism. The solution is to have effective regulation,” said NR Bhanumurthy of the Bengaluru Dr. BR Ambedkar School of Economics.