New Farm Bills and Its Impact on Income and Status of Farmers

Written By: Falakdipti

The Indian Agriculture Acts of 2020 are three acts of September 2020 that seek to build an environment in which farmers and traders can enjoy the right to choose between the selling and purchasing of agro-products and encourage inter and intra-state trade and commerce beyond the physical premises of the markets informed by State Agricultural Produce Marketing legislations. The three bills which have been passed are the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and Essential Commodities (Amendment) Bill.

According to the Centre, these bills would completely change the agriculture sector for good and also raise farmers’ incomes. The government also reckoned that their income would double by 2022 and the farmers will have the liberty to fetch a better price for their produce by becoming independent of government-controlled markets. Moreover, they would be able to make a profit if they manage to know the fixed price of their produce in advance.

In the current APMC system (Agricultural Produce Market Committee), it is compulsory for farmers to go through a middle party, i.e., traders to sell their crops to consumers for which they receive the minimum selling prices. This system has led to a rise of cartels led by traders due to which the producers are paid the MSP (the lowest price) for their produce. The bills aim to create a system where farmers would be able to sell their produce outside mandis. Furthermore, they encourage intra-state trade and cut the cost of transportation. They will also facilitate farmers to engage with agriculture-related businesses, companies, exporters and retailers for service and sale of products while giving access to modern technology such as cold storages to the farmers. The bills propose providing benefits for small and marginal farmers (small farmers constitute 86% of the total) who have less than five hectares of land. Items such as cereals, oilseeds and pulses would be removed from the list of essential commodities. This will pull FDI (Foreign Direct Investment) into the farm market, as private investors' concerns will be eliminated.

According to Shri Narendra Singh Tomar, Minister of Agriculture, the provisions would attract farmers to relatively good crops which would lead to an increase in their income and led to agricultural growth. He and Shri Narendra Modi, the Prime Minister of India ensured that the MSP system (Minimum Support Price) would remain and “government procurement will continue”.

The new bills, if executed, would not bring any major changed, but a parallel system that would work with the existing system. They would ensure that the producers get the same attention as their produce and get stipulated price for their crops. The amendment to the Essential Commodities Act liquidates the fear of farmers that the traders who buy from them would be punished if the stocks that they hold are deemed to be in excess and inflicting harm to farmers.

However, there are some cons to these bills as well. The government declared MSPs for crops, but there are no laws to authorise their implementation. The only commodity for which the MSP payment has a statutory implementation is sugarcane for which FRP (Fair and Remunerative Price) is determined. This is because its pricing is governed under the Sugarcane (Control) Order, which was issued under the Essential Commodities Act. The Farmer’s Produce, Trade and Commerce (Promotion and Facilitation) Bill does not provide any legal backing to MSP.  There is no mention of either MSP or Procurement in the bill.

The three new bills place traders and farmers at the discretion of civil servants instead of the courts.

The easiest solution to eradicate some negatives of the three bills is to include statutory provisions for MSP and procurement in the new bills in order to eliminate the fear of farmers. Deletion of middlemen from the chain would prove beneficial for the farmers if they are provided with facilities such as climate-controlled storages, connectivity to markets, electricity supply etc. The rumours and misunderstandings should be cleared by the Centre and farmers should be guided well in this regard.