Farmers' Protests in India on Three Farm Laws

WHAT

Thousands of farmers, mostly from Punjab, Haryana and western Uttar Pradesh, have been camping at several Delhi border points since 26 November last year, demanding a repeal of three farm laws — 

1. Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; 

2. The Farmers Empowerment and Protection Agreement on Price Assurance and Farm Services Act 2020 and

3.  The Essential Commodities (Amendment) Act, 2020. 

They also demanded a legal guarantee on Minimum Support Prices (MSP) for their crops.

WHO 

Many of the protesting farmers are members of the Sikh religious minority and come from the states of Punjab and Haryana. Farmers in other parts of the country have held rallies in solidarity.

WHEN & WHERE

On Jan. 26, India's Republic Day, farmers hosting a planned rally drove their tractors into Delhi's city center and stormed the capital's historic Red Fort, where they clashed with police armed with tear gas, batons, and assault rifles.

According to the BBC, one protestor died and more than 300 police officers were injured in the clash; more than 200 protestors were subsequently detained, as were eight working journalists, per Human Rights Watch.

WHY

The demonstrators are demanding that Mr. Modi repeal recent farming laws that would minimize the government’s role in agriculture and open more space for private investors. The government says the new laws would unshackle farmers and private investment, bringing growth. But farmers are skeptical, fearing that the removal of state protections that they already consider insufficient would leave them at the mercy of greedy corporations.

Centre’s Proposal	Farmers’ Objection
Reforming India’s Agricultural Produce Market Committees (APMCs), state boards that tightly control sales. The new law eliminates interstate trade barriers and allows e-trading, opening up options for farmers to sell their produce beyond the previously mandated APMC yards (mandis) and seek better prices.	Creation of private mandis along with the state-run Agriculture Produce Market Committees (APMC) will push all agriculture businesses towards private markets. The result will be the end of government markets and intermediary (commission agent) systems as well as APMC systems. After that only big traders and giant companies will operate in the markets and procure farm produce at incidental prices. The government has proposed that there will be uniform policy of taxes, fee, and cess both for government and private markets. But the governments would deliberately delay procurement as in case of paddy and turn the public markets inefficient and redundant.
Creating a legal framework for contract farming, allowing farmers to contract with buyers on prices and quantities before planting, better ensuring incomes.	The Union government has put a proposal to allay the fears of farmers by saying that there will be no sale, lease, and transfer of land during the period of contract agreement. But the history of contract farming has many examples of non-payment by the companies making various excuses like substandard produce. It has happened in the case of sugarcane where payments were held for many years or cases of non-procurement making excuses of poor quality. It has pushed the farmers into a debt trap. In such cases farmers are unable to repay the loans and have no option other than to sell/lose their lands. Contract farming has resulted in displacing and destroying the farmers all over the world. Even in the USA, where huge subsidies are given for the agriculture sector the farmers are forced to commit suicides
Limiting the reach of the Essential Commodities Act—which allows the government to control prices and impose stock limits of certain “essential” items—exempting important products including cereals, oilseed, onions, potatoes and pulses. This creates an incentive for private sector investment in supply chains.	Foodstuffs like pulses, onions and edible oil are part of a common man’s daily essential commodities. The government not regulating the supply of such food items means the chances of hoarding are high. The Forum of Traders Organisations, a body of traders, said that amendment to the Act will allow big businessmen to hoard essential commodities leading to rise in prices.
Power Bill 2020 is only a draft open for discussion	The Union government wants to control the power sector by taking it from the jurisdiction of states. It wants to discontinue the subsidies to farmers. The WTO has given repeated instructions to the Indian government to discontinue the subsidies. Therefore the Modi government wants to bring the power sector under central control. The farmers are opposing this move. The government is proposing to exclude subsidies from this Bill and saying that power subsidy will be transferred to farmers in cash, which is practically not possible when there are a majority of small and marginal farmers who cannot pay their power bills first and then to avail subsidy.

HOW

The three farm acts in detail: 

1. Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

This act allows farmers to engage in trade of their agricultural produce outside the physical markets notified under various state Agricultural Produce Marketing Committee laws (APMC acts). Also known as the ‘APMC Bypass Bill’, it will override all the state-level APMC acts.

• Promotes barrier-free intra-state and inter-state trade of farmer’s produce.

• Proposes an electronic trading platform for direct and online trading of produce. Entities that can establish such platforms include companies, partnership firms, or societies.

• Allows farmers the freedom to trade anywhere outside state-notified APMC markets, and this includes allowing trade at farm gates, warehouses, cold storages, and so on.

• Prohibits state governments or APMCs from levying fees, cess, or any other charge on farmers' produce.

2. Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020

The act seeks to provide farmers with a framework to engage in contract farming, where farmers can enter into a direct agreement with a buyer (before sowing season) to sell the produce to them at predetermined prices.

• Entities that may strike agreements with farmers to buy agricultural produce are defined as “sponsors’’ and can include individuals, companies, partnership firms, limited liability groups, and societies.

• The act provides for setting up farming agreements between farmers and sponsors. Any third parties involved in the transaction (like aggregators) will have to be explicitly mentioned in the agreement. Registration authorities can be established by state governments to provide for electronic registry of farming agreements.

• Agreements can cover mutually agreed terms between farmers and sponsors, and the terms can cover supply, quality, standards, price, as well as farm services. These include supply of seeds, feed, fodder, agro-chemicals, machinery and technology, non-chemical agro-inputs, and other farming inputs.

• Agreements must have a minimum duration of one cropping season, or one production cycle of livestock. The maximum duration can be five years. For production cycles beyond five years, the period of agreement can be mutually decided by the farmer and sponsor.

• Purchase price of the farming produce—including the methods of determining price—may be added in the agreement. In case the price is subject to variations, the agreement must include a guaranteed price to be paid as well as clear references for any additional amounts the farmer may receive, like bonus or premium.

• There is no mention of minimum support price (MSP) that buyers need to offer to farmers.

• Delivery of farmers’ produce may be undertaken by either parties within the agreed time frame. Sponsors are liable to inspect the quality of products as per the agreement, otherwise they will be deemed to have inspected the produce and have to accept the delivery within the agreed time frame.

• In case of seed production, sponsors are required to pay at least two-thirds of the agreed amount at the time of delivery, and the remaining amount to be paid after due certification within 30 days of date of delivery. Regarding all other cases, the entire amount must be paid at the time of delivery and a receipt slip must be issued with the details of the sale.

• Produce generated under farming agreements are exempt from any state acts aimed at regulating the sale and purchase of farming produce, therefore leaving no room for states to impose MSPs on such produce. Such agreements also exempt the sponsor from any stock-limit obligations applicable under the Essential Commodities Act, 1955. Stock-limits are a method of preventing hoarding of agricultural produce.

• Provides for a three-level dispute settlement mechanism: the conciliation board—comprising representatives of parties to the agreement, the sub-divisional magistrate, and appellate authority.

3. Essential Commodities (Amendment) Act, 2020

An amendment to the Essential Commodities Act, 1955, this act seeks to restrict the powers of the government with respect to production, supply, and distribution of certain key commodities.

• The act removes cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities.

• Government can impose stock holding limits and regulate the prices for the above commodities—under the Essential Commodities, 1955—only under exceptional circumstances. These include war, famine, extraordinary price rise, and natural calamity of grave nature.

• Stock limits on farming produce to be based on price rise in the market.  They may be imposed only if there is: (i) a 100 percent increase in retail price of horticultural produce, and (ii) a 50 percent increase in the retail price of non-perishable agricultural food items. The increase is to be calculated over the price prevailing during the preceding twelve months, or the average retail price over the last five years, whichever is lower.

• The act aims at removing fears of private investors of regulatory influence in their business operations.

• Gives freedom to produce, hold, move, distribute, and supply produce, leading to harnessing private sector/foreign direct investment in agricultural infrastructure.

Way forward:

In terms of the way forward for Indian agricultural reform, some key points for consideration are:

1. Agriculture is a state subject and having a centralised policy requires the participation of all the stakeholders along with a farmer-centric approach.

2. The opening of the agricultural market requires better institutional and infrastructure support in place for farmers.

3. In terms of addressing the grievance/redressal mechanism, the 2003 model APMC Act was a better system in terms of addressing this, and it also had counterparty risk assurance.

4. There is a need to improve farmers’ income and shift the focus from production to farmers’ livelihoods.

5. Policies to meet the basic requirement of water, improvements in land, and access to technology are essential

6. Providing institutional support such as rural business hubs and strengthening of FPOs for small and marginal farmers to actualise the right price is essential.

7. With adverse climate change impacts, reforms are needed to help farmers to mitigate the risks of weather and price volatility.

To conclude, it is important to understand whose needs are we putting first, consumers or producers (farmers), and to aim to achieve the balance while reflecting on “Whose reality counts? and Whose priorities?”.