Thousands of farmers are protesting in New Delhi against the agricultural reforms planned by the Central government. N13 explains the three Acts the Centre has introduced to reform the sector, and why farmers are opposing them.
Thousands of farmers have reached New Delhi for a planned protest after resisting hours of lathi-charge and water cannons at the borders. The efforts of the State to stifle the protests gave it a violent spin, but the Delhi police eventually had to cave in and allow the farmers to enter the capital and stage the protest.
But why are the farmers protesting? What are the Acts that they want the government to pull back? And why is the Centre pushing forward with the Acts despite the widespread protests?
Before understanding the controversial Acts, it is important to study the shocking statistics in the agricultural sector in India.
More than 40 per cent of India’s workforce is employed in agriculture. These people have to borrow heavily to buy seeds and equipment, but the yield often gets affected by poor weather and other factors, leading to high debts and financial disaster. According to a 2018 report, farmers’ debts have been increasing many folds since 1993.
Farmer suicides in India due to mounting debt is not new. Statistics by the National Crime Records Bureau shows there were 10,281 farmer suicides in 2019.
Although several states and the Centre have written off agriculture loans to help the struggling farmers, many policies taken by the government have ended up detrimental to the sector. The farmers fear the new Acts will add to their woes and their fears are not entirely unfounded.
1. Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020
According to the Centre, the purpose of this Act is to protect farmers from being exploited by large retailers using a legal agreement. However, in reality, it does the opposite and gives more power to the buyer.
The Act ensures a dispute settlement mechanism where farmers can complain against a retailer if they underpay based on the quality of the produce. It also allows the retailer to specifically tell the farmer what quality or grade of the produce is required. If the farmer agrees, the buyer would promise to pay a pre-determined price. This is called contract farming.
The government believes the Act will attract private investments and transform the Indian agriculture sector as these buyers could help farmers in several ways. However, the Act also allows the investor to legally dominate the farmer on liability clauses. So, in case of a dispute, the powerful corporates are in a stronger position to crush the poor farmers and take over their assets.
2. Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
The purpose of this Act is to facilitate inter-state and intra-state trade of farmers’ produce beyond the physical premises of the Agricultural Produce Market Committee (APMC) markets. According to present laws, farmers are allowed to sell their products only through markets notified under APMC Acts. These markets ensure minimum support price for farmers.
Under the new Act, the state government cannot impose a tax on the sale and purchase of farm produce outside the APMC markets, making it beneficial for large-scale farmers. They have more choices for buyers and can sell directly to private players.
However, the small farmers, who produce smaller quantities, cannot sell to big players because of a lack of logistical capabilities. This puts them at a disadvantage. The Act will also cut a big source of revenue from state governments like Punjab and Haryana that run APMC markets.
The Act is also an opportunity for governments to stop giving basic support to the agriculture industry. If the farmers do not go through APMC markets, the government’s role will reduce significantly. When the farmers reach the buyers directly, market demand will go down, leading to a drop in prices. But at the same time cost of cultivation remains high, disallowing the farmers to make any profits. Usually, the government supports the farming community with subsidies and ensuring minimum prices. But, with the government stepping out of the scene, profit-seeking private buyers who have higher bargaining power in the market than the small agriculturists would try to buy the farm produce at lower costs and push the farmers into debt.
3. Essential Commodities (Amendment) Act, 2020
This is not a new Act, but an amendment to the existing Essential Commodities Act, 1955. The original Act controls the production, supply, and distribution of certain commodities. This is to ensure certain essential items are not hoarded for creating artificial demand and later sold at higher prices.
The amendment to the Act excludes certain food items like cereals, pulses, potato, onion, edible oil seeds and oil. Although these are essential items that we consume daily, the Centre wants to bring it back to the list only in case of war, famine, extraordinary price rises, or natural calamity. An extraordinary price rise means a 50 per cent increase for non-perishable items and a 100 per cent increase for perishable items. This means the corporate retailers can buy produce directly at cheaper rates using the first and second Acts, and sell at a higher price using the third Act.
Although farmers benefit from the amendment, the protesters argue that it would benefit only a small portion of big farmers. The small farmers would be forced to continue selling at a cheaper price as the private players would become too powerful in the market.
Farmer bodies say the combination of three Acts helps the corporate giants who run supermarkets, and not the small farmers. At a time when farmers are facing a mounting financial crisis and the impacts of the Covid-19 pandemic, the last thing they want is more pressure from big corporates who exploit their livelihood.
Farmers say that by implementing the new farm laws the Union government wants to take powers off states’ hands by centralising the agriculture sector. The protesters believe the reforms would further weaken the sector, as corporates would thrive under little or no restrictions from the states and push the farmer to the margins.