Farm Laws: A Clash of Egos

By | December 23, 2020
Farm Laws: A Clash of Egos

As of today, consequential to the indecisive series of sittings with the government, Bhartiya Kisan Union has moved to Supreme Court over three farm laws which according to them seem to have been passed in a rush. According to farmers, there is a lurking fear that these three laws will open the doors for the cartelization of agriculture.  

In this article, the author analyses the contentious farm laws.

I. Introduction

The three controversial farm laws were introduced in the form of the ordinances which were promulgated by the Union government on 5th June 2020. According to Article 123 of Indian Constitution [1], the provision to promulgate ordinance is for such situations when there is an immediate requirement for an urgent law when the houses of Parliament are not in session.

There should be no denial to the allegation that the bills were not discussed properly and passed hastily. Despite being the matter related to the agriculture, which contributes significantly in India’s GDP and emerged to be the only one to witness a positive growth of 3.4 per cent during the 1st quarter of pandemic [2], govt. should have waited for Parliament to resume. In a house full of opposition, it would be a daunting task to discuss bills, but it is, anyway, the way.

II. Need for Agri-reforms

It is true that the agricultural sector needed reforms; not just administrative reforms but reforms on the actual crop field. The government had a limited capacity to invest and the will to introduce much needed structural changes in areas like technology and infrastructure. The 1991 reforms did not introduce private investments because agriculture is considered the spine of the country. The utmost requirement of a country is to ensure food security across the country through regulations in agriculture.

It is a valid conception that the government must have significant control over food and sources of it. With times, the sector faced a lot of hardships. Due to limited investments, the changes in the infrastructure and technology remained absent. As a result, agriculture as a sector, though it did see growth and ensured food security, progressed slowly and cautiously. The primary concern was the investment in the sector. Thus, removal of stringent restrictions on stock, movement and price control of agricultural foodstuffs for attracting private investments in agricultural marketing and infrastructure became important.

III. Concerns about Farm Laws

When it is said that the investment is a prerequisite to bringing significant changes, it certainly does not mean that the interest of farmers must be compromised and to fully leave the agrarian economy in the hands of private enterprises which may lead to a food crisis in a country. How far the idea of leaving everything up to markets will go when our country is a welfare state having unequal income distribution. The farmers say reforms in APMC would have been welcomed if they did not push farmers in an exploitative regime where the illiterate farmers will have nothing to bargain against the private enterprises.

The government says that these laws are for farmers and to alleviate them. These laws do benefit farmers in some ways yet these are addressed to make changes in the core structure of agriculture in India. Yes, it can be said that the government wished for the benefit. The benefit of farmers, the benefit of private enterprises and the benefit of consumers.

Although the benefit of the farmers, for which these legislations were passed primarily (or presented as so) seems to be incidental and compromised. Legislations lack proper safeguards and remedial recourse to the aggrieved farmers. From taking the liberty to approach the judiciary to absolve public officers and “any other person” of their liability, these laws create new standards. The laws are also home to several lacunae and ambiguity. The law must be clear and unambiguous.

Leaving politics and some preliminary irregularities in the introduction of these laws behind, we will closely introspect the laws responsible for hue and cry.

IV. Agriculture Produce Market Committee (APMC)

Before coming to the laws, it is essential to understand APMC and its role. APMCs are set up by the state’s Act. APMC was introduced to safeguard the farmers from exploitation by creditors and other intermediaries. In APMC yards the produce is sold through an auction. The mall owners, retailers, etc. can not buy the produce from farmers directly. It eliminates the circumstances where the introduction of private markets would lead to the unfair pricing of the produce and a forced bargain.

Though, the APMCs across the nation were facing challenges because of the increased produce over the decades and the stringent statutory provisions related to the licensing, market fragmentation, market fee and other limitations in selling the produce. The farmers insisted upon changes in the APMC instead of the new law which, according to them, virtually replaces the APMC with the private market.

Farmers are concerned over the complete discontinuation of APMC in near future and lacking control of govt. on private enterprises. They say that it is not what the farmers wanted. However, it is necessary to mention that to allow farmers to trade outside the APMC also was the demand of some sections for many years.

V. New Legislations

The New Farm Acts are as follows:

  • Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020
  • Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
  • Essential Commodities (Amendment) Act, 2020

It is important to note that these laws were already promulgated by the Union Cabinet on 5th June 2020 before introduction in Lok Sabha on 14th September 2020.

VI. Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

  • It is a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework in a fair and transparent manner and for matters connected therewith or incidental thereto. [3]
  • The law will allow farmers to enter into a contract with agri-business firms or large retailers on pre-agreed prices of their produce.
  • This will help small and marginal farmers as the legislation will transfer the risk of market unpredictability from the farmer to the sponsor.

Provisions and Concerns

Despite the fair intent to introduce private investment in agriculture, some sections of the Act deserve and require discussion.

  • Section 5 talks about the pricing of farming produce. It says that the price to be paid for the purchase of farming produce may be determined and mentioned in the farming agreement itself.

Farmers show concern over the idea of contract farming. They are primarily concerned over two things that the big sharks will take the land of small and illiterate farmers by outsmarting them through these agreements. They fear that there will be no level playing field as a different farm law which apparently removes the APMC Mandis from the picture. The farmers will have no option but to do contract farming with private enterprises.

Further, they say, to make it worse, Sections 13, 14 and 19 of the Act, dealing with the settlement of disputes arising out of these contracts excludes the Civil Courts jurisdiction and lends the power in the hands of bodies under the control of the government.

  • Section 13: Every farming agreement shall explicitly provide for a conciliation process and formation of a conciliation board consisting of representatives of parties to the agreement.
  • Section 14 states, where, the farming agreement does not provide for conciliation process, or the parties to the farming agreement fail to settle their dispute within thirty days, then, any such party may approach the concerned Sub-Divisional Magistrate who shall be the Sub-Divisional Authority for deciding the disputes under the farming agreement.

The most controversial provision against which Farmers are concerned is Section 19 of the Act which leaves farmers on the mercy of the governmental bodies for the dispute settlement between farmers and the private enterprises by excluding the Civil Courts’ jurisdiction.

  • Section 19 states:

“No civil court shall have jurisdiction to entertain any suit or proceedings in respect of any dispute which a Sub-Divisional Authority or the Appellate Authority is empowered by or under this Act to decide and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any rules made thereunder”.

Apart from these sections, Section 8 of the Act brings some relief. According to Section 8, no farming agreement shall be entered into for the purpose of—

  • any transfer, including the sale, lease and mortgage of the land or premises of the farmer; or
  • raising any permanent structure or making any modification on the land or the premises of the farmer, unless the Sponsor agrees to remove such structure or to restore the land to its original condition, at his cost, on the conclusion of the agreement or expiry of the agreement period, as the case may be.

Over the issue of taking away the lands of the farmers by enterprises, this provision bars any agreement with respect to such taking over. However, it is argued, when the dispute settlement provisions under the Act are itself weak and not promising, the fear will subsist despite the provision.

VII. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

  • An Act to provide for the creation of an ecosystem where the farmers and traders enjoy the freedom of choice relating to sale and purchase of farmers’ produce which facilitates remunerative prices through competitive alternative trading channels;
  • To promote efficient, transparent and barrier-free inter-State and intra-State trade and commerce of farmers’ produce outside the physical premises of markets or deemed markets notified under various State agricultural produce market legislations;
  • To provide a facilitative framework for electronic trading and for matters connected therewith or incidental thereto.

As per the statements of objects and reasons, Agricultural Produce Market Committee (APMC) Acts to develop market-yard as a market place and to provide regulation on marketing practices of notified agricultural produce were passed by States. However, the regulatory provisions hindered the freedom of choice-based marketing and also the inflow of investment in the development of alternative markets and marketing infrastructure. [4]

To keep pace with the dynamically changing Agri-economy, e-commerce and Agri-exports and also to meet the rising expectations of farmers and consumers, the country needs an accessible and competitive trading system outside the physical space of the notified market-yards under the State APMC Acts.

Provisions and Concern

  • Under section 3 and 4 of the Act, the Act allows the farmers to trade outside trade area such as farm gates, factory premises, cold storages, and so on with the traders inter or intra-state.
  • The traders with a valid PAN can be registered.

Farmers have a concern over this that anyone with a PAN can be registered as a trader and there are chances of fraud by the traders. Govt, as of now is ready to consider an amendment in this provision. Previously, trade could only be done in the APMC yards or Mandis which is relaxed by this specific Act.

  • As per section 6 of the Act, the State Governments are prohibited from levying any market fee or cess on farmers, traders and electronic trading platforms for trading farmers’ produce in an ‘outside trade area’.
  • Under section 8 the parties may seek a mutually acceptable solution through conciliation by filing an application to the Sub-Divisional Magistrate who shall refer such dispute to a Conciliation Board to be appointed by him for facilitating the binding settlement of the dispute. It also sets up an appellate authority.
  • Section 15 of the Act states, no civil court shall have jurisdiction to entertain any suit or proceedings in respect of any matter, the cognizance of which can be taken and disposed of by any authority empowered by or under this Act or the rules made thereunder.

The legislation seeks to facilitate the inter and intra-state trade of agriculture produce. For the purpose, the Act also prohibits levy of any market fee by the states to ensure the free movement.

VIII. Essential Commodities (Amendment) Act, 2020

The Essential Commodities Act, 1955 (10 of 1955) was enacted to regulate the production, supply and distribution of, and trade and commerce in, certain commodities which are declared as essential commodities and specified in the Schedule to the Act.

According to the Amendment Act, farmers have been unable to get better prices due to lack of investment in cold storage, warehouses, processing and export as entrepreneurs get discouraged by the regulatory mechanisms in the Essential Commodities Act, 1955. To boost investment in this sector, increase competition and enhance farmers’ income, there was a need to create an environment based on ease of doing business and for removing the fear of frequent statutory controls under the Essential Commodities Act. [5]

The Government of India regulates the production, supply, and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices. The Government can also fix the MRP of any packaged product that it declares an ‘essential commodity’.

As per the amended law, to regulate the supply and prices in cases of war, famine, extraordinary price rises, or natural calamities government will list certain commodities as essential. The commodities that have been deregulated with the amendments are food items, including cereals, pulses, potato, onion, edible oilseeds, and oils.

IX. Conclusion & Comments

The government is dedicated to bringing significant changes and reform to the agrarian economy. While making such an attempt, it hits a setback as the farmers register their disapproval against these reforms apart from the legal and ethical shortcomings in the enacted laws. There is a crucial environment which has now emerged between the government and the farmers. Who is going to bow first?

The government seems to be more worried about the trend of protests. It does not want to sabotage the reforms which it deems fit for the country because of the dissent of some sections of society. On the other hand, farmers are dissatisfied by how the government is trying to herd them in an ideology that it deems fit without giving many chances for discussions and suggestions. The farmers, therefore, are adamant in their demands.

At the outset, the government failed to communicate the reforms properly. If communicated and discussed well with the stakeholders and Unions before imposing, we might have a different situation here. The govt. says that farmers or people who are opposing are ill-informed but the government itself has given rise to such a situation.

Enacted laws are not free from ambiguities and lacunae which create confusion and insecurities. To bar the jurisdiction of a Civil Court is the centre of criticism. When the people for public nuisance can go to a court, why can’t the farmers for their living?

Despite already fixed standards for minimum wages and pay, the private entities ignore any such standards. Where the government pays according to that standard to its employees, the private sector exploits a large section of the population which struggles for a living. People even struggle to get basic income from the market. This has broadened the income differences.

The government has no control over private entities to ensure the minimum pay and wages to the employees. It is futile and absurd to think that the govt. will ever be able to ensure the fair price to the farmers by the private entities. Thus, the farmers are registering their dissent against these laws to ring a bell in the government’s ear.

It is noteworthy to understand that these laws focus more on the reforms in agriculture as a sector and market which can be done without the betterment of farmers as well as putting private enterprises and consumer at the beneficiary ends.

Government to please farmers could have set up a regulatory body to ensure the fair price or MSP by the private enterprises to farmers as well for their upliftment as the government boasts about the laws to be for the betterment of farmer. It is no surprise that the farmers feel insecure about the money they will get from private players.


References

[1] The Constitution of India, 1950, Art. 123.

[2] GDP data: Indian economy shrinks record 23.9% in Q1 – Here’s how different sectors fared | India business news – Times of India. (2020, August 31). The Times of India.

[3] The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

[4] Statement of Object & Reasons of The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

[5] Statement of Objects and Reasons of The Essential Commodities (Amendment) Act, 2020


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Author: Tushar Kol

Research Associate

One thought on “Farm Laws: A Clash of Egos

  1. Daniel Tan

    It was a very sensible issue that you have raised through this blog. People usually hesitate to write on such topics

    Reply

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