Farmer protest, do we understand our farmers

Farmers’ protest: Do we really understand our farmers’?

It has now been more than half a year since the farmers’ protest first began in June 2020. Three ordinances related to the agriculture sector were signed by the Indian President Mr Ramnath Kovind on the 5th of June 2020. The farmers have been protesting ever since, demanding to repeal these laws completely. But why? Let’s try to understand precisely that.

The three agricultural ordinances were passed in the Rajya Sabha in September 2020. The very passing of these bills is quite questionable as it was met with heavy opposition. Curiously though, the bills were still passed successfully and the President also gave it his approval.

Besides the stubble burning penalty and the electricity bill amendment, following are the three main farm laws that the farmers have been protesting against:

  1. The Farmers Empowerment and Protection Agreement on Price Assurance and Farm Services Ordinance, 2020.
  2. The Farmers Produce Trade and Commerce Promotion and Facilitation Ordinance, 2020.
  3. The Essential Commodities Amendment Ordinance, 2020.

These bills encompass three very important subjects:

  1. Trade and Commerce
  2. Dispute Resolution
  3. Storage of Commodities.

Let us understand why these bills that are supposed to be of “Farmers’ absolute benefit” got the farmers so agitated that their protest has lasted for more than half a year and still remains as strong as ever.

The trade and commerce bill allows big corporate players to buy directly from farmers, without the need of a middleman. The Government is of the opinion that this is of benefit for farmers as middlemen often exploit the farmers. While the farmers do not completely disagree that exploitation exists to a certain extent, they refuse to accept the new laws because according to them, middlemen are a very crucial part of the whole trading system ecosystem.

The term “middleman” itself is quite misleading as they are “service-providers” who bring business to the farmers. Furthermore, these “service-providers” have close relations with the farmers, in the sense that their business is not purely formal or contractual but instead runs on trust, acquaintanceship, and reputation.

A farmer does not have money in-hand throughout the year as the harvest is annual; hence they need to turn to other sources of income, like animal husbandry, manual labour, etc. which more often than not merely helps them get by with the extensive expenses on land, fertilizers, taxes, etc.

In the event of a situation where a farmer needs extra funds, taking loans from banks is not the best option as the interest rates can be quite high, and finding guarantees can be challenging. At such times, farmers usually borrow money from their “service-providers” based on the trust between them.

Furthermore, this trade and commerce law will not end exploitation, instead, it will take it to a whole new level. Exploitation by middlemen is when farmers are offered a low price for their produce. Corporates can do the same but also increase exploitation by decreasing the offered price as they will have a larger pool of clients as compared to traditional middlemen.

The prices are generally lowered by making excuses about the product not being of the desired quality; as if crops are cultivated in a factory!

Furthermore, these laws do not at all mention MSP (Minimum Support Price). MSP is a fixed minimum price set by the Government of India to ensure that a farmer makes a minimum profit on the harvest. MSP is crucial to ensure that farmers are compensated for their hard work and to be able to sustain their business, if not be able to score profits for their product.

MSP though promised to farmers could only be availed on a couple of crops, depending on the region. Now, these farm laws have completely disregarded MSP altogether.

Whilst the Prime Minister in one of his early speeches in 2020 did say that “MSP will remain as it has been; it will neither stop nor be canceled”, the truth, as put by these laws seems to be something else entirely. Without a fixed rate or an MSP for their produce, it will only become easier for big corporate players to exploit farmers, which contradicts the reason given by the Government for making these laws.

Also, in a case where there is exploitation or dispute on a trade, the farmers are only allowed to contact their SDM (Sub-Divisional Magistrate) or DC (District Collector). The SDM has not nearly enough power to be able to legally solve most disputes and to bring them to justice. Suppose a corporate player exploits a farmer’s trade by lowering the price on account of the product “not meeting the agreed requirements”, all the SDM can say is “Yes, you are right” and that doesn’t even resolve the issue. The farmers demand that they should at least be able to approach a judiciary body in case of such disputes.

Additionally, the trade and commerce bill says that no tax will be applicable to any transactions made outside the APMC market. This is a concern as it can lead to APMC markets (government market) being systematically broken and permanently destroyed. Seems far-fetched? Well, it is not. Allow me to explain.

Suppose on every transaction in the APMC markets, there is tax of Rs.150, private players make transactions outside APMC markets, without the need of a middleman, furthermore, with zero tax.

Corporates could take advantage of transactions being tax-free and offer, let’s say, a Rs.100 extra (compared to the price in APMC markets w/ taxation) as an incentive to farmers for their products. The corporates still get a profit while farmers also get a higher price as compared to the APMC.

No farmer would be stupid enough to not take advantage of a higher price for their products. So far it seems all sweet and nice, right? The real problem begins now!

As more and more farmers turn to the private market for selling their product, APMC markets will eventually start losing their value and eventually be rendered functionless. This will result in the APMC markets closing permanently. When the farmers will lose the option to choose between markets, it will only become easier for corporate players to exploit the vulnerable and helpless farmers.

In fact this is not a recent phenomena. We have seen this happen before in sectors such as Telecom, Healthcare, Education etc. This also happened to farmers in America after the government markets were closed.

To give an example closer to home, our very dear state of Bihar has suffered the same fate; being exploited by private players after the APMC markets were abolished there in the year 2006.

One can sense from these laws a conspiracy to systematically and deliberately break down and destroy government markets to let corporates take over the market and establish their monopoly.

Prathamesh Borchate
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