Title : GO BACK TO COMMITTEES IS THE FARM LAWS' LESSON

Date : Nov 22, 2021

Description :

Based on an News Article published in the ‘The Hindu’ on 22nd November on Page Number 6

 

Useful for UPSC CSE Prelims and Mains (GS Paper II)

 

What's the latest news:

 

• The government has decided to overturn three controversial agriculture regulations passed during Parliament's Monsoon Session in September 2020, according to the Prime Minister.

 

What were the three agricultural laws that were repealed:

 

Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act of 2020:

 

• It is about the promotion and facilitation of farmers' produce trade and commerce.

 

• Aim:

• Break the monopoly of government-controlled mandis and provide farmers and dealers more options for selling and buying agricultural products.

 

• Important provisions:

 

• Farmers' produce trading: It permits intrastate and interstate commerce of farmers' produce outside of the physical premises of marketplaces that have been notified under State Agricultural Produce Marketing Act.
• In addition to mandis, traders have the freedom to trade at farmgate, cold storage, warehouses, and processing plants, among other places.
• It proposes electronic trading in the transaction platform in order to ensure a seamless electronic trade.
• Farmers will not be charged a market fee, cess, or levy for selling their produce, and they will not be responsible for transportation costs.

 

• Issues:

 

• Lack of regulatory control and reporting: The bill allows for non-APMC marketplaces, but there is no system in place to regulate them. There are fears that a lack of regulation could lead to unregulated commerce, which would be harmful to the primary goal of providing farmers with market access.
• It also lacks a proper procedure for resolving grievances.
• Revenue loss for states: Some states rely heavily on market fees, rural development fees, and arhatiya's commission for revenue. Punjab and Haryana could lose an estimated Rs 3,500 crore and Rs 1,600 crore per year if states are not allowed to impose market fee/cess outside APMC zones under the new rules.
• MSP's fears: According to detractors, the APMCs' monopoly is being dismantled as a hint that the guaranteed purchase of food grains at minimum support prices is coming to an end (MSP).
• Setting the Price: Even for private participants, APMC continues to determine the reference price.
• There will be no substitute for a huge market that can truly set price signals if APMC does not exist.
• Buyer cartels will start fixing the market price, according to global experience such as the French dairy producers and the dairy farmers' cooperatives in the United States.

 

Essential Commodities Amendment Bill, 2020:

 

• Objectives:

 

• The Essential Commodities Act, 1955, is amended by the Essential Commodities (Amendment) Bill, 2020.
• The goal is to boost farmer income by increasing competition in the agriculture sector. It also tries to alleviate private investors' concerns about excessive regulatory intrusion in their activities.

 

• Key Features:

 

• The Essential Commodities Act of 1955 controls the production, supply, and distribution of certain commodities that the government designates "essential" in order to make them available to consumers at reasonable costs.
• Cereal, legumes, oilseed, edible oil, onion, and potatoes are all removed from the list of essential goods in the bill.
• Stock Limit: It stipulates that any stock limit imposed on agricultural produce must be based on price increases.
• Only if there is a 100 percent increase in the retail price of horticulture produce and a 50 percent increase in the retail price of non-perishable agricultural food items can a stock restriction be imposed.

 

• Issues:

 

• Undermining Food security: If food regulations are relaxed, exporters, processors, and merchants would store farm produce during the harvest season, when prices are often lower, and then release it later when prices rise. This could jeopardise food security because states would be unaware of stock availability within their borders.
• Food deregulation: Because the bill removes grains, pulses, oilseeds, edible oils, onions, and potatoes off the list of essential commodities, the production, storage, movement, and distribution of these crucial food commodities will be deregulated.

 

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020:

 

• It seeks to deliver farmers with a legal contract that allows them to enter into written contracts with businesses and produce for them.

 

• Key features:

 

• Before the production or rearing of any farm produce, a farmers and purchasers (processors, distributors, aggregators, wholesalers, large retailers, exporters, etc.) must sign a farming
• agreement.

 

• Farming produce pricing: The following should be included in the agreement:

 

• The cost of agricultural products:

 

• A guaranteed price for the produce and a clear reference for any additional amount over the guaranteed price procedure of price determination are required for prices that are susceptible to volatility.
• Dispute Settlement: A farming contract must include a conciliation board and a conciliation process for resolving disagreements.
• Farmers' protection: Farmers have received appropriate protection. Farmers' land is completely prohibited from being sold, leased, or mortgaged, and it is also protected from any recovery.

 

• Issues:

 

• No mechanism for price fixing: The bill protects farmers from price exploitation, but it makes no provision for a price fixing system. There are concerns that giving the private sector such leeway could lead to agricultural corporatization and farmer exploitation.
• Because of the unorganised character of the agriculture sector and farmers' lack of resources to fight private corporate organisations in court, there are concerns that formal contractual responsibilities will eventually prove damaging to impoverished farmers in the country.
• Lack of MSP assurance: The bill makes no guarantees for the Minimum Support Price (MSP) in contract farming. Critics believe that no MSP will be declared for all crops, as established by Swaminathan's calculation of C2 costs + 50%.
• Fear of intermediaries: Despite the bill's stated goal of eliminating middlemen from the supply chain, critics are concerned that middlemen will operate as sponsors or farm service providers for contract farming.
• Farmer eviction: The Act allows for "farming agreements" that include "insurance or a credit instrument." This will imply tying credit to the mortgage of a farmer's land. There are fears that if the contract suffers a financial loss, the farmer would be forced to repay the debt with his or her land.
• Food security to be subjected to global markets: There are concerns that multinational food conglomerates and their Indian partners would link Indian agricultural production with global markets. Farmers' freedom will be harmed, and food security will be jeopardised.
• Concerns that firms would promote prohibited and harmful GM seeds, as well as terminator seed technologies, pose a threat to India's food and political sovereignty. India's seed sovereignty would be eroded, and its food and political sovereignty will be jeopardised.

 

 

Why have farmers been so adamant about these farm laws:

 

• Farmers were concerned that the rules will result in the elimination of the government-guaranteed Minimum Support Price (MSP) for certain crops, leaving them at the mercy of large businesses.

 

What other announcements has the Prime Minister made:

 

• The Prime Minister has announced the formation of a committee to promote zero-budget farming, improve the efficiency of the Minimum Support Price (MSP), and adjust the crop pattern scientifically.

 

• Representatives from the federal government, state governments, farmers, agricultural experts, and economists will make up the group.

Tags : farm laws