Three Ordinances that Evict Farmers from Indian Agriculture

Vidyarthi Vikas

The importance of agriculture can be gauged from the statement of Nehru that "everything can wait, but not agriculture." Keeping in mind, most of the cases, farmers are unaware of institutional practices, vulnerable, resource-poor, lack in-house professionals, are realizing on local intermediaries, etc. This concept has neither a historical nor practical basis. Therefore, regulated APMC (Agriculture Produce Marketing Committee) mandis are being easily accessible and understandable, while NAM (National Agricultural Markets) has its demerits. It is a fact that real prices of agricultural produce have been decreased over the time (Chand 2019, Newton 2020); farmers are facing a severe viability crisis, resulted in the indebtedness of petty producers often degenerates into an acute condition of debt-trap which has led to more than 300,000 suicides of farmers in the last two decades in India (Rupakula 2016). In this situation, farmers need at least a sum assured prices of agricultural produce with other support. At the outset of the Green Revolution (GR) in India, regulated APMC mandis were established under the APMC Act where farmers can be ensured Minimum Support Prices (MSP) since 1965. The APMC Act brought radical changes and significant improvement in almost all aspects of marketing of farm produce (Acharya 2004), where a good number of irregularities have been arisen in the time being need reforms (Singh and Bhogal 2016). In the absence of APMC, the farmers in Bihar resorted to distress sale; whereas farmers in Punjab with the APMC intact were able to sell at MSP price. The whole country saw that amid the COVID19 epidemic, it was agriculture and farmers who ensured food security and strength, just imagine, if India’s agriculture destroyed, who could save the country between the epidemic and the 2008 recession? Union Budget (2018-19) has ensured “minimum 50% profits over the cost of production (C2+50%) (a recommendation of the M S Swaminathan-headed National Commission on Farmers) and at the same time 22000 haats for small and marginal farmers for direct sell, while these haats will be exempted from APMC Act while Section 26 (2) (viii) of the APMC Act ensure MSP to the farmers. Progress of the Rural Haat is still under question. According to John Newton, Chief Economist of the American Agriculture Farm Bureau, since the 1960s there has been a steady decline in crop prices in the US, 85% of farmers in America are indebted, suicides are increasing, and farmers are leaving agriculture because America and others developed countries agriculture is controlled and regulated by the market.

Amid a crisis –COVID19, three draconian ordinances have been brought against the interests of agrarian structure and the general public. The structure of the ordinance is such that it can be called "of the corporate, for corporate, and by the corporate". Section 2 of The Farmers Empowerment and Protection Ordinance defines that "person" denotes "company" and "agricultural product" denotes "processed food". After reading the ordinance, one does not believe that it has been prepared by the public representatives where 70% of the population lives in the village, and these parliamentarians are being elected by the vote of farmers. No clause of the ordinances in a favour of farmers and consumers except its “name”- The Essential Commodities (Amendment) Ordinance 2020; second, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020; third, The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020. The question is whether it will empower the farmers and give them protection and if so, why are the farmers agitating on the roads in the country? Why farmers organizations are upset? After all, what was the hurry that it has been brought during the COVID19 epidemic when Parliament is not running regularly? Does this show the priority of the government? However, the idea was already uprooted on the Contract Farming Act since 2014-15 when Professor T Haque visited Patna to discuss it. The Model of Contract Farming Act was discussed by Professor T. Haque at the A N Sinha Institute Social Studies, Patna during his visit. It is now clear that the present government wants to hand over the agricultural land to the corporate through contract farming with other public entities.

It is worth noting that migration is more in Bihar as the APMC Act has not been implemented in Bihar since 2006 along with other initiatives, which ensure minimum support price (MSP) to farmers. This has led to a distress sale. In Bihar, middlemen buy wheat, rice, maize, pulses, and oilseeds at low prices and sell it in Punjab at a high price? In Nalanda district of the State of Bihar, in 2020, farmers resorted to distress sale of maize at Rs.900-1100 per quintal (qtl.) while MSP (Minimum Support Price) was Rs.1850/qtl., which led to a loss of around Rs.750 to Rs.950/ qtl to the respective farmers. Meanwhile, the MSP of moong was Rs.7196/ qtl. while the farmers of Bihar had distress sell at Rs. 6500/ qtl. Similarly, the MSP of paddy was Rs. 1815/ qtl. last year, while the farmers of Bihar had to sell Rs. 1600/ qtl. The farmers of Bihar got only 1800/ qtl. of wheat whereas MSP was Rs. 1975/ qtl. After all, who are responsible for these? Existing practices of PACS (Primary Agriculture Credit Society) is not in favour of farmers. Farmers of Bihar hardly to know that the Government of India announces annually Minimum Support Price (MSP) for 24 agricultural produce. If the farmers of Bihar receive MSP, then such farmers and labourers may not be migrated to Punjab, Haryana; farmers of Bihar would have been more prosperous than the present if MSP is ensured.

First - The Essential Commodities (Amendment) Ordinance 2020 says that it will increase competitiveness in agriculture and enhance the income of farmers while protecting the interests of farmers. And at the same time, it also says that any person who owns a PAN Card can hoard as much grain as he wants. It is a contradictory clause, that the middlemen/traders can hoard the food grains and the income of the farmers will increase, while, on the contrary, at the time of crop cutting, the traders will pour the grains in the market to deflate the prices and buy the grains from the farmers at cheap prices? And after that same will be sold at higher prices. Food inflation will be increased and completely controlled by the corporate in India. Section 3 of the Essential Commodities Act, 1955 has explicit provisions to control the hoarding of agricultural produce infavor of farmers and consumers. Second, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 says that it will provide a national framework on farming agreements that protects and empowers farmers to engage with traders/companies for the sale of future farming produce at a mutually agreed remunerative price framework fairly and transparently. In sum, it promotes contract/corporate farming that a farmer may enter into a written farming agreement for five years or more in respect of any farming produce and such agreement may ensure supply of such produce, including the time of supply, quality, grade, standards, price, and other matters if described (Section 3 (1). A good number of articles suggested that in most cases farmers lose and face huge problems in given terms and conditions. Section 6 (3) (a) says that two-third of prices will be paid at the time of delivery and the remaining amount after due certification like quality, grade, and standards. The price of the produce will also be included in the contract? To resolve the disputes between farmers and corporate/traders, there will be a Conciliation Board, in case of failure to settle the disputes, then, any party may approach the concerned Sub-Divisional Magistrate (Section 13 and 14). Appellate Authority will be the District Magistrate; who will have the power of the Civil Court. No Civil Court will have jurisdiction to entertain any suit or proceeding in respect of any disputes under this agreement (Section 19). The ordinance also indicates that no provision of the Essential Commodities Act 1955 will have any implications regarding the agreement. The question arises, are farmers in a position to fight with corporate/traders/new zamindars? Nation saw, what happen in the case of land reform disputes between Zamindar and Raiyat? In sum, ordinances will give ‘free hit ball’ to corporate. 

Objectives of the third Ordinance, The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 is supposed 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; this ordinance is a complementary ordinance to empower the first and second. In a country, like India, where 85% of the farmers are small (less than 2 ha) are not in a position to sell in inter-state or intra-state at e-platform. While, it also says that no market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied on any farmer or trader (Section 6). This was not earlier. Traders also had to buy grain at the MSP in the mandis operated by APMC and they have to pay 6% tax. The question is when traders can buy outside the market without tax, then why would they buy in the regulated mandis? In this way, the importance of the APMC mandi will be gradually decreased and MSP will be redundant. The government of India is saying that it is not ending the MSP but it is clear that influx of time, provision of these ordinances will hamper the practices of APMC mandi and gradually MSP will also be terminated. There are 7000 mandis and a total of 42000 mandis are required. Instead of increasing the regulated mandi, the government is trying to finish it and handover the agriculture market, farmer’s land, and their produce in the hand of traders/corporates. These three ordinances also violate the rights of the federal structure as per the constitutional provisions Article 246 (3) read with Schedule VII, List II, items 14-21-18-28-30-45.

According to NSSO Report 571, 85.41% of the farmers in the country in 2013 are small farmers (less than 2 hectares) who own 53.28% of the agricultural land. The number of small farmers in Bihar is 92.89% who own 76.34% of agricultural land and while in Punjab small farmers are 82.79% who own only 32.82% agricultural land, means most of the agricultural land (77.18%) in Punjab is owned by the 18.11% of large farmers (more than 5 ha), that is, two-thirds of the agricultural land. Does the question arise that if large farmers of Punjab, Haryana, and Rajsthan are agitated and afraid by these ordinances then what will be happened to the farmers of the remaining States?

Keeping in mind, the American model is failed. If intentions of the ordinances are good, then the Government should amend the ordinances and ensure MSP prices and prohibit the contract farming and regulate the essential commodities in the favour of farmers, and consumers. If not then, should the ordinances be renamed as Corporates’ Empowerment and Protection instead of Farmers’ Empowerment and Protection?

Acharya, S S (2004). State of the Indian Farmer: AMillennium Study, Agricultural Marketing, Departmentof Agricultural and Cooperation,Ministry of Agriculture, Government of India,and Academic Foundation.
Chand, Ramesh (2019). Presidential address “Transforming Agriculture forChallenges of 21st Century” at 102 Annual ConferenceIndian Economic Association (IEA), AURO University, Surat (Gujarat) on 27-29 December 2019.
Government of India (2020).The Essential Commodities (Amendment)Ordinance.
Government ofIndia (2020).The Farmers (Empowerment and Protection) AgreementOn Price Assurance And Farm Services Bill
Government ofIndia (2020).The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
Newton, John (2020). John Newton, chief economist at the American Farm Bureau Federation, The Economist Newspaper, Date 20.09.2020
RupakulaRamanamurthy V. (2016).Class Differentiation and Crisis of Agrarian Petty Producers in India. World Review of Political Economy, Vol. 7, No. 1 (Spring), pp. 85-105
Singh, Sukhpaland Bhogal, Shruti (2016). Commission Agent System What Ought To Be Done. Vol II (32), Economic and Political Weekly.

Dr. Vidyarthi Vikas, Assistant Professor of Economics, A N Sinha Institute of Social Studies, Patna, INDIA

Back to Home Page

Oct 3, 2020

Vidyarthi Vikas

Your Comment if any