Context: Farm laws enacted by government will protect farmers’ interest only by providing them more option to sell their produce and enter into agreements with corporate buyers. Apprehensions are misplaced.
Why there is need for reforms?
- The mandi trader role in APMC mandis reduces the net received by the farmer to below MSP due to the off-book trader’s commissions. Thank
- Still farmers are compelled to sell their produce to traders as each trader in the mandi has built relationships with a set of farmers and provide them with credit, thus the farmer sells his produce only through that trader, to have the credit/advance against such sales adjusted that reduces his profit realisation.
- It is the reason behind Strong opposition by the mandi traders on bringing reforms to the APMC laws for long time. For example, In Rajasthan 2004, a Cabinet-approved amendment to the APMC Act had to be withdrawn because traders went on strike.
- But farmer’s opposition to these bills is not rationale as according to many experts allowing/introducing more buyers for farm produce, would further reduce exploitation of farmers because if there are an unlimited number of buyers a farmer can sell to whoever offers the best price.
How the changes brought in three farm laws will benefit farmers?
- First, The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 benefits the farmers by providing farmers the freedom to sell either outside or to the mandi and enables buyers to buy at “farm gate”, without the necessity of a mandi licence.
- However, farmers are in the misconception that this reform is a precursor to the abolition of mandis and MSP. But it is not true as it would be politically suicidal for any government.
- Even, the government is ready to provide assurance to the farmers on their continuation, and to make mandi fee applying to private “mandis” as well.
- Second, The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020, provides for contract farming that will help the farmer to transit to commercial crops, such as vegetables and fruits, which give higher returns than food grain sold at MSP.
- Contract farming will provide assured return for farmers even if there is excess production and market fall.
- In case of contracted prices lower than market prices there are provisions to share the excess windfall to the farmers.
- Third, the Essential Commodities (Amendment) Act, 2020 will help the farmers to build better supply/marketing chains and have the potential of getting higher prices/returns for the farmer.
- Whereas the earlier EC Act served the interest of urban middle classes, by trying to get farm produce to them at low prices. It has also led to discourage investments in cold chains, warehouses, etc.
So, why the Farm laws that has tremendous opportunity and potential to change the lives of farmers are being opposed. The answer partly lies in the way the MSP scheme works in certain states, and the way “big” farmer-trader relationships have worked out in such states.