Are the new Farm Bills Exploitative?

Introduction:

The three Farmer Bills 2020 are controversial bills that have been assented by President Ram Nath Kovind. It has caused turmoil in the recent Parliament meetings, triggered the farmers which have led to an outburst in protests during the Pandemic. The Bills would be a drastic change in the way the Indian Farmers have been performing their business for several years. It has been designed to help the modern 21st Century Farmers which would lead them to get good rates for their output. It has been aimed to implement reforms in the agricultural sector.

After the realization that 60% of the population in India is employed under the agricultural sector, there needs to be some effective reforms in this sector to uplift the growth instead of making a downfall. This sector contributes to about 18% of the GDP of the nation. After this bill was assented by the President which makes it a law now, it has contributed to ramping up agitation by the farmers in the states of Punjab, Haryana, and Madhya Pradesh and opposition parties across the nation. These bills have become a law without any meaningful consultation, debate, or a majority in the Rajya Sabha which hits a lower belt in a country that has a democratic Constitution. The bills represent an unprecedented encroachment into the rights of the states: Agriculture is a state subject under the Constitution since the Entry 33 of the Concurrent list gives the Centre and the State full control over any production, supply, and distribution of products on any industry which includes agriculture as well.

A Critical Analysis of the Bills:

Based on a survey, more than half of the Indian farmers have condemned the three farm reform laws enacted whereas only 35 percent endorse them. This is a clear picture that projects that a large section of the agricultural society is not satisfied with the new laws and it is a great hurdle in their occupation. It is a cause of concern for them if the investors of big companies would contract them to large law firms which would make them liable and it would, in turn, make them weak and insatiable in front of big private traders and companies.

There would be a significant opportunity for traders to de-register themselves from the APMC until private uncontrolled trading outside the APMC is legalized. Even the opposition has shown concerns regarding the same. Some arguments which highly related to the subject are as follows:

The statute that governs the Competition law in India is the Competition Act 2002, which establishes the Competition Commission of India and does the following:

  • It ensures the fair market competition
  • It eliminates practices that hinder fair competition, protection of the interest of consumers, and freedom of trade

There is no clause of the Act which relates to or the restriction of the applicability of the agricultural sector of the competition law, the preamble notes that it extends to all the markets, including to those of the agricultural sector. The new farm bills overshadow this Act because of several fears including the concern for the farmers that they will be open to facing unfair competition from big companies which is clear exploitation to them. It makes agriculture much  riskier and inefficient with regard to both input and output management. It is important to address these challenges in order to realise  issues concerning  higher productivity, cost-effective production, and efficient monetisation of the produce to increase farmers’ income.

The Congress Party leader, Gaurav Gogoi made a statement against the Modi administration in a recent house session, has called this bill a plot that suppresses the Green Revolution. This bill has led to many controversial debates against the Modi Government, and there are several claims that the Ruling Government has taken this bill forward to benefit their capitalist friend whether coming to the Land Acquisition Act, whether in the industrial system through weakening the labor courts and now this three-pronged attack on the Indian agricultural system through the two bills on farming – one related to APMC, the other one is related to contract farming and the third bill which is on essential commodities, it is a three-pronged attack on the Indian farmers.

Possible Advantages

The Government has been claiming that these laws that have been drafted would change the set-up of the Agricultural sector and draw private investments. The Farmers (Empowerment and Protection) Act, 2020, provides for contract farming, under which for a mutually agreed remuneration, farmers will produce crops as per contracts with corporate investors. The Standing Committee on Agriculture notes that a provision of a marketing mechanism is open and readily available and a comprehensive mechanism. This will ensure that farmers earn remunerative prices. Entry to Government procurement services and the APMC markets is missing for most of the producers. It was also noticed that in places where infrastructure facilities would be established, there would be an emergence of small rural markets as well and this would be a feasible alternative to agricultural marketing. These new laws would do the needful.

APMCs must be phased out as they act as import barriers while they have fulfilled a valuable function by being a safety net for a portion of the farmers. The APMCs are not an ideal market and do not represent all farmers, collect high rents for reasons that have been well established and in circumstances under the situation of influences under merchants and intermediaries. Earlier, there were coteries which were established on the APMC market by the Arthiyas, which are commission agents or intermediaries, that have acquired influence over the management of APMCs which the farmers did not find participation in the operation for those markets. However, the APMC has continued to have a monopoly over the trade of agricultural commodities and the non- issuance of the new license to traders and has stopped the entry for the new entrepreneurs.

Drawbacks due to the implementation of the Bill:

Non-integration of the APMC has ensured that there was no smooth flow of commodities from farmers to consumers and several multiple intermediaries in between that have resulted in higher prices of commodities without bringing commensurate benefit to farmers. It has been noted that this case has not favored the farmers yet, but the new laws will help in the growth of the sector and the farmers.

These bills divert the attention from the anti-farmer stance of the Government. Small and marginal farmers form about 86% of the farming community and contribute over 50% of the crop output. The majority faces substantial bottlenecks in connecting to markets and the bills bring no relief to them. There has been no systematic attempt by the Government to infuse capital, infrastructure, and knowledge to make farming on small land-holdings profitable. In the absence of infrastructure, small and most medium farmers will continue to turn to local traders. With the marginalization of APMCs, this relationship will turn even more adverse for the farmer. Input cost-price mismatch will worsen and rural indebtedness; as per the National Sample Survey Office, a farming household is likely to have a 630% higher debt-to-asset ratio in 2013 than in 1992, and this has worsened in the last six years.

Farmers have been demanding the government to go back to the old policies as they wish to protect the APMCs all over the country. RBI’s reports (2016), only 0.4% GDP of the country is invested in the agriculture sector, which is absurd as it is the largest sector. The government must invest more in the agriculture field for the betterment of farmers and the country as a whole.

If these bills are a boon or a bane for the country’s farmers is a controversial question. Though farmers are assuming all the potential downfalls of the move, the nation hopes that it turns out to be a success.

Starting with demonetization, withdrawal of support to agricultural research, the steep fall in international commodity prices, disruption of logistics on account of the Covid-19 pandemic, and forcing of APMCs into irrelevance are likely to push millions of farmers deeper into poverty and encourage profiteering, widen income and wealth inequalities and fuel social unrest. These reasons should convince us that while agricultural marketing and procurement need examination, this needs extensive consultation, most importantly with farmers, the organizations that represent them, and state governments, whose experience with the farm sector is much more vast, diverse, and nuanced than that of the central government.

Conclusion:

The unconstitutional manner by which these laws have been enacted is the main reason by which there have been several controversies over this subject across the nation. This subject matter comes under the matters of the State. Article 131 of the Constitution provides exclusive jurisdiction to the Supreme Court to adjudicate matters between the states and the Centre. The Chief Minister of Punjab has already been said to take this state matter to the Supreme Court. It is also not possible for the farmers union attached with the political parties to challenge these laws in the Court, hence however, the Union can move these matters to the High Court under Article 226 of the Constitution.

For the Government to close the gaps of the bill, they should have included the opposition and have taken into account the voice of the farmers. This would be an aided solution to the sector’s privatization and it would also prevent further exploitation as well. On the contrary, it has been noticed that these bills were not discussed within the members of the Parties adequately and hence it led to a scenario of dishonesty between the ruling, opposition, and the farmers. Due to lack of prior consultation, and without a vote by division as necessary, the breaking rush with which ordinances are enacted and substituted by the Acts requires in-depth examination. The underlying intent of the Government lies under a haze in enacting these diverse laws.

Sanchali Bhowmik, a 2nd-year law student (L.L.B Hons.) at Jindal Global Law School

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