Agriculture is the primary source of livelihood for some 60% of India’s 1.3 billion-strong population, and the country’s farmers constitute its largest voting base, imbuing them with a wealth of political power. It is against this backdrop that a series of recent legislative disputes have provoked turmoil between the authorities and the farming community. In its latest explainer, JURIST dives into India’s Farm Laws and explores the surrounding controversy.
What is the issue?
In September 2020, Indian President Ram Nath Kovind gave his assent to three agricultural bills that came to be colloquially known as the Farm Laws. These had earlier been passed by both houses of the Indian parliament. The government maintains that these bills are necessary to reform the agricultural sector, which provides livelihood to nearly 60 percent of the country’s population. However, farmers fear that they will be left at the mercy of large corporations due to the open market model that the bills usher in. This has led to large scale protests all over the country by farmer groups demanding a repeal of these laws. In January 2021, the Supreme Court of India stayed the implementation of the laws and created a committee of agricultural experts to mediate between the farmer groups and the government.
The Farm Laws are the culmination of years of attempts by successive governments to reform India’s agricultural sector, which – although key to the national economy – continues to be marred by outdated policies, government corruption and infrastructural shortfalls. Under the existing system, mandated by the Agriculture Produce Marketing Committee (APMC) Act, farmers were required to sell their crops at government-regulated markets. At these markets, middlemen helped growers sell harvests to either the state-run company or private players, thus acting as intermediaries in all transactions.
The APMC was originally introduced to protect the interests of farmers from open market competition and exploitation. It aimed to prevent the dependence of small farmers on creditors by ensuring timely payments. However, it also created a stagnation in the agricultural sector which led to increasing intermediary costs, restrictions on the sale of produce and inadequate infrastructure.
The current Bhartiya Janta Party (BJP) government, which came into power for the second time in 2019, had promised a doubling of farmer incomes, interest free loans and massive investment in the agricultural sector in the run up to the elections. The farm laws are seen as an attempt towards this as they give an impetus to the current agricultural model of the country by reducing the role of the government. On the other hand, the protesting farmers are apprehensive that they will be in an unfavorable position while dealing with corporations and large private players. To better understand the contentions from both sides of the debate, we need to look at the three laws in brief:
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
The act allows intra-state and inter-state trade of farmers’ produce outside the markets designated under the APMC regime. It also abolishes the market fee that was earlier levied on farmers selling their produce outside of designated market places.
This would allow the farmers more flexibility and freedom in selling their produce along with a reduction in dependence on middlemen and intermediaries. The farmers argue this would lead to trade completely moving out of the APMC markets along with the loss of livelihood for the intermediaries. They also fear that it would lead the government to stop providing Minimum Support Prices (“MSP”) which are the prices fixed by the government to procure specific crops. Currently MSP is fixed by the government to offset the market instability and provide a definitive remuneration to farmers. The government on the other hand maintains that MSP will be continued.
- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020
This act provides for contract farming by allowing a farming agreement between a buyer and a seller for farm produce. It also mandates that the price of produce along with the process of price determination should be mentioned in the agreement. Additionally the act sets up a three-tiered process for dispute resolution. Firstly, the agreement should have provisions for the settlement of disputes by way of conciliation in front of a neutral board. If the dispute remains unresolved for 30 days, the parties can approach the Sub-divisional Magistrate. Further unsatisfied, the parties can approach the Appellate Authority which will be presided over by a collector or collectors.
The government hopes that the act will provide a national framework for contract farming which was until now haphazardly implemented depending on different state laws. The farmer groups, on the other hand, are apprehensive about the entry of corporate entities into farming which will have a negative impact on small farmers. They also feel that farmers will be at a disadvantage while entering into any contract or being a part of any legal battle that may follow.
- The Essential Commodities (Amendment) Ordinance, 2020
This act amended the Essential Commodities Act, 1955 which was enacted to regulate the production, supply, and distribution of a whole host of commodities that it declares essential so as to make them available to consumers at fair prices in times of shortage. The current amendment allows the government to delist certain commodities – such as cereals, pulses, oilseeds, etc. – from the list of essential commodities. These can now only be regulated in exceptional circumstances like war, famine, extraordinary price rise etc.
The government aims to increase Foreign Direct Investment (FDI) in agriculture by doing away with the stockpiling limits. The farmer groups contend that this will be detrimental to both small farmers and consumers by promoting black marketing and hoarding. Further, the exceptional circumstances provided in the act set a very high threshold and thus don’t provide enough safeguard.
Who are the key players?
The Indian Prime Minister, Narendra Modi has been vocal about the need for agricultural reforms in the country. With an absolute majority in the last elections, he has used this mandate to push for the current laws. India’s Minister of Agriculture, Narendra Singh Tomar has also been a strong supporter of farm laws and is representing the government in talks with farmer groups. Last month he hinted at a possible amendment to accommodate the demands of the farmers.
The protesting farmers belong to various farmer and labour unions. Some prominent leaders that have emerged include: Balbir Singh Rajewal and Rakesh Tikait of Bharti Kisan Union, Satnam Singh Pannu of Kisan Mazdoor Sangarsh Committee, Dr Darshan Pal of Krantikari Kisan Union Punjab among others. All of the leaders are unequivocal that they will continue with the protest until all the three laws are repealed.
Why is this important?
The farmer groups’ protest efforts have included setting up camp for lengthy periods outside of key government buildings. The protests turned violent on India’s Republic Day, on January 26, when thousands of protesters stormed into the Red Fort and clashed with the police. The incident attracted widespread international attention and highly polarized the situation domestically. The talks between the farmers and government have also failed to produce any headway even after eleven rounds. The Supreme Court-appointed mediation committee has been rejected by the farm leaders based on allegations of bias.
Most of India’s farmers are small players with relatively meager landholdings, and any change to the existing system of MSPs or government support will have huge ramifications. Farmer suicides are also a very pertinent issue with thousands of farmers committing suicide every year due to debt trap, low produce, government apathy, among other reasons. Farmers also form the biggest voting base in the country which has made the situation highly charged, with political groups vying for coverage, on both sides of the issue.
There is no doubt that the farm laws will have far reaching consequences with the potential for affecting millions of livelihoods. There are some very clear and obvious problems with them along with very clear and obvious benefits. The need of the hour is the harmonization of interests of all the stakeholders involved instead of taking a one sided approach. The current agricultural institutions have been around for a long time and proper planning and dialogue is the key for modifying them.