India is currently witnessing large scale protests by farmers especially since September 25 after the three Farm bills were passed through Lok Sabha and Rajya Sabha. The bills subsequently got the assent of the president casually overlooking the protests.
But the situation brought ahead by the bills is far from casual with regards to the agriculture, the low income category farmers and the general populace.
The three contentious laws are the Farmers produce trade and commerce (promotion and facilitation) Act, Farmers (empowerment and protection) agreement on price assurance and farm services ordinance and the Essential commodities amendment ordinance. These three will drastically impact the farming scenario in India which is already in not a great shape for the farmers (especially the poor farmers) in terms of what they get out of the market. Before we examine the concerning facets of the Farm bills 2020, we will see where the current scenario of price support and food security for Indian farmers stands structurally.
There have been three instruments developed in the late 1950s to provide price support for farmers, food security for the general population and preparation for unprecedented national circumstances like flood or any other disaster. The most well known among the three is the MSP-Minimum support price. This is basically given by the government as a kind of assurance in case the prices of the farm produce in the market go below a threshold. It is the price at which the government promises and assures to buy the farm produce from the farmers at given facilities and sites of the FCI. The suggestion for this support mechanism came in the year 1959 in a letter to GOI by Dr. Frank W Parker, the then chief agriculturalist of US Agency for International Development mission to India. In the immediate years of post-independence time, MSP was also suggested by the ML Dantwala committee (for especially the paddy crop). This price mechanism for 24 crops secures the farmers against the turbulent market dynamics where price may fall to an unsustainably low level for the farmer.
There are many distribution policies under which FCI supplies or sells crop produce to various agencies for policies like Antodaya yojana. The price at which the FCI sells to agencies to make the food-grains available for distribution schemes is known as the central issue price (CIP). There is also the requirement of the central government to maintain buffer stocks of food-grains. The price at which the government buys the food-grains to maintain the levels of the buffer stock is known as the procurement price. This price (declared only for food-grains, not for all crops) is generally kept at a level higher than the MSP and is used when there is an urgency felt by the government to top up the buffer stocks. The difference between the MSP and the CIP gives the measure of the food security for the poor farmers. The richer farmers having access to FCI facilities and enough money to palm grease and manipulate the FCI officials generally take the benefit of the differences between the MSP and the market prices which can be modulated by them (through controlling of the mandis and the sourcing & supply). Hence, the effective food security is the difference between the market price of the crop produce and the CIP which can gets very thin depending upon the state, the relevant farm acts, the strength of the state APMC acts and the PDS systems in the particular region of the country.
In some places, the benefits of the PDS which is the base of the CIP pricing are not obtained by the poor farmers, due to lack of proper documents and other reasons like malafide intent of the FCI and PDS officials. In many cases, the benefits of the CIP are also harnessed by the rich among the farmers. These may get compounded by issues like debt burden and inability to get proper subsidy for their farmland inputs. Occasionally these factors combine disallowing the farmers to get benefits from the MSP or CIP or the market. This leads them to take extreme step of suicide as they feel trapped between hunger and destitution.. As per NCRB data on accidental deaths and suicides, in 2018, 10357 farmers and in 2019, 10,281 farmers had committed suicide.
In the context of the recently passed farm bills 2020, some important features which are being avoided or unknown by most of the media-houses including the ones in support or in opposition of the bills are hereby discussed in a bit details.
The laws have included almost all the crops grown by Indian farmers. For these crops, the companies or individuals in Agro-marketing and distribution, irrespective of whether they are large or small will be able to lay down contracts with the farmers for the sale of the crops. The agreements which will be enunciated in the contracts will fix the time period during which the produce of the farmers will be purchased. The first point of concern in the farm bills is that instead of keeping a minimum support price for any crop, there will be a least price in which the crops or rather the worst quality of the crop can be purchased in the market. Hence the minimum support price will become minimum selling price. This means that even if the crop produce will be of high quality (which has another rider in the new bills) then the MSP will be the highest selling price. This will inherently destroy the price support offered by the government to the farmers.
The quality of the crops will be defined with three terms stated in the bills-quality, grade and standard. These three factors will be decided by the officials appointed by the government. This group of officials with the authority to give certificates on the grade, quality and standard will then be susceptible to palm greasing by the corporations who can get certificate showing lower quality for a genuinely good quality crop. The corporations will do this to reduce the crops’ selling prices nearer to the least selling price, decreasing their cost of purchase.
There is another position defined in the bills called as the mediator who is supposed to bring manures, fertilizers and other related things to the farmers. A grave issue will arise here keeping in mind the profit seeking tendency. The mediator can charge the farmer for high priced fertilizers which will be decided prior to planting of the crops, and can bring the farmers low quality materials.
The bills will also entail Essential commodity act to be functionally inapplicable which can and will give rise to rampant hoarding and stockpiling of the produce. The food price will skyrocket fatally puncturing the food security of large chunk of population.
Another problematic issue in the bills is that the agreements between the farmers and the corporations can be terminated anytime. This will give chances to the corporations to terminate the agreements and force the farmers, who have nowhere to go, to sell the produce at extremely low rates (even lower than the least selling price).
The above provisions will definitely give rise to litigation issues and disputes which some farmers will take to authorities. The bills speak of a specific category of boards which will decide on such disputes. Such boards can be easily influenced by the big corporations.
All of the above leave actually no room for dispute solution for the farmers, with high probability of hoarding of crop produce and sky high prices of food-grains for the public. With the increased probability of hoarding due to the removal of some of the staple food crops from the essential commodities list, and sky high prices of the food-grains in the market due to the subtle leeway provided to the big corporations in the laws, it can be said that the hunger would become a prominent and common issue in India wiping out the bottom of the economic pyramid.
A possible way out of these problems would be for the states to declare their entire area as market yard. This was suggested by Sukhbir Singh Badal, president of Shiromani Akali Dal, to the Punjab CM Captain Amarinder Singh. Some observers state that it might be possible, others doubt its success as they believe that it would be operationally difficult for the state government to monitor all the markets for the sale of farm produce and to bring all the purchasers under a single tax regime.
All of these are occurring in the larger backdrop of climate change where the annual global average temperature is increasing. The availability of water is also decreasing at a fast pace which is going to put pressure on the agricultural output. The higher average temperature will make the pests more virulent and associated diseases tougher to tackle with available resources. This would complicate the scenario given that use of chemical pesticides has already made many weeds and pests resistant to the chemicals. As per a study published in PNAS in 2017, without the effect of CO2 fertilization, or genetic improvement, each degree rise in the global mean temperature would mean reduction in the yield of rice by 3.2%, wheat by 6%, soyabean by 3.1% and maize by 7.4%. This should come as alarming news for India with a burgeoning population in a world showing no symptoms of slowing down of the rise in annual global average temperature.
The Farm bills 2020, show symptoms of a state showing no signs of being in sync with reality of the global conditions which are gradually having effect on the agricultural sector and only interested in filling the bottomless pockets of its cronies who are set to gain monopolistic control over the food-grain supply in India. The bills can be said to be Indian crony oligarchs’ answer to the Marie Antoinette of France in a heating up world.
It would be prudent to remember that Marie Antoinette’s insensitive “bread and cake” comment had led to the fall of Bastille and had caused her and her husband, the French monarch to be dragged to the guillotine by the hungry third estate- the French public.