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Will the new Farmers’
change the economic
condition of farmers?

Image by AP Photo/Altaf Qadri. An elderly farmer shouts slogans as
others listen to a speaker as they block a major highway during a protest
to abolish new farming laws.

November 17, 2020

The new farmers’ bill has left the farmers community in great strife and dismay, with rife protests taking place in states like Punjab, Haryana and Karnataka as of 29th of September 2020. The bill was passed in the parliament by Lok Sabha on 17th September 2020. Approximately 60% of India’s population works in the farming industry, contributing to 18% of India’s GDP. Earlier in June of 2020, 3 farmer bills were introduced as ordinances:

  1. The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 will bequeath freedom to farmers and traders to sell and purchase their goods outside registered Agricultural produce market committee(APMC) markets or ‘mandis’ as they are called. This aims to get farmers better prices as there are a myriad number of buyers. This also waives off any kind of market fee, cess or levy on farmers, traders and electronic trading platforms that the state government was previously entitled to.

  2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 essentially creates a framework for contract farming where an agreement can be reached before the rearing or production of any produce.

  3. The Essential Commodities (Amendment) Ordinance, 2020 gives the central government rights to regulate the supply of selected foods under ‘extraordinary circumstances’(war, famine, etc), stock limits can be imposed in the event of a steep rise in prices. Lastly, cereals, pulses, oilseeds, edible oils, onion and potato are removed from the list of essential commodities in an attempt to make them lucrative investment opportunities for the private sector and foreign direct investment.

The leader of the National Congress Party, Mr Rahul Gandhi took to Twitter accusing PM Narendra Modi of “making farmers ‘slaves’ of the capitalists…” and called the bill “Black Law”.
PM Narendra Modi defended his stand by saying
“For decades, the Indian farmer was bound by various constraints and bullied by middlemen. The bills passed by Parliament liberate the farmers from such adversities. These bills will add impetus to the efforts to double income of farmers and ensure greater prosperity for them.”
This was just regular politics other than that raises the more salient question: is this bill beneficial for farmers or is it leaving them at the mercy of big corporations?

Interview with Mr Nikhil Daga

FarmX interviewed Mr Nikhil Daga, a pioneer in the field of agro based trading and the CEO of Mira International India PVT.

To summarize Mr Nikhil Daga says the success of the bill is heavily dependent on the implementation of the bill. He also acknowledges the fact that the bill comes with its sets of pros and cons. To rectify these cons Mr Daga says there must be a “price discovery mechanism” as before the bill was imposed the APMC markets had a bidding procedure so farmers were aware of the prices of the market but now they can be exploited by large corporations as farmers don't know the market prices. Mr Nikhil Daga also says that the Minimum Support Price(MSP) isn’t a solution due to the logistical costs incurred. Moreover, MSP is a fixed price so if in a case in point import is cheaper than local prices the MSP will fail making it highly inefficient as it currently doesn't factor in the demand and supply of crops. We also interviewed Mr.Sanjay Pansare in another blog, he also said the same thing that MSP should be dynamic and should change in relation with changes in demand and supply.

FarmX’s Take

To summarize this bill was introduced to help farmers getting a fair price, this waives off mandi taxes allowing farmers to sell their goods on their own, but what this doesn’t consider is bigger cooperation curating contracts with clauses the farmers won't understand clauses, this also means the farmer has to travel long distances to sell his goods and nothing to compare the price offered by bigger corporations.

In our opinion this bill was certainly a step in the right direction but a lackluster execution hindered it. The government should now create an E-portal where all fair prices for the day are written and the farmers can use those prices as references to sell their goods. The government should also educate farmers about the potential ways they could be exploited through clauses in contracts as also mentioned in our farmer illiteracy issue and view.