A holistic approach
While it cannot be denied that the Indian agriculture sector is in need of reforms; several concerns remain; writes Sucharita Basu & Rohini Bhandari
India has historically evolved to become a global powerhouse in the agriculture sector. Over the last few decades, as a consequence of the Green Revolution, India from at one time being an importer of food grains, has rapidly progressed, with India's current food grain production for the year 2019-2020 being estimated at an impressive 295.77 million tonnes.
A prime constituent of the current agricultural regulatory framework is the Agricultural Produce Market Committees (APMCs) - statutory market committees which are set up by the State Governments, to inter alia ensure fair and transparent trade, in designated physical premises (yards/mandis etc.) between farmers and buyers. The other concept to note is that of Minimum Support Price (MSP) - which is a tool which assures the farmers that they will receive a promised, fixed price for their produce.
The Central Government has promulgated the following legislations with the aspiration to make the farming sector further beneficial to its stakeholders. The question which persists is whether this new, radical set of laws aid in augmenting its potential or are too cumbersome and incongruous vis-a-vis the Indian farming ecosystem?
Farmers Produce Trade and Commerce (Promotion & Facilitation) Act 2020:
The two main features of this legislation are that (a) it endeavours to provide for barrier-free trade of farmers
produce outside of the markets notified under APMC
Act, within or outside the State, at remunerative prices; and
(b) provides for an electronic trading and transaction
platform for facilitating trade and commerce of farmers' produce.
The Farmers (Empowerment & Protection) Agreement on Price Assurance and Farm Services Act, 2020:
The main feature of this Act is to provide a national framework for farming agreements, in order to protect farmers in dealing with buyers, to build a mutually remunerative price framework and to promote dealing transparently. Under this concept of contract farming, conditions for the production of farm products like quality and delivery requirements, pricing etc., would be set out in such contracts.
The Essential Commodities (Amendment) Act 2020:
This Amendment Act has removed certain agricultural commodities as essential from the ambit of the Act and allows the Central Government to regulate the supply of certain food items only under extraordinary circumstances. Stock limits may be imposed by the Government, on agricultural produce only if there is a steep price rise.
However, the new legal framework has multiple practical concerns, such as:
Barrier-free trade and removing/reducing the produce covered by MSP: Freeing up trade may not benefit small and marginal farmers, as there may not be enough incentive for them to travel long distances to sell their produce. If the MSP system is removed/weakened, the income of these farmers will become dependent on the market vicissitudes, whilst dealing with the private sector, and they stand to lose the protection of guaranteed income, assistance in the form of Government subsidies etc.
Corporate monopoly: The prime concern is that giving freedom to corporates to enter this sector could create a monopoly, negatively impacting the farmers. This may lead to big retailers controlling the market by driving demand and supply, leading to the formation of cartels, eventually affecting the consumers.
Additionally, while framing the policy for a new framework, certain critical conditions prevailing in the country were perhaps not amply considered, as was also ignored the primary stakeholder - being the farmer community. The technical, political and organisational implementability of the new legal framework was also perhaps not given enough thought. Some of the policy lapses are as follows:
Not enough education: The new legal framework, inter alia, professes the establishment of digital platforms and use of technology to sell farm produce by the farmers. It further envisages farming contracts (with corporates/traders) and provides for dispute resolution/settlement mechanisms arising from such contracts. Question is, are majority of Indian farmers equipped with the necessary literacy level to be able to avail the above with optimum technical and operational understanding? Adult illiteracy level is one of the highest in India, more so in rural India and even more so amongst the small and marginalized farmers of India. Such complex legal provisions are not only cumbersome for them in all parameters ranging from their assimilation to affordability of compliance but also exposes them to the highest risk of being severely disadvantaged.
Unemployment: As per World Bank data, in 2000, 59.64 per cent of India's employment came from agriculture. In 2015, it dropped to 45.67 per cent and in 2020 it has further dropped to 41.49 per cent. One of the reasons for this is perhaps the inter-generational bequeathing of agricultural plots resulting in small and unviable land holdings, consequently making agriculture an untenable means of consistent livelihood. In a pandemic struck country, such times and situations do not seem to be at all conducive for burdening existing farmers with complicated legislation to conform to, when rather the panacea perhaps actually lies in augmenting rural income.
Slow enforcement of contracts: The new framework provides for complex dispute resolution/ settlement mechanisms. How far is it possible for poor, illiterate farmers to avail of such complex dispute resolution/settlement mechanisms and defend themselves and their causes of action against traders and large corporates is to be really seen? In any event, where India's judiciary is overburdened and India lags grossly behind in the index of enforcement of contracts, this may only add to the predicament.
It cannot be gainsaid that this sector demanded a more well-planned transition to a new legal regime for its sustained development and success of its stakeholders. It warrants that every policy, law and action around it should not only be holistic but also compassionate. Over the past weeks, farmers have been protesting against the new framework and garnering global support. Despite multiple rounds of talks between the Central Government and the farmers' representatives, the two focal issues of MSP, and a demand by the farmers for a complete rollback of the new legal framework are yet to see a conclusion. The outcome of these issues is of paramount national importance, as it will decide the trajectory of the progress of this absolutely indispensable sector.
S Basu is Partner, AQUILAW & R Bhandari is Senior Associate, AQUILAW. Views expressed are personal