Cause for concern
The new agricultural bills passed by the Lok Sabha may not be beneficial for farmers and consumers, instead allowing for the conditions required for corporate cartelisation
Bringing three important agriculture-related bills in Parliament at one go and getting them passed in less than a week's time without any serious debate or special scrutiny is most unusual, if not unprecedented. On the face of it, the bills seek to double farmers' income which the ruling BJP promised before the last Lok Sabha election. They also seek to conditionally contain retail prices of key agri products. Here lies the apprehension of both big and small farmers. Consumers are not convinced. Farmers fear a gradual extinction of the mandis and the minimum support price (MSP) system. To prove the opposition perception wrong, the Government took a highly unusual step by announcing increases in MSP of six rabi crops — by two to six per cent — months ahead of the schedule.
Farmers from Punjab and Haryana, who have been at the forefront of the anti-legislation agitation, will be big beneficiaries. Among the key Ravi crops are wheat, Bajra, lentils, mustard and gram. The immediate Government action is seen as an attempt to allay doubts of farmers over the future of the MSP regime in the wake of at least two of the farm bills. The three farm bills are: the 'Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill', Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill' and 'Essential Commodities (Amendment) Bill'. The first two were passed by Lok Sabha on September 17. The Upper House of Parliament (Rajya Sabha) passed the contentious farm bills on September 20 amid uproar by opposition members. The bills have triggered protests by farmers and opposition parties in several states.
Unfortunately, the bills seem to have little for marginal farmers with small holdings in states such as West Bengal, Orissa, Bihar and Assam. They will continue to get exploited. The 'Essential Commodities (Amendment) Bill' is rather harsh to consumers. The current structure of middleman operation is expected to be replaced by big monopolies. There is no reason to believe that the latter will be more considerate to consumers. They are expected to follow the market forces and demand-supply situation. The new set-up will not only see fragmented markets with different sets of rules but also fragmented regulatory structures that will create a more bumpy ride for farmers who want legally guaranteed remunerative prices. The new rule concerning farm products export may help multinational corporations get away from stock limit imposition. The Government may not be able to even verify if the stock limit is fake or real. The price rise triggers to bring in stock limit regulation are too wide to be relevant for poor consumers.
It would have been better if the Government sent the bills to Parliamentary committees to scrutinise the details instead of hurriedly passing the bills. There is little justification for such a hasty legislative push at this point of time. Clearly, the bills do not provide farmers what they need and they are asking for — guaranteed remunerative prices, oversight of players, transactions and prices, and empowerment of state governments to regulate and place all markets on a level playing field. The 'Essential Commodities Amendment Bill 2020' appears to legitimise hoarding by big players. Few will disagree that the Government does not have even the capability of knowing what stocks are existing with who, when and where. After the exercise turns into law, it will help attract private investment in post-harvest infrastructure. The Government will have little role or authority to ensure the interests of poor consumers and farmers.
The Government said that the bills would transform the agriculture sector. It would raise the income of farmers. The Government had earlier promised to double farmers' income by 2022. It said the bills will make the farmer independent of government-controlled markets and fetch them a better price for their produce. The bills propose to create a system in which the farmers and traders can sell and purchase outside the mandis. It also encourages intra-state trade. The Government claims that this will reduce the cost of transportation.
Further, the bills formulate a framework on the agreements that will enable farmers to engage with agri-business companies, retailers, exporters for service and sale of produce while giving the farmers access to modern technology. The bills also will remove items such as cereals and pulses from the list of essential commodities and attract FDI. The legislation will allow the Government to invoke the 'Essential Commodities Act' only if retail prices rise 50 per cent in the case of non-perishables and 100 per cent for perishable items from the average retail prices in the preceding 12 months or last five years.
The most contentious part of the amendment of 'Essential Commodities Act' is that the legislation will do away with the imposition of stock holding limits on a number of items except under 'extraordinary circumstances' such as war and natural calamities. Cereals, pulses, oilseeds, edible oils, onions and potatoes will no longer be regarded as 'essential commodities.' The removal of stockholding limits of such commodities is designed to attract corporate investment in the farm sector. Investors need not fear regulatory interference in their business operations. Private investors will control cold storage, warehouses and food supply chain
It is too early to predict how the withdrawal of stock holding limits and the decisive play of private sector organisation in the supply and prices of the so-called 'essential commodities' under the existing legal definition will impact the prices of the commodities and their import-export trade. Big companies in the commodity trade will dictate terms on both farmers and consumers. This is truly a major concern. The 'Essential Commodities Amendment Bill' fails to clearly address these concerns. Apart from the fact that the legislations will intrude into the jurisdiction of states in the sphere of agricultural production, procurement and pricing, they will promote corporate cartelisation of the trade.
Views expressed are personal