History of Farm Bills and reason behind the Protest

Since the last few days, we have been watching the news about Farmer’s protesting the Farm Bill. Even though majority of the farmers are happy about the new amendments and the implementation of the same, there are a few sections in our society, who are unhappy with the same. But before we understand why they are protesting against this bill, it is important that we understand a bit about the farming History of India.

Historical Background:-

In 1947 when there was prevelance of the ‘Zamindari’ system the farmers directly used to sell their produce to the consumers, but the farmers used to get exploited by the money lenders, when they were unable to repay the loan that they had taken for cultivation. These money lenders used to take high interest from the poor farmers and when they were unable to repay then their produce were confiscated by these moneysharks at a very low price, and this cycle of money lending and unable to repay used to continue each year, due to which farmers had never been able to become sustainable.

 After observing such exploitation of farmers by the money lenders, the government intervened and bought the APMC Act (Agricultural Produce and Livestock Marketing Act) – which was established by the Respective State Government in India.

The sole objective of the act is:-

  • To prevent farmers from exploitation by such middle men, money lenders who compel farmer to sell their produce at a very low price and hence was solely bought for the welfare of the farmers.
  • All foods to be bought to the Mandi and then sold through auction.

Each state has its own APMC, so the trader has to get his licence from the respective APMC in order to buy produce, from the Mandi.

As per the APMC act the farmers would have to go to the APMC(mandi) and supply his production to the commission agent, and then the commission agent goes to the trader for price discovery and negotiation based on supply and demand, Now this process is not transparent as the farmer doesn’t gets to know about the final price discovery, which is later informed by the transaction agent to the farmer, who charges 3% market fees on the decided price (this price varies for each state), this fees is very important to understand why protests are going on especially in Punjab and Haryana.

Now the major concern was that in this process of selling produce how many middle men were there?

So there are numerous number of middle men in this process, and specially in the Framer protection bill the objective of this bill is to remove all these middle men and to provide the farmers a fresh ecosystem so that they can become more sustainable.

Role of MSP :

The minimum support price (MSP) is an agricultural product price set by the Government of India to purchase directly from the farmer.

For selling the produce a farmer has to go to the Mandi where trader comes for auctioning, and in this auctioning process Government of India gives a MSP from which the auction price starts, this is to prevent the farmers from exploitation and so that they get a minimum profit.

Now the real problem comes when Minimum Support Price becomes the Maximum Selling Price. Traders form cartel and set the maximum selling price not more than that of  MSP, hence food items which are of perishable nature will get destroyed if not sold within one or two months, hence no price can be obtained.So the farmers face a dilemma over here and are compelled to give their produce in the MSP rate.

So, if the Government can see such flaws in the system then why is the MSP not increased?

  • If the government increases the MSP then incentives will come to the farmers due to which farmers will start to grow more crops and bring it to the Mandi for selling, but there will be no incentives for the traders and they will wait for the rate to get lower.
  • When the product finally reaches to the consumers it has to be bought at a huge price which is a greater issue, so the Government never intervened in the MSP.

MSP is provided for only 22 crops and other crops which are perishable in nature are not even provided for a MSP rate.

 Further in India how many farmers are really aware of MSP?

As per the the Shanta Kumar Committee report(2015) which was made by the Food  Corporation of India for reformation – only 6% of the Indian farmers take the benefit of MSP. NITI Aayog in 2016  stated that 81% of the farmers don’t even know that the Government provides for MSP.

We think that if the Government of India provided for the APMC Act, MSP, and various subsidies, loans in order to prevent farmers from exploitation then why so many suicides committed by the farmers?

According to a report of the 2018 National Crime Report Beaurea 134516 suicides were reported in India among which 10350 suicides were just committed by the farmers that contributes to 7.7%.

The act which was bought to prevent farmers from exploitation, today that very act has become the main reason of exploitation. The AMPC Act was introduced to prevent farmers from the zamindari system, and now the problems of farmers have totally changed. As of today problems like climate change, soil erosion, lack of mechanisation, irrigation; farmer protests are not even addressed.

Importance of Economic Liberalisation:

In 1999 when there was Economic liberalisation, and with the introduction of LPG Policies a lot of industries were set free from the control of government as for example in Competition Act and MRTP Act it was realised that the main role of the government is not to regulate or control or to form a burden upon the industries; rather government’s main function was to provide welfare to the people, so in todays world welfare is then only possible if there is absense of monopoly and competition is there then only there could be larger economic development, it is very important to bring a competitive price for the advantage of people. But agriculture and farming industries were still under the  control of government, as the Goverment felt that APMC was meant to regulate them.

APMC was introduced in 1963 when its objective was to prevent farmers from exploitation, but currently the APMC Act was establishing monopoly of the traders, as depending on a geographical area only a certain amount of traders could get the license.

A similar case study in 2014 when the suicides rates in Maharashtra were at peak introduction of new reforms were very necessary, there were 2 markets in Maharashtra one the usual APMC market and another the ‘farmer to consumer’ market and both were of the State government. The Maharashtra government had introduced a new act in Maharashtra (MSAMB)- Maharashtra State Marketing Agricultural Board, it was stated by the government that is not essential for the farmers to sell their produce in the Mandi, the farmers can also sell their products in a alternative market which is also regulated by the government but there are less middlemen and less taxes.

 Now taking about the difference in this APMC market & farmer to consumer market so

  1. APMC market the firm produce gets circulated through multiple levels and this multiple system moves and farmers can directly sell to the consumers;
  2. 10% of the value that the farmer gets goes as market fees.

So this reform was referred to as the second generation reform in the agricultural sector

In another case study of Dairy Farming,between 1970 – 2014 there was reduction on the govermnent intervention in dairy farm, ie there will be no restrictions or regulations as such in the production limit, so in year the contribution of dairy farms in the agricultural GDP increased from 17% to 29% , and this happened just because there was much more autonomy in the dairy sector as compared to the agricultural sector.

So lesser the control of the government more will be the profit, if the economy is free, freedom of speech and expression is there then that becomes a plus point for the economy, the main role of the government is welfare, and later comes protection of the rights of individuals, providing security, regulation and control.

Objectives of the three bills:

The farm bill comprises of three bills:

  1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 

It will decide the ecosystem, APMC (of 1971) is going to remain intact but the new alternative system was given to provide a better ecosystem.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services bill, 2020

It tells about creating a national framework, in which farmers will be helped to interact with companies, terms and conditions will be set that below MSP there will be no selling, what new things will be done, how will be the export system, terms of contract farming government will intervene in that, and the

The Essential Commodities (Amendment) Ordinance, 2020

Objective of these three bills were basically providing farmers protection, to provide them a new ecosystem, and basically to overcome all the lacunas in the existing system.

Protests in Punjab and Haryana:

India is a federal state formed by the Union of States, now in a State development both the State and Union government play a major role and every state contributes a amount of tax to the Central govermnent like Personal Income tax, Corporate tax, Sales tax, Excise tax, Sevice tax,etc.

Now taking the example of Punjab itself, a farmer of Punjab sells his produce from the Mandi , now 3% of market fees is required in the APMC, and 3% goes as (Krishi Kalyan Cess) and 2.5% goes to the commission agent, hence the total comes to 3%+3%+2.5%=8.5% so this mandi tax directly goes to the state govt.

So, if we see the farm commodities contribution in the financial year 2020 total collection was 8600 crores among which Punjab and Haryana got 2600 crore which is the highest as APMC tax, now this tax was previously decided by the Punjab and Haryana govt as how to utilize it for farmer welfare, or in rural development, roads construction or to provide subsidies.

Now through APMC there was total monopoly of the State Goverenment, as they were getting 8% as return from the Mandi tax so the State developments were also taking place from this amount in the respective states.

Now according to the new tax structure which introduces with one more system parallel to the APMC system, which will not be under the control of the State government and the farmers will get better prices as it was  excluding the market fees, and other certain taxes, so obviously the farmers will be more interested to sell in the second system, so in the APMC System the profit was going to the state but in the new pattern the total profit was going to the central government instead.

Secondly, the amount that was returned by the Central govt in the redistribution of taxes the poorer states like Bihar, Assam, Uttarpradesh gets the maximum return and richer states like Maharashtra, Gujarat, Haryana, Punjab, Karnataka, Tamilnadu gets minimum return but previously no such problem was there as the amount this states were getting from the APMC was enough for their State development, but as of now in the present case the Govt of India will have control over that also, so in this State is going to get affected.

If the bill was bought as a way of giving farmers a greater amount of profit and making them more sustainable or in just one word for the welfare of the farmers, then other acts such as  the Land Reveneu act, The Land ceiling act which are outdated and in much more need of reforms should have also been addressed to.

Lastly, as we are a democratic country so there should always be a proper democratic way, else problems such as protest and all have to be faced. If agricultural reforms had to be made then an  agricultural committee should have been formed, where mainly representatives from the agricultural states had to be taken, now if we talk aboutt the illegalities that have occurred in the Rajya Sabha then that cannot be challenged because the proceedings of the Parliament cannot be challenged as per under Article 122. So in this total law the major loop hole lies that it is an undemocratic way of implementing, which could be only challenged before the judiciary on basis of the infringement of  the federal structure.

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13 thoughts on “History of Farm Bills and reason behind the Protest

Add yours

  1. This is such a gripping post bringing into light the exploitation faced by the working class ever since independence and taking into account the number of farmers that commit suicide each year, I feel such posts are need of the hour. Keep up the good work!

    Liked by 1 person

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