On India's 3 Farm Laws Enacted and Repealed (2020-2021)

                                                                                                           

Repeal of 3 Farm Laws:

A Year Ago, in September 2020, India's Central Government got approved the three Federal Farm laws in the Parliament, brushing aside the objection of it being a State's Subject. This package combines three laws - all introduced through the Ordinance route. 

First, the government has amended the Essential Commodities Act 1955 to remove the existing restrictions on stocking food produce.

Second, it has introduced a new law - The Farmers' Produce Trade and Commerce (Promotion and Facilitation) - to end the Agricultural Produce Market Committees (APMC) and allow anyone to purchase and sell agricultural produce.

Third, - The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services - to legalize contract farming so that big businesses and companies can cultivate vast swaths of land on contract.

These laws are hailed as landmark decisions that would benefit Indian farmers and transform the agricultural sector. The government stated that these laws would help move towards a freer and more flexible system for both parties involved (farmers and sponsors that can be individuals, partnership firms, companies, limited liability groups and societies). Altogether, these laws intend to liberalize the regulatory system in the agriculture sector, provide freedom to farmers and traders to trade in farm produce at a site of their choice such as farm gates, warehouses, etc., and to usher in legal contract farming uniformly throughout the country.

A year later, in December 2021, the government repealed the laws due to a historical protest movement by the farmers. But, more decisive was its fear of losing Elections in five key States ahead.

However, in an unguarded moment, the Agriculture Minister said it was only a temporary setback and will go ahead with the said laws in the future. Hence, the effectiveness of these laws needs to be critically analyzed in light of the problems faced by the agriculture sector and the farmers.

MODERN INDIA'S AGRARIAN CRISIS: 

Experts and economists have listed the following issues as the primary reasons for the agrarian crisis of India.

 - Small and fragmented land holdings -- Uneconomic holdings.

 - Heavy dependency on Agriculture 

 - Subsistence farming

 - Seeds. Manures, Fertilizers and Biocides - Under the control of MNCs

 - Irrigation  - only 46 per cent of the cultivated area is irrigated. 

 - Lack of Mechanization and Technology.

 - Marketing.

 - Storage, Transport.

 - Absence of Land Use planning. 

 - Crop planning. 

 - Disguised Unemployment.

 - Insecurity for Agricultural Labourers.

 - Scarcity of Capital.

Apart from the above problems, Farmers face complicated present-day situations. They are deepening the Agrarian crisis with the new issues due to change in social equations, misuse and abuse of scientific inventions degrading agricultural resources, climate change, expanding economic arena, policies of globalization, liberalization etc. However, pro-establishment Experts hesitate/refuse to recognize these issues as problems.

 

It is pertinent to examine whether these new laws can solve the above problems. Though, the narrative follows no set order, and along the way, dilates by contrasting it with the Prout solutions. It is done to bring into relief the unique holistic Prout approach to agrarian distress. 

Small and fragmented land holdings:

More than 67% of farmers own less than 1 ha, and 1% own more than 4 Ha. It is one of the primary reasons for the agrarian crisis. The solution begins with the formation of 'economic landholdings'.

Prout's Economic Landholdings:

According to PROUT, we must first organize economic holdings to facilitate increased production. An economic holding means a holding where output exceeds input. It is not possible to predetermine the size of this economic unit. While considering input, output, productivity, etc., to determine the optimum size of an economic unit, factors like the fertility of the soil, climatic conditions, etc., will have to be considered.

Economic holdings will generally comprise land of the same topography having adequate irrigation and other agricultural facilities. Therefore, economic holdings must be progressively increased, keeping all these factors in mind. In the first stage, small farmers should be encouraged to pool their land together to make it economically viable and cultivate on cooperative principles.

The land ownership is inconsequential; what counts is the production from the land. Merely delegating land management to someone will not achieve the desired production. Formation of economic holdings through the inculcation of cooperation among the farmers and phase-wise cooperativisation of farming is the way out.

 

The success of Cooperatives:

Many people raise questions regarding cooperatives because, in most countries, the cooperative system has failed. However, it is inappropriate to criticize the cooperative approach based on the current examples. It is because most countries could not evolve the indispensable conditions necessary for the success of the cooperative system. Cooperatives depend upon three main factors for their success - “ morality, strong supervision and the wholehearted acceptance of the masses. Wherever these three factors have been evident in whatever measure, cooperatives have achieved proportionate success.

As we never created this kind of mentality in India, India is a classic example of the failure of the cooperative system. Indian cooperatives were not designed for economic development but to fulfil political interests. Under such circumstances, the cooperative system couldn't succeed.

The new laws fail to address the above issue; hence the problem will continue.

Reclaiming Farm Sector:

In the last hundred years, the Industrial revolution has divested from the Farm sector, the Agrico (pre-harvest) and Agro-processing (post-harvest) industries, which were integral to it for millennia, worldwide.

Farmers have lost control over agrico and agro-industries, reducing them to poverty and loss of employment—the agrico-corporates of Seeds, Fertilizers, Pesticides, Energy, Agro-machinery. Further, Agro-processing, Corporates of grain, oil, fibre, vegetables-fruits, cold-storage, packaging and marketing, and the Credit and Insurance corporates were divested from the community of farm sector. Nevertheless, we must not lose sight that they make huge profits even while the agrarian distress is deepening and farmer-suicides have become endemic.

Prout Solution:

Prout demands Industry status to agriculture to free itself from distress sale of farm produce, bringing it on par and integrating it with the industries status of agrico and agro-industries. Further, agrico and agro-industries will be re-integrated, investing total control over them with the local farmers' community. Thus, the Farm sector community will reclaim its power by organizing large Farmer producer-consumer agrico and agro Cooperatives. Furthermore, locating Agrico (pre-harvest) and Agro (post-harvest) Industries in villages will ensure full employment opportunities by redeploying excessive dependence on farming alone.

The new laws do not address these major issues. As a result, the central government does not address the issues of a balanced economy.

Perspectives on Water / Irrigation Development:

Post-1980s, groundwater-based irrigation took over with the expansion of electricity and tube-well or bore well technologies. Meanwhile, groundwater extraction has surpassed the limits of its replenishment in several parts of the country, making private investments more and more insecure with the depletion and erosion of agricultural resources.

 

The solution lies in Prout's principle that subterranean water should not be disturbed; otherwise, the water table level will drop, leading to an acute water shortage. The best system is to collect surface water. Even from light showers, we should collect the rainwater where it falls. It is always better to conserve surface water". 

Because these laws give a free hand to the corporate sector, there is every possibility of overexploitation of underground water since the companies plan to maximize profits quickly. Therefore, they have no interest in it, in the long run, whereas a farmer or a Cooperative of farmers will have a long-range interest. Hence, they take up water conservation projects which yield results over long periods.

Impact of Globalization and Liberalization: 

Production and marketing of agriculture produce are no more protected activities. The Indian farmers, unprepared and disempowered, have to face tough competition from Corporate farmers and imports from other countries.

- Free Trade Agreements (FTAs).

- Genetically Modified Crops.

The farming community is facing the threat of losing their seed and farm technology independence because of pressure and allurement from MNCs to grow Genetically Modified crops. Therefore, farmers' Demand that no patents be allowed on any seed/planting material-related technologies is justified.

New laws aggravate this problem by giving more scope to the greed of corporates and FDI in agriculture. 

Climate Change: 

Studies show that there has been a significant increase in the area, duration and intensity of monsoon droughts in India since the mid-1950s. Droughts are not just about reduced rainfall; higher temperatures also increase droughts' incidence and impact.

Agriculture, as practised now, also contributes to climate change due to massive emissions of greenhouse gases. In addition, shifting rainfall patterns increased temperatures, and extreme climate events are changing some critical factors that influence farming, such as carbon dioxide levels and ozone concentration. These are, in turn, causing an increased incidence of climate change at a large scale and localized sporadic disasters such as intensive rains, floods, drought, cloud bursts etc. These are also causing unexpected changes in soil quality, crop growth, pest and disease, and even nutritional quality of the produce, making farm management a huge challenge and farming a risky affair for farmers.

We can overcome this problem by adopting a farming system that is sensitive to the specific agroecology of the region and adopting methods that are best suited to that particular zone. It means applying ecological concepts and principles to optimize interactions between plants, animals, humans, and the environment while considering the socioeconomic aspects of a sustainable and fair food system.

The three laws under reference or the existing laws do not address the issue of climate change.

Scarcity of capital and Mounting Debts:

Famers argue that the causes for poverty and indebtedness are not farmers themselves. It is due to the Government policies towards agriculture like levy policy, price policy, credit policy, revenue policies etc. Thus, the government should remove the misery inflicted on farmers by these unfair policies. For this, they demand all debt of farmers has to be written off. In future, the farmers should be ensured with a fair price so that they can never be in debt. 

From 1998 to 2018, the agrarian crisis led to the suicides of more than 300,000 farmers in the country. Many farmers do not have access to institutional finance. Often, an apathetic attitude of the Bankers towards the village folks and the complexity of the formalities to be fulfilled turns them to private lenders. The scale of finance followed while lending to the agriculture sector is unscientific, irrational and inadequate, forcing the farmers to approach private money lenders. To avoid the ignominy and insults they may have to face while availing loans, many farmers, that too the small and marginal farmers, use their hard-earned savings for cultivation. All these farmers are deprived of the benefit of loan waivers.

The new laws may prompt corporate farming to introduce capital in agriculture to get higher profits. Still, it will not benefit the crores of agriculturists who are in dire need of timely finance at a reasonable rate of interest.

Marketing - Storage -Transport:

The central government says that agricultural markets are over-strained by a web of outdated laws codified with a food scarcity mindset. The restrictions on 'hoarding' were a legacy of the food crisis of the 1950s. These are irrelevant now, barring a national food emergency. Removal of these would help traders and stockists and may sometimes help crop prices from falling. The government claims that dropping out agriculture commodities from the purview of the Essential Commodities Act will help achieve price stability and benefit consumers; it is expected to help traders primarily.

The Essential Commodities (Amendment) Ordinance, 2020, amends the existing Act to remove all agricultural commodities from the list of essential commodities. The government assumes thatm "the freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale and attract private sector/foreign direct investment into the agriculture sector. In addition, it will help drive up investment in cold storage and modernization of food supply chain. "But, more horrifying is that this law helps to legalize hoarding activity, which will force the consumers  - “ all citizens of this country –to face increased prices because of the greed of few.

The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, does not do away with the APMC (Agricultural Produce Market Committee) system but restricts it to the physical space of the market, with transactions made outside of this area exempted from any taxes or fees associated with the APMC.

 

Through a barrier-free trade of farmers' produce outside the markets notified under the various states agricultural produce market laws (state APMC Acts)", this ordinance is "another milestone in the path of freeing up Indian farmers from the licence-permit raj". 

It aims to create trading opportunities outside state-run Agricultural Produce Marketing Committee yards. The government said that "this is a historic step [in] unlocking the vastly regulated agriculture markets in the country". Farmers did not benefit from the Act earlier -  now, it is supposed to help them. 

Doing away with APMCs:

There is no doubt that APMC markets have been marred by several problems in different states  -  such as lack of enough market yards and facilities/amenities in the existing markets. Further, the bureaucratic monopoly in current APMC markets and aperiodic elections to the market committees, malpractices by traders such as non-issue of receipts, unwarranted deductions in the payments given to the farmers, etc. But the changes proposed in the law, especially the prospect of zero-tax trade outside the APMCs, could lead to the withering away of the eco-system of the APMC. It is like jumping from a frying pan into a fire.

However, the presence of all these inefficiencies and issues does not mean that APMC markets are inherently problematic. On the contrary, APMC markets have been an essential medium for price discovery at the local level for the farmers. Moreover, APMC markets are the last resort for millions of marginal and small farmers who would never be attractive to corporate buyers, individually or perhaps even collectively, through Farmer Producer Organizations (FPOs).

It leads to a situation where local farmers do not find adequate Demand for their produce at MSP in the local market. Moreover, since most farmers are small or marginal landowners, they cannot transport their produce to large distances and are forced to sell them at a lower price than the MSP in the local market itself.

 

Situations in Bihar, which did away with APMCs in 2006 and other states that never had APMCs, point out that it has not stopped the exploitation of farmers; rather, they are at the mercy of a private trader in a fragmented market. Bihar, which did away with APMCs in 2006 and other states that never had APMCs, point out that it has not stopped the exploitation of farmers; rather, they are at the mercy of a private trader in a fragmented market.

This law would help big businesses do direct deals with the farmer. Still, the power asymmetry between them will not allow any farmer, bargaining power or ability to enforce any contractual obligations of the corporate individuals or agencies. It is evidenced by the experience of 'online trading' introduced during the last decade. New law could demolish the existing faulty structure without replacing it with anything better.

 

The solutions to overcome this problem are the production, collection, procurement, processing, marketing, and distribution of agricultural produce and essential goods exclusively through Producers and Consumer Farmers cooperatives. But unfortunately, the government has not shown interest in this direction. 

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act 2020 - Contract Farming:

It is unlikely that individual farmers might find themselves equipped or powerful enough to negotiate with corporates or big-pocket sponsors to ensure a fair price for their produce. The Act says that the two parties can mutually decide the quality parameters in the agreement. But the quality aspect will become crucial when a few corporates try to usher in uniformity, adversely impacting the already skewed agro-ecological diversity in the country. The experience of the farmers who entered into contract farming reveals that they are the losers in the long run when the company starts applying impractical quality standards and reject a significant share of the produce.

Legal sanction to contract farming would help corporates enter the agriculture sector and disrupt this ongoing oral contract farming practice. Though there is an elaborate dispute resolution mechanism, how would the small farmer with little bargaining power access it when pitted against big companies?

 

To get higher yields, the Contractors use high doses of fertilizers and plenty of water, which in the long run will cause waterlogging and salinity, making the land unfit for cultivation. Excess use of fungicides, pesticides, and chemicals will pollute the environment and build resistance in insects and the like. Principles of organic and sustainable farming will find no place in contract farming. 

The timing and the context in which these three ordinances have been enacted makes it clear that these are designed to work for the traders, big agri-businesses and corporates and not for farmers, least of all small farmers.

Reasons for Opposition of these laws:

Not only the farmers oppose the laws but also those concerned with the wellbeing of the masses. The main reasons are dealt with hereunder.

Laws Without Scrutiny:

If the government wanted to bring about historic changes to agricultural laws for the benefit of the farmers, why did it need to evade public and parliamentary scrutiny? There is nothing urgent in these three laws that call for bypassing Parliament through an ordinance. Why this haste? Why bring these changes through the back door in the dark hours of a national covid-medical emergency, displacing the constitutionally mandated state governments?

These reforms will not help farmers realize higher incomes; at best, this may be another example in the long history of policies that work for agriculture but not for agriculturists, as seen in the agricultural research activities. Agri-imports are likely to increase in a liberalized atmosphere. If that happens, farmers will be short-changed due to competition from imports and an information asymmetry in the market. 

Some states have removed the existing restrictions on non-agriculturists buying agricultural land, along with the above laws. Now, anyone can buy agricultural land, which the states claim is a big step in increasing food production and better utilizing arable land. But, the farmers fear that the situation will worsen because it is an opportunity for the rich people to buy land for the construction of farmhouses and for the real estate lobby to expand its tentacles. These sections have hardly any interest in farming or increasing the productivity of the land.

Who benefits?

Despite the government's claims, not one of these Acts benefits farmers in any way. On the contrary, however, as the text in the ordinances reveals, they will help traders and giant corporations.

Infringement of State Powers:

While agriculture is a state subject, the Central government is involved in many aspects – from planning, fund allocation and implementations. These three acts on agricultural commerce cut through state government incomes; the power of states over agriculture will get diluted. Together, these acts are viewed as the government's plan targeted at usurping state powers, overriding state laws and market committees, and weakening the Sates. 

Solutions to Agrarian Crisis: 

Numerous attempts and ways suggested so far to solve the agrarian crisis has revolved around the acceptance of individual ownership of the land, which they consider as a natural right. Individual cultivators should own that land because they are deeply attached to their land. We should privilege the collective welfare in the maximum utilization of an individual's assets over mere unproductive ownership of the individual by grouping the uneconomic holdings into Cooperative economic landholding units.

Peasants agitations throughout history have mainly focussed on the issues connected with cultivators, i.e. the landowners, sharecroppers, tenants etc. There is hardly any movement to address the problems of landless agricultural labourers except the populist movements demanding a grant of land to them, which is neither technically sound nor practically possible.

 

The modus operandi of exploiters has changed. It is no more physical and economic exploitation of the farming community; other aspects like cultural subjugation, language suppression, etc. and newer psycho-economic exploitation methods are forced upon the people, including farmers. 

Faults of MSP:

Cost of cultivation and yield vary according to agro-climatic conditions, availability of irrigation facility or dependence on rain, cost of labour, size of holding etc. Arriving at a uniform figure of the cost of cultivation for the entire country is not rational. The government declares MSP for a few crops only that too in an unscientific, irrational way and trying to implement in a half-hearted manner and through corrupt non-committal Government machinery will only aggravate the problem rather than solving it.

In the Proutist economy frame, Samaja or socioeconomic units would implement planned local production for consumption. It will allow a rational Samaj-wise Maximum Support Price instead of the current irrational, country-wide Minimum Support Price (MSP). Moreover, in practice, even this is denied to 85 per cent of farm produce, currently, by dysfunctional bureaucratic arrangements.

Balanced Economy:

Shri P.R. Sarkar opines that we must develop the agricultural potentiality of the country by reducing the percentage of the population working in agriculture. Secondly, we must reduce the excessively high percentage of the population dependent on agriculture by developing industries.

 

Prout suggests that for a perfectly balanced economic environment, following workforce distribution. Thirty to forty per cent of the people depend directly on agriculture; ten to twenty per cent on agrico-industries (pre-harvest); ten to twenty per cent on agro-industries (post-harvest); twenty per cent on general industries; ten per cent on general trade and commerce, and ten per cent on intellectual or white-collar jobs.

Block Level Planning:

Planning should function on various levels such as the block, district, state, national and global levels, but block-level planning should be the basic level of planning. Block-level planning is essential for economic decentralization, so it should be adopted in all blocks. There should be a provision in the constitution for block-level planning for socioeconomic development.

The amount of natural and human resources vary from Block to block; hence separate economic plans will have to be made for each Block. There should be a block-level planning board in every Block for this purpose. The block-level planning body will prepare a plan for the development of the Block and accordingly implement the local developmental programmes. Above the block level, there will be a district-level planning board. Thus, planning boards will implement the local plans and programmes from the block level upwards. We must remember that planning should be of ascending order, starting at the block level and including all the levels of a socioeconomic zone and the state. 

Most blocks are currently demarcated based on political considerations. PROUT does not support such divisions. Block divisions should be reorganized according to factors such as the physical features of the area, including river valleys, varying climatic conditions, topography, the nature of the soil, the type of flora and fauna, etc. That is the socioeconomic requirements and problems of the people and their physico-psychic aspirations. Thus, blocks should be scientifically and systematically demarcated as the basis for efficient decentralized economic planning. 

 

Industry Status to Agriculture:

The manufacturer decides the price of any industrial product, whereas the intermediaries or traders determine the price of agriculture produce. Neither the growers nor the consumers can determine the price of agriculture produce. Though the regulated markets and online trading are supposed to give better prices and opportunities for the growers, the system remains the same. That is, the intermediaries or the traders decide the price of agriculture commodities. This situation will not change with the entry of corporates and the opportunity to sell at the farm gate. The grower, at best, can only refuse to sell the produce at the quoted price. Still, due to the limited keeping period of agricultural produce or pressing economic needs, he is forced to sell it on some other day, for the price quoted by traders, even if it is uneconomical. At no point in time the farmer gets an opportunity to quote the price based on the cost of production.

Policy Support for Economic Holdings:

According to PROUT, agriculture should be given the status of an industry. It means adopting the methods, standards, and factors in deciding the selling price of an industrial product while determining the agriculture produce price. Industry status to Agriculture does not mean tolerating inefficiency or giving doles to that sector. On the contrary, it means making the agriculture sector more robust and more competitive and putting an end to the exploitation and suffering of the farming community, including agriculture labourers. It also means improving the efficiency, reducing the cost of production, addressing disguised unemployment, introducing scientific cultivation methods, mechanization, healthy competition, cooperation, creating economic holdings either of individual or Cooperative groups etc. In addition following steps are necessary. 

Land Use Planning:

There should be land-use planning from Aqua Culture to Silviculture in every watershed area.

Crop Planning:

Each farmer guesses the Demand for a particular crop and takes up cultivation in the present setup. Often, the supply exceeds Demand and the prices crash, making farmers suffer. Thus it is necessary to assess the Demand at the micro and macro levels and plan the cropping pattern.

Cooperation in Farming:

Implementing a land-use plan requires cooperation among the farmers in that area. Therefore, phase-wise cooperative farming needs to be adopted. We must utilize modern equipment in the cooperative agricultural system because such modernization will facilitate increased production. If modern equipment is used in agriculture, agriculture will not remain labour intensive, and we can employ people in other activities to enhance the country's development. If fewer people work in agricultural cooperatives, there will be substantial savings. Simultaneously, we will free women and children from related work to get a scope to develop themselves. In addition, increased mechanization will link the villages to the cities and towns, and as a result, the standard of living in the villagers will be increased.

 

Solving Unemployment:

For the development of agriculture, there is also a need for agricultural specialists and technicians. So cooperatives will have to train unskilled rural people to acquire the necessary skills to develop the agricultural sector. Producer's cooperatives should employ such skilled labour. Thus, educated people will not remain unemployed and will not leave the villages for the cities. Moreover, it will ensure rapid agricultural development. All types of agrico and agro-industries would be developed, according to the needs and resources of the local area, and managed as cooperatives.

Mitigating disguised unemployment:

In villages, the farmer and their family are entirely dependent on agriculture. At times, the farmer will have to work for a few hours only and remain idle for the rest of the day. They remain unemployed during intermittent periods and after harvest of one crop till the sowing season of another crop. In the absence of alternate employment opportunities in villages and because of smallholdings and inevitable circumstances, the farming community faces disguised unemployment.

When cultivation is taken up with proper land use planning on a cooperative basis, it is possible to generate full employment potentiality for dependent landholders and landless labourers. Further, starting of Agro (post-harvest) and Agrico (pre-harvest) industries in rural areas is the solution to mitigate the problem of disguised unemployment and increase villagers' income.

Security for landless labourers:

The Prout system recognizes landless agriculture labourers on par with landholders. They will also be members of cultivator's cooperatives, enabling their full employment and for dividends on their share.

If agricultural labourers only raise slogans of agrarian reform, they will not change it. It is possible by consolidation of the economy through a system-based constructive approach. For the first time, Prout offers a novel viable solution to the problems of landless agricultural labourers.

Solution for the Agrarian Crisis - A New Approach:

Agrarian crisis cannot be addressed in isolation, overlooking other aspects of the economy. A comprehensive and holistic approach is necessary. There is an urgent need to think beyond Capitalism in a different pragmatic way. 

Shrii Prabhat Ranjan Sarkar, the propounder of a new socioeconomic theory, PROUT - (acronym of Progressive Utilization Theory), opines that the structural locus standi of agriculture has not been properly developed. All aspects of the structural side of agriculture have been neglected. The solution to India's agricultural problems lies in a radical change in agriculture, re-integrating agrico and agro-industries with itself as farm sector.

Prout suggests revolutionary ideas of agrarian reforms. The decentralized Economic System of Prout includes the concept of a balanced economy, that is, the re-integration of agrico and agro-industries within the farm sector. Further, block-level planning, industry status to agriculture, Cooperative management of agriculture, phase-wise socialization of land etc., will radically transform the rural economy.

--------------------------------------------------------

Ganesh Bhat Sirsi and Surender Reddy