Will the Bills Bear Fruit?!

The past year was certainly filled with uncertainty at every point! The pandemic affected lives and livelihoods in the most unexpected manner and the entire world was in a state of despair. Most of us are very hopeful that 2021 will be different. As we start this year full of hope and joy, there are many who welcomed it in the most unforeseen manner. The ongoing farmers' protest in and around Delhi, India is in full swing. The farmers are determined and have been protesting for over 60 days now.

The Indian government passed three farm bills in September 2020. The bills claim to revolutionise the agriculture sector and related services. They also aim to double the income of farmers with the help of new rules and regulations. Even after these promises, the farmers are reluctant and want the government to withdraw the bills.

The bills are as follows:

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

-  The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

-  The Essential Commodities (Amendment) Bill, 2020

In the existing system, farmers were supposed to sell their produce in registered Agricultural Produce Market Committee (APMC) markets (mandis). As the first bill comes into effect, it will allow the farmers to sell their produce outside of these APMC markets. This gives free entry to private corporations in the market and to directly deal with the farmers. Even though this sounds good, as farmers will now have autonomy regarding where to sell their produce, it won’t be as beneficial as it claims to be. Reports show that 85% of the farmers fall in the category of marginal or small farmers who own less than 2 hectares of land. These farmers will now have to face competition in the open market as government regulations will be reduced. Since most of them are marginal farmers, big corporates will certainly try to exploit them during transactions. Thus, these farmers will be worse off in the revolutionised era. The corporations will find it easy to buy produce at minimum prices, thereby increasing their profits. Without government intervention, it will be easy for corporations to use unfair practices during trade. The effects of the bills on farmers are manifold.

The second bill allows farmers to enter into contract farming with agribusiness firms, wholesale vendors or large retailers at pre-agreed prices. Even though this move helps the big farmers as they won’t be regulated by a third party, the marginal farmers won’t be gaining much out of the scheme. No regulation from the government's end also gives an edge to the firms in negotiations. Farmers are seeing this bill as an opportunity for agribusiness firms and retailers to expand themselves and dominate the market. They would definitely earn more profits without the imposition of rules. Thus, the bill is more beneficial for the corporations rather than the farmers, especially the small farmers.

The third bill removes many commodities like pulses, cereals, onions, etc. from the essential commodities list. This allows firms and retailers to hoard these commodities for longer periods. This essentially gives them the power to manipulate pricing and dominate the farmers during trade and transactions. This also means that the minimum support price (MSP) won’t be given for these commodities. This leaves the farmers with little or no incentive to continue the production of the same.

The above explanation gives us an idea that the three bills don’t directly benefit the farmers much. They are simply easing the regulation that existed in the agricultural sector. It gives a free entry to private players who in turn will exploit the marginal and poor farmers for their personal gains. As soon as the government steps out, the negotiating power of the farmers also reduces. They will be more vulnerable and the removal of MSP from certain commodities makes it even worse for them. As mentioned before, 85% of the farmers are small and thus are barely making any profits. These bills do not incentivise them in any way. The demands of the farmers still remain the same and unheard. Improved infrastructure and farming supplements at subsidised prices would benefit them way more than the privatisation which these bills indirectly aim at.

The protest has prolonged since September and the Indian government  has ignored it all along. The maximum population of our country is involved in agriculture and thus makes it a vital part of our economy. These disruptions directly affect the flow of business cycles as well. The bills have been painting a very rosy picture which doesn’t really fit the frame. The only people who will make money after the implementation will be the rich retailers and firm owners. The exploitation will increase without government intervention and thus farmers will have to struggle more than ever.

We are currently witnessing the largest protest ever held and that conveys the urgency of the issue. It directly hits the poor who will most likely lose out on their meagre incomes once these laws come into play. The consequences are cyclic and the propensity of loss increases on this side. Welfare has always been a priority for our state. We have managed to follow a mixed economic model, which has proved  beneficial for all sectors. Privatisation might be the next step towards the reform but not at the cost of farmers losing out on their livelihoods. The need of the hour is to make them more self-reliant and provide them with farming supplements at cheaper rates. Reforms are only helpful when everyone is capable of making the best out of the available opportunities!


Ananya Singh

An Economics student trying to make sense of the world! Extremely fun & talkative but only if I like you ;)

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