EXPLAINER: FARM BILLS

Updated: Apr 1

We are currently living in a world which has been engulfed by oxymorons. Concepts and phenomena which we generally believe are transpiring due to natural circumstances are in reality manufactured and adjudged to be convenient, not withstanding their immoral character. One can say Capitalism is such a dichotomous phenomenon which has become a way of life and is no longer restricted to denoting just an economic system.


Therefore, it is not surprising that our country's policymakers have been mesmerized by Capitalism since time immemorial. Moreover, the passing of the recent farm bills has shattered all arguments that claim our country has a mixed economy. These three bills were passed in a moment of haste which created tremendous chaos, affecting the agricultural sector adversely, especially the poor farmers. The farmer's protest has gained huge momentum in our country and is winning recognition internationally. Therefore, only those who live under a rock will be unaware of the predicament of the farmers.


The three farm bills entail that:

a) Farmers, who previously sold their produce to licensed middlemen/traders in the state-run APMC (agriculture produce market committees) Mandis only, will now be allowed to sell their produce directly to private parties/consumers outside of the regulated Mandis, anywhere in their state or in other states as well, removing the role of middlemen and also avoiding the additional expense of Mandi tax.

b) Farmers would be able to indulge in contract farming, i.e., they can enter into pre-arranged contracts with private buyers/companies directly. The price of their produce would be hedged during the contract and even in the case of actual price fluctuations, the farmers will supply the produce on the pre-decided price.

c) Foodstuff such as cereals, pulses, potato, onions, oilseeds have been removed from the list of 'essential commodities' and stockholding limits on these items have been removed.


In a utopian dreamland, farmers, who have essentially been price- takers since time immemorial and have never been upgraded to the position of price-makers will engage with private buyers in an unregulated marketplace where price negotiations will take place to enter into a mutually beneficial transaction. The private industrialist will offer the desired price against the same product to the farmer. In this situation, there will be no middleman, who adds value to the whole process, and no state levied cess or tax will be charged. Therefore, for the farmer, it is an economic paradise.


Also, in the case of contract farming, the farmer can enter into valuable contracts with big private companies and can earn considerably by sufficing the requirements of the contract, as prices will be hedged. The farmer may also approach the sub-district magistrate for dispute redressal if he is facing issues with the buyer. Indeed, an excellent approach towards increasing farmers' income and eliminating costs which do not add any value to the produce.


Therefore, if we view the farm bills exclusively from an ideal economic lens, these reforms can not only increase the farmers' incomes by cutting some substantial costs but also can facilitate a system with a lot of unrestricted, non-regulated agri- trade, where the free-flowing invisible hand of the market will decide the market demand and supply, further leading to the discovery of a fair price.


Unfortunately, this utopian dreamland does not exist, and we are living in an imperfect capitalistic world where people without money are powerless. This is why our farmers are apprehensive of the bills, as it will ultimately lead to a battle between ideal facts and legitimate fears. Theoretically, farm bills are a set of substantial reforms, but in implementation- they do not seem to be so. If unlicensed private buyers can access the farmer's products in the absence of Mandis, they can very conveniently exploit the farmer, by imposing a price on all of them, which may be even lesser than the Minimum Support Price offered by the government on some crops. The farmers fear that if the trade will take place in the absence of regulated Mandis, the APMCs will soon stop functioning and made redundant. Therefore, there will be no Minimum Support Price which is usually the last resort for a farmer to sell his/her produce, offered by the government. Thus, the small/marginal farmers, which constitute 60% of the total population of farmers, will be deprived of their livelihoods. As far as contract farming is concerned, the power of big companies to manipulate contracts and turn them towards their favour shall come into play. Moreover, the dispute redressal system stated in the bills is highly inefficient and there will possibly be no concrete support to the comparatively gullible and less-educated farmers if a problem arises.



All this might sound to be very approving and appreciative of the status-quo. However, the regulated Mandi system which currently exists is flawed too. APMCs do not provide adequate facilities to the farmers that were mandatory in the first place. Reforms could have been introduced to improve the APMC system itself so that farm