Farm laws to unshackle Indian agriculture, boost farmers’ incomes

As the farmers dig in their heels over the three farm laws, Agriculture Minister Narendra Singh Tomar has reached out to them. He has invited the farmers for talks on December 3 and the government is even speaking through bureaucrats in Punjab to allay farmers' fears over the laws.

Tomar has emphasized that the new farm laws will bring about revolutionary changes in Indian agriculture. Even Prime Minister Narendra Modi, after the passing of the Bills by Parliament, had called it a "watershed moment" moment.

However, since September, farmers, particularly in Punjab, have been protesting against the three laws—the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act (FPTC); the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act (FAPAFS); and the Essential Commodities (Amendment) Act.

<strong>More markets and avenues to sell crops</strong>

The amendments to the farm laws open up more markets for the farmers to sell their produce as they will be able to sell it outside the mandis, also known as the Agricultural Produce Market Committees, which are run by the state governments and local bodies. Hence, the laws eliminate the intermediaries allowing higher prices to the farmers. Over decades, the role of middlemen and local politicians had increased in the mandis, which was often detrimental to the interests of farmers.

Moreover, farmers will be able to sell their produce anywhere in the country—inter-state or intra-state. Tomar said the laws will promote inter-state trade and the farmers will have more markets to sell their produce. However, the state governments will not be able to charge any fee from the farmers.

<strong>Assured future prices for farmers</strong>

The new laws open up the farm sector for contract farming—which basically means that farmers and companies can reach an agreement and fix prices before the harvest. This allows the farmers to enter into a contract with agri-businesses, supermarket chains and large retailers even before he reaps the harvest. This cushions the farmers from market unpredictability and provides an assurance about income.

Currently, the farmers sell part of their produce at the minimum support price (MSP), a price fixed by the government at which it buys the produce from farmers at the wholesale markets. This assures the farmers of a minimum price and they are used to this system. But simultaneously, many farmers are already selling their produce directly to private companies right now.

The government says that it is not doing away with the MSP. However, the protestors say that once they get used to selling to private players, the government will slowly wind up the mandis and the MSP. The umbrella of support that they have with an assured price will go away after which the companies will give un-remunerative rates to the farmers.

<strong>Who are the protesters?</strong>

For many farmers, the real fear is the fear of the unknown. With too many changes in the laws, farmers are not clear how the changes will pan out.

Many protests are being spearheaded by big farmers' organizations. Opposition parties in the states also are opposing the changes to the farm laws as they lose considerable revenue. The middlemen and local leaders working at the mandis also tend to lose their commissions if the farmers begin to explore newer markets or start selling their produce to companies directly.

<strong>Agriculture Infrastructure Fund to benefit farmers</strong>

Amitabh Kant, CEO, Niti Aayog, said in an opinion piece for <em>The Times of India</em>: "Experts have pointed out that only 6 per cent of all farmers benefited from public procurement at MSP. However, this has led others to conclude that 94 per cent of the remaining farmers must be selling their produce in the open market. To the contrary, these remaining farmers in fact did not have that benefit."

What Kant is pointing out is the fact that the bigger and the powerful farmers have been taking the benefits of the government pricing and procurement controls on agriculture, while the smaller farmers have been kept out of these benefits. He also points out to the government's commitment of developing rural infrastructure by setting up the Rs 1-lakh crore Agriculture Infrastructure Fund (AIF) which will develop infrastructure including collection centres and pre-processing facilities.

There are arguments and counter-arguments. But what cannot be denied is the fact that the government is trying to unshackle the agriculture sector. The new laws bring about an unthinkable change in the pricing structures, selling of produce, storage of grains as well as enhancing the role of corporations in Indian agriculture, which can bring in more technology into farming. These changes can lead to better crop productivity, more earnings for farmers as well as creation of more jobs in the agro-processing sector..