20th September 2020

 Musings.......

I would like to write about an incident, one about which I read sometime ago. 

It was the early 1990s when few corporate companies in the United States of America (USA) came up with a scheme for the pig and poultry farmers. 

The Corporate company would provide Piglets to the farmers at low cost. The farmers just had to grow them in their farm and the company itself will buy back the fully grown pigs at the market price. 

Superficially this looked like a brilliant plan where both sides benefitted. The farmer didn't have to run around small markets for their pigs and the Corporate company didn't have to spent the time, money and space of growing the animal. 

The first year went all fine, farmers were paid the market price and everyone was very happy. The second year too went without incident. However,by the third year citing some difficulties the Corporare company halved the price of the pigs. The farmers thought this to be an aberration and bore the loss. Again the next year the company buying back the pigs further reduced the price!! 

This time the farmers rose in protest. They decided not to sell the pigs to the company which they had bought as piglets from the company and looked after. They decided to sell the pigs to the open market as before. 

This is when the twist happens. 

Three years had passed since the companies had come to the scene and all small markets and small time businessmen had closed shop. The farmers had nowhere to sell their pigs !! 

Finally, the poor farmers had to sell their produce at an even lesser price and a bigger loss to the corporate company. 

This long incident was highlighted in view of the recent ordinances promulgated by the Central government which was recently introduced to be passed as law in Parliament. As I write this the Bills are being introduced in Rajya Sabha and is sure of passing. 

So which are the three Bills - 

1) The Essential Commodities ( Amendment Bill ) 

This empowers the Government of India to control the supply of particular agro-food products under unusual situations. In case of steep price hike, stock limits can be applied on farm products. 

This bill proposes to deregulate the production, storage, movement and sale of several foodstuffs including cereals, pulses,edible oils and onions, except in extraordinary circumstances which includes

- War

- famine 

- extraordinary price rise 

- natural calamity of grave nature 

Other provisions include that a stock limit may be imposed only if there is

- a 100% increase in retail price of horticultural produce and 

- a 50% increase in the retail price of non-perishable agricultural food items. 

The increase will be calculated over the price prevailing immediately preceding 12 months. 

The freedom to produce, hold, move, distribute and supply will lead to more private sector/ FDI investment in the agricultural sector. 

Also excessive regulatory interference will he removed giving confidence to private investors. 

This can also drive up investment in cold storage and modernise food supply chain. 

However, there is fear that food security of our country could be undermined here. 

Easing of regulation of food items would lead to exporters, processors and traders hoarding farm produce during the harvest season, when prices are generally lower, and releasing it later when price increases. The states would also not have any information of the availability of stocks within the state too. 

There is a genuine cause for concern, whether this deregulation of products would lead to black marketing and irrational volatility of prices of farm produce. 

2) Farmers ( Empowerment and Protection ) Agreement of Price Assurance and Farm Services Bill 2020 

This bill aims for framing contractual farming between a buyer and farmer, through an agreement. This should be done before the production of any agro product. 

Three tier dispute settlement framework is provided - Sub- Divisional Magistrate, thr conciliation board and Appalate authority. 

The Price assurance bill even though offers protection to farmers against price exploitation, it does not prescribe a mechanism for price fixation. There is a fear that giving free hand to private corporate companies would lead to farmer exploitation. 

There is also apprehension about a formal contractual agreement, as the farming sector is highly unorganized and the poor farmers may have few resources or nill for a legal battle with private corporate companies. 

3) Farmers Produce Trade and Commerce ( Promotion and Facilitation ) Bill 2020 

This bill will allow intra and interstate farmers produce even outside the premises of APMC markets without paying any extra market fee, cess or levy as State Governments are prohibited from levying tax. 

The APMCs were set up with the objective of ensuring free trade between buyers and sellers for effective price discovery of farmer produce. 

APMC can regulate the trade of farmers produce, levy market fees or charges and provide infrastructure within their markets to facilitate trade. 

By dismantling the monopoly of APMC Mandi system, it would in the long run ensure, ending the assured procurement of food grains at MSP. 

Another issue is that Agriculture and Markets are State Subjects and these laws are seen as against the spirit of cooperative federalism. 

The Union Government, however says that trade and commerce in food items is under Concurrent list. 

Farmers and Farmer associations across the country have protested against the ordinance and bill which was introduced by the Central Government when the country is reeling under the Coronavirus pandemic. 

Even though on paper these bills sound good for Agriculture as it may remove barriers for inter and intra state business of agri products, increases competition, farmers enter agreements with large buyers and corporates, high quality seeds, pesticides and fertilizers can be availed private investors in farming; in reality this could turn harmful for the poor farmers. 

If the government is acting in good faith for a ' One Nation One Market' then it should ensure that sufficient safeguards are included in the bills itself to prevent exploitation of poor farmers in the hands of big corporates. 

We owe our farmers for our food security and nutrition. If private players and big corporates are allowed to enter this market unchecked, it would be disastorous in future. 

A prudent and effective bill covering all the benefits of the present bill with safeguards 

against poor farmer exploitation and food security is the need of the hour. 

Food for Thought.......

RC 

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