Home / Opinion / Views /  Farm laws may be gone but we need to press ahead with reforms

It is October-November, kharif harvest time. The farmer has just started reaping soybean or maize crop in, say, Bihar or Madhya Pradesh. Typically, he gets up at 4am and loads his produce, perhaps 1 tonne or less, in a truck or tractor and takes it to a mandi which may be 50km away. He reaches there hoping to get, say, 1,800 per quintal for maize or close to 4,000 a quintal for soybean, which are the broad Minimum Support Price (MSP) benchmarks. With all due processes followed, he puts his stock up for sale at the mandi. Buyers, usually a closed group, offer 1,500 and 3,500 respectively, which is not acceptable. The farmer decides to wait for a better deal. By 4pm, however, he realizes that prices have fallen to 1,400 and 3,200. Buyers are aware that the farmer must catch a 5 o’clock bus, the last available, and return to his village. He can’t keep his stock for the next day, he reasons, as the same story will likely play out. Besides, his family would have harvested more of the crop by then. There is hence a despair sale.

The farm law giving farmers the right to sell outside the mandi would have protected them from this story playing out. In a way, it reinforces something already in place called the Model Agricultural Produce Marketing Committee (APMC) laws of 2003, which over 16 states have implemented to give farmers this right. They can sell their output where they like. Andhra Pradesh, Telangana, Tamil Nadu, Maharashtra, Bihar and Karnataka are some states that allow it. The horticultural produce we see being ferried about in Mumbai today on some days is a manifestation of it. However, traditions endure. For example, Bihar, which has almost fully implemented these laws and repealed its APMC monopsony, still has farmers going the mandi way.

Why should farmers oppose an all-India law on the same? After all, we have an operational eNAM (e-national agricultural mandi), offering an alternative marketplace that has not aroused protests. Clearly, it’s powerful lobbies in Punjab, Haryana and Uttar Pradesh that are up in arms, as rich farmers fear a loss of hegemony. There have been clear signs of their role in the year-long agitation against the trio of farm laws enacted in 2020, though small-operation farmers did not complain. Nor did these protests spread to other states. Why were they confined to north India?

This is where the second law comes in, the one that pushed for contract farming. This is also very much in operation already. The Tata Group, Reliance, Big Bazaar (Future) and Godrej have linkages with farmers for contract-based supplies of standardized-quality farm produce. No wonder we pay 50 per kg for onions at their outlets even when a shortage pushes market prices upwards of 80 per kg. With intermediaries cut out, farmers get reasonably high compensation. The farm lobby does not like this. So, what does it do?

The MSP issue has been raked up on a hypothetical scenario that the laws will let India Inc make inroads in the sector and initially pay farmers high sums, but the government will then slowly withdraw MSP procurement, and once that is done, evil corporate houses will pay them less, leaving them hapless as APMCs would have withered away. Sounds fantastical? Yes, but the gullible will fall for this story even though the government has assured that MSPs will remain. While support prices are announced for all significant crops, they are active for only rice and wheat, which Food Corporation of India procures in bulk for our public distribution system (and buffer stock).

Anecdotally, it has been seen that in contract farming, farmers often renege on contracts and sell elsewhere when prices are high, and companies at the other end find it hard to begin legal proceedings. Soft-drink firms have had this problem with potato and tomato farmers in the past.

The third law met less resistance, as it merely said that the Essential Commodities Act was to be withdrawn and stock holdings at the retail or wholesale ends would be applicable only under specified conditions.

The problem with India’s agriculture sector is that it employs around 60% of our workforce and contributes to just 15% of the economy. Yet, farm lobbies, which include landlords, large-holding farmers, intermediaries and APMCs, are just too powerful and hold sway over small and marginal farmers who are led to believe in doom forecasts. True, these lobby groups provide informal support to landless labourers and farmers in the form of loans, buybacks, advice, etc. This fosters close relations that allow farm leaders to stoke their anxieties without making space for them to understand the true situation.

The repeal of these laws would be very unfortunate because it may mean that we are unable to commercialize agriculture for an extended period. The fact that farming is constitutionally a state subject means that the Centre has limited power on it, unless states are taken along. The Union government may have been compelled to withdraw these laws because it needs to stay in power to effect reforms, and if three states turn antagonistic, its future agenda would be in jeopardy.

Can we ever go back to getting these laws in? The answer is ‘yes’, and for this to happen, the government needs a stronger communication strategy, one that effectively conveys their benefits to all farmers across India. This will be a long battle that requires patience and perseverance, but it can be done.

It will, of course, take time. States that are more open to these ideas and have brought in the Model APMC laws could serve as case studies to be propagated among farmers in other states. Large numbers need to be convinced that these laws are in their interest.

Madan Sabnavis is author of ‘Hits & Misses: The Indian Banking Story’

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Recommended For You
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsFeedbackRedeem a Gift CardLogout