Farm Bills Concerns and evaluation

Context: Agriculture in India needs state support to thrive.

Background

• Recently, President Ram Nath Kovind gave his assent to three contentious farm bills passed by Parliament.

1. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act,2020 (FAPAFS).
2. The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (FPTC).

• The Essential Commodities (Amendment) Act, 2020 (EC).
• Indian farmers worry that these farm bills may clear the way for giant Indian companies.

Why the Farm bills are touted as a watershed moment for Indian agriculture?

• Elimination of middlemen: The reforms would remove the shackles from the agriculture sector and free farmers from the stranglehold of middlemen by creating one market.
• Abolition of monopoly of APMC mandis: The bills will permit private buyers to hoard essential commodities for future sales, which only government-authorized agents could do earlier, along with changing the rules for contract farming.

Why the farmers are concerned about farm bills?

• Issue of withdrawing MSP: Since the Minimum Support Price (MSP) is not mentioned in the bills, they fear that they will lose the assured option of selling to the APMC mandis and that this will lead to corporate exploitation.
• Corporatisation of agriculture: In the absence of regulation, as agribusiness firms might well be able to dictate both the market conditions (including prices) and the terms of contract farming as small farmers do not have the same bargaining power.
• Loss of livelihood and employment: Farmers are suspicious that the entry of giant Indian companies in future such as Reliance and Adani who have already made investments in the agri-business infrastructure will wipe out their livelihood in farming. For instance, the management of the crop insurance scheme against natural disasters, introduced in 2017, was handed over to one of Anil Ambani’s companies, among others.

How in most countries governments subsidise Agriculture sector?

• In the US, the agriculture subsidies accounts for about 40 percent of the total farm income. sector ($46 billion in federal subsidies this year). – New York times.
• Similarly, the European Union’s Common Agricultural Policy spending has averaged €54 billion annually since 2006.

Why Agriculture sector needs state support in India?

• Majority of the farmers are small in India: Smallholder and marginal farmers, those with less than two hectares of land account for 86.2 per cent of all cultivators – 10th Agriculture Census.
  • For them, it is unaffordable to carry their produce to other states or far-off places to sell. Without some support from the state, the smallest of Indian peasants would be even more vulnerable.
• Lack of proper jobs: Also, the prospects of generating employment from other secondary and tertiary sector is not bright. For example, the share of the secondary sector in total employment has been stagnant at around 26 per cent (as against 41 per cent for agriculture) and its share in the GDP is declining.
• Urban rural divide: There is a wide gap between urban and rural India in terms of per capita resources is widening.

What is the way forward?

• Need to increase public investment in agriculture in terms of Agri- infrastructure.
• Promote Livelihood and Income Augmentation schemes like the Rythu Bandhu in Telangana or the Krushak in Odisha.
• Need to ensure that no transaction can be done below the MSP, would help alleviate some rural distress.
• For making farming sustainable, the government should draw inspiration from Andhra Pradesh’s community managed farming model which promotes agro-ecological principles with the use of locally produced, ecologically sustainable inputs, focusing on soil health, instead of depending on chemical fertilisers. This model is more resilient as well as more biodiverse in nature and provides a safety net to farmers.