The three farm laws were never a solution

News: On November 29, the Farm Laws Repeal Bill was passed in the Lok Sabha without discussion

One of the significant issues with the farm laws was that the centre tried to regulate agricultural markets.

However, it must be noted that, While the Centre has the capacity to make landmark changes, true reform and action rests with local governments.

Because, states are better placed to assimilate and respond to the diversity of institutional and socio-economic contexts and agroclimatic regions. They are often better placed to incorporate local concerns for robust and sustainable solutions.

How the states are affected by the farm laws?

Transfer of regulatory authority from the States to the Centre: The APMC Act mandated that states can regulate, designated physical premises called the ‘market yards’, via their respective APMCs. However, through the farm laws, the Centre assumed control of market areas outside these yards, now called ‘trade areas’, from the States.

This particularly hurt States that had the most deregulated systems. A State that had no APMC Act, for example, suddenly found that all deregulated areas within the State would now come under the Centre’s regulatory ambit and control.

Further, by exempting private players from adhering to any State law in agricultural marketing, it effectively nullified the power of States to control agricultural markets.

Why the central governments should not regulate agricultural markets?

Firstly, there is no systematic evidence to suggest that the Centre is better informed and better equipped to regulate agricultural markets.

Secondly, during the COVID-19 lockdown, the Centre was almost unable to implement relief measures for agricultural marketing. In contrast, States, regardless of the ruling parties, offered a more timely and relevant response to manage the fallout of the COVID-19 lockdown on agriculture.

Thirdly, beyond agricultural marketing, the central government’s efforts in the past such as One Million Ponds, 10,000 FPOs, and One District One Product are often disconnected from local needs for robust and sustainable solutions for agriculture.

Fourthly, Centralisation of authority to influence the functioning of trade areas, would facilitate consolidation of big business, a trend that is evident globally.

For instance, the recent memoranda of understanding that the Government of India has signed for building data stacks with Cisco, Jio, ITC, NeML, etc. has raised fears.

These select few companies have been granted limited access to “data from the federated Farmers’ database” for specific areas.

A “trade” area under full control of the central government would potentially offer the big business a digital data consolidation route to controlling supply chains.

What is the way forward?

For state governments: States need to implement the suggestions that many expert committees have proposed for agricultural market reform, i.e., delinking the regulatory and operational roles of the APMCs.

For the center: The Centre, in the short term, should try to offer a stable and predictable policy environment vis-à-vis imports and exports, the functioning of national commodity exchanges, and futures markets.

Further, it should work towards providing inclusive platforms for discussions on State-level market reform, public procurement, and price support, designing safeguards against the consolidation of corporate interests, and framing data policies.

Source: This post is based on the article “The three farm laws were never a solution” published in The Hindu on 30th November 2021.