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Discussion on Farm Laws

Author : Tanushree Bhattacharya (Jindal Global Law School)

One of the recent and most important events in the legal sphere of the country is the row sparked by the 3 Farm Bills proposed in September 2020. The 3 bills proposed that later became acts are – The Essential Commodities (Amendment) Act, 2020; The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Act, 2020; and The Farmers (Empowerment And Protection) Agreement On Price Assurance And Farm Services Act, 2020.

The first act focuses the stocking or hoarding of essential commodities like wheat, rice, etc. This act allows these private players to stock food grains in an unlimited manner without facing any consequences for it. This activity was considered illegal in the past. This current amendment is a serious pitfall to the farmers as this kind of hoarding and selling will lead to artificial price fluctuations, granting the farmers a much lower price for their produce than they were initially entitled to.

The second act enables farmers to eliminate middlemen and sell their produce directly to institutional or corporate buyers at prices that are agreed between them. But what arises as the main concern of the farmers here is that this system invests a majority of bargaining power in the hands of the corporates, leaving the small or limitedly resourceful farmers to be exploited. This is also primarily because about 85% of Indian farmers own less than three hectares of land, which gives them barely any authority to negotiate with such institutional buyers. This can result in earnings for farms that are even lower than the prescribed minimum support price. Although it is being said that geographical restrictions are removed, it is not a logistically sound provision for the farmers in terms of expenditure. Additionally, this kind of privatization may ultimately lead to the closure of the Agricultural Produce Market Committees (APMCs) which is in a way a revenue loss for even the state as no taxes will be imposed on private markets. Many people employed in the maintenance of these APMCs will also lose their jobs.

Finally, the last act essentially allows farmers to enter into specific contracts with the buyer – corporates and agri-firms, to sell the produce at a pre-agreed price. While this seems to be a very providential law, in effect it can be said that government interventions in form of MSPs are at risk since the pre-agreed price is not related to the MSP in any way. And ultimately, profit maximization is the aim of all these corporate buyers, leaving farmers in a debilitating situation which is a consequential hit to the economy.

It is in relation to these developments that farmers and middlemen have been staging incessant protests in various parts of northern India, particularly Punjab, Haryana and Uttar Pradesh. In essence, the objection raised by the farmers against these acts is that they are primarily favouring the large corporates and institutional buyers only, not taking into consideration the empowerment and financial wellbeing of the farmers. They are of the opinion that the minimum support price will be severely affected if these new laws are implemented, leaving them with barely any returns as against the toiling labour they have put in to cultivate their produce and hence entitlement to MSPs must be made a legal right in the country. As per statistics, even today, only 6% of Indian farmers receive the benefits of MSP as despite the listing several crops, procurement by the government is done only for the basic and essential ones like wheat and rice. Privatisation in the field of agriculture is vehemently opposed by these farmers in this regard.

The government has firmly backed these laws and is not willing repeal the them at any cost despite several failed attempts at negotiations with the protesting farmers. While the farmers still continue to stage their protest in evident rejection of the laws. This clear divide between the stands taken by the government and the farmer unions and failure in consensus is mainly why the Supreme Court of India decided to step up and intervene, expressing its gross disappointment. On 12th January 2021, the Supreme Court in a three judge bench comprising the CJI S.A. Bobde, Bopanna J. and V. Ramasubramanian J., suspended the implementation of the three farm laws, which seemed to be a dire cause of conflict between the Modi government and the farmer unions. It also set up a committee to look into the farmer’s grievances comprising an agricultural economist Ashok Gulati, director of the South Asia International Food Policy Research Institute Pramod Joshi, Anil Ghanwat of the Shetkari Sangathan and B.S. Mann of the BKU. The SC expects utmost cooperation from the farmer unions in the complete resolution of this conflict. Regardless, the farmers have continued their protests and propose to carry out a tractor rally on the Republic Day of India, which is being call an embarrassment to the nation by the centre. Personally, a middle ground must be met through the SC’s stay order by amending the farm laws to ensure financial soundness of the farmers and to eliminate exploitative tactics practiced by private players.