In a joint appeal addressed to Union Agriculture Minister Narendra Singh Tomar, several leading economists have urged the government to repeal the farm laws that have been opposed by peasants across the country.
The economists, many of whom specialise on issues of agricultural policy, urged the government to repeal the laws because they “are not in the best interests of the small and marginal farmers of the country”. Echoing support to the peasant organisations that have converged on the national capital since the end of November, they affirmed that these “organisations have raised very critical objections”.
The economists said that they did indeed believe that agricultural marketing systems needed to be improved, but they pointed out the interests of millions of small and marginal farmers would not be served by the three new farm Acts. In support of their contention, they listed five key objections.
The economists argued that the passage of a Central Act would “override and undermine” the role of State governments. Terming the Centre’s approach as “flawed”, they said the new legislation would skew the “Centre-State power balance” and, in the process, violate principles of Indian federalism. They argued that State governments, being close to the ground and more accessible to peasants, were more suited to serve them. In any case, they pointed out, most Indian States had amended their Agricultural Produce Market Committee (APMC) legislation to provide for private mandis and for electronic transactions and other such avenues for trade.
The economists warned that the new legislation would create “practically unregulated markets” outside of the APMC mandis. Allowing two markets to be governed by two different legal regimes and market fees would lead to an anomalous situation, they said.
Since there were no protective provisions in place in these unregulated markets, farmers would be exposed to unfair practices in these new trading channels, they warned.
In their letter to the Minister, the economists pointed out that even before the passage of the new legislation, the APMCs functioned as a platform for the credible establishment of benchmarks for commodity prices. This was despite most of the trading actually happening outside the APMC mandis, they pointed out. Referring to the case of Bihar, after the removal of APMC Act in 2006, they observed that farmers there had “less choice of buyers and less bargaining power, resulting in significantly lower prices compared to other States”.
The economists pointed out that the new law meant to promote contract farming failed to take into account the “huge asymmetry” between small and marginal farmers on the one hand and companies on the other. Contract farming currently happens through “unwritten arrangements” which offer no protection to the peasants. Moreover, most of these arrangements are negotiated through aggregators and they protect the interests of the larger companies. The new law is unlikely to change this unequal arrangement, they pointed out.
The economists warned that the new legislation may promote the “consolidation of the market and the value chains in agricultural commodities in the hands of a few big players, as has happened in other countries such as the U.S. and Europe”. The resulting “Get-Big-or-Get-Out” dynamic may “push out the small farmers, small traders and local agri-businesses”. They suggested that Indian farmers need “a system that enables better bargaining power and their expanded involvement in the value chain through storage, processing and marketing infrastructure in the hands of farmers and FPOs.” This would result in enhanced farmer incomes, a stated policy objective of the government, they added.
The signatories urged the government to withdraw these Acts and “hold extensive consultations with farmer organisations and other stakeholders” on measures that would bring equitable and sustainable benefits to farmers and the economy. “It would be the truly democratic thing to do,” they wrote.
The signatories to the letter included Prof D. Narasimha Reddy, retired Professor of Economics at the University of Hyderabad; Prof Kamal Nayan Kabra, retired Professor of Economics at the Indian Institute of Public Administration; Prof Arun Kumar, Malcolm S. Adiseshiah Chair Professor, Institute of Social Sciences, New Delhi; Prof K.N. Harilal, Member, Kerala State Planning Board; Prof R. Ramakumar, NABARD Chair Professor, Tata Institute of Social Sciences, Mumbai; Prof Vikas Rawal and Prof Himanshu, Associate Professors of Economics at Jawaharlal Nehru University, New Delhi.
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