WITH the Bharatiya Janata Party (BJP) returning to power in four of the five States in which Assembly elections were held in February-March and the report of the Supreme Court-appointed committee being made public by one of its members, there appears to be an attempt to resurrect the three controversial farm laws. The three laws—the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and the Essential Commodities (Amendment) Act, 2020—received presidential assent in September 2020 and were subsequently withdrawn in November 2021.
The apex court set up the committee after a slew of petitions in favour of and against the laws were filed before it. The court reasoned that as talks between the government and the agitating farmers had made little headway, it constituted a committee of experts to negotiate with the government and the farmers. It stayed the implementation of the three laws on January 21, 2021.
On March 21, Anil Ghanwat, president of the Shetkari Sanghatana and a member of the court-appointed committee, released the 98-page report, which was basically a treatise in defence of the farm laws. On the basis of the feedback received from the stakeholders, the committee concluded that only 13.3 per cent of the farmers were against the three laws, whereas 85.7 per cent were in favour of them. A repeal or a prolonged suspension of the farm laws, it concluded, would be “unfair” to the silent majority who support them. It recommended a “major communication exercise” to “clear the apprehension that the land of the farmers would be usurped under the Act”.
The demand to legalise the minimum support price (MSP) system, as demanded by farmers, was not feasible and difficult to implement. The government did not have the “financial coffers” to buy all the produce of 23 crops covered under the MSP, it observed. In sum, the committee’s recommendations were exactly what the government wanted to hear. It also recommended doing away with the Commission on Agricultural Costs and Prices and abolition of market/cess charged by Agricultural Produce Marketing Committees (APMC). It suggested that service charges in trade areas be decided competitively to reduce intermediary costs.
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The report was released by Anil Ghanwat alone. The committee included two other members: Ashok Gulati, agricultural economist and former chairperson of the Commission of Agricultural Costs and Prices, and Pramod Kumar Joshi, also an agricultural economist and South Asia Director at the International Food Policy Research Institute. A fourth member, Bhupinder Singh Mann, national president of the Bharatiya Kisan Union (BKU) and a former Rajya Sabha member, had recused himself soon after the committee was constituted.
The farm laws could provide an overarching architecture for agricultural marketing, the report stated, arguing that States could be given the flexibility of adopting the farm laws so that the “basic spirit of the laws for promoting effective competition in agricultural markets and creation of ‘one nation, one market’ is not violated”. The Acts, according to the report, were an attempt to formalise transactions outside the APMC to facilitate the “creation of an ecoystem for more competitive markets and trade”.
Anil Ghanwat, a strong supporter of open market reforms in agriculture, had threatened to bring one lakh farmers to New Delhi in support of the farm laws a few days after the Prime Minister, in his Mann Ki Baat programme, announced that Parliament would repeal the laws.
The committee members claimed to have interacted with 73 farmer organisations representing 3.83 crore farmers. It was asserted that 61 of the 73 organisations, representing 3.3 crore farmers, fully supported the three Acts. This, it was claimed, was the majority, comprising 85.7 per cent of the farmers. Basically, this meant that less than 15 per cent were opposed to the three Acts, a claim that was refuted by the Samyukta Kisan Morcha (SKM), the front organisation of more than 500 farmer and peasant organisations that led the protest for over a year. Again, according to the report, only four organisations representing 51 lakh farmers (13.3 per cent) did not support the laws. Seven farmer organisations, representing 3.6 lakh farmers (1 per cent), supported the laws but with some modifications, and one organisation, representing 500 farmers, appeared unclear about the implications of the Act.
As per the report, the interactions produced many suggestions about an alternative dispute settlement process, farmers’ courts, fast track tribunals, complete abolition of the Essential Commodities Act, centralised registration for parties entering into a farming agreement, electronic registration for private traders, extending the MSP to more commodities with a legal backing, and so on. The committee report acknowledged that representatives of farmers organisations that were on protest did not join the deliberations. To be fair, the SKM, which was spearheading the protests, had made it clear that it would not settle for anything less than a repeal. Further, as the farm laws were enacted by Parliament, it was Parliament alone that could undo them. The committee was informed that the protesting farmers preferred bilateral discussions with the government. The SKM maintained that it had never approached the Supreme Court. Besides, it could not be compelled to do depose before the committee. Besides, discussions with the government had started before the committee was constituted. The committee “respected” the decision of the protesting farmers and claimed to have addressed their concerns in the recommendations.
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It further claimed that it had received 19,000-odd representations and suggestions through a questionnaire put up on a dedicated portal. The feedback included “5,451 farmers, 929 FPOs, 151 farmer unions and 12, 496 other stakeholders”. The overall results showed that two-thirds of the respondents “supported the Acts”.
The committee was required to submit its report within two months of its formation. The report was kept in abeyance. The committee members were known supporters of the farm laws and it was assumed that their recommendations would not have been different from the government’s position. The reason for withholding the contents of the report was that the government perceived that as there was anger against the farm laws, the findings would have added fuel to fire and that if the protests had continued for another summer, they would have impacted the BJP’s prospects in the Assembly elections. By repealing the laws, the BJP government at the Centre was able to deflect some of the anger.
The committee found that only 42.3 per cent of the farmers sold their produce in APMC-managed mandis and, mostly concentrated in Punjab and Haryana, where more than 70 per cent of the respondent farmers did so . Two-thirds of the respondents felt that the Famers Produce Trade and Commerce (Promotion and Facilitation) Act, FPTC Act, would give farmers more choice than the system provided by the APMC mandis. According to State-wise feedback received on the Act, 64 per cent of the respondents in Punjab, 51 per cent in Andhra Pradesh, 49 per cent in Kerala and 47 per cent in West Bengal felt that the Acts would not give farmers the choice to sell beyond the APMC mandis. It was notable that these percentages reflected that proportion of farmers who were not part of the protest and yet had expressed reservations about the farm laws.
On the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, the report concluded that 69.1 per cent were aware that the agreement provided for farm produce not for the land. Some 58.2 per cent felt there was no risk from the corporate sector, 28.7 per cent were unsure about the clause and 13 per cent felt there was a risk of land acquisition. This meant that 43.7 per cent of the respondents were not confident that their lands would be protected under the Act. Around 52.7 per cent felt that the dispute resolution mechanism under the Act was effective. That they should have come to this conclusion was a mystery as the Act had not yet been implemented and, therefore, its effectiveness was untested. The committee further stated that only 27.5 per cent of the farmers sold their produce at the MSP, procurement of which was concentrated in Punjab, Chhattisgarh and Madhya Pradesh.
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If, as per the committee, 57.7 per cent of the farmers sold their produce outside APMC mandis and 42.3 per cent sold at mandis, it was evident that the mandis had not lost relevance despite the “open market” system where traders were under no obligation to buy the produce at the declared MSP rates. If 64.6 per cent of the respondents said that the Act would get better prices for farmers, 35.4 per cent (25.3 per cent said they can’t say and 10.1 per cent replied in the negative) were unsure of the benefits of the Act. On whether the existing provision for dispute resolution under the SDM in the FPTC Act was adequate, 48.4 per cent of the respondents said ‘No’, and 51.5 per cent replied in the affirmative. Similarly, 47.3 per cent of the respondents, as against 52.7 per cent, said they were unsure and not in agreement with the dispute resolution by the SDM provided under the Agreement on Price Assurance and Farm Services Act. These were farmers and farmer groups that had responded to the questionnaire. A large number of agricultural workers and their organisations did not participate in the study.
In the feedback received by the committee, it was stated that “it also manifests that many respondents were uncertain on some aspects of the Acts though they supported the overall Acts. This shows the communication gap between the farmers and what the government intends through these Acts”. This observation was sufficient indication that even those who interacted with the committee were not totally convinced about the benefits of the Acts.
Report is pro corporate: AIKS
The All India Kisan Sabha (AIKS), one of the prime constituents of the SKM, came down strongly on the recommendations of the committee. The recommendations, it said, were “aimed to facilitate pro-corporate reforms in agriculture”. It stated that the observation that 85 per cent of farmers in the country were in favour of the farm Acts was “nothing but a concerted effort to distort facts and to create a pro-reform environment to facilitate the corporate takeover of agricultural land, agro produce and agricultural markets”. As there was no existing institutional system of representation of farmers’ organisations, the assertion by a committee member that a “silent majority” was in favour was baseless, it said. The recommendation to cap procurement of wheat and rice commensurate with the needs of the public distribution system (PDS), it said, was against farmers’ interests and would endanger the existing system of procurement under the PDS. The committee had also glossed over the recommendations of the M.S. Swaminathan Committee on MSP (50 per cent of the cost of production) which was promised by none other than Narendra Modi during the run-up to the 2014 Lok Sabha election.
Interestingly, the responses by email showed a consistent 53-54 per cent supporting the Act with the remaining 46-47 per cent either unsure or opposed to the Acts. Of this, a consistent 2-3 per cent were opposed to the three Acts.
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The farm laws, according to the report, will reduce post-harvest losses and “create an ecosystem to facilitate private investment in well-oiled supply chains to cut down logistics, add value and reduce food losses”. The post-harvest losses were 6 per cent in cereals, 8 per cent in pulses, 10 per cent in oilseeds and 15 per cent in fruits and vegetables. There was a need for post-harvest management, the authors of the report argue, “by connecting food producers with consumers so that farmers can access these markets by minimising food losses and ensuring safety”. But, according to the committee, it is not farmers who will connect with the consumers directly but a private investment driven “well-oiled supply chain”. The APMC mandis set up under the Agricultural Produce Markets Regulation Acts to regulate primary agricultural market yards to protect the interests of farmers and ensure fair play had become “oligopolistic structures with high commissions and rent-seeking”. There were stringent controls on storage and movement of several agricultural commodities under the Essential Commodities Act, 1955.
Reduce buffer stocks
The committee’s report recommends that buffer stocks of the Food Corporation of India (FCI) be reduced. As of July 1, it stated that the FCI had 97.2 million tonnes of wheat and rice, which was way above the buffer stock norm of 41.1 million tonnes. This was expected to increase to 100 million tonnes as of July 2021. It was estimated that the cost for the FCI for acquiring, storing and distributing foodgrains was 40 per cent more than the procurement costs. It was also argued that procurement by NAFED was only 11.8 per cent of the total production of pulses and 4.5 per cent oilseeds whereas the FCI procured 36.2 per cent of rice and 35 per cent of total wheat production. Such a comparison was fallacious as rice and wheat were staples consumed by the majority of the population and were essential for the sustenance of the PDS.
The committee might complain about the excess stock and the costs incurred thereby but when an increase in global prices in wheat in 2021 happened owing to supply concerns, there was an increase in demand for Indian wheat. In early November, wheat stocks stood at 41.98 million tonnes. Despite the year-long farmers protest from November 2020 to December 9, 2021, the cultivation of both rabi and kharif crops was not allowed to suffer. In the 2021-22 crop year, wheat production was expected to touch a record 111.32 million tonnes as per agency reports quoting Agriculture Ministry estimates. In 2021, it was over 109 million tonnes. Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, Gujarat, Bihar and Rajasthan are the major wheat-producing States. Ironically, despite the hype over excess stocks and costs, the Central government was able to rely on those stocks to implement the Pradhan Mantri Garib Kalyan Yojana to distribute additional 5 kg of foodgrains to National Food Security Act (NFSA) households and ration card holders during the first and second phases of the COVID-19 pandemic. Soon after the first Cabinet meeting, Uttar Pradesh Chief Minister Adityanath announced that the free ration scheme in his State would be extended by another three months.
The committee report makes a strong case for the Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017, which basically deregulated access to markets, providing freedom of choice of sale and purchase of agricultural produce as against the set up where farmers could sell only to licensed traders in the APMC mandis. Despite the Model Act being in force since 2017, only 103 private mandis had come up in the country. The report admitted that the Model Act had not been adopted uniformly by all the States although its main pitch was that it would reduce the scope of cartelisation, middlemen, reduce transaction costs and increase the “share of farmer’s realisation in the overall price of the agri produce”.
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The committee felt that most of the transactions occurred outside the APMC mandis and that there was a lot of inter-State disparity between procurement and production.
Ironically, BJP-ruled States such as Haryana, Uttar Pradesh, Madhya Pradesh, Karnataka and Gujarat, and Punjab, Maharashtra and Rajasthan were drawing substantial revenues from mandi transactions meant for the maintenance of State APMC markets. The committee also made a strong case for contract farming on the grounds that as many as 19 States had a provision for this in their APMC Acts and, therefore, a national framework was required under the repealed Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act. But apprehensions were expressed before the committee by the stakeholders about the risks involved, such as land getting hypothecated against the agreement and determination of cropping patterns, price and quality by the agri business. Apart from mentioning some stray examples of contract farming in poultry or the experience of Mother Dairy Fruits and Vegetables Limited involving some 18,000 farmers and 300 producer associations or Sahyadri Farmer Producer Company Limited, which manufactures the Kissan brand ketchup, the committee report did not have many successful instances of contract farming to boast about. Contract farming in basic staples such as wheat and rice and items such as poultry or tomato were like comparing apples and oranges.
Like the committee, the government believes that more effort should have gone into convincing farmers about the merits of the laws. The committee report itself acknowledged respondent farmers’ apprehensions over the laws. Whether the laws will be brought back, only time will tell. The timing of the release of the report is, however, curious.