Economic Interest 02 :- Agricultural reforms
History of Agricultural law
Essential Commodity Act, 1955 is an old law inherited by British India like many other laws. There are many good and bad laws which are inherited by British India. This is one of the bad ones. This law was passed during World War 2. So Britishers could regulate and control how much, and which commodity will be stored by a grocer in India.
Which helped Great Britain to ensure food supply to Europe when many parts of India were facing famines {especially Great Britain}.
In 1955,
Indian farmers were trapped in a debt trap. Moneylenders and Zamindars used to give loans. Since majority of farmers couldn’t pay back loans, they were supposed to take new loans. To avoid this exploitation, The Government of India introduced APMC. Thus, it was mandatory for the farmers to sell their products at a Mandi. Traders were issued licences and could buy produce only from Mandi. Thus, a centralised system was created to avoid the exploitation of farmers.
1st week of November 2001,
BJP established a committee and suggested some agricultural reforms. The committee was headed by the then-rising star from Gujrat, Narendra Modi. These are the points proposed by the committee.
1. All restrictions should be removed, bringing necessary amendments to the Essential Commodity Act, 1955.
2. If necessary, such law should be used only in an emergency condition.
Congress party Manifesto,2019
1. Congress party will make amendments in the Agricultural Price Marketing Committee act in such a way that all restrictions on the trading of agricultural commodities across all states, including international trade.
2. In large villages and small towns, the congress will set up an agricultural market where farmers will be able to sell their products without restrictions.
All parties say something when in power and something else when in opposition. This is a classic example of oppositional.
APMC
1. It is mandatory for the farmer to sell his produce only at Mandi.
2. He is supposed to bring all his produce in a truck, bullock mart or any other means of transport.
3. A farmer of that area is supposed to sell his produce at the mandi in his area.
4. Similarly, a trader is supposed to acquire the licence of that particular Mandi if he wants to purchase any goods from that mandi.
5. The government of India decides MSP (Minimum Support Price). MSP is only decided for 22 specified crops.
6. The auction for these 22 crops can not start below the MSP, and for remaining items, the price is decided on the basis of demand and supply of the produce.
7. The product is sold in an auction system, and the sale is carried through a supply chain.
a. Farmer will take his production at APMC mandi where he will meet commission agents.
b. This commission agent will take the production to Traders to negotiate the price.
c. Transition agents will inform the farmer that his production was sold for a particular amount. Transaction agents will take 3% market fees which are supposed to be paid by the farmers.
d. From Traders, it will go to a wholesaler, retailer and ultimately to the consumers
.
The problem in old agricultural laws.
1. In the 60s there was a licence quota raj in industries which was liberalised by honourable Narasimha Rao and Manmohan Singh in 1991. Similarly, there was a licence quota raj in the agriculture sector which was never resolved.
2. Grocers were only allowed to keep a certain amount of items. There was a surge limit on commodities, storing beyond which was a criminal offence.
3. Thus, an inspector raj was established from top to bottom and bottom to top. A farmer may sell potatoes at 2rs per kg, and the consumer will buy potatoes at 40 rs/kg. Serval people in the middle will make the rest of the income.
4. Farmers will get very less for its products and consumers have to pay very much for the same.
5. Farmers have always been farming, but they are alienated in the business of farming.
6. All of India got its independence in 1947, 1950 we got our honourable constitution, 1952 we got our first elected government, the industrial sector was liberalised in 1991. Unfortunately, the Agricultural sector is still under licenced Raj.
7. This led to the rise of monopoly. All monopolies are bad, but the government monopoly is the worst in 3 worlds. Since licensing was issued by the state government, the traders who had a good relationship with the respective state government got the licence for the same.
8. Traders formed cartels (groups) to make sure that minimum support price is also the Maximum support Price. They made sure that farmers were forced to sell their produce at MSP since agricultural goods are perishable goods, they couldn’t take it back with them.
9. If Traders in the Market knows that these farmers have no other option to sell their production, a monopoly is established.
10. Agricultural produce is perishable. Farmers don’t have the luxury to take back the production if they are not satisfied with the price. They are supposed to sell their product as MSP at Mandi if no one is ready to pay them.
11. Indian Farmers must be married with the market and disintermediation with the market must be reversed.
12. For this procedure the farmers are forced to pay Mandi Tax, Tax is high as 8.5% in Punjab. This is a perfect example of colonialism where you are paying the restaurant to eat home-cooked food.
Why the farmer’s problem is not a problem for the Government.
1. When Onion price reach a high, we do see headlines in the news saying
a. “Tears in the eyes of Sonia Gandhi.”
b. “Tears in the eyes of Shushma Swaraj.”
2. Consumers, Politicians, Media has always colonised Indian farmers.
Bad example: Recently the government banned exports of Onions as Onion prices are increasing. This is so decorian that exports are reversed. Bangladesh, Sri Lanka are angry with India because of this decision. India had initially committed this supply, but India is breaking its word because state elections are coming in Bihar, West Bengal and by-election MP. If Onion prices are high, consumers will get upset. The sudden break in the exports also affects India’s reputation in International Trade.
Consumers are always taken care of by the government and the opposition too. It is the farmers who sold bullshit in the name of Agriculture reforms.
The Legality of the reform
According to the 7th schedule in our constitution
Only the Centre Government can make laws related to points in List one, State government related to list two and Both state Gov and Central Gov can make laws related to list 3.
According to Article 248, Residuary Power. If anything doesn’t belong to either of the lists then the centre has the authority to make laws regarding them.
Technically agricultural production falls under list two, that means only the state government can make laws regarding agricultural production.
But Article 249, Power of Legislation grants centre power to make laws related to the list two provided they are in National Interest.
Moreover, Entry 33 was used to make the Essential Commodities Act thus is right to say that the Centre Government has the legal authority to make laws related to agriculture.
Farm bill
a. The farmer’s Produce Trade and Commerce
(Promotion and Facilitation Ordinance 2020)
b. The Farmer (Empowerment and Protection) Agreement on Price Assurance and Farm Service Ordinance
c. The Amendment to the Essential Commodities Act, 1955
The Amendment to the Essential Commodities Act, 1955
Even the opposition {Excluding the left} agree with these amendments. The government has proposed amendments in section 3 of the Essential Commodities Act. Whereby reduce the power of the State and Center to enforce a stock limit , price limit, etc. The number on which this restriction is proposed to be limited.
There is a certain Price rise limit set beyond which the government will have the power to fix an upper limit for agricultural goods.
100 % for Vegetables and 50 % for cereals.
Which basically mean that if price rise by 100% for vegetables only then Government can put an upper limit on the price and 50% for cereals
In 2014, West Bengal Government ordered the farmers to sell potatoes bellow the MSP using the Essential Commodities Act,1955
Between 2014-2019, rules on Onion export were changed 17 times and in the same interval rules for rice export were changed 14 times thus farmers are not aware of the export laws which are important to conduct business without any difficulties.
The farmer’s Produce Trade and Commerce (Promotion and Facilitation Ordinance 2020)
APMC will now lose its monopoly. They will not be shut down, APMC will be operational but at the same time farmer is free to sell his production wherever he desires. If Traders in the Market knows that these farmers have no other option to sell their production, a monopoly is established. Agricultural produce is perishable, farmers don’t have the luxury to take back the production if they are not satisfied with the price. They are supposed to sell their product as MSP at Mandi if no one is ready to pay them.
It's hypocritical that Europe is united for Trade and Commerce, India is talking about globalization and International Trade, but in India, it was illegal for the farmer to sell his product apart from the Mandi in his area.
The Farmer (Empowerment and Protection) Agreement on Price Assurance and Farm Service Ordinance
Its emphasis on Contact farming which will assure the farmer the selling price of his production before the harvest.
Important Reasons
a. Price gap between the price farmers sell their products, and the price at which consumers buy them is 65% to 94 %.
b. In Nordic countries, the gap between the price farmers sell, and the consumer buys is 10%.
c. According to the data released by the government, the Number of farmers suicide clearly shows that APMC is not helping farmers.
d. Because of the long-chain Farmer, APMC, Trader, Wholesaler, Retailer, Consumer. Approximately 25 % of the total production is wasted.
Misconception and logical arguments
1) There is a false alarm that farmers will not be given MSP by the government at Mandi. MSP will still be released by the government, and if a farmer wants, then he can sell the same at Mandi.
2) It will be a huge loss for the State government, especially Punjab. Punjab has the highest Mandi tax, which helps the state to get a fund of 17500 Crore.
3) The year-long chain of middlemen will be disturbed.
4) There is no mechanism to check and punish private organisations if they buy agricultural goods below the MSP. Already in some states like Maharashtra, the company is punished if they buy agricultural goods below MSP. Moreover, they are supposed to pay rumination to the farmer.
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