Farmers across India have been confronting the government and protesting for months about three controversial laws that will change the way they operate. Under the previous laws, farmers were required to sell their goods at auction at their state’s Agricultural Produce Market Committee where they were guaranteed the government-agreed minimum price. The new laws allow farmers to sell their goods to anyone and to set their own price. We asked several Indian agricultural consultants to shed more light on the topic.
Are India’s new reforms a ‘death warrant’ for farmers? Discuss your position.
“No, the new farm reforms are not a death warrant for Indian farmers. The measures introduced by these farm laws along with Farmers Producer Organizations (FPO) and Agriculture Infrastructure Fund (AIF) schemes will be significant. They will have a collective impact that will bring about exciting possibilities – they can be truly transformative in the next few years. As we know in India, the complete market economy has its own challenges and these are continuing to increase due to inappropriate past policies and lack of partnerships. India has 82% small and marginal farmers with an average 1.1 hectare landholding and the small marketable surplus that reaches the institutional Agricultural Produce Market Committees (APMCs) is around 10%. Why have several Indian states, led by large farmers followed by smallholders in Punjab and Haryana, refused to accept all the bills? The farmers’ view is that they see a big threat from capitalists gaining benefit from the reform and controlling the whole agriculture market. Farmers want assured procurement at the minimum support price (MSP) and in APMCs. I don’t support capitalism grabbing the agriculture market with high investment in the sector. But, what farmers are demanding, the withdrawal of the farm laws, is not good at all for the future. For positive higher growth, the Indian agriculture economy needs more infrastructure investment, more Small and Medium Enterprises (SMEs), agri start-ups, entrepreneurs, supply chains, high quality (global certified) agriculture practices, farm producers, and new employment opportunities. This is very much possible with the new farm laws. Farmers cannot continue taking responsibility just for production. They must be prepared to engage in farm to fork value chains through farmers’ collectives and by building different stakeholder and enabler partnerships. All these three farm laws and the FPO and AIF schemes provide a high opportunity for them to evolve to contribute to economic growth, environmental benefits and overall wealth creation.”
“43% of the population is employed in India’s agriculture sector, contributing a mere 16% of the GDP. Indeed, this calls for sectoral reform and this is exactly what the new farm laws aim to do – according to our policymakers. Farmers would no longer be bound by the existing Mandi system and minimum support prices and could sell produce to anyone (including e-commerce firms). The underlying assumption here is that all things being equal, farmers will get higher prices and this will spur investments in agro-logistics and processing hubs. However, reading between the lines tells us that a push for a laissez-faire policy may not actually work as expected. Farmers, mainly smallholders, fear that the new laws will gradually remove all support systems and will give greater bargaining power to private buyers, leaving farmers susceptible to low prices and poverty. The direction of the policymakers through these reforms is not wrong, but the laws need to be re-crafted giving clarity on how capitalists would be regulated and how farmers would benefit. Farmers need to adopt better agriculture practices and need to be fully involved in the supply chains and they need to see the benefits of working with the private sector. To do so, the laws must include provisions on how various actors in the value chain would be regulated and how farmers can collaborate with SMEs, e-commerce firms, etc.”
“The new farm laws are quite impressive in reading. It is like a bullet train without it having a proper track. Average Indian farmers are resource-poor and have marginal income. Most of them have a very small landholding (1-3 acres) for agriculture. They don’t have access to the markets for pricing. Therefore they sell their crops to middlemen or medium-sized farm owners. The supply chain system has not been improved because private players have not shown interest in the domain of agriculture. These laws could be changed if the government had thought earlier about building the capacities of the farmers. Government mechanisms work according to their vested interests. They will also continue their customs in the same way by introducing private players into this area. I think the future belongs to corporate farming and contract farming, so this is why our farmers feel insecure about these laws. But here I would like to add that land always belongs to the landowner and the government must protect their interests. India is a farmer’s country. I also believe that India needs to travel such a long way to achieve the goal of eradicating poverty through farming alone.”
“The Farmers’ Produce Trade and Commerce (Promotion and Facilitation, Act, 2020 has these strengths: a) It reduces farmers’ dependence on APMCs and local agri-traders; b) Farmers are empowered to access markets within and outside the state. It also has its weaknesses: a) Silent on the continuation of MSP and government procurement support – perhaps the main cause for farmers’ unrest in Punjab and Haryana. The opportunities are: a) Electronic platforms for trading, b) Price discovery will be quicker and cover markets nationwide. Threats: Traditional bonding of farmers built over generations with local traders (adthiyas) and access to informal, non-institutional credit will diminish. The Farmers (Empowerment and Protection) Agreement on Price assurance and Farm Services Act, 2020 also has several strengths: a) It provides a legal framework for farmers to enter into formal contractual arrangements to market farm produce, b) Farmers and traders are freed from the EC Act. Weaknesses: Higher entry barriers for dubious players are needed to safeguard farmers’ interests against spurious sponsors. Opportunities: a) A boost to private investment in agriculture with technology infusion, b) Farmers’ learning curve in agribusiness will rise. Threats: Corporate exploitation in the long run with a weakening of farmers’ collectives and cooperatives.”
“The three new farm acts legislated by the Government of India have been widely acclaimed at home and abroad as historical and long overdue. However, some experts, states, and stakeholders, including farmers, have been protesting against them and seeking their withdrawal. The Prime Minister of India has called the reforms a “watershed moment” for Indian agriculture but opposition parties have termed them “anti-farmer” and compared them to a “death warrant”. Farm laws lead farming to be under the control of a few corporates which is a death warrant for small and marginal farmers. The protests have been the strongest in Punjab and the neighbouring Haryana state where the Mandi system is strong and productivity is high so only the government has been able to buy that volume of produce at a set price. Now a more tangible solution would be to make some amendments and give assurances to farmers, particularly with regard to the Minimum Support Price (MSP) and the Agriculture Produce Market Committees (APMCs). There must be some security such as making any trade below MSP illegal. The new legislations have the potential to represent a significant step forward for agricultural reforms in India and could help farmers providing certain safeguards are incorporated. The reforms carry farmers’ prosperity and the transformation of the rural economy to make it a growth engine of the Indian economy.”
“For decades I have been working for farmers and Farmers’ Producer Organizations (FPOs). In my opinion, the three farm laws help farmers to get rid of the vicious cycle of exploitation from brokers, agri input suppliers, and APMC (agricultural produce market committee) goondas/corrupt officials. Now with the new laws, farmers have the freedom to sell their produce outside the APMC market, outside the states and there will be no tax on such trade which will give farmers a higher price. The Minimum Support Price (MSP) benefits are enjoyed by only 5% who are big and politically strong farmers. The MSP is of no use to small and marginal farmers although the government will continue it. Thus, the three laws are beneficial for real, small, and marginal farmers. Only agriculture market brokers (Mandi), big farmers, the APMC political lobbies, and few anti-national elements are opposing these laws. The number of small farmers who are opposing the laws are misguided or unaware about the provisions and benefits of the new farm laws. Thus, India’s new reforms are not a ‘death warrant’ for farmers, they are a boon for farmers.”
“For decades, small and marginal farmers in India have been facing difficulties due to problems that exist in the agriculture sector. Unfulfilled promises on the minimum support price (MSP) mechanism and the interference of middlemen have had a negative impact on farming. With a vision to liberate farmers from the Mandi structure and free them from the shackles of middlemen, the Government of India introduced the three farm bills. But farmers in the country where state-run Agricultural Produce Market Committees (APMC) operate are worried that the farm laws which aim to deregulate the tight agricultural market mechanism will further reduce their price security net. Under the new laws, procurement from farmers can be done without a licence or payment of fee, unlike in the APMC structure. The floodgates are opened to those who can directly procure from farmers without the interference of middlemen. Farmers are scared that this will allow corporates to have control over farm prices when the free-market system is fully established.”
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