What the new farm policy draft reveals and conceals

The year 2024 was marked by sustained efforts by the Union agriculture and farmers’ welfare ministry to introduce ‘reforms’ in agriculture. In March, it mooted the idea of setting up a National Council for Agricultural and Rural Transformation (NCART) during the first 100 days of the anticipated third term of Narendra Modi as PM.

The NCART was envisaged as an overarching federal body to devise policy and programmes for the agriculture sector. In October, the ministry came up with the idea of a National Agriculture Code (NAC) to standardise agricultural processes including ‘crop selection, sowing, irrigation, harvesting, post-harvesting operations, fertilisers, Internet of Things technology and storage’.

In November, the ministry issued a draft national policy framework on agricultural marketing and called for farmers to respond in two weeks. All these ideas were mooted without any consultations with either farmers or the states, although agriculture and agriculture marketing are on the state list in the Constitution. These attempts stem from the ministry’s ‘one size fits all’ mindset and its determined push to corporatise agriculture, pitching it as the solution to the problems that beset India’s agriculture sector.

The ministry also appears to have suppressed the report of a highpowered committee of experts it had set up after repealing the three contentious farm marketing laws in 2021. The report, if submitted at all, probably did not find favour with the government.

In September, the Supreme Court constituted a committee of independent experts including retired IPS officer B.S. Sandhu, Mohali resident Devinder Sharma, economist Ranjit Singh Ghuman and Sukhpal Singh, agricultural economist with the Punjab Agriculture University. It is expected to submit its first report in January 2025.

What, then, explains the ministry’s haste in releasing the policy framework on marketing?

Farmers and several farm experts believe that, undeterred by the farmers’ ongoing agitation, the government is busy preparing the ground for the corporate takeover of agriculture. “The proposals in the new framework facilitate the backdoor resurrection of the three controversial farm laws, which had been repealed due to concerns over their potential to corporatise agriculture, the food industry and the public distribution system [PDS],” says P. Krishnaprasad of the All India Kisan Sabha (AIKS), adding: “The proposed reforms seek to encroach upon the rights of state governments over agriculture, land, industry and markets—areas that fall under the ‘State List’ of the Constitution of India.”

Questioning the urgency of the agricultural marketing draft, Professor Ghuman asks: “What was the urgency? Farmers’ fears are right because the draft policy framework talks about contract farming, private mandis and ‘one nation, one market’. While farmers are protesting for the last 10 months to legalise MSP for all crops, there is not even a mention of MSP in the draft policy framework.”

Another conspicuous omission is the failure to address international agricultural trade and marketing. Export duties, bans and minimum export price policies and similar restrictions on exports imposed by the ministry of commerce often result in significant losses for Indian farmers, particularly when global prices are high.

What arouses suspicion is the stealth with which the Union government is seeking to introduce the changes it packages as ‘reforms’. Shouldn’t they consult the states and the farmers first? The ministry also needs to explain how a uniform, ‘onesize-fits-all’ policy can work in a large country with diverse soil and crop patterns, vastly different climate, food habits and levels of poverty. Wouldn’t it be more prudent to roll out these changes in an agriculturally backward state or a small state first?

The agriculture ministry’s draft policy emphasises that the key idea is to ‘build a vibrant marketing ecosystem in the country wherein farmers of all categories find a market of their choice to realise the best price for their produce’. It paradoxically begins by highlighting the robust health of Indian agriculture.

It makes the claim that agriculture has never before witnessed a sustained growth of 5 per cent per annum between 2016–17 and 2022–23. Foodgrains and oilseeds production, it claims, has reached record levels of 328.9 MT and 39.6 MT, respectively. Horticulture, the draft claims, has registered impressive growth to reach 352.23 MT and agricultural exports are at an all-time high of $50.2 billion. All is well, then, right?

Not quite.

The draft acknowledges that a large number of Indian farmers are small and marginal farmers. Fragmented landholding, high cost of production, poor accessibility to good markets and ‘lack of demand-driven production’ prevents farmers from realising ‘optimum realisation of value’.

Ostensibly addressing the needs of this vast majority of small and marginal farmers, the draft underlines 12 reforms in agricultural marketing including allowing private wholesale markets, direct wholesale purchase by food processors, exporters, organised retailers and bulk buyers. The policy document declares warehouses, silos and cold storages as deemed markets, and calls for an e-trading platform, a single point levy of market fee, a single unified licence, rationalisation of market fee and commission charges.

Chapter 7 of the draft policy reads: ‘Private markets are required to create competition among them and with other channels of marketing including APMC (Agricultural Produce Market Committee) markets. Establishing private markets improves farmers-market linkages. As a fulcrum, private markets would enhance the farmers’ net income.

Though the majority of states have made enabling provision for setting up of private wholesale markets, yet private markets have come up in only a few states like Maharashtra, Gujarat, Rajasthan, Karnataka, and Uttar Pradesh.’

The more contentious points in the draft policy bear similarities to the three farm laws that triggered a year-long protest by farmers forcing the government to repeal the Acts. These are:

• Minimum Support Price (MSP). Farmers have been demanding a legally guaranteed MSP for all crops. The government has ignored this demand. Under the banner of the Kisan Mazdoor Morcha (KMM) led by Sardar Jagjit Singh Dallewal—whose fast-unto-death entered the 38th day on 2 January— and Sarwan Singh Pandher, the farmers have been protesting at Shambhu and Khanauri borders from 13 February 2024. Although the parliament’s standing committee on agriculture recommended MSP in its report laid in Parliament on 17 December, the draft policy does not mention MSP at all.

• Involvement of private capital. Increased private sector involvement raises fears of monopolisation, potentially reducing farmers’ bargaining power. Established mandi systems, which are vital for Punjab and Haryana farmers, might face erosion under a national framework. The policy’s emphasis on private investment and infrastructure development aligns with the second farm law, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act.

• Contract farming. Part of the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, which promoted contract farming and privatisation, this finds a mention again in the draft policy framework.

• Private mandis. The draft policy talks about equipping the APMC markets or mandis with specific infrastructure and services under Public Private Partnership (PPP) mode. It promotes private investment in market infrastructure, such as warehouses and cold storage facilities, and encourages the adoption of digital trading and e-market platforms.

Farmers believe this is designed to allow private corporate bodies to eventually take over the mandis for their own profit. The draft policy also mentions allowing private wholesale markets to be set up, and permitting direct wholesale purchase by processors, exporters, organised retailers and bulk buyers. It declares warehouses, silos and cold storages as deemed markets, and calls for an e-trading platform, a single point levy of market fee, a single license, rationalisation of market fee and commission charges.

• ‘One Nation One Market’. The draft advocates for a fundamental restructuring of the existing agricultural marketing system, proposing its transformation into a Unified National Market (UNM) linked to a Value Chain Centric Infrastructure (VCCI). The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act of 2021 also allowed farmers to sell their produce outside the APMC markets. The Modi government’s assertion was that this law would provide an open market to farmers and they could sell their produce anywhere in the country, across various platforms, directly to consumers.

• Emphasis on technology and professionalism. The draft policy framework’s emphasis on Internet of Things (IoT), blockchain technology, integrated output management system and digitisation are a feature of the repealed Acts.

Samyukta Kisan Morcha leader Balbir Singh Rajewal said, “The Modi government’s message is clear: they want to break the APMC mandis in Punjab and bring corporate monopoly in agriculture. PM Modi is adamant to take revenge on Punjab, as we had led the farmers protest in Delhi. Since agriculture is a state subject, we have asked Punjab agriculture minister Gurmeet Singh Khuddian to bring a resolution in the Punjab assembly and oppose the new draft policy.”

Rajewal claimed that the new draft agricultural policy would erode Punjab’s hold over its own resources and agrarian economy in the same way in which the Goods and Services Tax (GST) has “broken the backbone of federal states’ financial autonomy.”