Farmers will prosper only if Centre’s ‘one nation, one market’ agenda is replaced by ‘one nation, one MSP’
The farm laws in their current form will weaken the Mandi system and give more power to big traders and promote black marketing
Corporates across the globe have adopted new ways of exploiting marginalised, less informed and weaker sections of the society by the means of draconian legislation in the host countries. The recent decade has witnessed large scale agriculture land deals and its systemic political response. In some cases, such movements have succeeded in toppling the ruling government.
India has a long history of agrarian movements. Mahatma Gandhi himself led a movement of indigo farmers in 1917 which became a significant event towards Independence. History shows that agrarian movements can quickly escalate into popular movements which may overthrow the ruling government if their grievances are not addressed.
On June 22, 2005, POSCO, the world’s fifth biggest steelmakers by output, came to an agreement with the Government of Odisha for a 12-million tons per annum plant on 4000 hectare of lands with investment of USD 12 billion. This was the biggest FDI in India, aiming to make the country a steel superpower. However, amidst huge protests by villagers, POSCO has changed its plan and reduced its land demand to 2700 acres of land for a 8 million tons per annum plant.
In late 2006, to realize the dream of Tata’s cheapest car, West Bengal Government acquired 997 acre of fertile land in Singur district. The farmers began a protest against the forceful land acquisition act of the government. The All India Trinamool Congress subsequently galvanized the movement and toppled the ruling regime of thirty years in West Bengal in 2011.
In 2015, the NDA government introduced the controversial Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015. The genesis of this bill can be traced back to a bill envisaged by the UPA govt back in 2013, although with some major differences. The 2015 bill provided free passage for land acquisition by private players. The Congress under the leadership of Rahul Gandhi opposed the bill and forced the government to go for some changes as per the 2013 bill.
In 2020, the government decided to bring ‘reforms’ into the agriculture sector of India which feeds 17 percent of the world's population with 2.4 percent of available land. The farm bills took shape in a phased manner; on 2nd June the government brought an ordinance which became a law on 27 September, but the stakeholders have been opposing the bill since its inception as ordinance.
As farmers are the major stakeholders for whom farm laws were framed, the question is why they were not taken into confidence before implementing the laws? This was not the first instance when such events have taken place. The present government has made every law in a hurry without consulting the stakeholders involved. It is clear that the farm laws will bring misery to small farmers and traders as well as it will also damage the ‘Mandi System’.
The laws will leave farmers powerless and their fate will lie at the mercy of large retailers and exporters. The claim that the risk of market instability will be transferred from the farmer to sponsor (i.e. corporate companies) is totally baseless. Undoubtedly, the laws will give impetus to stocking and hoarding which will further result into artificial price
fluctuations and low prices for farmers after harvest. The laws seem to be anti-farmer and fail on constitutional grounds too. It is unwise to use entry 33 in the Concurrent List by the Centre to push these laws. It weakens the spirit of cooperative federalism as agriculture is exclusively a state subject.
The govt said that contractual farming, provided for by the laws, is needed to boost the productivity and raise the income of farmers, but the laws create a situation where the farmer is less informed than the second party i.e. the contractor. Contract farming can coerce the farmers to pay a heavy price and run from pillar to post to fight legal battles. In such a situation, the poor and less informed farmers have little choice but to dance to the tune of big corporates.
An even more abominable situation for farmers is the prevalent information asymmetry in the price determination. A mere fluctuation in demand and supply creates a ripple effect in the prices. Besides, there is already a prevalent intermediary culture for farm produce, and such a situation hampers the transfer of information to the farmers.
This was precisely the case when PepsiCo, a leading multinational, had filed a lawsuit against farmers in Gujarat in April 2019. PepsiCo had entered into a contract with farmers in north Gujarat to produce and sell a particular variety of potatoes as per the terms and conditions of the US food and beverages giant. This lawsuit had attracted strong reaction from the farmers and farmers' rights groups and they had demanded government intervention to solve the conflict and protect the farmers as per Section 39 of the Farmers’ Rights Act
For policy making, it is very important to do comparative study of a similar law. The government of Bihar had in 2006 abolished APMC in Bihar. This has negatively affected the bargaining power of farmers. Farmers in Bihar are receiving 10-15 percent lower prices than the MSP,
because of which nearly half the farmers can’t even recover their investments. Farmers are forced to sell their produce to private procurers at throwaway prices. Farming in Bihar has turned out to be a non-viable profession. This experiment should be taken as an important lesson for the current farm laws as it has forced farmers to a hapless situation.
The government is claiming that the farm laws are a salvation for farmers but that is clearly not the case. The laws will weaken the Mandi system and give more power to big traders and promote black marketing. If the Centre’s ‘one nation, one market’ agenda is replaced by ‘one nation, one MSP’, then only the farmers would prosper.
(The author teaches Economics at Bhagat Singh College, University of Delhi and is Post-Doctoral fellow at Department of Political Science, DU)