Across the Aisle: Farm laws — not choice, just noise, says P Chidambaram

By: |
October 4, 2020 4:45 AM

Their argument is that farmers were 'tied' to the APMCs and, now, they have the choice to sell outside the APMCs.

farm acts, freedom of choice, doubling farmers' income, farm billsNow, all non-Mandi sales will neither need permissions nor invoke any taxes or cess.

From Prime Minister Modi to the Agriculture Minister to the Finance Minister to the CEO, Niti Aayog to the BJP’s President to the BJP’s spokespersons, everyone is singing the same tune. Their argument is that farmers were ‘tied’ to the APMCs and, now, they have the choice to sell outside the APMCs. Of course, they will not support their argument with data.

Mr Narayana Murthy, co-founder of Infosys, is reported to have said, “In God we trust. For everything else bring me data.”

The irrefutable data
What does the data show? They show

  • that 86 % of farmers are small farmers and have a holding of less than 2 hectares;
  • that farm holdings are being fragmented: according to the Agriculture Census, the number of farm holdings increased from 138 million in 2010-11 to 146 million in 2015-16;
  • that small farmers have little surplus grain to sell, yet they will sell a few bags of paddy or wheat to repay the loan(s) taken or for urgent household needs;
  • that only 6 % of farmers sell their produce in the APMC market yards; the remaining 94 % sell outside the APMC, mostly to local traders or a cooperative society or a processor;
  • that there are no APMCs in Kerala, UTs except Chandigarh, and some North-eastern states. Bihar repealed the state’s APMC Act a few years ago. In these states, agriculture produce marketing takes place outside APMCs
  • that the number of APMCs varies from 106 in Haryana to 145 in Punjab (with many sub-yards) to 283 in Tamil Nadu. While 70 % of wheat and paddy produced in Punjab and Haryana are procured by government agencies (mostly FCI), the total turnover of APMCs in all agriculture produce in Tamil Nadu was only Rs 129.76 crore in 2019-20; and n that, on average, a farmer in Maharashtra has to travel 25 kilometres to find an APMC yard.

Reinforcing the status quo
Whether a state has APMCs or not and whether an APMC is accessible or distant, the fact is that 94 % of the farmers have no choice except to sell their produce outside the APMC in an unregulated environment. From the Prime Minister to the spokespersons, none will explain why the farmer is portrayed as bound, hand and foot, to an APMC and the middlemen, when the fact is that 94 % of farmers are not. Hence, the argument that the new Farm Laws give a superior choice to the farmer, where none existed before, is a deeply flawed argument conclusively rebutted by the data. The new Farm Laws actually reinforce the status quo with all its imperfections.

I support giving choices to the farmer (Fooling All the People All the Time, Indian Express, September 27, 2020). I also think that, eventually, the APMCs have to be phased out because, although they have served an useful purpose of being a safety net for a section of the farmers, they are trade restrictions. For reasons that have been documented well, the APMCs are not perfect markets, do not serve all farmers, extract too high a rent and are, in some cases, under the control of the traders and middlemen.

But before the APMCs are phased out, the farmers must be given a genuine choice. That choice can only be multiple alternative markets located in thousands of large villages and small towns, easily accessible to farmers, and lightly regulated by the state governments on weight and price of the commodity. Farmers can go to these alternative markets and sell, procurement agencies and private traders can buy, but the price shall be not less than the notified MSP. Thus, a very large proportion of farmers — unlike as at present — will get the MSP or a better price for their produce. False alarms are being raised that if there is a legal guarantee of MSP, it will require detecting violations, prosecution and jail for thousands of traders. That is nonsense. The legal guarantee will apply for the sale and purchase within the precincts of the farmers’ markets.

The Modi government’s new laws do not create these thousands of alternative farmers’ markets. On the contrary, by allowing private traders including corporates to conclude private agreements, and installing a convoluted and bureaucratic dispute resolution mechanism (to the exclusion of civil courts), the government has tilted the scales even more against the farmers. Besides, once private unregulated trade outside the APMC is legalized, there will be a powerful incentive for traders to de-register themselves from the APMC.

Let states legislate
Each state is unique in terms of crops cultivated, marketable surpluses and behaviour of traders. Let the states legislate on the subject of trading in agricultural produce. Let there be a Punjab model and let there be a Bihar model. Let the state government, the farmers and the people of the state decide what is best for that state. That would be true federalism. Parliament-made laws on a subject that falls, arguably, within the State List of the Constitution in the vain hope of one-size-fits-all-states are invariably suspect.

The tearing hurry in which the Ordinances were promulgated and replaced by Acts without prior consultation or proper debate – and without a voting by division as demanded – deserves a deeper probe. The true motive of the government in enacting these controversial laws remains under a cloud.

Website: pchidambaram.in
Twitter @Pchidambaram_IN

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