Farm laws impasse: A way forward?

December 15, 2020 7:00 AM

Nothing will be lost if another six months are spent in finding an acceptable, if differentiated (with state-specific variations), solution to the issues the farmers seem to have with the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

The demands of farmers have been reported widely. I do not have access to the official documents. Therefore, I base my observations on reported facts.

By T Nanda Kumar
The impasse between farmers and the government continues. Concerned citizens are hoping for a solution. Farmers appear adamant in their demand for repeal of all the three laws and amendments in two others, one already enacted and the other proposed. The government has shown patience and willingness to accommodate a number of demands by offering to amend the laws. Policy experts have joined the issue as well: Some are asking for repeal of the three laws, and some others arguing for a ‘no retreat, push forward’ strategy. The issue has acquired political overtones and has become complex.

The question on everyone’s minds is: Is there a way forward?
I attempt to answer this from an administrator’s perspective. Are these suggestions politically feasible, desirable or acceptable? Honestly, I do not know. Here is my two-bit unsolicited advice, an imperfect one, call it ‘band-aid’ if you like, but probably worth a ‘dekko’.

The underlying tenet is that reforms in the agricultural marketing systems are long overdue. More reforms are required, not less. But we need take farmers along, and they need to be convinced that it is good for them. When we speak of ‘farmers’, let us not forget the majority, ‘non-MSP’ farmers—fruits, vegetables, dairy and poultry farmers who are dependent on the market and its fluctuations.

The demands of farmers have been reported widely. I do not have access to the official documents. Therefore, I base my observations on reported facts.

Without elaborating on the demands, let me suggest a way forward:

1. The most contentious law seems to be the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020—call it the mandi bypass Act. Arguments about unequal treatment, corporate overreach, minimum support price (MSP), revenue loss, arhatiyas, etc, come from this law. While the Agricultural Produce Market Committees (APMCs) do require major reforms (see ‘Agri reforms: Where did the APMCs go wrong?’, FE, September 25, 2020;, nothing will be lost if another six months are spent in finding an acceptable, if differentiated (state-specific variations) solution.

Even at the cost of pushing back some of the likely gains, the operation of this Act could be suspended (not sure if this is legally possible; the alternative is repeal) for a period of six months for consultations and rewriting. Prior to this, assurances will have to be sought from chief ministers that they will ensure farmers are enabled to sell their produce anywhere in the country. Alongside, the government will need to incentivise a few states to reform their laws to open up markets, introduce competition, and fast-track agricultural infrastructure projects, while ensuring that farmers get paid what they are promised and not below MSP. States such as Madhya Pradesh, Uttar Pradesh, Bihar, Gujarat, Karnataka, Odisha and Assam could lead the way in demonstrating the benefits of opening up. When farmers from other states see the benefits, reforms will be on.

2. The Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020—call it the contract farming Act—is a long-term solution to the demand-supply mismatch issues. Agreeing to make some required changes to reassure farmers that their interests will be protected is worth the time and effort. The following are suggested:

(a) Provide for a clause stating that a farming agreement will be void/voidable if the price mentioned in the agreement is below the MSP declared by government of India (for crops covered by MSP; Sections 2 and 3).

(b) Reinforce the provision relating to the prohibition on sale, mortgage, etc, of farmers’ lands by adding a condition that a ‘sponsor’ will have no right to use such land as collateral or security for any loan of any kind (Section 8).

(c) Amend the provisions relating to dispute redressal mechanisms (Section 14 and 19) to provide for a reference to the civil court. While the subdivisional officer may continue to set up arbitration panels, a decision on any dispute can be left to the civil court to adjudicate.

(d) Insert a provision—more as a reinforcement—that inputs, technologies, etc, banned by state governments cannot be supplied by sponsors to farmers. This will allay fears of introducing genetically-modified crops and other related issues.

(e) Provide for state-specific amendments and rules (Sections 23 and 16) to enable states to be innovative.
Some other amendments concerned with providing a level-playing field to farmers in judicial processes and reducing administrative overreach are not discussed here due to space constraints.

While farmers are conscious of their social obligation to stop stubble burning, they seem to be upset at the severity of punishment prescribed for even small infringements. There is no case for condoning this, but there exists a case for levying differential penalties. Farmers do expect the government to help them solve the problem with technology support and financial assistance.

In the ‘Commission for Air Quality management in NCT’ ordinance, make amendments (Section 14) to distinguish between offences by companies and those by farmers. A separate sub-section to penalise burning of agricultural (or similar) waste outside urban areas and its periphery should be introduced under which penalties can be restricted to a smaller fine with no imprisonment.

The proposed amendment to the Electricity Act, 2003, suggests the stopping for free power, but allows state governments to give cash support in lieu thereof. Free power has disastrous economic and ecological consequences, and the central government is rightly concerned about the financial health of power distribution companies in spite of huge budgetary support. Farmers seem to be more worried about the process of reimbursement, possible harassment and delays.

Unspoken worries may be about metering and excess use of power, especially by rich farmers. While unmetered use and delayed payments to power distribution companies have to be discouraged, legal provisions can be suitably drafted to allow upfront direct cash payments to farmers.

Farmers should leave the amendments to the Essential Commodities Act from this discussion. In fact, these amendments should be beneficial to them in the long run since these are intended to provide predictability to ‘select categories’ of businesses that add value to agricultural produce.

As far as mandating MSP is concerned, this is an impractical idea with serious consequences (see ‘Mandatory MSP: Watering a dangerous idea’, FE, December 8, 2020; I hope farmers accept the government’s written assurance that this will continue undisturbed. In any case, MSP has continued so far without an Act.

Farmers are wise people, listening to them has been an enriching experience. They can easily separate the grain from the chaff.


The author is former secretary, Food & Agriculture, Government of India. Views are personal

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