The Farmers have been rampaging the streets, protesting against the Three Bills on agriculture market reforms that were passed by Parliament and awaiting the President’s signature to become laws. Hundreds of farmers have marched towards Delhi from UP, MP, Haryana, Rajasthan, Punjab which is a part of their “Delhi Chalo” March. While marching, the police in order to stop them from reaching Delhi used water cannons and tear gas. 

Bandhs were observed in Punjab and Haryana, where the farmers were seen in mass rallies. Farmers along with opposition parties are concerned with the changes so made and have expressed their concerns regarding the corporatization of agriculture, which will threaten the current mandi network and State revenues, not only that but also weakens the government procurement system of purchasing the produce at guaranteed prices.

Let’s first take a look into the Bills:

The Bills were initially issued in June as ordinance which was then passed by voice note in both the houses of Parliament namely, the Lok Sabha and the Rajya Sabha even after the outspoken protest by the Opposition. These Bills aims at changing the manner in which agricultural produce is marketed, sold, and stored across the country. 

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, makes room for farmers to sell their produce to anyone outside the notified Agricultural Produce Market Committee (APMC) mandis without paying any State taxes or fees.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and The Farm Services Bill, 2020, paves the way for contract farming and direct marketing. 

The Essential Commodities (Amendment) Bill, 2020, aims to not interfere in the production, storage, movement, and sale of several major foodstuffs, which includes edible oils, onion, cereals, and pulses except in the case of extraordinary circumstances.

The government hopes that with this move of incorporating the new laws, it will provide farmers with more options, will lead to rising in the competition which in turn is going to provide better prices, as well as assist in a gush of private investments in agricultural marketing, processing, and infrastructure.

Though the farmers seem to have a very different opinion on these laws to come and therefore such protest.

Concerns revolving around minimum support price:

The slogans that are being used at the farmers’ protests revolve mostly around the need to protect MSPs (minimum support prices), which the farmers fear are in danger by the new laws. 

MSPs are the pre-decided rates at which the Central government purchases farmers’ produce without considering the rates persistent in markets. These rates are declared at the beginning of each sowing season for 23 crops. 

Though the Centre purchases paddy, wheat, and some selected pulses only in large quantities, and out of all only 6% of farmers actually sell their crops at MSP rates, as per the 2015 Shanta Kumar Committee’s report using National Sample Survey data. None of the laws directly affect the MSP regime. 

Because most of the government procurement centres are located within the notified APMC mandis in the state of Punjab, Haryana, Rajasthan, and a few more, farmers are terrified of the fact that stimulating tax-free private trade outside the APMC mandis will make these notified markets unviable, which could lead to decrease in government procurement. 

The demand of farmers is that MSPs should be made universal, whether in mandis or otherwise so that all buyers, be it government or corporates, will have a floor price to adhere to,  below which sales cannot be made.

About the outrage:

As per the data available from the Agriculture Ministry, more than half of the governments’ collection of wheat and paddy has been taken from Punjab and Haryana for the last 5 years and more than 85% of wheat and paddy is grown in Punjab, whereas 75% in Haryana, which is bought by the government at MSP rates.

Farmers in these States have a feeling that without MSPs, market prices will eventually fall. These States are the ones that rely on the APMC system the most, with a strong mandi network, a disciplined system of arthiyas (commission agents) who help in facilitating procurement, and smoothly connects most of the villages with the notified markets and allowing them to easily bring their produce for selling in the big market. The Government of Punjab levy 6% mandi tax and 2.5% fee as handling charges and earns up to ₹3,500 crores as annual revenue which helps the state in development activities.

Certain other issues alongside:

The non – BJP state governments and other regional political parties have shown their concern on the part that agriculture is a State list matter and the Centre should not have made legislation on this subject at all.

The parties are concerned about the loss of revenue that the States will face from the loss of mandi taxes and fees, which happen to contribute in good amount to some States overall tax revenue collection.

There are certain economists and activists that are of the saying that both Punjab and Rajasthan are taking into account certain legal measures to expand the bounds of their APMC mandi yards in order to ensure continuous collection of taxes on all agricultural trade within their State’s borders. There are states like Chhattisgarh and Odisha that have seen procurement increase in the last five years itself only after the implementation of decentralized procurement. With that to say, Paddy farming has also received a major hike with procurement at MSPs and this becomes the reason for farmers’ fear, the fear that their newly assured incomes are at stake.

Most private buyers are currently small traders at the local mandis but the removal of stock limits and facilitation of bulk purchase and storage via these amendments could bring large corporate players into the agriculture space. 

Although they will bring much-needed investment in the agriculture sector, they could also snatch the small farmers with their bargaining power.