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The farm bills are - Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services; Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill; and Essential Commodities (Amendment) Bill. The Upper House, on Sunday, cleared the first two, paving the way for them to become laws (once President Ram Nath Kovind signs off) and triggering protests.
The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill allows barrier-free intra- and inter-state trade of farm produce. Previously, farm produce was sold at notified wholesale markets, or mandis, run by Agricultural Produce Marketing Committees (APMCs). Each APMC, of which there are around 7,000, had licensed middlemen who would buy from farmers - at prices set by auction - before selling to institutional buyers like retailers and big traders.
Under the proposed system, farmers can (eliminate middlemen and) sell directly to institutional buyers at prices to be agreed between them. However, farmers' groups are worried this exposes them to corporates who have more bargaining power (and resources) than small or marginal farmers. A Madhya Pradesh farmer who spoke to NDTV said: "I am worried... sometimes they ask for wheat at Rs 1,400 or Rs 1,500 per quintal. They will take (produce) as they wish".
In India, nearly 85 per cent of poor farmers own less than two hectares of land. Farmers like these find it difficult to negotiate directly with large-scale buyers. In a report by news agency Reuters, leaders within the farming community said mandis play a crucial role in ensuring timely payments to them. Removing these markets, or allowing corporates direct access, without offering an alternative, such as regulated direct-purchase centres, does not make sense, they say.
Also, with APMCs, farmers were usually required to sell to nearby markets rather than in the open, which will now be allowed. The government has pointed to this to suggest farmers' incomes will increase. In practice, however, small farmers may find it difficult to avail potentially better prices at markets further away because of constraints on travel and storage, as well as associated costs.
The second bill to clear the Rajya Sabha - The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services - is supposed to allow "contract farming", or allow farmers to enter into agreements with agri-firms, exporters or large buyers to produce a crop for a pre-agreed price.
Farmers are worried this means the MSP (a price guaranteed by the government) will be removed. They point, once again, to small and marginal farmers who will likely by vulnerable to disadvantageous contracts unless the sale prices continue to be regulated. As Congress MP P Chidambaram pointed out, there needs to be a clause linking MSPs to the lowest agreeable price.
Although the new law has not explicitly removed MSPs (and Prime Minister Narendra Modi has insisted it will not), farmers are concerned because allowing prices to be settled outside regulated mandis makes it difficult for the government to monitor each transaction individually.
MSPs are also of concern to rice and wheat farmers, who sell directly to the government at these guaranteed prices. They fear that government purchase will give way to private buyers, who could arm-twist them to sell at lower rates. These guaranteed prices, which the government today raised, are often a source of credit in hard times like droughts and crop failure.
In addition to farmers' concerns, state governments - particularly those in Punjab and Haryana - fear that if private buyers start purchasing directly from farmers, they will lose out on taxes that are charged at mandis. The potential scrapping of mandis, they also argue, endangers the jobs of millions who work there.
With input from Reuters