From UPSC perspective, the following things are important :
Prelims level : Provisions in the act
Mains level : Paper 3- Provisions in the new farm laws and their purpose
Some provisions of the new farm laws are opposed by the farmers. The article explains the utility of these provisions.
Major objections to farm laws
- The first objection is that the Agricultural Produce Market Committees (APMC) will be eventually closed,
- The second objection is that Minimum Support Prices (MSP) will be stopped,
- The third fear is that corporates will take over the agriculture trade, and farmers’ land will be taken over by powerful corporates.
Why reforms were needed
- The gap between the agri-income of a farmer and that of a non-agriculture worker increased from ₹25,398 in 1993–94 to ₹1.42 lakh in 2011-12.
- Aggregate food demand has fallen short of domestic production necessitating the export of a large quantity to prevent domestic prices from falling very low.
- India is sitting on an excess stock of 60 lakh tons of sugar and nearly 72 million tons of extra buffer stock of wheat and rice which is causing a huge drain on fiscal resources.
- India’s agri-exports are facing difficulty, imports are turning attractive as domestic prices are turning much higher.
- Rural youth are looking for jobs outside agriculture and there is a serious problem of unemployment in the countryside.
- There are numerous instances of market failure to the detriment of producers and consumers.
- This is turning farmers to look at the government for remunerative prices through MSP for most agricultural products.
- The growth rate in agriculture is driven by heavy support through various kinds of subsidies and output price support.
- These costs and losses and subsidies will take away most of the tax revenue of the central government.
3 Provisions and their utility
1) Relation between MSP and APMC
- APMC has nothing to do with the payment of the MSP.
- The necessary and sufficient conditions for the MSP are procurement by the government, with or without the APMC.
- Experience shows that even after fruits and vegetables were de-notified from the APMC, they continued to arrive at APMC mandis in large quantities while farmers got additional options.
- The protesting farmers have raised concerns to keep the level-playing field for the APMC and private players, and the government has shown agreement to address this fully.
2) Criteria for traders
- Protesting farmers are also opposing the provision of the simple requirement of a PAN card for a trader.
- After having a PAN card, even a farmer can go for trading, his son can do agri-business and other rural youth can undertake purchases of farm commodities for direct sale to a consumer or other agribusiness firms.
- If stringent criteria such as bank guarantee, etc. are included in the registration, then the spirit of the new law to facilitate farmers and rural youth to become agribusiness entrepreneurs will be lost.
3) Mistaking contract farming with corporate farming
- Critics and protesting farmers are mixing contract farming with corporate farming.
- The new Act intends to insulate interested farmers (especially small farmers), against market and price risks.
- The Act is voluntary and either party is free to leave it after the expiry of the agreement.
- It prohibits the transfer, sale, lease, mortgage of the land or premises of the farmer.
- The Act will promote diversification, quality production for a premium price, export, and direct sale of produce, with desired attributes to interested consumers.
- It will also bring new capital and knowledge into agriculture and pave the way for farmers’ participation in the value chain.
The policy reforms undertaken by the central government through these Acts are in keeping with the changing times and requirements of farmers and farming. If they are implemented in the right spirit, they will take Indian agriculture to new heights and usher in the transformation of the rural economy.