Tuesday, Nov 29, 2022

Two markets, multiple middlemen, no stock limit: What irked farmers

The farmers have been protesting against the three farm laws alleging that the they will lead to the abolishment of the minimum support price (MSP) regime and leave them at the mercy of big corporates.

Farmers on way to Delhi from Barnala on Sturday. (Express Photo by Gurmeet Singh)

After the nearly year-long agitation by farmers, mostly from Punjab, Haryana and Uttar Pradesh, Prime Minister Narendra Modi Friday announced that Centre will repeal the three contentious farm laws. The farmers have been protesting against the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; Essential Commodities (Amendment) Act, 2020; and Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 alleging that the laws will lead to the abolishment of the minimum support price (MSP) regime and leave them at the mercy of big corporates.

Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020

Government claimed that the Act will give farmers “freedom of choice to sell to anyone and anywhere”. Farmers said there was nothing new in the law as a major percentage of agricultural produce was already being sold outside the APMC (agricultural produce market committee) regulated yards. The APMC market yards, however, set the benchmark rates through the daily auctions and offered reliable price signals to the farmers.

Farmers said that the law would lead to two markets and two different sets of rules. A key problem with the Act is the creation of a practically unregulated market in the “trade area” along side an already existing regulated market in APMC market yards, subject to two different laws, different regimes of market fees, and different sets of rules which would lead to the exploitation of farmers over issues such as rates, weighing, grading and moisture measurement of produce among others.

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The Act has no provision to regulate the traders. Any person with a PAN (permanent account number) is eligible to procure grains from the markets at their own price and hoard the produce. Instead of making provisions of registration to regulate the traders, the farmers alleged that the Centre was trying to pass the buck on to the state governments to regulate the traders in the proposed amendments, which were later proposed during farm union’s meeting with Union government. Farmers said that even in the proposed amendment the market area was not defined clearly.

“There was a fear among farmers that with creation of private mandis the existing APMCs will go and government will do away with the public procurement system under MSP regime and everything will be controlled by the big corporates and big farmers,” said Prof Sukhpal Singh, Principal Economist, (Marketing) Punjab Agriculture University (PAU), adding that with this Centre “overrides and undermines” the role of state governments.
There was no provision under which farmers could approach a court of law in case of any fraud by the traders. They could only approach the SDM or Deputy Commissioner. Later, Centre proposed to amend the law to provide the provision to farmers to approach civil court.

Farmers (Empower-ment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

The government claimed that the law will remove intermediaries from the farming. In Punjab, arhtiyas (commission agents) act as intermediaries between the government or private players and farmers for procuring their produce. The farmer bodies, however argued that the new law will bring multiple middlemen in the new system and claimed that the legislation does no protect of farmers’ interest.


They said Sections 2 (g), (ii) Sec.2 (d) ,Sec.3 (1) (b), Sec 4(1), 4(3), and 4(4) of the law will create various types of middlemen.

For instance, the Section 2 (g) says: “A farm agreement is to be an agreement between a farmer and a sponsor or a sponsor or any third party prior to the production or rearing of any farming produce of a predetermined quality, in which the sponsor agrees to purchase such farming produce from the farmer and to provide farm services”. Farmers argued that the third party in this section has been left undefined and it can be any person or intermediary and in such a situation it would lead to creation of multiple intermediaries such as commercial agents, arhatiyas and village touts .

They also said the words “sponsor” in Section 2 (g) (ii) and “farm service provider” in Section 3 (1) (b) were not clearly defined. Further, Section 4 (1) & Section 4 (3) used several such words which could lead to creation of other middlemen within the system.


“Section 10 says ‘an aggregator or farm service provider may become a party to the farming agreement’. “Aggregator’ means any entity, including a farmer producer organization (FPO) that acts as an intermediary between a farmer or a group of farmers and a sponsor and provides aggregation related services to both farmers and sponsor,” pointed farm unions.

In Bihar, following doing away with APMC Act, several village level touts, and small and big traders started controlling the crop purchase from the farmers, said farm unions.

Essential Commodities (Amendment) Act, 2020

The farmers said this law is not only anti-farmer but also anti-human, anti-poor and anti-consumer. They said people will die of hunger if it was implemented. Even Centre “overruled” the provisions of this law at least twice in past one year.

The preamble of this Act says that its purpose is “enhancing income of farmers” as the Essential Commodity (EC) Act 1955 didn’t talk about farmers or their incomes. There was no restriction under the ECA on farmers or FPOs from stocking produce and selling it. The restriction was on agri-business companies and traders, which have the means to stock farmers’ produce.


“Such restrictions were removed for all food commodities, which gave traders freedom to purchase and store any quantity, hence indulging in hoarding. Therefore it should be called ‘Food Hoarding (Freedom for Corporates) Act’,” the All India Kisan Sangharsh Coordination Committee (AIKSCC) had said, adding it will lead to complete market domination by big compaines, which would dictate terms to farmers .

“It has been established that when there is a price rise in the retail market, the benefit is not passed on to the farmers, who sell at low prices mostly. The high prices of commodities eventually affect the end consumers,” said farm bodies. When unlimited stocking of the essential commodities like cereals, pulses, oilseed, onion, potato will take place, the consumer will feel the price pinch.


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Jagmohan Singh Patiala, general secretary Bharti Kisan Union (BKU) Ekta (Dakaunda) said that thi law affects the urban and rural poor consumers who get grains under Public Distribution System (PDS). “People will die of hunger if this is implemented. While the government claims that the Acts have got nothing to do with the procurement under existing MSP regime, in the EC Amendment Act, it is stated that ‘nothing contained in this sub-section shall apply to any order relating to the PDS or the Targeted PDS (TPDS), made by the Government under this Act or under any other law for the time being in force’,” he said, adding that the law does not state that PDS will continue.


Also, it qualifies the non-applicability to PDS and TPDS “for the time being in force” and this “time being in force” is very sinister, Jagmohan Singh added.

“Even if the government gives some cash to the people, who get grains from PDS, to purchase the commodities from the market, it will not work owing to several reasons including price fluctuation,” he added.

First published on: 21-11-2021 at 01:55:52 am
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