Ordinances on agriculture show unwise haste, may do harm along with good
Rather than coax the states financially to correct the markets, an unregulated marketplace has been created where 15 crore farmers will be exposed to the skulduggery of traders. Imagine the mayhem in stock markets if ROC and SEBI were similarly made redundant.
The ordinances announced recently to facilitate trade in agricultural produce were historically resisted by the bureaucracy and the states.
Just as all ordinances aren’t reforms, all reforms aren’t the “1991 moment” for agriculture. The ordinances announced recently to facilitate trade in agricultural produce were historically resisted by the bureaucracy and the states. Pent up frustration at repeatedly failing to change the status quo of depressed farmer livelihoods, and the pressure of the PMO seeking instant delivery, has the establishment introducing ordinances rather than bills.
Bills would require to be placed in the public domain for comments, consultations would be held with farmers, and states whose powers and revenues were being curtailed would get a hearing. In the hurry to impose ordinances, however, the baby has been thrown out with the bath water, specifically with ‘Farming Produce Trade and Commerce (Promotion & Facilitation) Ordinance 2020.’
Due to the unionisation of middlemen (arhatias) and their financial clout, politicians in the states have been reluctant to amend agriculture marketing laws which are exploitative and don’t allow farmers to receive a fair price. Rather than coax the states financially to correct the markets, an unregulated marketplace has been created where 15 crore farmers will be exposed to the skulduggery of traders. Imagine the mayhem in stock markets if ROC and SEBI were similarly made redundant.
Rather than replicate Punjab’s successful agriculture mandi model, now states will lose vital revenue to even upgrade and repair rural infrastructure. The ordinance may be challenged by the states for its constitutional overreach, but, on the flip side, over time, the largest informal sector in the country will begin to get formalised and new business models will develop. A different breed of aggregators will create the much-needed competition to the existing monopoly of local traders.
Additionally, henceforth, when farmers sell agricultural produce outside of APMC market yards, they cannot legally be charged commission on the sale of farm produce. To survive, the APMCs across the nation will have to radically standardise and rationalise their mandi fee structure and limit the commission charged by traders on sale of farmers’ produce.
My conjecture is that only because the amendment limited the powers and revenues of the state, and not the agriculture department itself, did the central government rush in with an amputation where a surgery would have sufficed.
An amputation was required in the Essential Commodities Act (ECA), 1955, where a band-aid dressing has been applied. This amendment was supposed to allay the genuine fears of traders emitting from the bureaucracy’s draconian powers to arbitrarily evoke stockholding limits etc. Rather than forego its own powers for the larger good, the amendment’s fine print makes it ambiguous and leaves space for whimsical interpretations as before. The trader’s uncertainty is compounded by the arbitrary import-export policy decisions which dilute the purpose of the amendment itself.
Explained | What is the Essential Commodities Act, and how will amending it help?
Lastly, “The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance 2020” could have been simply called the “contract farming ordinance 2020”. It tries to placate the fears of both the farmer and the contractor when they sign an agreement. For the farmer, the legal recourse is never a practical choice as the persuasive powers of the aggregators’ deep pockets cast a dark shadow over the redressal process. Likewise, the tediously stretched legal proceedings are dissuasion enough to either not seek redressal or settle for unfavourable terms.
That produce derived from contract farming operations will not be subject to any obstructionist laws is a very good step. Farmer-producer organisations and new aggregators will get a boost with these laws, and become harbingers of prosperity in some small corners of the countryside. There are green shoots in the ordinances, but the downside dwarfs the upside.
The union of the three ordinances appears to be a precursor to implementing the Shanta Kumar Committee recommendations to dilute and dismantle FCI, MSP & PDS which will push farmers from the frying into the fire. It may also be interpreted to mean that now the sugar industry needn’t pay farmers the central government FRP or the state government SAP price for sugarcane. The way the establishment has gone about pushing these ordinances, the government has lost moral and political ground even amongst its most ardent supporters.
Opinion | From Plate to Plough: A 1991 moment for agriculture
Shakespeare said, “The evil that men do lives after them; the good is oft interred with their bones”. As in the past, government efforts aren’t bearing fruit and like a wound, rural distress festers. Senior officers creating policy retire and thus fail to be held accountable for the mess they leave behind.
This article first appeared in the print edition on June 18, 2020 under the title ‘Unpacking the reform’. The writer is chairman, Bharat Krishak Samaj.
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