10 Reasons New Farm Laws will Trouble Farmers | UPSC
Why the new farm laws will not level the playing field
WHY IN NEWS:
Protests are on rise in Punjab . State overrides previous laws .
SYLLABUS COVERED: GS 3:Agriculture
For MAINS go through key recommendations and Pros and Cons of each law . Let us dive in !
CONCERNS -NEW FARM LAWS 2020
- MARGINAL FARMERS : More than 86 per cent farmers in India own or cultivate on less than two acres of land and have little surplus to sell.
- VICTIMS OF MIDDLEMEN : They are the victims of middlemen (arthiya) at the mandis (local exchange markets) and are forced to sell their produce at very low prices often below their input costs.
- PERISHABLE GOODS : The perishable nature of their produce also puts pressure on them to sell it off quickly, and which has skewed their bargaining position.
- RISK-INTENSE FARMING : Their produce is ‘risk-intense’ and often a victim of untimely rains, droughts, hail storms, infestation, etc.
- UNPROTECTED DEAL : This often leads to partial or total loss of the farmer’s crop and income.
- CROP INSURANCE : They have no meaningful crop insurance: This has been the reason for farmer loan defaults.
MINIMUM SUPPORT PRICE
- MSP RATES : Even in cases when farmers have a good crop, experience shows that they are unable to secure the minimum support price (MSP) at mandis.
- MSP DUES : Cane farmer’s associations, for example, have sold their produce at less than half the MSP in Uttar Pradesh and are still waiting for their mandatory dues from 2014-15.
- POWERLESS AND DEPENDENT : Leaving the farmers to their own devices to negotiate prices would put an average farmer in a helpless situation with no immediate outlet or skills to augment his income by other means.
- A LEVEL-PLAYING FIELD : Liberal economics aims at a level-playing field to the supply as well as demand side factors for sustenance of robust markets.
- CORPORATE PLAYERS : With bargaining position, understanding of contracts, financial strength, legal support systems may completely refuse to offer the poor ill-educated farmer a fair sustainable price.
- UNSKILLED NEGOTIATIONS : An average marginal farmer is ill-equipped to perform all these tasks.
- NILL ASSURANCE : There is no assurance of minimum support price guaranteed based on his input costs.
The three legislations —
- The Essential Commodities (Amendment) Act, 2020
- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020
- Farmers Produce Trade and Commerce (Promotion and Facilitation ) Act, 2020 .
ISSUES WITH ESSENTIAL COMMODITIES (AMENDMENT) ACT, 2020
- The Essential Commodities Act, 1955 was enacted to regulate the distribution and sale of essential commodities such as food items.
- Prior to the current amendment, items such as pulses, cereals, rice, onions were under its ambit.
- The objective was to ensure procurement and sale at an appropriate price .
- The Essential Commodities (Amendment) Act, 2020 marks a huge departure from this, and takes the above mentioned food items out of the purview of the Act.
- Thus the state may now not be bound to purchase the same and sell it through the public distribution system at fair prices to the poor.
- The purchasers can now hoard as much as they like without any restriction.
- Thus , alternatively influencing market prices to the detriment of the ultimate consumer.
- In regard with the other two enactments, Article 246 of the Indian Constitution read with entry 14 of the Seventh Schedule places ‘agriculture’ and entry 28 places ‘markets’ exclusively in the domain of the state government.
- This means that the Parliament could not have legislated on it.
- This also makes the remaining two Acts are vulnerable for being struck down by the Supreme Court.
- This will create a huge uncertainty around these two Acts and their implementation.
- The farmer is left to his own devices to negotiate aspects such as farm produce act, produce price, quality, quantity, effects of pestilence, force majeure, food safety standards, labour to be employed.
- The purchaser may refuse to buy his crop based on his arbitrary inspection.There is no provision for independent and fair inspection.
REDRESSAL OF THE DISPUTE
- ONE-SIDED CONTRACT : The farmer will be out manoeuvre and have no choice but to accept a one-sided contract.
- UNDERMINING ILL EQUIPPED FARMERS : The Act overlooks the surfeit of historical experience in agri-economics, which clearly points out that farmers are ill-equipped to negotiate a fair price, even collectively.
- REDRESSAL MECHANISM : Any genuine dispute resolution by a civil court is excluded under section 19 of the Act.
- LEGAL REMEDY : Adjudications envisaged before sub-divisional magistrate will be illusory as such the officer does not have legal training to provide the correct judicial outcome.
- BOUNDARIES OF THE ACT : Then, there is no embargo against the buyer to hoard the goods as they are now outside the purview of the Essential Commodities Act, 1955.
ISSUES WITH FARMERS PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) ACT 2020
- The idea that farmers were previously legally prohibited to sell their produce except in mandis is incorrect, except under some local legislations.
- Marginal farmers were constrained to sell at mandis near their farms by the force of factors enumerated above and as a consequence of cost and convenience.
- RIGHT TO SEEK LEGAL REMEDY : Section 15 of the Act debars the jurisdiction of civil courts to look into any dispute;
- FINAL AUTHORITY : The farmer is left to the illusory right to seek legal determination of a dispute before the SDM in the area where the private mandi is located.
- DISPUTE RESOLUTION MECHANISM : Naturally, this makes the dispute resolution impossible and meaningless, and would force him to sell at distress rates.
- The Economic Survey of India 2018-19 recommended a development strategy based on increasing incomes of this distressed segment.
- Its recommendations, however, have not been implemented by any government so far.
- In this case, the ground is clearly skewed and outcome may be civil distress and or unrest.
- The Union government would have to consider balancing the needs of producers and purchasers.
- It is clear that the farmers / farmer’s associations are ill-informed to negotiate minimum price.
- If the State wanted to encourage private players, it could have intervened prior to point of sale to secure legal guarantee of a minimum support price .
- Since the new regime envisaged a drastic change from the past, the state may also think to provide for a regulator to ensure fair play, correct inspection of crops for sale.
- There are concerns that a state- or regulator-backed minimum support price will lead to inflation in prices of food items.
- Surely, mechanisms need to be augmented to work within these margins for the benefit of farmers, corporate interests and the final consumers.
The legislations will not correct skewed market conditions.