After one year of intense and intensive agitation by millions of farmers, which caused 671 deaths and untold suffering, Prime Minister Narendra Modi has announced the Union government’s decision to repeal the three controversial farm laws that were passed in Parliament in September last year. This is what he said: “I apologise to India and with true and pure heart ... we were not able to convince farmers [over the farm laws]. I’m here to declare that we have decided to repeal the three farm laws. … We will complete all the formalities during the Parliament session that begins this month.”
The three laws are—The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, and The Essential Commodities (Amendment) Act. These laws permit the sale of agricultural produce outside the mandis regulated by the Agricultural Produce Market Committees (APMC) constituted by different state legislations, allow contract farming, and deregulate production, supply and distribution of food items like cereals, pulses, potatoes, onions and edible oilseeds. Besides causing considerable anguish to the farmers, these legislations are seen as a direct violation of the federal structure of India, agriculture being a state subject in the Constitution. The feisty farmers deserve the nation’s gratitude for restoring constitutional values and principles through democratic and non-violent means.
Hopefully the laws would be done and dusted when Parliament meets for its Winter Session on November 29. So it is the right time to suggest alternatives that could bring vibrancy to the farm economy and ensure food security for India’s teeming millions. This is particularly critical in the pandemic period that has brought about widespread hunger and malnutrition.
Dismantling APMCs and opening up agricultural sale and marketing outside these mandis as well as providing a framework for electronic trading exposes farmers to the volatility and vicissitudes of the market, which is invariably imperfect. Dismantling of the APMCs would mean the ending of assured procurement of food grains at minimum support prices (MSP). Contract farming provides a framework on trade agreements for the sale and purchase of farm produce. There is apprehension that the free hand given to private corporate houses could lead to farmer exploitation. Cereals, pulses, oilseeds, edible oils, onions and potatoes have been removed from the list of essential commodities. This could lead to exporters, processors and traders hoarding farm produce during the harvest season, when prices are generally lower, and releasing it later when prices increase, thereby undermining food security.
Though there are many issues, the most important one is the lack of a pricing mechanism that protects the producers of food grains (farmers) and consumers (all of us), including a legal guarantee for MSP. A formula for this is contained in the “Report of the High-Powered Committee on Agricultural Policies and Programmes-1990” (HPC) headed by former Union agriculture minister Bhanu Pratap Singh that had top farmer-leaders, parliamentarians, eminent economists and administrators as members.
At the outset the committee realised that farmers faced a triple-whammy: very high risk due to constant exposure to elements of nature, adverse terms of trade and non-remunerative prices. These needed to be ameliorated. The committee looked at farming and farmers from one large perspective—remunerative/stable income across the board while ensuring food security with the active involvement of key stakeholders.
The core issues identified were: need to rely more on the commitment of farmers, who are the producers, and the market mechanism that influences consumption; protecting the farmer and the consumer against the vagaries of production and the market forces in order to enhance agricultural productivity and ensure fair prices; reduction in the cost of food grain procurement, storage, transportation and distribution; an efficient delivery system under which those in genuine need of subsidies and support are properly targeted and given sufficient access to food grains; and effective intervention powers in the hands of the government in times of need to protect the interests of producers or consumers.
With these in view, the committee suggested a series of policy initiatives. The emphasis was on withdrawal of all controls, except that of quality. “Triple pricing” was advocated in order to regulate the market and protect the producer, consumer and the trader. There will be a ‘parity price’ to fully compensate the farmers for a rise in the cost of inputs and their other necessities of life, a ‘support price’ below which prices will not be allowed to fall, and ‘intervention price’ beyond which prices would not be allowed to rise.
As soon as the price of food grains in the open market rises above the intervention price (already fixed), all stocks or part of it would be acquired by the government agencies on payment of “parity” price. If the price falls below the support price, the farmers would have the right to sell their stocks to the government at the support price already fixed. This mechanism could be made to work effectively by setting up a decentralised chain of warehouses involving local panchayats/governments and establishing appropriate Food Security Regulatory Authorities vested with adequate powers to implement and monitor.
Under this policy mechanism, farmers will be assured of MSP and consumers a reasonable and relatively stable cost. Traders will know the limits within which they can operate. Small farmers will be saved from going in for distress sales, and the government will have the facility to quickly locate and acquire food grain stocks in times of need. In short, the committee’s recommendations were meant to prevent food inflation while making the farmer stand on his feet and be his own master instead of depending on government charity or market volatility.
While repealing the three farm laws, Parliament should look to enact a fresh law on the above lines in the interest of the nation and the suffering farming community, which is the backbone of India’s economy.
M G Devasahayam, Writer, a former Army and IAS officer, and a member of the HPC-1990 (devasahayammg@gmail.com)