The repeal of the three newly enacted farm laws by the government has set back the whole reform process. Because, it could not explain the benefits to some farmers. It has also engendered a fresh thinking about the reform process. How to garner wider support on the reform agenda?
The three farm laws were enacted to bring reforms in agriculture markets, which are largely being controlled by the state Agriculture Produce Marketing Committees (APMCs). These APMCs, by default, act as regulatory barriers to competition in agriculture market. Thus, there had been a long pending demand, rather consensus across the political spectrum, for reforms to enhance competition among the buyers of agriculture produce so that farmers realise a better competitive market price. Several States have been reforming APMC laws, albeit very slowly, despite the presence of politically strong vested interest groups.
It seems that the repeal saga is sending a wrong political message against such necessary reforms, which can result not only in governments’ inaction, but also action in a wrong direction. Rajasthan, for instance, is reportedly planning to reverse its decision to allow trade outside of the APMC markets, though there are a few private mandis in existence. A few days back, Maharashtra issued notices to farmer producer companies for carrying out trade outside of the AMPC mandis.
In order to clear air on the wrong messaging against APMC reforms and in order to establish the right communication with the farming communities, it will be useful to separate the wheat from the chaff i.e. the differences between myths and realities about such reforms in a dispassionate manner.
Myth: Reforms are anti-farmer
Reality: No, reforms are not anti-farmer, but in the interest of farmers. The present APMC system is contributing to farmers’ apathy and must be reformed. The state APMC laws provide fertile breeding grounds for anti-competitive activities nurtured by local vested interests, which in turn retard competitive market price realisation by farmers. Therefore, pro-competition elements must be included by reforming the present, yet age-old, regulatory regime. Ideally states should lead such reforms, but failing which if the Centre intervenes the same should be taken in the right spirit. For example, the central government launched the Electronic National Agriculture Market (E-Nam) five years ago which networks all mandis and enables them to trade across borders and get better prices. It is proving to be a boon.
The three Central laws were meant to enlarge the freedoms of farmers and give them more choice. It not only paved the way for selling farm produce outside the APMC mandi system, but also promised freedom from arbitrary stocking limits and gave option for farmers to deal directly with buyers. Though repealed, the essence of such reform is still valid.
Myth: Reforms will establish corporate control over farming
Reality: There are apprehensions that with the unregulated entry of corporates into agriculture market they may influence market conditions and dictate terms of trade, in view of their asymmetric bargaining power. This may go against farmers’ interests. This fear, however, is more imaginary than practical considering the present highly fragmented agriculture market in India, which is particularly reflected in the difference between marketable and marketed surplus. It will take several years for the market to consolidate enough in order to make the said fear a reality.
In order to shed such fears, government can establish effective monitoring mechanism to keep an eye on the market dynamics, and intervene when needed. An active role of the Competition Commission of India can also help correct the market if such a situation arises. Maintaining competition in the buyers’ market is the key for farmers’ welfare in a liberalised set-up. Additionally, farmers can always indulge in organised protest against corporate malpractices as it has proven in this agitation.
A Structural Adjustment Programme as a Way Forward
It may be better if a comprehensive India-specific sui generis Structural Adjustment Programme (SAP) is introduced to guide the implementation of various transitions needed to rectify the Indian agriculture sector. The proposed Committee to be appointed by the Government could look into this too. The SAP can be an umbrella programme to guide, among other things:
Agriculture market reforms with safety nets;
Disciplining the subsidy regime, including transition into direct benefit transfer to farmers
Curbing other market distortionary policies and practices
Discouraging mono-cropping and promoting multi-cropping culture
Safeguarding and restoring the deteriorating soil and groundwater
Reduction of fertiliser and pesticide usage
Promotion of organic agriculture
Promotion of environmentally sustainable agriculture
Promoting digitalisation in Indian agriculture, including agriculture market such as eNAM
The basic aim of the SAP could be to build a sustainable food and farm system through the Farm-to-Fork strategy, including by factoring-in the right biodiversity strategy and climate action plan to achieve the goal of net-zero emissions in India by 2070.