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Hey everyone! In today’s Article we will discuss about recently passed 3 Farm Bill. In today’s Article we will discuss about all major points like, do the central government have the power to make a law in this area, what disputes are going around the central and state government?

Why are some states protesting heavily against this Farm Bill?

Failures that happened in the Parliament and the proceedings conducted in Rajya Sabha, can that be challenged in Supreme Court and by this Farm Bill, will
farmers be finally reformed?

To answer about all such questions, I am going to discuss about the 3 Farm Bills combined. So let’s start!

After the Indian Independence in 1947, farmers directly used to sell their agricultural produce to the consumers. But due to Zamindari System and many other situations, maximum farmers of India were under debt and the money lenders used to charge high interest rates for the debts taken by the farmer.

When farmer fails to pay the money back, then those money lenders used to buy the products from the farmer at a very cheap price, thereafter those farmers had to take loan again from the money lenders for their subsequent agricultural produce and this process became a cycle from which farmers were not able to come out and they were exploited continuously. In order to solve this problem of farmer exploitation, the Government interfered and they introduced Agricultural Produce Market Committee (APMC) Act.

This act says that, farmers cannot sell their products directly to the consumer nor anyone can directly purchase from them, all the sale will be done through the ‘MANDI’ which was established through the APMC Act and all the MANDIS will be run by the state governments.

So now let’s see how the present model of the APMC Act functions. Each State’s government has its own APMC. States divide the Mandis according to their area and each area has its specific Mandi.

If any trader wants to purchase anything from ‘Mandi’ then he has to acquire the license of that specific ‘Mandi’. Similarly, the farmers of that area are allowed to sell their agricultural produce on that specific ‘Mandi’. This system of selling and purchasing things from the specific ‘Mandi’ is Mandatory for the traders and farmers. So it is mandatory for the trader to acquire license from the APMC who wants to purchase the products from APMC.

SO NOW LETS SEE HOW DO THE PRODUCTS GET SOLD THROUGH APMC

For selling the products, the process of auction is followed in
the ‘Mandis’. We divide auction system in to 2 parts:

1. Minimum Selling Price [MSP]

2. Price Discovery system [PDS]

1. Minimum Selling Price [MSP]

MSP system, means Minimum Selling Price and the minimum selling price is decided by the Government of India. MSP is not for all the crops, there are 22 such crops for which Government of India decides minimum selling price. MSP means auction price can’t go down from that minimum price. MSP will be the starting level from where the auction will start in order to sell the product. It can’t be sold at lesser price from the decided minimum price.

2. Price Discovery system [PDS]

As mentioned above, apart from the 22 crops, the other crops are sold by the Price Discovery System which means on the basis of demand and supply of that produce in the market. The price is discovered of that crops. The products are sold through the auction system. We can see that products are sold in APMC through a supply chain which means when farmer produces something it reaches to the consumer in the end but before that there are lots of middle men in the process. And this new system is trying to eliminate this middle men process.

Now let us understand what is the supply chain. In this process, the farmer will take his produce to APMC MANDI and there he will meet with Commission Agent, also known as Arthiyas. These Commission Agents will take forward the farmers produce to the traders for selling the product and there they will negotiate and will discover the price and this process is not transparent after that. The Transaction Agent comes to the farmer and informs him about the price at which his product has been sold. Thereafter, the Transaction Agent charges 3% market fees on the said selling price which is payable by the farmer himself.

Now, finally the product is up to trader, from the trader it goes to the wholesaler, from wholesalers to the retailers and there on to many vendors and thereafter it finally reaches the consumers. By the time when the consumers receive the product, there is 50% difference of the actual cost of the product and at least 25% of the total produce gets wasted.

E.g.: If the consumer is buying a product at the price of Rs. 50/- or Rs. 70/- then the farmer is getting only Rs. 7/- in return and all the remaining money is divided in the middle men and also market fees. So, this is the picture of the existing APMC system. We can clearly see 2 flaws in this system, as elaborated below.

A. WHO CAN BE A TRADER?

APMC market is totally under the control of State Government. Many people believe that only those people qualify to become as these traders who already have some political connections and who have close connections with the State Government.

B. PRESENCE OF MANY MIDDLE MEN BETWEEN THE FARMER AND THE CONSUMER.

It can be clearly seen that because of the presence of these middle men between the farmers and the consumers, these consumers get the final produce at very inflated price and the farmer sells his product at a very low price.

In 1963, when APMC Act was introduced, its objective was to protect the farmers from the exploitation and such money lenders and middle men’s exploitation. But unfortunately, in changing times, this act itself became the reason for the exploitation of the farmers. APMC Act speaks about MSP (Minimum Support Price). But in many situation, traders’ malafidely create troubles by uniting together in a group and objecting the purchase at the stipulated MSP in the particular MANDI. 

In this situation, let us think about the misery that the farmers have to face. As their produce is of perishable nature, they must be sold within a limited period of time. If they don’t, then the value of that product will decrease by each passing day. So the traders take undue advantage of this situation and unite together and decline the purchase of the products at stipulated MSP. The helpless farmer, unfortunately, has to sell his produce at the lowest price. There have been many attempts on behalf of the farmers from every state, demanding to raise the MSP price to the government.

You should also know that, there is nothing like regional MSP in our country. If you are producing rice in Chhattisgarh then its cost is different than what it is if you are producing in Tamil Nadu. But note that MSP for rice is the same in the whole country, meaning, there is going to be difference in the profits earned by the farmers of Chhattisgarh and that of Tamil Nadu. This is the major drawback and hence in order to bring reforms in the existing structure of MSP, many farmers of different states have protested.

All I am trying to say is the existing APMC Act has become the reason for monopoly and exploitation thereby rendering it counterproductive. If people find that there is no need in bringing this new Farm Bill into existence, then too it is really the need of the hour to at least rectify the existing APMC Act.

In the year 1991, when the policy of LPG (Liberalization, Privatization and Globalization) was introduced then government reduced its control from the maximum Indian industry for creating free market and economy. Similar steps must be taken by the government and reduce their control in agriculture and farming industry also. There must be a regulatory method and controlled mechanism to make sure that farmers are not been exploited but at the same time these mechanisms should be compatible in a way that it suits the need of 21^st century.

There should be some mechanism deciding on problems such as, who should bear the cost in case when the export gets cancelled. The farmers should never be exploited for this. Another mechanism for deciding the clause where, if any trader buys the produce at a price which is lower than the MSP, then what measures to be taken. The new system has already been adopted by the states like Karnataka, Bihar and Maharashtra, from past several years. Therefore, they brought this new law by seeing the flaws of existing system such as mentioned about by placing control measures like how the trader should be penalized and what remuneration farmer should receive, in case where the trader buys the produce at the price lower than the stipulated MSP. Therefore, the government needs to pull back its control from the agriculture and farming sector because the existing system is creating monopoly. Whenever there exist monopoly, whether be it in government, market or business, it is not at all good because it takes away the chances of fair play and fair competition thus giving advantage and benefits to only few people.

Next, we will discuss about whether the center has the power to make a law around the farming sector or not. For answering this question, we will refer to 7^th Schedule. There are 3 lists given in 7^th Schedule.

List 1 is of Centre, in which Centre can make laws;

List 2 is of State, subjects in which states can make laws;

And

List 3 is Concurrent list, in which both Centre and State can make laws.

Herein, agriculture comes in List 2 – Entry 14 which means, it is a part of State list. So strictly speaking, agriculture comes under state where state can make laws for it. The state has the powers regarding agriculture research and agricultural produce, if we talk about strict division of the power to make laws, it lies with the State only and not with the Centre but the strict division is of no worth.3

Why because on referring to these 2 articles viz. i) Article 248 of the Constitution speaks about Residuary Powers. It says that, if any entry which is not present in those 3 lists, the power will go the Centre and it can make law on that matter. ii) Article 249 says that, if any entry present in the part of States list but when it comes to the National Interest, then the Centre will have the power to make laws on the subjects of States’ list. Therefore, using Article 249, by imposing the National Interest, the Centre holds the power and it can make laws.

Also, if we talk about Concurrent list – Entry 33, it reduces the power of the State to make laws for agriculture. Entry 33 says – the Centre can also make laws in the matter of agriculture and by using Entry 33 Centre passed another law viz. the Essential Commodities Act, so strictly speaking Centre do have the power to make laws for agriculture.

Next point of discussion is about the failures that happened in the parliamentary proceedings in the Rajya Sabha like destroying mike, standing on the desk, actions happened with the speaker not taking vote, can all these proceedings be challenged in Supreme Court?

To answer this question, we will take help of Article – 122 of the Constitution which says that, on the basis of Unconstitutionality, Illegality or Irregularity, you can challenge Parliament’s proceedings in the Supreme Court. But know this, whatever happens inside the Parliament, the Supreme Court cannot interfere in the Parliament’s proceedings so to answer our question, it cannot be challenged in the Supreme Court.

Yet another discussion about the reason behind heavy protests in some states against the Farm Bill, why are the farmers revolting?

After Independence, every state has its own and distinct development rate which is why some states are classified as rich states namely Maharashtra, Gujarat, Karnataka, Tamil Nadu whereas others come in the category of poor states. Every State government acquires certain funds from the State funds and they also receive some funds from the Centre for the development of their respective states.

Let us take a common matric. Imagine, all the States and Union Territories give Rs. 100/- each to the Centre. Now the Centre allocates all the funds contributed by the States and UT but the Centre also has to redistribute the funds. At the time of redistribution, the Centre ensures more funds towards the poor states for their better development thereby allotting lesser funds to the rich states.

For example, if we take a look at 2017 data. Maharashtra has given Rs. 100/- to the Centre but received back only Rs. 13/- from the Centre; whereas Kerala received Rs. 52/- in return, Punjab received Rs. 42/-; Uttar Pradesh received Rs. 149/- and that of the state of Bihar received the highest amount of Rs. 219/- in return of paying or contributing Rs. 100/-.

This division between rich sate and poor state is not only in India but is present in other countries as well. Eg. if we talk about the US, its richest state New Jersey when gives $ 100/- it receives $ 60/- in return. There is a huge difference that these funds can make which can be used for the State’s development, rural development and farmer and agricultural development.

To let you understand in a clear way, let me explain you case wise – For example, lets discuss about the state of Punjab. In order to develop their state, the government of Punjab can depend on 2 things – on state funds and the funds given by the Centre. We already saw that, if Punjab gives Rs. 100/- then it receives Rs. 42/- in return. It means it receives less funds. In order to acquire funds for its state’s development, the State government charges some taxes so the Mandis present in the whole country houses these taxes which range from 1% to 8 – 8.5%. The highest tax is charged from Punjab’s Mandi.  Through APMC, the Punjab government charges Mandi tax, rural development tax, and by combining all these taxes Punjab government charges 8 – 8.5% taxes. In the form of Mandi tax, the value of this 8 – 8.5% taxes was of Rs. 1,750 crores. This year, the government, now, has the opportunity to use this tax income for the State’s development. They can use it for rural development, infrastructure development and any other welfare and development purposes of state.

Now Understand the problem – Mandi Tax was collected through APMC, which, according to the existing system, is with the State government and the new Farm Bills which are introduced speaks about creating a new ecosystem, a parallel system so the tax which was collected through APMC and going directly in the piggy bank of Punjab’s government will no longer function in the same way but take away the
control and power of the State government hence the tax effects will be reflected on those 8 – 8.5% tax which the Punjab State government usually pocketed directly, thereby causing direct effect on the state’s development.

NOTE: NO MARKET FEES OR LEVY WILL BE CHARGED ON TRADE AREAS OUTSIDE MANDIS.

According to the data of NCRB (National Crime Records Bureau) in 2018, there were 1,34,000 suicide cases across the country in which 7% around 10,000 people were Indian farmers. The nation’s farmer is not at all happy and for this in 2015 Shanta Kumar committee was formed for bringing reformation in Food Corporation. This Committee found an interesting fact, they said there are only 6% farmers of the nation who are taking benefits of MSP and the remaining 94% of farmers are, sadly, unable to take the benefit of the MSP.

So discussion on the Farm Bills have caught the nation’s eyes towards farmer reform and farmer welfare. So don’t let it be with Farm Bills only, we should also talk about awareness and education. Why is it that most of the farmers are not even aware about the MSP. What steps the government have taken for farmer education?

And

What is the state government doing for the education of the farmers?

These 3 Bills are new, of course, but along with this, there are many such laws which act against the interest of the farmers like Land Acquisition Act, Land Ceiling Act and many other laws which are not at all beneficial for the farmers.

I hope you liked today’s Article and you can be able to think unbiasedly about farmer welfare and farmer reforms. If you liked this Article, then please share it with your friends and family, the country should discuss about farmer reforms in order to bring reform in the society, thereby bringing the reformation in the entire country.