Indian Farmers and the Agriculture Bills

Shravanti Suraj [1]

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After the successful passing of the new agriculture bills namely, The Famers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act 2020 (Act 20 of 2020), the Farmers’ Produce Trade and Commerce (Promotion and Facilitation Act 2020 (Act 21 of 2020) and the Essential Commodities (Amendment) Act of 2020 (Act 22 of 2020), there have been many contentions raised by farmers and elected representatives.

The bills had mentioned various aspects that could impact the farmers. These aspects would be discussed on the basis of the ordinances.

1. The first bill [The Famers’ (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act 2020 (Act 20 of 2020)]

The first bill provides for an alternative channel in the otherwise government dominated sector, that allows farmers to have a choice to sell their produce to independent buyers or the corporates. This implies that the government-owned APMC’s (Agriculture Produce Market Committee) Mandis would have a limited “physical space” in the market. Transactions made outside the body of APMC is incentivised with the provision of enjoying exemption from taxes and fees of any kind except for the selling price for the farmer. This means, that the centre through this bill is trying to facilitate interstate and intrastate trade for farmers by limiting the usage of middlemen, and by directly connecting the seller and the buyer of the produce.

There is hope that this would drive the prices upwards and provide for a mark-up of 65% between the difference with the amount the farmer sells to that of the price at which consumers buy. This is good for the economy that has such a huge population in the agriculture sector contributing ₹ 454,658 crores and had a rise of 3.4% against other contracting sectors. In the author's opinion, this might be a move to capitalise on this rise.

However, the contention raised was that this would end the MSP(minimum support price) Procurement, which was primarily instituted along with Mandis. Along with this, there would be a surge of unemployment for the middlemen and a reduction in the States’ revenue as the Mandi fees will not be paid by all farmers in the state. These issues have not been addressed in the bill. Furthermore, it provides for a dispute resolution mechanism that would be governed by the sub- magistrate. The bill allows for private parties to set up online platforms like e-NAM (an online trading portal for farmed goods) which was supported by the MSP system. This would be beneficial for a small percentage of literate farmers who have access to the resources but, the majority would be at a disadvantage due to the lack of infrastructure regarding the same. The question regarding this provision is, if the MSP system would remain as it was, or would there be corporate or private interference in the mechanism, which is very likely.

2. The second bill [the Farmers’ Produce Trade and Commerce (Promotion and Facilitation Act 2020 (Act 21 of 2020)]

This bill enumerates the term ‘contract framing’, a method practised in the United States as well as in parts of Africa. Contract Farming is essentially a type of farming that would be executed as said in the contract signed by the corporate or other entities and the farmer. This agreement is made prior to the production or even rearing, and includes clauses on the-

1. Volume of the crop,

2. Inputs to be used as fertilizers,

3. Quality of the crop,

4. Time of delivery in the span of five years (maximum), and

5. The price or pricing formula that will be used.

This would be something that could give farmers a guaranteed income provided that the produce is good and the produce that isn’t according to this standard could be sold through the Mandi given that the contract specifies so. This is an alternative or a supplement which the farmer could use to raise the income of his or her family. Many Multinational Corporations (McDonald's, Pepsi and various others) use contract farming to grow the produce that they would specifically need for their product or service. Therefore, there is a ready contractor but the instances of exploitation against these marginal farmers (86% of all farmers), who have less than 5 hectares of land, are very high. This would also mean that their produce could be sold at a lower or higher price than that of the present Minimum Support Price fixed by the Government due to the market forces as well as the contractors. A legislation must be made either to prevent prices from dropping or for the minimum support price to be 50% more than the weighted average cost of production which is one of the demands of the protesting farmers. This must be done to protect the farmer's rights and prevent exploitation that has had a long-standing history in this sector.

3. The third Ordinance [Essential Commodities (Amendment) Act of 2020 (Act 22 of 2020)]

This ordinance is an amendment to the Essential Commodities Act of 1955, that regulates the supply and distribution of commodities termed to be essentially at a fair price for public welfare. It proposes to remove lentils, cereals, onions, oilseeds and potatoes from the list of essential commodities. Additionally, the insertion of a new subsection to Section 3 of the Act limits the power to act, vested in the Centre and State Governments in terms of regulation and stock limitations. However, in extraordinary circumstances like war, famine, grave natural calamities and unusual price upsurges, the power would be vested in the Government.

This provision would attract investments from the corporate sector to revamp the whole agricultural sector with modern technology, certain facilities that the Government could not supply to the sector. However, this means that the corporate would have a massive impact on this sector, in terms of surging prices as well as the increase in supply. Corporations could control the supply of commodities which implies that the supply of the produce could be exported, or the quality of the produce in the Indian market would be in variation with no standardisation within its borders and in foreign markets. This would lead to big corporations charging a variety of prices for the same quantity. For example, tea leaves which are organically grown in India could be sold at Rs. 300 in Karnataka but would be sold at Rs. 100 in Assam. This variation in price could exist for the same quantity and quality of the tea leaves.

In response to these recently passed ordinances, the farmers protested against the Government. They demanded that the government should revoke all these ordinances and let the Mandi system remain as it is with their loans cleared. Additionally, they firmly stated that the recommendation in the Swaminathan Report of 2006 by the National Commission on Farmers implied that the government must formulate legislation on the MSP as mentioned earlier, with a provision that would penalise the individual or corporate if MSP is not paid.

These bills and ordinances not only are contended by the farmers and other bodies but could be challenged in the Supreme Court as well through Article 13. This allows the Supreme court and the High Court to declare a law to be unconstitutional if it doesn't abide by the provision of Part III of the constitution (fundamental Rights). Currently, these bills are violative of Article 14 (right to equality), 21 i.e., right to life and personal liberty and in this context right to livelihood as well as 23 which provides for favourable conditions of work and protection against unemployment. It is also essential to note that most of these farmers belong to scheduled castes and tribes who have been given additional protection as per schedule five and six which these bills take away.

A Public Interest Litigation is filed by Rashtriya Janata Dal MP Manoj Jha that enumerates reasons stating why these bills while having the intention of farmers’ welfare could cause a devastating effect on the farmers, and ultimately the nation.

These bills infringe upon Article 246 of the Constitution of India, that has divided subjects into three lists- the State, the Union and the concurrent list to maintain the federal spirit. These Agri bills are subjects of the State list making them ultra vires of the Centre’s power and sought that these bills be declared “unconstitutional, illegal and void”. The Supreme court bench headed by the Chief Justice of India, S. A. Bobde, has given the Advocate General time to prepare a reply on behalf of the Government of India while Advocate Manohar Lal Sharma is to present the ‘cause of action’ for the petition.

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[1] Shravanthi Suraj is a law undergraduate from Jindal Global Law School. For any discussion related to the article, she can be contacted via mail: suraj.shravanthi@gmail.com

Preferred Citation - Shravanthi Suraj, "Indian Farmers and the Agriculture Bills", Syin and Sern Law Review, Published on 2nd December 2020.

Indian Farmers and the Agriculture Bills.

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