NEW DELHI — Farmer and grandmother Sukhjinder Kaur of Tohra village in Punjab’s Patiala district has spent nearly three months at the Singhu protest site on New Delhi’s northern edge, among the tens of thousands of Indian farmers staging a blockade of highways outside the capital city since Nov. 26, 2020.
“We have all seen profits and farm income decline over 10 years. These three new laws will turn even middle class farmer families into laborers working on other people’s land,” she told Devex.
“These are ‘kaale kanoon’ [literally black laws, or unfair],” Sukhjinder said. The protestors are demanding a full withdrawal of three laws pertaining to marketing and trade of agricultural produce that were rushed through the Indian parliament in September 2020. The laws were enacted in the midst of the COVID-19 pandemic, without legislative scrutiny despite opposition party members’ protests.
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The government and the farmer unions have held 11 rounds of talks so far, during which the government offered to make various amendments to the laws. The government finally offered to keep the laws in abeyance for 18 months while stakeholder negotiations continue — an unprecedented measure. The farmers have rejected this offer as inadequate.
Farm union leaders told Devex the government is attempting to present the protestors as intractable, unwilling to negotiate clause by clause. “In fact, the government refuses to back down. It is committed to a corporate lobby that will profit from the laws. Each of these three laws is weighed heavily against farmers,” said Dr. Ashok Dhawale, president of All India Kisan Sabha, one of 30-odd unions leading the protesting farmers.
The government’s view is that the laws are a watershed moment, and that the protestors must give them a chance. Many economists and farm leaders say reforms should have taken a bottom-up approach instead of only relying on private investments in the sector. The farmers are resolute, insisting that nothing short of a full repeal of the laws will be acceptable.
One size won’t fit all
The three laws are the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020; and the Essential Commodities (Amendment) Act, 2020.
The first seeks to facilitate trade of farmers’ produce outside the market areas notified under every state’s Agriculture Produce Marketing Committee laws, giving farmers the choice to sell directly to private buyers instead of through the regulated APMC market yards. The second promotes contract farming arrangements, offering farmers the security of an assured buyer at a pre-fixed rate. The third relaxes traders’ stocking limits on several food items including cereals and pulses, an anti-hoarding regulation dating back to an era of scarcity.
“We didn’t get our money [ever]. How do simple farmers hunt down corporations that vanish with our goods?”— Baljit Singh, farmer
The most vociferous protests against these laws have been in the states of Punjab and Haryana, where most farmers are heavily dependent on the public procurement system for their wheat and paddy. They fear a slow dismantling of this procurement at a minimum support price, or MSP, the price at which the government is willing to buy.
Additionally, Punjab farmers’ average agricultural land holding is over three times the national average, at 3.62 hectare, according to the Agriculture Census 2015-16.
Nirvikar Singh, distinguished professor of economics and co-director of the Center for Analytical Finance at the University of California, Santa Cruz, said many of Punjab’s farmers, seen as relatively wealthy, are in fact heavily in debt. “Farmers in other states, who may be even worse off, often have no interaction or limited interaction with the [APMC] market for their output, and even when they market their produce, do not participate in the public procurement system. So they have less knowledge of possible reform impacts, as well as much less to lose,” Singh told Devex.
Prime Minister Narendra Modi has presented the laws as key reforms to liberalize India’s agricultural markets. Even the opposition parties agree that reforms in this sector are long overdue, and promised as much in their 2019 election manifestos including a full overhaul of the APMC market yards.
The market yards, which served to protect farmers from exploitation by middlemen in the ‘60s and ‘70s, and farmers see them as a moribund feature of agricultural marketing in India, offering neither electronic trade nor modern physical infrastructure, but continuing to levy market fees.
Two-thirds of Indian farmers already sell their produce to village-level aggregators or traders at the farm gate or elsewhere, and among them the general complaint is that the new laws do not address structural problems in Indian agriculture.
For starters, there is a cloud over the constitutionality of the laws — agriculture is a state subject. And while an okra farmer with a half-acre farm in Maharashtra’s arid Marathwada region won’t split hairs on whether the law violates a federal principle, the state support they require is different from that of a paddy farmer with large, irrigated farmland along the Sutlej in Punjab. The marginal okra farmer does not sell at the market yards — the transport cost would be prohibitive — and in fact sells to the village trader. If they sign a contract for a pre-fixed rate with an aggregator or exporter, they will require extensive training on quality, grading, and homogeneity.
According to R. Ramakumar, a professor of economics at the premier Tata Institute of Social Sciences in Mumbai, for the 68% of Indian farmers who own “small and marginal” land-holdings of less than 1 hectare, power relations with traders and contractors are even more asymmetrical and that is why contract farming requires extensive regulation.
“With contract farming, the fears range from breach of contracts to food security concerns. There could be cropping pattern changes such as food crops to non-food crops, sustainability concerns in terms of soil quality and water consumption, and large-scale mechanization of labor impacting local labor displacement. The profitability motive could also promote use of lowpaid female labour, child labor, etc.,” Ramakumar explained.
At the Singhu protest site, Baljit Singh and his family are parked in a large trolley, one of about 20,000 such vehicles and tents housing protestors. Singh, who owns 40 acres of land in Patiala, said he signed a contract to grow potatoes on a section of his farm a couple of years ago. “We didn’t get our money [ever]. How do simple farmers hunt down corporations that vanish with our goods?” he asked.
Doubts over major corporatization
Across Punjab, following the last harvest season, there were widespread complaints of farmers receiving barely half of MSP. This is a widespread problem, including at the market yards, where commission agents dictate what price a farmer’s goods will receive.
While Modi reiterated in parliament last week that public procurement at MSP will continue, there is a trust deficit among farmers. Unions have now demanded that a legislation be introduced guaranteeing farmers MSP for certain farm produce, but economists and experts agree that this could be an impractical demand — MSP is by definition a price the government pays for procurements, to be later distributed through the Public Distribution System, the price difference absorbed by the budgeted food subsidy.
Alongside the mistrust over MSP, the amendment to the Essential Commodities Act that removes stocking limits is seen as a likely profitable area for large corporates to occupy.
Ramakumar said the removal of stock limits alone will not bring large private investments in warehousing and silos. But in anticipation that the market yards system will be dismantled, pushing those commodities to the open markets, some players could capitalize in the future. He cited the example of the Adani group, that now has a large presence in India’s ports, airports, cold chain, and in food retail — “different points of the supply chain.”
Bharatiya Kisan Union leader Joginder Singh Ugrahan said a weakening of public procurements is the farmers’ big fear. “We could have a situation where procurement by the Food Corporation of India is curtailed. All indications until now are that private players will dictate terms in the agricultural commodities market,” he told Devex.
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