Farm Bills: The Victim of Misguided Perception

In September 2020, the Indian government passed three farm bills with the aim to liberalize the agriculture sector, improve farmer earnings, and increase the industry’s economic contribution. However, adulterated opinions and misunderstanding created by certain elements have caused protests around Delhi, which ultimately resulted in the shameful Red Fort attack on January 26 this year. In order to separate ‘wheat’ from ‘chaff’, here is the reality of the three bills:

The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill

Ideally, farmers sell their produce at APMC regulated mandis at Minimum Support Price (MSP). However, in reality, middlemen and brokers exercise APMC monopoly to decrease the purchase price, maintain the selling cost, and pocket the profits.

Perception: This bill will finish MSP, invite corporate players who will purchase crop at a lower amount and eliminate the prospect of selling at mandis.

Reality: The bill ends the APMC monopoly by creating a competitive market, where corporate players can purchase the produce in bulk at a price decided by the farmers. In case the price offered is unfair, farmers can choose to sell at APMC mandis at MSP. They will continue to function.

Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill

This bill enables Contract Farming.

Perception: Farmers will not know how to negotiate contracts with big companies and in turn, receive pennies for large produce.

Reality: Farmers have a choice to enter into contract farming with a company for the sale of specific produce at a pre-determined price. This guarantees the sale of produce before it is ripe, at a price decided through discussion with farmers.

Essential Commodities (Amendment) Bill

This bill removes pulses, onion, potatoes, and oilseeds from the essential commodity list, which removes their stockholding limits.

Perception: If companies can stock without limits, the bulk produce purchase price will be less.

Reality: The amendment attracts private players to buy in bulk that helps to avoid produce wastage – a prolonged issue in Indian agriculture – and leads to heavy investments for cold storage. Furthermore, this change will bring price stability for consumers due to sufficient stock.

Hope this piece of information clears the air around the Farm bills!