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UNDERSTANDING FARMS ACT, 2020 & BEYOND

Updated: Dec 9, 2020

India is a country highly dependent on agriculture. With the growing population, pressure on the agrarian sector rises to feed people. Agriculture plays a vital role in the Indian economy. Over 70 per cent of rural households depend on agriculture. Agriculture is an important sector of the Indian economy as it contributes about 17% of the total GDP. But it is difficult for farmers to earn substantial income from the produce. The main focus of the development policy was agriculture and to provide better living standards to rural poor. Hence, agriculture policies took shape and with changing governments, different plans were produce introduced to support farmers. The history of agriculture in India is explained to understand the backdrop of the present laws and policies implemented for reforms in the agricultural sector, with analysis, arguments against (by the opposition and farmers) and in favour (by the government) of the recent Farm Act, 2020 moved in by the Narendra Modi government.

Agricultural History of India

The oldest settlement in India, Indus Valley Civilization was an ideal one as far as housing, drainage, agriculture, animal rearing is concerned. Among all the occupations, considering the diversity of environment and available natural resources, farming was the most profitable and worthy occupation for fulfilling the daily needs. Wooden ploughs were used for preparing land and wells, canals supplied water for irrigation.

During the medieval era too, agriculture was a significant economic activity which shifted to the Ganga Valley. The presence of water all over the year, helped people to cultivate paddy. The distinction between settled farmers and nomadic pastoralists became watertight.

Under the Mughal rule, ensure good quality of production and collection on revenue based on it, regulating the relationship between the state and the rural agrarian population. Particularly under Emperor Akbar, a meticulous effort was made to record all about agriculture in ‘Ain-i Akbari’. Zamindars were petty landholders in the villages, descendants of old ruling families who retained a small portion of their ancestral lands and had peasants/labourers to work on their lands.

With the advent of the British, the zamindari system became more oppressive due to fixed revenue rates irrespective of quantity produced, leading to revolt by peasants. Farmers were hit hard by indebtedness and increasing burden to expand cultivation. They were forced to grow indigo on their fields and yield the harvest to the British without any substantial wage. Mahatma Gandhi started Champaran Satyagraha as a moral force against an adversary and the English were asked to compensate the farmers. A similar situation arose in Kheda after harvest failure and peasants asked for the remission of taxes.

Afterwards, the Congress party formed government, with Jawaharlal Nehru as the first Prime Minister of independent India. The focus of government policies was to meet socio-economic growth and alleviation of poverty. Some suggested to invest in the industrial sector and others were preoccupied with agrarian sector upliftment. The government adopted the Soviet Union’s Five-Year Plans model and established the Planning Commission of India in 1950, for all income and expenditure in the coming 5 years. The First Five Year Plan (1951-1956) was based on Harrod-Domar model which suggested that growth was dependent on two things, high level of savings since higher savings enabled greater investment and a low capital-output ratio that ensure efficient investment and a higher growth rate. Indian Agriculture Research Institute, New Delhi (1958) and Institute of Science, Bangalore were established for facilitating scientific research to increase productivity.

In the 1960s, Indian agriculture suffered a lot due to droughts and famine leading to food shortage. This was the time when the Green Revolution was introduced in India with modern methods and technology- including high-yielding variety (HYV) seeds, tractors, irrigation facilities, pesticides and fertilizers- were adopted. Lal Bahadur Shastri appealed to keep fast once a week and raised the slogan ‘Jai Jawan, Jai Kisan’ to successfully overcome the food crisis.

The income disparity among the primary, secondary and tertiary sector is quite visible and since the investment in the latter two has increased, the former is sometimes left out. The policies by the governments could be beneficial if implemented wisely. The BJP-government led by Narendra Modi has done much for the agrarian sector and the Farmers Act, 2020 is one such step to make it self-reliant.

The Farm Act of 2020

The Indian Parliament passed three agriculture acts—Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, Farmers (Empowerment and Protection) Agreement of Price Assurance, Farm Services Act, 2020, and the Essential Commodities (Amendment) Act, 2020—during its monsoon session culminating on 23 September. The Act provides for contract farming, under which farmers will produce crops as per contracts with corporate investors for a mutually agreed remuneration. The law specifies that a farmer may enter into an agreement with any Sponsor, agro-based firm to sell his produce, time period of such agreement, quality, grade and standards of products and terms and conditions of the contract can be mutually decided. This shall widen the supply chain of farm produce in national markets and the farmers shall get a better price (without commission cut on transportation etc.) for their crop. The Act is a foundational and initial step towards being self-reliant, and significant for farmers independence from the shackles of poverty and indebtedness.

The bills became law amidst protests and opposition by other political parties, some allies of BJP and farmers of Punjab, Haryana, Maharashtra, Chhattisgarh. Minister of Food Processing Industries and the only Shiromani Akali Dal representative in the Modi Government, Harsimrat Kaur Badal, resigned from the Union Cabinet, protesting against the bills, alleging the Bills to be detrimental to Punjab’s agriculture sector. The major concern of the farmers is being bound by unfavourable terms of contracts made by law firms that would be beyond the comprehension of poor and illiterate farmers. The unpredictable monsoon shall lead to fluctuation in the quantity and quality of the produce placing farmers at the mercy of corporations.

Why is it a Point of Concern?

  1. Farmers think that the law blows out the Minimum Support Price safety net and subsidies on power, water and fertilizers.

  2. There is an apprehension that upper hand given to corporations may lead to farmers’ exploitation.

  3. States will lose revenue as they will not be able to collect ‘mandi fees’ and the commission agents stand to lose if entire farm trade moves out of mandis.

  4. Corporates shall have the freedom of hoarding stock by dictating the terms over farmers.

  5. In case of a dispute between a farmer and corporate, it shall be settled through conciliation but the farmers doubt the negotiation process to be misused against them.

  6. Once the contract is made, farmers cannot go back to mandis and sell their produce in case they are not satisfied with prices offered or any contingent condition coming up in future.

What does it bring to the Table?

  1. The law introduces a parallel market channel together with existing mandi, that does not touch on MSP-based procurement of food grains, rather it provides an alternative choice to the farmers to sell their produce wherever they wish to.

  2. Contract farming has been prevalent in India for commercial crops like sugarcane, tea, etc. and presently its scope has been widened for freedom in trade.

  3. Only those who wish to contract with corporates will be governed by the new laws and there shall be no interference with States’ APMC Act and the APMC mandis will continue to function.

  4. The removal of license on traders to hold the produce, shall curb corruption and unethical practices to hold stock and in-turn smoothen and strengthen the supply chain.

  5. The APMC system is occupied with middlemen and commission agents often resulting in red-tapism and loss to farmers, so the new law is a way out to free the farmers of the problems.

  6. The bills passed were to increase farmers’ choices as far as sale and purchase of their own produce is concerned which will increase competition. The contract farming will surely benefit them as they can choose their sponsors and it is the responsibility of the buyer to provide farmers with modern technology and equipment. What people need is patience and the new laws time, to settle and yield positive results.

Agriculture has been the backbone of India economy and important occupation for rural people. The increasing population raised the demand of food and direct pressure came upon the agricultural sector to sustain it. With factors of agriculture (rainfall, the fertility of the soil, equipment) constantly fluctuating, affecting the amount of produce, it became a prime concern for governments to support the sector by investing in it. This was the time when agrarian reforms and policies were drafted to bring agriculture under the supervision of the State. Since independence, State has put in efforts to boost the agricultural sector and raise the standard of living of farmers. The Farmers Act of 2020, is a novice step to guarantee more freedom to cultivators in their occupation. Bringing them out of fetters of tiresome and less profiting mandi system, the alternative policy of contract farming is surely open the channels to national and international markets. Investments in agriculture in this way will help farmers by uplifting them from poverty and make them self-sufficient. The vices of the corporate world would not severely affect them as there are higher obligations on the firms. ­­­­Any legislation has to pass the scrutiny of people for whom the law has been enacted. The farmers protesting against the law are under the convention that corporatization of agriculture would harm them and increase the burden to meet the conditions of the contract. But they should understand that the new legislation will eliminate corrupt activities and increase their income. Programs shall be started to educate them about the same and legal aid be provided, as their growth is necessary for the development of the country.

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