DRAMA at the Farm Gate

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DRAMA at the Farm Gate

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• The two sides: In the farmers' agitation 2020, the mass of agitating farmers was pitted against the government that had made up its mind not to listen. The non-violent farmers tried holding steadfast. But are the farmers misled and misguided by the political elements? Govt. claims so.
• The primary argument: The major act is the first one - Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020. Logic is this -

1. Farmers had no freedom to seel anything outside APMCs, which exploited them. 
2. The Act is now called "APMC Bypass Act" as it builds new trade areas outside the APMCs, and farmers will be liberated.
3. But this is a lie, as farmers can sell outside APMCs even today, and they do sell bulk of their produce there. 
4. For wheat and rice, the bulk in some states like Punjab goes through APMC mandis only. Why? Assured procurement at MSPs.
5. Some States' APMC Acts restrict the wholesale traders not farmers or intermediaries from trading outside APMCs
6. The free trade area being created can also be regulated (by union govt, as per new law), while APMCs will remain under state govts.

• Trade area control: The new law empowers the union govt. to regulate the new "trade area" and hence it becomes DRAMA - Dual Regulation of Agri Marketing Act.

1. It is good that regulation is being thought of, because unregulated free markets never serve public interest.
2. Unregulated agri markets lead to problems of uncertainty, equity, collusion, quality control, economies of scale, contract enforcement and abuse of political power.
3. That's why farmers' cooperatives exist, and the successful dairy cooperatives prove that free markets are not the only way forward.

• Real question: Hence, the real question is not "free markets versus regulation", but what kind of regulation to be used in the "trade area". DRAMA is unclear on this, and only lists issues involved. All powers are given to union government (just like in recent labour codes). States are out of the game.
• Corporate interests: It's clear that those powers will be used to further the interests of agri-business corporates. Electronic trade will be pushed, and a national market under Centre's control will be made. So mandatory Aadhar, digital payments, data harvesting, fintech all will begin. 
• Similar centralisations: The MGNREGA and GST have been centralised in similar fashion, and severe teething troubles experienced for years. And states will be out of the solution. Mandis, which are public goods, are facilitators of regulation and collective action in agri marketing. They need reforms, but will face an uncertain future.
• Only way to survive: Mandis will have to cut their mandi fees immediately, to survive. Upto a point, it's good. But then, they will find it hard to build infrastructure and facilities. States too will lose interest. The existing problems in mandis - efficiency, equity and sustainability - will be resolved by death of mandis!
• Dual regulation bad: The new framework does not solve the core issues, and reduces farmers' powers. Such direct intervention by union govt. is uncalled for, but direct inputs by farmers are. Citizens, consumers and farmers must have a say larger than that of agribusiness, software firms and data brokers.

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