Sow the seeds of trust

Excellent study material for all civil services aspirants - begin learning - Kar ke dikhayenge!

Sow the seeds of trust

---

Read more on - Polity | Economy | Schemes | S&T | Environment

---

• Farmer protests 2020: Initially it was seen as a local protest against two new Union farm laws (except the Contract Farming law), but it snowballed into a national event. The govt. says that farmers are not able to understand the benefit of the new laws, and the farmers are demanding a total repeal of all three, and MSP as a guaranteed legal right.
• Contract farming confusion: Farmers are scared that their lands may be usurped by corporates, but the Act says that farmer land cannot be leased, mortgaged or bought by contracting agency.
• Analysis of first law: The FPTC Act (called APMC Mandi bypass Act) makes a new trade area outside the regular APMC market yard / sub-yard, and any buyer with a PAN card can buy from farmers, without any state level tax on it. (FPTC - Farmer Produce Trade and Commerce (Promotion and Facilitation Act)

1. Logic is that with low cost for buyers, realisation of farmers will rise. That may not be true, as buyers may not pass the savings to farmers! 
2. Second logic is that now farmers get a choice whom /where to sell. But that's wrong as the bulk of farm produce in India was anyway being sold outside APMC mandis only! (Punjab and Haryana are exceptions as mandi procurement is very strong)
3. To allow anyone with a PAN card to become agri buyer is a free-for-all situation, not desirable.

• Aspects of contract farming: It's already in vogue across India, but marginal and small farmers are excluded. Many issues - pro-buyer contracts, delayed payments, undue rejections of produce, cheating, and poor enforcement by States. 

1. The new law - Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act - has defined FPOs as farmers
2. FPOs are thus restricted to supply side, while they are hardly into farm production, and with law, cannot coming into contract farming as agencies   [FPO - Farmer Producer Organisastions]
3. The new Act has nearly no remedies if companies cancel contracts. It is better if the 2003 Model APMC Act is used here, which authorised the APMCs to resolve disputes. Farmers are more familiar at this level, and most APMCs are multi-stakeholder elected bodies. Also, for any licence given to traders, there is a "counterparty risk assurance".

• Fear of MSPs ending: Farmers are scared that MSP system will end, because the new laws refer to Shanta Kumar Committee report, and CACP reports suggesting end to open ended procurements, and cutting costs of FCI. So farmers fear that FCI will go to new trade areas (outside APMC mandis) and cut buying costs like market fees and arhtiya commission. So farmers are upset due to change in the relation they have had with central govt.
• A bad demand: The CACP recommends MSPs for 23 crops, but not all are bought across India through the year. To make MSPs legally binding will be improper, because private players may then choose to import than buy. FCI may also choose not to buy. Then what? The new Punjab state laws making it mandatory to buy only at MSPs (wheat and paddy) and provision for prison or fine is a bad idea. Private agri markets cannot be run like this, as some desperate farmer may want to sell below MSP.
• The nature of MSPs: It is ultimately a political decision that is administratively carried out. Private players cannot be forced to be a part of that system. Maharashtra tried it in 2018 (via APMC Act) but withdrew quickly due to huge trader resistance. Liberalisation of trade and compulsory MSP won't go together.
• Summary: For small and marginal farmers, APMC mandi is the final sale channel. Don't let them die, as farmers would lose out unless organised in FPO formats, which then would be attractive to private agencies for direct buying or contract farming.

Read more on - Polity | Economy | Schemes | S&T | Environment

Join UPSC Self Prep course | Online Course (PT Gurukul)  | Covid Special Course | Join PT courses

* Content sourced from free internet sources (publications, PIB site, international sites, etc.). Take your own subscriptions. Copyrights acknowledged.