Transforming Farmers into Entrepreneurs
Agriculture being reinvented as an industry and farmers, freed from the clutches of the middlemen, are striding on the path of prosperity and Self-Reliance, which is a must concomitant of a Self-Reliant India. The Government has done well to bring out the new laws to mitigate the plight of farmers with measures such as higher Minimum Support Price which is one-and-a-half times the cost of production so as to double the farmers’ income by 2022 and transferring nearly Rs 7 Lakh Crore directly to the accounts of around 10 Crore farmers in the next 10 years.
After ‘One Nation One Tax’, ‘One Nation One Ration Card’, and ‘One Nation One Test’ for Government jobs, the Government has demonstrated its unabated zeal for reforms by legislating ‘One Nation One Market’ for agriculture sector The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill. These are the biggest agriculture reforms in the country so far.
When a monetary benefit is extended to farmers or to the poor, the arm-chair economists disparage it as a ‘subsidy’. However, if a similar benefit given to industry or commerce, it is glowingly lauded as an “incentive” or a “subvention”. Does this difference in language also reflect a difference in attitude? Prime Minister Narendra Modi had expressed these views in a programme of a media house on January 30, 2016, and the next day to a delegation of farmers. In pursuing the vision of Prime Minister Narendra Modi for the farming community, the Government has got the new laws made by the Parliament, which, at one stroke, demolished the nexus of Mandi and middlemen and will give the real freedom to farmers from the shackles of middlemen.
After the Prime Minister announced One Nation One Market initiative from the ramparts of the Red Fort in 2016, he ensured that it did not remain merely an announcement but soon transformed into a reality. During his address, the Prime Minister had said that idea of making Ek Bharat Shreshtha Bharat, which Sardar Patel dreamt of with his unification initiative, has been realised. But India is yet to become a unified market. The Government started in this direction in a phased manner. Though the eNAM platform was launched as early as April 14, 2016, with the Bill now passed in Parliament, the Government has made its vision clear that not only the agriculture sector will be developed on the lines of industry but also farmers will be free to sell their produces anywhere in the country at a profitable price like a true owner.
So far, farmers did not have this freedom as ‘One Mandi One Licence’ regime forced them to sell their produce in a particular agriculture market which worked to the unfair advantage of the middlemen because farmers could not afford to take their wares back to his village if the middleman offered un-remunerative price.
Confusion is being created that the Minimum Support Price (MSP) will be scrapped after these laws come into effect. However, the truth is that the Government, in its effort to double the income of farmers has been continuously raising MSP which is now one-and-a-half times the cost to farmers. The Government procured 1,870 Lakh metric tonnes of paddy between 2014 and 2019 and paid Rs 4.34 Lakh Crore for the same against the 1,670 Lakh metric tonnes procured between 2009 and 2014 for Rs 2.88 Lakh Crore. The incumbent Government has implemented recommendations of MS Swaminathan Commission in deciding MSPs.
Another falsehood being spread is that big corporates will capture farmers’ lands. However, the new laws provide that the corporate contact with the farmers will have no clause regarding the ownership of the land. As a matter of fact, the laws will benefit 86 per cent marginal farmers who do not have money to invest in improving their farms. The Government is strengthening 10,000 Farmer Producer Organisations (FPOs) with an investment of Rs 7,000 Crore. These FPOs will assist small and marginal farmers in creating groups for entering into contracts with the corporates. To ensure that nobody takes undue advantage of farmers, sale, lease or mortgage of farmers’ land is totally prohibited and farmers’ land is also protected against any recovery. Also, while the contract is binding on the private entity, it is not binding on the farmers. If the farmer has not taken any advance or any payment then the farmer can cancel the contract at any time even after signing it and without any penalty. If the farmer has accepted any advance or payment, then too he can end the contract at any time by returning the principal amount on which no interest would be payable. However, the private player cannot cancel the contract unilaterally and has to make the payout that he has agreed to in the contract. Hence, the farmer has been protected against all eventualities.
To further empower farmers, an effective dispute resolution mechanism has been provided for with clear timelines for redressal. This will ensure that the farmer gets justice and gets it without delay. All disputes have to be mandatorily resolved within 30 days. In the event, the price of production goes up after the contract, the additional benefits will be transferred to farmers.
In fact, the farmers will be now free from Mandi Tax that they have to pay, varying from 2 to 8.5 per cent with the highest being in Punjab. But, with farmers now being allowed to sell their produce outside the Mandi, they will be spared of the tax burden which will add to their income. The legal shield for farmers Farmers, who had been subject to continuous exploitation since Independence, has now been freed from shackles for the first time. Under the new laws, farmers have many options to sell their produce.
The Prime Minister has described the passing of these laws in Parliament as a watershed moment. He said: “Some people who ruled this country for decades are attempting to mislead the farmers on this issue. They are supporting the middlemen and the looters of the farmers’ earnings. Lies were being propagated that farmers will no longer get the MSP. The government was committed to providing fair prices to farmers through MSP and the Government procurement will continue as before.” He added, “With the new provisions coming into force, farmers can sell their crop at their desired price in any market of the country; this is a historic move.” With these legal shields, the intention of the Government is clear that the 21st Century farmer of the country will be free from any restrictions in agriculture activities, movement and selling of their produce.
The Prime Minister said: “For decades, the Indian farmers were bound by various constraints and bullied by middlemen. The Bills passed by Parliament liberate the farmers from such adversities. These Bills will add impetus to the efforts to double the income of farmers and ensure greater prosperity for them.” The New agricultural reforms have given the freedom to every farmer of the country to sell his crops, fruits and vegetables to anyone, anywhere. Now he has got many more options besides the Mandi of his area. Now if he gets more profit in the Mandis, then he will go to the Mandi and sell his crops. If he gets more money elsewhere, then he will go there and sell. Now he is free from any kind of compulsion.
The new laws will create an ecosystem where farmers and traders will enjoy the freedom of choice of sale and purchase of produce. They will promote barrier-free, inter-state and intra-state trade and commerce outside the physical premises of state notified markets. Farmers will not be charged any cess or levy for sale of their products and will not have to bear transport costs. The laws also allow electronic trading in transaction platform for ensuring trade electronically. In addition to Mandis, farmers will be free to trade at their farms, cold storages, warehouses, processing units etc. Farmers will be able to engage in direct marketing thereby eliminating intermediaries resulting in full realization of price.
Due to prior price determination, farmers will be shielded from the rise and fall of market prices. The new laws will provide the farmer to access modern technology, better seeds and other inputs. They will reduce the cost of marketing and boost the income of farmers. The farmer will have full power in the contract to fix a selling price for his produce. They will receive a payment within a maximum of 3 days. 10,000 Farmer Producer Organizations (FPOs) are being formed throughout the country. These FPOs will bring together small farmers and will work to ensure remunerative pricing for farm produce. After signing the contract, the consumer will lift the produce directly from the farm.
Noted agricultural economist Ashok Gulati has described the new laws to be pieces of legislation that are as revolutionary in content and potential benefits as “de-licensing of the industry in 1991”. He says, “ The economic rationale of these pieces of legislation is to provide greater choice and freedom to farmers to sell their produce and to buyers to buy and store, thereby creating competition in agricultural marketing. This competition is expected to help build more efficient value chains in agriculture by reducing marketing costs, enabling better price discovery, improving price realisation for farmers and, at the same time, reducing the price paid by consumers.“