Mains Article

Controversy related to three farm bills in India [Mains Article]

While economists have hailed the Acts, the farmers are up in arms against them. The Acts benefits both the farmers and corporates, the farmer through increased yield and the corporate can get higher production from suppliers.
By IT's Mains Articles Team
October 08, 2020

Contents

  • Introduction
  • What the bills seek to do?
  • What are the bills and reasons for opposition?
  • Question over the constitutionality of these laws
  • Question of federalism
  • Legislation that covers entries in two Lists
  • Conclusion

Controversy related to three farm bills in India

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Introduction:

Amid a huge controversy and protests by farmers’ organisations over the new farm bills, the President of India has given assent to the bills passed by Parliament. However, the Chhattisgarh, Maharashtra, and Punjab state governments might not implement the new laws & Kerala and Punjab have declared their intention to challenge them in the Supreme Court.

What the bills seek to do?

  • The three bills are Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020; The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020; and The Essential Commodities (Amendment) Ordinance, 2020.
  • They aim at Agri market reforms, contract farming provisions and on amending Essential Commodities Act.
  • The reasons for opposition include lack of consultations with stake holders, the state governments, farmers & arhatiyas by the Central Government at any stage.

What are the bills and reasons for opposition?

1. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020:

  • Provides for contract farming, under which farmers will produce crops as per contracts with corporate investors for a mutually agreed remuneration.

Opposition:

  • The protesting farmers fear that powerful investors would bind them to unfavourable contracts drafted by big corporate law firms, with liability clauses that would be beyond the understanding of poor farmers in most cases.
  • Under this law it’s not mandatory for a company to make a written contract with the farmer for any contract farming. So, even if the company violates the terms of the contract, the farmer cannot prove it.
  • Bill does not prescribe or specify that contract price of the crop should be at least equivalent or above the Minimum Support Price (MSP). It means the contractor/companies can pay whatever price they want to the farmer.
  • It does not have any provision to penalize companies which do not register their contracts. For eg: Last year, Potato farmers from Gujarat witnessed a big issue where Pepsico attempted to penalize potato farmers for growing the same seed varieties.

Myth:

  • Under contract farming, farmers will be dictated by corporates and the former will not be able to fix prices according to their free will.
  • How will small farmers be able to do contract farming, sponsors will not finance them.
  • In case of dispute, big companies will have their say. The farmers and the opposition political parties are protesting against the above fears.

Reality:

  • Under contract farming, farmers will have full power to determine prices for their produce. They will receive a payment within a maximum of 3 days.
  • 10000 Farmer Producer organizations are coming to existence across the country. These FPOs will bring together small farmers and work to enforce a remunerative pricing mechanism for farm produce.
  • After signing the contract, farmers will not have to seek out traders. The purchasing consumer will pick up the produce directly from the farm.
  • In case of dispute, there will be no need to go to court time and again. There will be a local dispute redressal system.

2. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020:

  • It allows intra-state and inter-state trade of farmers produce beyond the physical premises of Agricultural Produce and Livestock Market Committee (APMC) markets.
  • State will be now prohibited from levying any market fees or cess outside APMC areas.

Opposition:

  • Under this, agri-business companies and traders will be allowed to open their own markets to purchase from farmers. However, this will destroy the level playing field between the APMC markets and other traders. Under it, the trade outside the APMC Mandis is virtually unregulated.
  • Farmers were demanding that in case the government is allowing, new set of farm markets to come up; the state and local government should be given power to oversee their functioning.
  • Presently if the farmers feel the traders working inside the APMC Mandis are involved in any unfair practices, they could complaint to the APMC Officers.
  • However, new act, in case of any disputes, farmers would be required to go to a sub-divisional magistrate court – which is beyond the capacity of small farmers to pursue given their financial constraints.

Myth- Procurement at Minimum Support Price will stop:

  • If selling in mandis are optional will the mandis exist? What will happen to the government electronic trading portal like e-NAM?
  • The farmers and the opposition political parties are protesting against the above fears.

Reality- Farmers can sell their produce at MSP:

  • Mandis will be open as before but farmers will have the option to sell at other places too. The e-NAM trading method will be functional in the mandis.
  • Electronic platforms trading would increase which would raise transparency and augment time-saving.

3. The Essential Commodities Act (Amendment): 

  • It empowers the Central government to regulate food items in extraordinary circumstances or impose stock limits if there is a steep price rise.

Opposition:

  • Till now only farmers, farmer cooperatives and Farmer Producer Organisations (FPO) didn’t have any limit or restriction for stocking, producing or selling their crop. As a result, they take conscious decision of selling their crops only when the market is offering good price for the crop. So, under this, the farmers are not getting any new freedom.
  • On the contrary the government is now removing all the foodstuffs from this category allowing companies to store as much quantity of food as they want which amounts to promoting hoarding.
  • Through this Amendment the government is giving up its power to prevent hoarding and controlling price inflation.
  • According to the law, government can intervene only if there is 50% price rise over previous year’s price in case of non-perishable goods and 100% price rise over previous year’s perishable goods.

Question over the constitutionality of these laws:

  • As per Union of India v H. S. Dhillon (1972), constitutionality of parliamentary laws can be challenged only on two grounds — that the subject is in the State List, or that it violates fundamental rights.
  • As per Ram Krishna Dalmia v Justice S R Tendulkar (1958), the Supreme Court will begin hearings after presuming the constitutionality of these laws.
  • The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 do not mention the constitutional provisions under which Parliament has the power to legislate on the subjects covered.

Question of federalism:

  • Federalism means both the Centre and states have the freedom to operate in their allotted spheres of power, in coordination with each other.
  • Although Federalism, like constitutionalism and separation of powers, is not mentioned in the Constitution, the court in S R Bommai v Union of India (1994) held that federalism was part of the basic structure of the Constitution.
  • The 7th Schedule of the Constitution contains three lists that distribute power between the Centre and states.
    1. Union List (97 subjects) – Parliament has exclusive power to legislate (Article 246);
    2. State List (66 subjects) – states alone can legislate. However, Parliament can legislate on an item in the State List under certain specific circumstances laid down in the Constitution.
    3. Concurrent List (47 subjects) – both the Centre and states can legislate. But in case of a conflict, the law made by Parliament prevails (Article 254).
  • Union List and Concurrent List put matters relating to agriculture outside Parliament’s jurisdiction, and give state legislatures exclusive power. No entry in respect of agriculture in the State List is subject to any entry in the Union or Concurrent Lists.

What happens in case of legislation that covers entries in two Lists?

  • The entry 27 in state list is related to Production, supply and distribution of goods subject to the provisions of entry 33 of List III.
  • Entry 33 of the Concurrent List mentions trade and commerce, production, supply and distribution of domestic products of an industry over which Parliament has control in the public interest; foodstuffs, including oilseeds and oils; cattle fodder; raw cotton and jute.
  • Hence, Centre could argue that it is within its powers to pass laws on contract farming and intra- and inter-state trade, and prohibit states from imposing fees/cesses outside APMC areas.
  • The committees headed by Ashok Dalwai, Ramesh Chand and Swaminathan recommended that agricultural market be entered in the Concurrent List.

Conclusion:

  • While economists have hailed the Acts, the farmers are up in arms against them.
  • The purchase by organised retailers curtails the length of the supply chain, giving better prices to farmers and asking for lower prices from consumers.
  • It is witnessed that middlemen charge higher prices than organised retail players.
  • Also, contract farming by corporates implies that the corporate will provide technology to the farmers to improve their yield.
  • It is witnessed that middlemen charge higher prices than organised retail players.
  • Also, contract farming by corporates implies that the corporate will provide technology to the farmers to improve their yield.
  • This benefits both, the farmer through increased yield and the corporate, who can get higher production from suppliers.
  • Hence, the new Farmers bill will be a boon for the economy and any loopholes will be addressed by the experts and the policymakers.
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