Why are Indian farmers protesting against the new Farm Bills?



We might be wondering that if these three legislations are solving so many problems at large, why are so many farmers protesting against and demanding a roll-back of these bills. Well, the simple answer is that even if these bills are plagued with some issues that should be addressed before the implementation of these bills to ensure that the small farmer does not suffer.

1. The end of Minimum Support Price (MSP)

MSP is a price guarantee scheme introduced by the Government of India, which insures the farmers against any sharp fall in prices. The minimum support prices are announced by the government at the beginning of the sowing season for certain crops to help the investment decisions of producers. In case of an excessive fall in prices due to bumper production, the government procures the produce at the minimum support price for the Food Corporation of India (FCI) for public distribution.

Considering 11,379 farmers committed suicide in 2016, it is important to provide the farmers with a guarantee such as the MSP so that the farmers are provided with a safeguard against sluggish market prices. The farmers demand to include a clause regarding procurement that would quell a lot of fears or setting a floor price for all transactions within or outside the APMC.

2. Lack of Regulation

When the producers sell directly to agri-businesses, it will create a lack of regulatory oversight and transparency. Currently, the transactions in the APMCs set a reference price for the private agri-businesses to conduct their own transactions. When it is not mandatory to trade through the APMC, large corporates will conduct their trade outside the APMC in order to avoid Mandi fees or taxes. When such large scale trade is conducted with no oversight and almost invisibly, it is bound to provide an unfair advantage to the corporates to dictate terms and prices undermining farmers interests.

3. Grievance Redressal

We are all aware of the inexorable delays in the Indian Judicial system. When the farmers deal directly with the private organisations, any grievances shall have to be dealt with under the administrative or judicial system. And it is quite obvious that a small farmer shall not be able to withstand the heat and financial burden of a long and cumbersome trial stretching over years if not decades. With the APMC system, the state government regulates all transactions and there is a proper grievance redressal system that provides resolutions for all associated stakeholders.

4. Vitiation of farmers’ interests by corporates

According to Sudha Narayan, agricultural economist at Indira Gandhi Institute of Development Research, “Internationally, we’ve seen cartels. The French dairy producers and the dairy farmers’ co-operatives in the U.S. have become huge players. A lot of buyer cartels fix the price, and that’s one of the reasons the EU and the U.S. are taking a hard look at their own supply chains to reduce the power of consolidation… The farmer runs a lot of risks dealing with the big players. It’s not a given that the big players will come in, set up shop and crowd out other players. But if they manage to get a place, there are two ways in which I have seen them operate. One is to try to crowd out competition and the other is to co-opt them.“

5. Collapsing APMC system

By creating a system to bypass the APMC system with an advantage to save the Mandi fees or taxes, most private players shall circumvent the APMC system to save costs. APMC traders might as well start operating outside the Mandi for the same reason. This shall result in the collapse of the whole APMC system. Most small farmers do not have storage capacity for their harvest and tend to transport their harvest to their designated Mandis at the earliest. Without the Mandis, the farmers might have to incur extra costs on storage and transportation of the produce.

With the collapse of the APMC system, the state governments will lose out on major revenue streams from Mandi fees and the traders shall also be affected.

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