The new Indian farm acts 2020: All you need to know.
If you watch international news regularly, you must have heard about huge Indian farmers’ agitation. They are demanding to take back the “new farm laws” that prevent the state governments from collecting a market fee, cess or levy for trade outside the APMC markets.
About 300,000 are protesting and sleeping on roads for about 25 days now, in freezing nights of the capital.
After reading many articles and watching hundreds of interviews, I tried to summarize the issues and compared them with existing/ old laws:
Law 1: Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020
First issue: No Judiciary involved in the “Contract Farming”.
Existing Law: Indian farmers produce tomatoes for big ketchup companies (e.g. Heinz, Del Monte). They sign contracts with all legalities, making them eligible to file a case in court if these corporates do not abide by the contract conditions.
New Law says: In case of any dispute between the farmer and the company regarding the quality of tomatoes or corporate decides not to pay as per contract, according to these new laws, farmers won’t be able to go to any judicial court of India. In case of disputes, they can only reach out to the Senior Divisional Magistrate of that province or state. The sad reality is that in India, a small scale farmer can never reach these higher authorities. In short — they will have to agree with what corporate says.
2nd issue: No, MSP (Minimum Support Prices) for farmers
Existing Law: There’s a minimum wage act, and the minimum salary is insured under that. Every employee has a minimum wage called CTC or monthly in-hand-salary. That is how the minimum support price was introduced in agriculture to ensure that farmers’ produce will be bought at a certain price, not less than that. Hence, the government supports that there’s a minimum “support price.”
New Law says: Now, these 3 new acts don’t mention MSP at all. The government argues that it was never a law! Why are farmers fighting for it in the first place? There were just old policy decisions! But farmers have a counter-argument that if it was not a law and we are asking for it, why are you not making it as a law, simple as that. Why not make some changes in the farmer’s interests? And this has become the most prominent concern.
Law 2: Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
Issue: Dismantling the Government markets (APMC markets)
Agricultural Produce Market Committee (APMC) is a place in the market area managed by a “Govt. Market Committee” to regulate agricultural produce and livestock in physical, electronic or another such mode.
The interesting thing is that it is not written in any law, but there are assumptions that these laws will make APMC markets redundant.
Existing Law: The current transactions in APMC markets are taxed.
New Law says: Now there’s a freedom to sell their crops to anyone; those transactions will not be taxed. This process is already implemented worldwide in agricultural markets like the US. As per learnings from history — once the private players enter, they offer incentives at the starting to allure their sellers. However, after a certain period (2,5 or 10 years), they stop giving a “valuable” price to the farmers because now they dominate and control the whole market.
They start playing by their own rules, known as “Monopoly” (in some countries, this word is prohibited in business politics). We already have examples of these around us as Digital Dominance from Google, Amazon etc. Don't’ we?
First, these players will reduce the price and make other competitors smaller and then take over the whole economics of supply and demand and set the price accordingly.
Hence, with time, the APMC markets will vanish because there will be no transactions happening over there as farmers will sell their crops where they will get higher prices. And then, after some years, these big corporates will have a monopoly.
Law 3: Essential Commodities (Amendment) Act, 2020
Issue: Allowed the storage of “Essential Commodities”
Existing Law: It is mentioned that except the “war” times, no one could store grains or any eatables (fruits, veggies). The government will regulate it, and no-one can indulge in hoarding.
New Law says: There are no storage limits. Having high capital, private players will enter the market and buy the eatables on a large scale and store them in cellos. Hence, they will control the price.
A small example is that in local Indian “Kirana Shops” (grocery stores), you can get corn at 25 per kg price, but it is sold at 100–150 per kg at Walmart stores.
As per basic economics- they will then control the demand and, eventually, the price of that food commodity.
