Champaran to Wallmart : Journey of Farmer

Champaran to Wallmart Journey of Farmer_The Policy Times

History of the Freedom Struggle of India in fact is the story of the struggle of Indian farmers.  One such farmer uprising gave the nation its father “Mahatma Gandhi”. After returning to India, in the year 1917, the first movement Mahatma Gandhi led was the struggle of peasants of Champaran.  The agriculturists of Champaran were cultivating indigo under the Farming Agreement with the local landlord and British Company that used to export the products from India.  The cultivators were provided with loans and other services from their sponsors and were forced to cultivate indigo in their land. Meanwhile, some countries banned the import of indigo and its price in the international market crashed. To overcome the losses the landlord and the British government increased the taxes and the other charges on the farmers that resulted in their devastation.

The passing of the recent Bills in the Parliament related to farmers reminded me of this part of Indian History. The Parliament has passed (i) “The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020” and (ii) “The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020”. The aims and objects of these bills provide that they are being introduced for the creation of an ecosystem where the farmers and traders enjoy the freedom of choice. The Ruling party is terming these Bills as ‘historic’ while the Opposition is calling them ‘draconian’.  Therefore, it is imperative that we ascertain what exactly will be the impact of these bills on the farmers.

Through the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services, 2020, the term ‘Farming Agreement’ is introduced that permits a farmer to enter into an agreement with the sponsor to sell his agricultural produce, therefore he may enter into an agreement to get a predetermined price at the time of delivery or the sponsor may agree to provide the farmer services like supply of seed, fertilizers, technology or other inputs and is willing to bear the risk of output than the payment for the services rendered by the farmers. The agreement is to be registered with the authority specified by the State Government.  The price is to be determined and mentioned in the agreement and if it is subject to variation then the guaranteed price is to be mentioned or the parties can agree to link price with prevailing price in specified APMC yard etc.  It would be mandatory to make payment at the time of delivery or within 3 days at the most.  There would be no stock limit for the farming produce purchased under such agreement.  In no case the agreement could be entered for the purpose of transfer including the sale, lease and mortgage of the land or premises of the farmer neither any permanent structure could be erected.  The farming agreement may be linked with insurance or credit instruments.  In case of dispute, the matter is to be sent for conciliation to the Board appointed by the parties and in its absence, the Sub Divisional Magistrate would decide the dispute within 30 days.  If the sponsor is held responsible for the default, the penalty that may extend to 1 ½ time would be imposed on him but no such penalty can be imposed on the farmer and if the farmer could not fulfil his obligation due to force majeure, no order for recovery shall be passed, the order of Sub Divisional authority is appealable before the Collector, no civil court would have jurisdiction on this subject matter.

The Farmers Produce Trade and Commerce Promotion and Facilitation Bill, 2020 liberated the farmers from the limitation on their rights to deal with their products only with the licensees. Now any trader having a permanent account number (PAN) or any such document as notified by the Central Government can purchase the agricultural produce in any State or place throughout the country but he will need to make payment within maximum 3 working days. Any person can start an electronic trading and transaction platform. It would be mandatory to place on this platform and price information and market intelligence system developed by the Government organization if any trader fails to place this information, the penalty of Rs.50,000/- to Rs.10 lacs can be imposed against him and failed to make payment within 3 days attracts penalty of Rs.25,000/- to Rs.5 lacs the only limitation on this Act is that it will apply beyond the boundaries of the APMC yards or private market yards.  No market fees, cess or levy would be charged on the farmer or trader if the transaction took place out of the yard.

In the year 2005, the Maharashtra Legislator amended the Maharashtra Agricultural Produce Marketing (Development and Regulation) Act, 1963 by adding section 5-D it introduced direct marketing giving an option to the agriculturists to either sale their produce in the traditional APMC or private yards created under this section. Regulating feature for the private yards were a license to be obtained after the deposit of adequate security deposit, so in some contingencies, the losses to the farmers can be made good.  In the year 2006 by a further amendment section 5-E was added introducing term “Contract Farming Agreement” interestingly the provision of ‘Contract Farming Agreement’ in the Maharashtra law are identical with the ‘Farming Agreement’ in the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farmer Services, 2020, recently brought by the Central Government. The only difference is the absence of the compulsory registration of sponsor in the Central Bill vis-à-vis the State Act with the market committee and the dispute resolving system.  The State Act seems to be tilting more in favour of the farmers as compared to the sponsor.

The fact remains that it is not for the first time such provisions are being made and the experiment of the open market is introduced contrary to the protectionist approach of the government since independence.  One thing becomes clear that it is neither a historical step nor an innovation of the present government but it is simply adaptation of the State Act. Now the other dimension to the dispute amongst the Ruling and Opposition is that both the amendments to the Maharashtra Act were done while the government was led by Congress and BJP was in Opposition in Maharashtra. ‘So for Congress how the law that was good in the State became bad in the Centre and for the BJP how it is a revolutionary step to liberate farmers when already similar provision exists in the State laws?’

Let the politician be busy in politicising the issues but in my opinion while identical provisions were in operation, their effect on farmers should have been studied before making such provision for the entire country.  Business Today on 17.10.2019 reported that between 2013 to 2018, 15000 farmers have committed suicide in Maharashtra according to another newspaper 2808 farmers suicide are reported in the year 2019 and 1074 in first six months of 2020.  If this unfortunate number of farmers’ suicide is to be considered as one of the markers then the provision of contract farming and availability of alternate market has not proved to be helpful in improvement of the economic position of the farmers.  The Central Government should have formulated some other solution considering past experience of Maharashtra.  For this purpose, it was necessary to have a public discourse on these bills and debate in the Parliament before their passage.

The bills have left some question unanswered as both dealt with the price of agricultural produce but do not mention the effect and obligation of Minimum Support Price as declared by Central Government appointed Commission since 1965, no specific time period is provided for dispute settlement by the Board and a grey area regarding regulating the electronic trading platforms, is left out. Though there is much discourse about the eradication of the role of middlemen, the new law introduced a player who is neither sponsor nor farmer but ‘Aggregator’ as an intermediary between the farmer and the sponsor.  The mute question is whether the present Adtias/ middleman/ brokers would be the new Aggregators? How are the ‘aggregators’ different from the middlemen that these acts intended to remove?

The Government could have easily made MSP a part of this new legislation that could have acted as security for farmers. Violation of MSP should have been made Pena, but the omission of reference to MSP and introduction of other methods of price fixation strengthen the suspicion on the intention of the Government about bringing these bills especially when except the farming sector all other sectors are performing badly post demonetisation and GST.

Despite all odds and evens, the newly introduced laws seem to be liberating the farmers from the clutches of traditional APMC who have failed to improve the condition of farmers and have often been accused of becoming toys in the hands of the traders. Now the big players like Wallmart, Jiomart can directly deal with farmers. But the future performance of these laws would depend on the awareness created amongst the farmers by educating them about their rights so also sensitizing the revenue authorities to whom these laws gave regulatory powers.

Along with these two laws, one more amendment is moved to the Essential Commodities Act thereby deregulating the stock limit and liberalizing the movement and trade of the commodities except in the times of war, famine, extraordinary price rise or natural calamity of grave nature. The stock limit could be imposed only in case of steep price rise, and that too more than 100% in horticulture produce or 50% in non-perishable produce. In no case, the regulation will apply to the processor or value chain participants.  The statement by the government states that the aim of this amendment is to boost immediate investigation and an increase in competition.

The amendment to Essential Commodities Act reminds me of another black chapter in Indian History, In 1942-43 the great famine occurred in Bengal claiming around 3 million lives according to Nobel Laureate Amartya Sen one of the major reason for the losses of lives in this famine was uncontrolled hoarding of food-grains by the traders in expectation of price rise.

I wish the government and the administration of present would keep the past in their eyes while implementing new laws and more so because now Mahatma is not available to lead farmers and any opposition to Law is termed as Sedition.

By Advocate Firdos MirzaFirdos Mirza_The_Policy_Times

Practising Advocate, Nagpur Bench of Bombay High Court


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