[Editorial Analysis] Step back from the Abyss

Mains Paper 3: Economy
Prelims level: APMC laws
Mains level: Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks

Context:

• Frustrations about a decade of low farm-gate prices form the origin of the farmers’ protests.

• Government’s carefully crafted agenda to appease the urban consumer vote bank will cost farmers their livelihoods and dignity.

• In face of the determined agitation, the government realises it has made mistake; yet, without acknowledging as much, it has relented to amend the Acts within weeks of their enactment.

Why are farmers upset with the farm bills?

• Farmers, from Punjab and Haryana, are protesting heavily against the Farm Bills 2020.

• The Farm Bill allows farmers to directly sell to private companies without relying on the APMC mandis. Farmers fear this could lead to scrapping of MSP.

• Government has removed most agricultural products from Essential Commodities List. Farmers expect this to lead to price volatility and hoarding.

• Effectively, the bills permit private sector investment into farm infrastructure.

• Farmers are sceptical that large corporates may squeeze out the traditional farmer.

Demand to repeal laws:

• The farmers demand that the Acts be repealed. The farmers want the Acts to be replaced not amended.

• The protests transformed into a nationwide movement that has gathered international attention.

• Worse, a cold-blooded attempt was made to divide farmers on religious, occupational and regional identities.

• The Supreme Court has redeemed itself by providing an amicable solution to the stalemate by suggesting that the Acts be held in abeyance.

• In light of the trust deficit and point-blank refusal to repeal the Acts, the government will be wise to accept the Court’s suggestion.

• It is common knowledge that with the present Acts, it’s impossible to achieve the PM’s promise of “doubling farmers income”.

Why opposition to reforming of APMC laws?

• The much-advocated reform of the APMC laws has not happened so far due to the opposition from mandi traders, by now an influential lobby.

• In Rajasthan, for example, in 2004, a similar Cabinet-approved amendment to the APMC Act had to be withdrawn because traders went on strike.

• What changes have the three farm laws wrought? The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 gives farmers the freedom to sell outside the mandi; and to the buyer to buy at farm gate, without the necessity of a mandi licence.

• The farmer’s choice to sell within the mandi, if she so wishes, is not taken away. Reportedly, farmers believe that this reform is a precursor to the abolition of mandis and MSP.

• It is hard to imagine what might have made them jump to this conclusion: Any political party would have to have an extreme and unprecedented case of myopia to do away with either mandis or MSP, as it would be politically suicidal.
• Besides, it seems the government is prepared to give whatever assurance the farmers want on their continuation, and also to make changes in the law such as mandi fee applying to private mandi as well.

What APMC means for farmers?

• The APMC Act of the 1950s freed the Indian farmer from the monopoly of the local trader, undoubtedly with substantial benefits. Equally truly, what got created were oligopolies.

• In practice, each trader in the mandi has built relationships with a set of farmers: The traders provide credit, the farmer then sells his produce only through that trader, to have the credit advance against such sales adjusted.

• More often than not, the mandi trader is also a conduit for the sale of foodgrain at MSP (direct sale by farmers to MSP centres is virtually impossible), reducing the net received by the farmer to below MSP.

• The symbiotic relationship between particular traders and farmers, which have been created within these oligopolies, is possibly less exploitative.

Could there be hoarding of pulses and food grains under the New Farm Bill?

• Technically yes; since supermarkets and corporates can stock up. This could reduce supply in the market and prop up prices.

• This could give corporates an opportunity to create temporary shortages and profit from the panic. It is likely that food might get more expensive and as a chain reaction inflation goes up. But the government has the right to intervene if prices move up too sharply.

Re-evaluating:

• The government should re-evaluate its response and agree to four other points.

• One, circulate the draft of the amended Acts;

• two, explicitly define its MSP commitment;

• three, hold wide ranging consultations with various stakeholders;

• four, if it is unagreeable to a one-person committee, constitute a small committee — otherwise it will be interpreted as a trick to scuttle the issue.

• The Acts, though, can’t be set right even with amendments. To usher in the much needed tangible agricultural reforms, it would actually be wise to put in place a new legal framework.

Conclusion:

• The concerns of the traders additional sale options for farm produce other than the mandis, and contract farming are being mouthed by the farmers.

• To think that the farmers have been misled as part of a political conspiracy is perhaps naive.

• Perhaps, the key lies in the way the MSP scheme works in certain states, and the way big farmer-trader relationships have worked out in such states.

• In every negotiation, both sides must have a face saver for the victory to have a lasting and positive impact.

• In the present circumstances, it’s absolutely essential to provide a way for the farmers to return home with dignity.

• Heart wrenching tales of distraught farmers returning home in hundreds of thousands, feeling betrayed is a sign of bad tidings.

• It is time also for the farmers to reassess and seek positive concessions, because at the end of the agitation, no one would want a status quo ante, that is inevitable otherwise.

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Prelims Questions:

Q.1) With reference to the coastal radar chain network, consider the following statements:

1. Mauritius, Seychelles and Sri Lanka have already been integrated into the country’s coastal radar chain network.

2. Under Phase-I of the coastal radar chain network, 46 coastal radar stations have been set up across the country’s coastline.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: C

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