Explained: Farm Laws 2020 and its Effect on Indian Farmers

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“Jai Jawan! Jai Kisaan!” We have all heard this slogan multiple times, as it is a very popular slogan in our country. In the recent past, our government has come up with three different ordinances related to agriculture which has infuriated the farmers of our nation. The farmers of Punjab and Haryana are even out on the streets to protest against these ordinances. What is the reason behind their protest? What changes are suggested by these ordinances? and Why does it concern the common man? The same will be discussed in this article.

Image Source: Moneycontrol

The Bhartiya Kisan Union and several other farmer organisations have sought permission from the Haryana government to take out a protest rally. The BJP-led Haryana government denied permission in view of the coronavirus pandemic. But the farmers did not pay heed to the government and a rally was organized in which more than 100 farmers rode their tractors to the protest site to raise slogans of “Save The Farmers, Save The Mandis”. However, the situation turned violent in some places and it is alleged that the farmers were lathi-charged by the police.

What do the farmers mean by ‘Save the Mandis’ in their slogans?

When India got its independence in 1947, the whole distribution system of the agriculture sector was dominated by money lenders and traders in the villages. At that time, the farmers had no means to sell their produce directly in the markets. They were fully dependent on moneylenders and traders who used to exploit the farmers. Hence, the farmers were perpetually in debt and had to face a lot of problems.

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To solve this problem, the government, in 1965, came up with a committee, named APMC i.e. Agriculture Produce Market Committee. The government set up special areas in the State and declared them as ‘market areas’. These market areas were regulated under the State APMC Act and would be subject to the jurisdiction of the ‘market committees’. According to this new setup, no farmer or trader would be able to sell or buy the produce freely in a market area, as they would require a ‘license’ to do so. And by a licensing system, the government-controlled these traders to some extent. The government also claimed that the farmers would be granted Minimum Support Price (MSP) in these market areas i.e. the government came up with a minimum price at which the farmers would be able to sell their produce to safeguard them from exploitation. It basically means that if some produce was left with the farmers, then the government would itself procure it at a minimum price if the traders are unable to do so.

In the local language, these market areas where the farmers and the traders trade with each other in an organized and controlled manner is known as ‘mandis’. Over the period of time, a large and impressive network of mandis developed in the state of Punjab and Haryana.

Some Loopholes of Agriculture Produce Market Committee (APMC)

As the time passes, some loopholes of APMC came on its surface, such as:

  1. The market committee had extraordinary powers to grant licence to the traders.
  2. The licensed commission agents that procure produce from the farmers started forming their cartels or groups and formulating deals with one another to collectively not buy produce from the farmers at a specified rate. So, the farmers would be left with no option.

Ordinances Passed in 2020

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The present government, recently, passed three ordinances related to agriculture and they claimed that these ordinances would create “One Nation, One Market” and give farmers the freedom of choice to sell their produce wherever they wish to. But the things are not as simple as it seems to be. As these ordinances became the act, the farmers showed their anger by protesting across the streets of several cities.

The points of concern for the farmers are as follows:

  1. These ordinances stated that the areas outside the ‘market areas’ will have no taxes on sale or purchase- It will make the sale and purchase outside the mandis more attractive and would pose a huge disadvantage for the farmers who want to trade in the mandis. Trade in APMC mandis is regulated, there exists a MSP where transactions are taken into account. However, outside these mandis, all these things will not be regulated and controlled which might lead to the exploitation of the farmers by some big private players.
  2. The protesting farmers believe that these ordinances would ‘corporatize’ the agricultural sector of India which will lead to the monopoly of the big private companies over the agricultural sector and it would become easier to exploit the farmers- As most of the farmers of our country do not have the requisite knowledge to understand the lengthy contracts formed by private and multinational companies and to fight legal battles with them.
  3. There is no mention of ‘Minimum Support Price’ in any of the ordinances as the government wants to remove the MSP System- As there are no tax regulations, the traders and the companies would want to buy produce outside the market area without payment of taxes, and gradually people will move out of the mandis which will cause the mandis to start becoming redundant. If Mandi System or Market Areas collapses, then the MSP that was assured to the farmers would also decline gradually.

Demands of The Farmers

The protesting farmers have four main demands:

  1. To roll back all the three ordinances as there is no need for such an act in our country.
  2. To protect the APMC’s Mandi Market System.
  3. To clear their due loans.
  4. To make a National Law for the regulation of Minimum Support Price in our country.

Conclusion and A Way Forward

Neoliberalism is an ideology that believes in the free markets. It basically refers to a situation where the government merely does or does not interfere and lets businesses operate the way in which they are operating. On paper, this ideology sounds very good but if the market is left free for the businesses to earn profit as they wish to, then overall this is not good for society and the world at large. If big private and multinational companies operate without the regulation of the government, then they will only think to make their profits and will ignore all the other factors such as the environment.

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Neoliberalism society should be avoided and the government should make the regulations in some sectors such as Minimum Support Price for the farmers, an upper limit should be set on the prices of medicines. There should be some sectors that should not be profit-driven, rather the focus should be welfare driven.

The present government is talking about the freedom of choice of the farmers. The true freedom for the farmers would be established if they would be assured with MSP both within and outside the mandis. There should be a national law for MSP to be at least 50% more than the weighted average cost of production. The agriculture system of our country has been kept impoverished.

According to the RBI Report of 2011-12 and 2017-18, 0.4% of the country’s total GDP was being invested in the agriculture sector. In a sector where almost 50% of the population is involved, only 0.4% of the GDP is being invested. There are various shortcomings and loopholes in the system of APMC, but the aim of the government should be on improving and closing these loopholes to lay a network of various mandis across the whole country and to provide the farmers with an assured income in the form of MSP if their crops are not being purchased by the traders.


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