Text of Agri Acts Nails the Lie in Govt.’s Claims

The text of the Acts Nails the lie in Govt’s Claims

Ashish Mital

The Acts are:

  1. The “Income Assurance” Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, in short the ‘Mandi Bypass’ or MB Act.

       2- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020,                in short the Contract Farming, or CF Act.

  1. Essential Commodities (Amendment) Act, 2020, in short the EC Act

The country is seized with the peasant opposition to the above Acts, brazenly declared passed in parliament, most undemocratically. The Prime Minister and Ministers continue claiming that these Acts will benefit farmers. It leaves one wondering why such ‘beneficial’ legislation is seeing such wide spread opposition. Let us test the claims, counter posing hard facts and the written law.

Claim 1. The farmer is now free to sell his crop anywhere. Govt is providing an Alternative to Farmers:

86.2 % of Indian farmers own less than 2 hectares land. They are under heavy compulsion to sell their crops immediately after harvest in order to pay back debts, to buy inputs for the next crop, other needs and because they have no capacity to store the crop, to transport it (which govt. procurement did) and bargain the best price. They go to the nearest mandi.

The claimants of ‘sell anywhere’ are obviously unconcerned with the peasant’s plight and are committed propagandists of falsehoods. Where is the alternative? Companies are alternative to what?  The Acts do not say so that Corporate will be alternative to MSP and Govt. procurement. There is no ‘freedom of choice’.

Claim 2. MSP and govt. procurement will continue.

Section 5 of the Contract Act states that “to ensure best value to the farmer” such price “may be linked to the prevailing prices in specified APMC yard or electronic trading and transaction platform or any other suitable benchmark prices” – but NOT to MSP, nor to Govt. Procurement rate – because both are to be wound up! No declaration of MSP for all crops, determined by Swaminathan formula of C2 costs plus 50%.

Cliam 3. Farmers will be free from exploitation by Intermediaries:

The APMCs, established in 1960s were meant to be a marketing solution to provide incentive of a fair price and govt. procurement to peasants and to save them from selling crops at throw away prices, in lieu of debts accumulated from private lenders for purchase of inputs. Half a century later peasants are making the same complaints against the arhatiyas of govt. mandis and against the govt. for its failure to declare profitable MSP, for coverage of only 23 crops under MSP and for scarce procurement. The claim is that the APMC Bypass Act will completely unshackle the control of the ‘middleman’, who are the main villains.

These Acts create at least 5 layers of middlemen, roles which will be filled by rural moneyed sections, who are the middlemen now also. Section 2(g) stipulates a Farm Agreement in which “written agreement entered into between a farmer and a Sponsor or a farmer, a sponsor and any third party”, the third party has been left undefined.

  1. a) Under 2(g) the Sponsor is to provide farm services, i.e. “seed, feed, fodder, agro-chemicals, machinery and technology, advice, non-chemical agro-inputs and such other inputs for farming, etc” (section 2d). The farmer pays for these. But section 3(1)(b) states that the “responsibility for compliance of any legal requirement for providing such farm services shall be with the Sponsor or the farm service provider”. This ‘farm service provider’ is a middleman.
  2. b) Section 4(1) and Section 4(3) say determining “quality, grade and standards for pesticide residue, food safety standards, good farming practices and labour and social development standards may also be adopted in the farming agreement”. Section 4(4) says monitoring and certification of quality and “the process of cultivation or rearing, or at the time of delivery, by third party qualified assayer ...” – another middleman.
  3. c) Section 10 provides for “an aggregator or farm service provider, the “aggregator” being any person, “including a Farmer Producer Organization”, who acts as an intermediary between a farmer or a group of farmers and a Sponsor and ‘provides aggregation related services to both farmers and Sponsor’. This middleman will have three roles, aggregate land of small owners for contracts, services from companies for farming and farm produce for sale to companies.
  4. d) Section 2(e) of Contract Act and Section 2(b) of the Mandi Bypass Act state that a “farmer” also includes ‘Farmer Producer Organization’. It is the landlord/rich farmer who will organize the FPOs and also act as an agency of the Sponsor Company. The original plan for FPOs was to be voluntary collectives of farmers to empower bargaining with traders. These acts envisage a middleman role for them, the present day moneylenders, brokers for banks, ‘arhatiyas’, commercial agents, etc. There is no security clause in the Acts for the underprivileged.
  5. e) Section 5 (1) of the Mandi Bypass Act also provides for the FPO the role of establishing and operating “electronic trading and transaction platform … commerce of scheduled farmers’ produce in a trade area”, meaning ownership and management of private mandis.

There is an obvious provision for a compete nexus between the Sponsor Company and the middlemen and with absence of govt., they will control all operations. Where is freedom from the middleman?

Claim 4. Food Security of the poor will not be harmed.

The EC Amendment says, “The supply of such foodstuffs, including cereals, pulses, potato, onions, edible oilseeds and oils”, etc., “may be regulated only under extraordinary circumstances” and “imposing stock limit shall be based on price rise” “may be issued under this Act only if there is—(i) hundred per cent increase in the retail price of horticultural produce; or (ii) fifty per cent increase in the retail price of non-perishable agricultural foodstuffs, over the price prevailing immediately preceding twelve months, ..”

There will be no regulation of food prices, no check on hoarding and black marketing, in a food market chain controlled by Corporate and MNCs! Cheap food grain under PDS will get converted to cash transfer scheme and more than 75 crore beneficiaries will be forced to buy from open market.

This law further states that these changes shall not apply to orders under PDS and TPDS ‘for the time being in force’. The ‘time being’, for PDS, is very sinister.

Claim 5. Farmers shall not be deprived of their land.

Section 8 of Contract Act mentions that, “No farming agreement shall be entered into for the purpose of (a) any transfer, including sale, lease and mortgage of the land or premises of the farmer”. That is indeed very nice!

But Section 9 links “farming agreements” “with insurance or credit instrument under any scheme of the Central Government or the State Government or any financial service provider to ensure risk mitigation and flow of credit to farmer or Sponsor or both.” This will entail credit linkage with mortgaging of farmer’s land, unless it had been specified that the Sponsor Company will provide the assets for mortgage.

In case the contract suffers a financial loss, there will be recovery, under Section 14(7) “amount payable … may be recovered as arrears of land revenue.” And though Section 15 prohibits recovery “against the agricultural land of the farmer”, clearly the credit instruments will follow their debt instruments, not Section 15 of this Act, to which they are only linked.

Claim 6. There will be no loss to the farmer in calamities (force majeure).

Section 14(2)(b) of CF Act provides that where the “order is against the farmer for recovery of the amount due to the Sponsor” on account of any advance payment or inputs, “such amount shall not exceed the actual cost incurred by the Sponsor”. So, apart from cost of inputs, the actual costs ‘incurred by the Sponsor’ will be recovered!

Further in cases of “default by the farmer is due to force majeure”, “no order for recovery of amount shall be passed against the farmer”. There is no commitment here to pay for the services of the farmer, though the loss is due to ‘force majeure’.

In these recoveries the govt. will play an active role.

Claim 7. There will be no govt. taxes and benefit will be shared by the Company and the farmer.

This is another total lie. Section 6 of the Mandi Bypass Act does bar “market fee or cess or levy”, but only under “any State APMC Act or any other State law”. And Section 5(2) provides that the “the person establishing and operating an electronic trading and transaction platform shall prepare and implement the guidelines for fair trade practices such as mode of trading, fees, …”. There will be no govt. taxes, but there will be mandi fees, and with no govt. control!

Three major threats stand out.

  1. Farmers will be subjected to Corporate Control: The scheme of these three Acts is to impose ‘Indigo farming’ type pattern in the entire agriculture, with powerful rural elites acting as middlemen of the MNCs and Corporate and both input and crop markets being corporate monopolized.
  2. Subjecting food Security to World markets: With complete govt. withdrawal from the food chain and food security, MNC food giants will freely import at the cheapest rate. ABCD (Archer Daniels Midland, Bunge, Cargill, Louis Dreyfus) the four major grain trade giants controlling more than 70% of world grain trade, Walmart, Nestle, Pepsico, CocaCola along with their Indian collaborators, Ambani, Adani, Tata, Birla, etc. will integrate Indian agriculture production with world markets and completely demolish freedom of farmers and food security.
  3. Threat to India’s food and political sovereignty: With legal freedom these companies will readily promote banned and dangerous GM seeds, Terminator seed technology, which has been restrained due to protests. They will erode our seed sovereignty and threatening our food and political sovereignty.

No country in the world has developed by handing over its agriculture and welfare of peasantry to foreign powers.