The three agricultural laws were never the solution

The recent announcement made by the Prime Minister that the Central Government will endeavor toAppeal three agricultural laws Various reactions are coming about the winter session of Parliament. On 29 November, the first day in Parliament, the Agricultural Laws Repeal Bill was passed in Lok Sabha without discussion, These laws are the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; Farmers (Empowerment and Protection) Agreement on Price Assurance and Agricultural Services Act, 2020 and Essential Commodities (Amendment) Act (ECA), 2020. Regardless of how this specific move is viewed and the motivations attributed to it, the prolonged protests by farmers and the extended standoff provide a rare teachable moment for policy making for Indian agriculture.

purpose, ‘creation’, way

To recall, each of the three laws was intended to remove barriers on buyers to purchase stocks, contracts, and agricultural commodities. While the Essential Commodities (Amendment) Act, 2020 (ECA) was largely the prerogative of the Centre, the Farmers (Empowerment and Protection) on Price Assurance and Agricultural Services Act, 2020 regulates contract farming and farmers’ product trade and commerce ( Publicity and Facilitation) Act, 2020 (from now on, the APMC Bypass Act), focusing on public regulated markets were hitherto the states under the State-Level Agricultural Produce Marketing Committee (APMC) Acts.

The most disturbing aspect of these laws was the way they were written and passed. First, the public today knows very little about who wrote these laws or who was consulted before they were introduced in the form of ordinances.

Second, these were hastily passed by voice vote in Parliament, which is seen by experts as a violation of established procedures. Acts with serious implications for states should be passed without in-depth discussion even within Parliament, with specific inputs from stakeholders and experts, is baffling. In view of the long history of discussion on agricultural market reform, attempts by some to deflect such criticism only serve to shed light on the departure from such tradition in the case of these three laws. Such opaque processes lead to the possibility of poorly designed laws; In fact, many critics have pointed out serious flaws in these laws.

Centre-State Agricultural Relations

Importantly, the APMC Bypass Act mandated that states can regulate designated physical premises, called ‘market yards’, only through their respective APMCs. Through this act, the Center essentially took away control of the market areas outside these yards, now called ‘trade areas’, from the states. The dominant popular narrative was that the Center was doing what the states had failed to do, i.e. free agricultural trade from the clutches of APMCs, an idea that found support in the Economic Survey 2014-15.

Yet, perversely, the APMC Bypass Act particularly hurt the states that had the most deregulation systems. For example, a state that did not have the APMC Act suddenly found that all non-regulated areas within the state would now come under the regulatory purview and control of the Centre, which had hitherto allowed private players to become a deregulated subject to the rules of a freak centre. operating independently in the environment. Furthermore, by exempting private players from complying with any state law in agricultural marketing, it effectively ended the power of states to shape the nature and functioning of agricultural markets.

Such transfer of regulatory authority from the states to the Center could be justified in principle if there was systematic evidence to suggest that the Center was better informed and better equipped to regulate agricultural markets. Here, the Centre’s own action following the Three Laws does not inspire confidence. For example, barely weeks after the ECA was amended, the Center banned stocking in October 2020 for onions and July 2021 for a range of pulses, apparently undermining the perceived spirit of the reformed ECA.

during the pandemic

Our analysis of COVID-19 lockdown management in the agriculture sector also found that the Center was always a step behind, implementing relief measures for agriculture marketing reactively rather than proactively. In contrast, states, regardless of ruling parties, offered a more timely, relevant and faster response to manage the fallout of the COVID-19 lockdown on agriculture. Beyond agricultural marketing, central government efforts such as One Million Ponds, 10,000 FPOs and One District One Product often diverge from local needs for robust and sustainable solutions for agriculture.

Another major concern is that as these Acts enable centralization of authority to influence the functioning of business sectors, this will facilitate the consolidation of big business, a trend that is evident globally. The underlying premise of these three Acts was that freedom to operate in agricultural markets would attract capital-rich private players to a sector that is in dire need of rejuvenating investment; And that the spread of efficient value chains and competition will help farmers reap benefits in the form of higher, and perhaps more stable, prices.

While it is hard to disagree with the stated purpose of these Acts, many critics question this very basis, pointing out that it was at best, and at worst, insidious; The Acts actually load the dice in favor of big-pocketed corporates who will now use this freedom not to compete but to remove competition to gain control of the supply chain at the expense of the farmer. Global evidence, based on data from 61 countries between 2005-15, finally suggests that farmers receive an average of 27% of consumer spending on food consumed at home, a share as national income increases. It falls a lot.

digital integration route

These fears of consolidation have been further fueled by a recent Memorandum of Understanding that the Government of India has signed a data stack with Cisco, Jio, ITC, NEML, Ninjakart, Microsoft, Amazon, ESRI India Technologies, Star AgriBazaar and Patanjali Organic Research Institute. Signed to make. , Claiming to not include private sector players, a select few of these sectors have been granted limited access to “data from federal farmers’ databases” for specific sectors. It seems, it may be the tapered edge of a wedge. A “business” sector under the full control of the central government would potentially provide a digital data consolidation route for big business to control supply chains.

The solution to many problems of Indian agriculture and Indian farmers was never going to be solved by the three agricultural laws, even within the realm of marketing. Nor is the repeal of these three Acts going to reverse or slow down the rapid growth of private players in agricultural marketing over the past two decades, as seen by the 2019 Status Assessment of Agricultural Households in India.

what needs to be done

The last decade has seen significant reforms in the agricultural marketing sector in many states, even though such reforms are relaxed and often piecemeal in their approach. While the center has the capacity to drive historical change, the real reform and action lies with the local governments. States are better positioned to assimilate and respond to the diversity of institutional and socio-economic contexts and agro-climatic zones. They are often better positioned to incorporate local concerns for robust and sustainable solutions.

The central national challenge is that different states have different rules and a different pace of reform because of the political stakes involved in tackling the collusion of traders in these markets. States need to go back to basics and the suggestions that several expert committees have proposed for agricultural market reform – for a start, the separation of regulatory and operational roles of APMCs. The Center, for its part, should shift its focus in the short term to offer a stable and predictable policy environment. face to face To provide an inclusive forum for discussions on imports and exports, functioning of national commodity exchanges and futures markets, and state-level market reforms, public procurement and price support, designing safeguards against consolidation of corporate interests, and formulating data policies.

Sudha Narayanan is a Research Fellow at the International Food Policy Research Institute, New Delhi. views expressed are personal