Topic: Agriculture and related issues
Qn. “ What factors prevent fair realization of prices by the farmers for their produce?Critically examine if the Farm Bills 2020 can be an effective solution to these problems ? (250 words)
Why this Question ?
The question has been asked in the context of the Farmers Protests against the Farm Bills 2020. There have been mixed opinion on the utility of the bills. While on one hand the arguement is in favour of the bills that it promotes the welfare of the farmers, on the other hand there are issues and concerns raised about the intervention of market forces.
Since the question discusses about the problems of Farmers, the introduction can bring in ideas about the problems of Farmers with an emphasis on issues with realizing Fair Prices for what the farmers produce
Agriculture has been on sector that has not benefited much from the liberalization of 1990-91. Reforms (structural) that were seen in other sectors were not visible in the agricultural farm sector. As a result Farmers have always been on the receiving end of the supply chain without much benefits accruing to them despite the fact that most of the risks (seasonal/financial) are borne by the farmers.
What prevents farmers from getting Fair Price for their produce ?
1.Dependence on middlemen
Majority of the farmers in India (70%) are either small or marginal in nature. Due to this they lack the means to transport the produce to the markets in an economical way. They have to depend upon middle men to even transport their produce from Farm Gate to mandis.This is the first point in which farmers lose control over the crops that they produce. The benefits that accrue due to better prices in the mandi’s are finally reaped by these middle men who in reality happen to be the large farmers and hence find no legal hurdles as only farmers are allowed to sell their products in the mandis. The APMC acts in various states only help the large farmers and not the small and marginal farmers who are in need of protection.
2. Financial burden.
Small and marginal farmers live on a subsistence basis. They are left with meager savings to take care of future sowing needs. Hence they resort to heavy financial borrowings from informal and local moneylenders. This places an additional burden on them to repay the loans at high rates of interest. The cycle goes on and the farmers continue to lack the support to come out of this cycle. In many cases predatory verbal agreements are reached by the money lender to supply him the produce at throw away prices.
3. Corruption in APMC’s
Though APMCs were created in the states to help farmer realize the fair price for their produce, the government staff in the mandis often work in the behest of the middle men. They do not support the farmers by bringing to their knowledge the current prices of the produce nor do they help the farmers with storage facilities for their produce. This forces the farmer to sell his produce at whatever prices are offered to them.
The Union Government had passed different laws under the umbrella term Farm Bills 2020.
Can the Farm Bill remedy these issues ?
1.Provides Choice to the Farmers
Under the farm bills 2020, the farmers are relieved from the mandate of compulsorily selling their produce only in the Mandis. This provides them the choice to sell their produce at fair prices offered to them at the farm gate. By passing mandis can in some ways help the farmers to escape from the stronghold of corruption that is seen in the mandis where middle men and corrupt officials cause harm to the farmers.
2.Provisions for farmers to enter into contract with larger players
The farm bill also allows the farmers to enter into price determined contract with buyers. This gives them the necessary assurance of availability of markets once the produce is ready for harvest. The presence of an adjudication mechanism also provides the security necessary for the farmers to resolve their disputes.
The farm bills 2020 have brought in choice and competition into the agricultural sector that have long been held up due to the dominance of middlemen. The protests against the bills are due to the fears that unrestricted and uncontrolled free play of market forces can turn the odds in favour of the farmers. Concerns have also been raised about the continuance of PDS system if market forces enter into procurement activities. It is the responsibility of the government to allay these fears and concerns of the farmers to realize the positive aspects of the farm bills.